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Afternoon Market Recap for December 12, 2017

Small WASDE-related gains fizzle by close.

Grain prices saw a modest morning bump that faded just hours later

Grain markets liked the prospect of 50 million fewer corn bushels. That’s where the latest USDA World Agricultural Supply and Demand Estimates (WASDE) report pegged 2017/18 U.S. corn stocks. The reports lacked any major U.S. or global shifts, however – and market sentiment shifted bearish after thinking more about those persistently large global supplies, with grain prices back in the red by the close.

Wednesday’s weather brings moderately cooler temperatures to the eastern Corn Belt, but much warmer-than-normal conditions across the Plains. Further out, the 8-to-14-day outlook shows seasonally cooler weather in the northern third of the U.S., with the rest of the country expecting warmer-than-normal temperatures. Most of the Midwest and Plains will experience drier-than-normal conditions during this time, too.

Higher U.S. production prices in November could signal higher inflation is on the way. Meantime, bank stocks anchored another positive day on Wall Street, with the Dow up 85 points in midmorning trading to 24,504. Energy futures, which have generally been strengthening in recent weeks, were mixed Wednesday morning, with crude oil prices slightly down, while diesel and gasoline prices firmed slightly. Ethanol prices continue to tumble, down another 1.5% and back below $1.30.

 

Corn prices rose 3 to 4 cents following the WASDE report release at 11 a.m. CST, but cooled off in early afternoon trading following a round of technical selling. Corn futures ended the day with small downward adjustments – December prices were down 0.75 cents to close at $3.3575, while March futures fell 1.25 cents to close at $3.4775. 

USDA now projects U.S. 2017/18 corn ending stocks 50 million bushels lower, to 2.437 billion total. Globally, corn stocks were projected slightly higher (by less than 0.5%), at 8.0311 billion bushels.

December’s WASDE report brought no changes to USDA’s South American production estimates from November. Those numbers include corn estimates of 1.6535 billion bushels in Argentina and 3.7400 billion bushels in Brazil.

China has reduced its estimates for 2017/18 corn inputs by 19.7 million bushels. That’s after the country increased its domestic production estimates by 227.5 million bushels. Domestic consumption estimates were also 210.2 million bushels higher.

Brazil’s ethanol stocks for 2017/18 may come in 20% lower than levels from a year ago, according to the country’s JOB Economia consultancy. By March 31, 2018, stocks could range between 396.3 million and 422.7 million gallons.

Private exporters reported the sale of 5.98 million bushels of corn for delivery to Mexico for the 2017/18 marketing year, which began September 1. 

Preliminary volume estimates were for 235,092 contracts, up from Monday’s final volume of 203,738.

 

Soybean prices continued their multiday slide over continued concerns of large global stocks, and as USDA made no downward production projections for South America’s crops. January and March futures each fell 6.75 cents in Wednesday’s session, closing at $9.7575 and $9.8725, respectively.

USDA raised U.S. soybean stocks slightly higher than its November projections, moving that volume from 425 million bushels to 445 million bushels. Global stocks remained virtually unchanged, at 3.6009 billion bushels. 

USDA left its soybean production estimates for South America unchanged, including 2.0944 billion bushels in Argentina and 3.9683 billion bushels in Brazil.

Private exporters reported the sale of 6.2 million bushels of soybeans for delivery to unknown destinations for the 2017/18 marketing year, which began September 1.

Brazilian soybean exports could reach record levels in 2017, according to the country’s association of oilseed processors. Total volume could reach 2.4912 billion bushels, up from November estimates of 2.4251 billion bushels. 

South Korea has purchased 5.3 million bushels of non-GMO soybeans from the U.S., for delivery between January and August of 2019. The purchase will be split among five monthly shipments during this time span.

Preliminary volume estimates were for 308,708 contracts, up moderately from Monday’s final tally of 254,578.

 

Wheat prices faced mixed results Wednesday, balancing some large export sales with technical selling and large global supplies. December Chicago SRW prices slipped 0.5 cents to close at $3.8725, but December Kansas City HRW edged 0.5 cents higher to close at $3.9575. December MGEX Spring Wheat futures were flat. 

USDA raised its estimates for 2017/18 U.S. wheat ending stocks from November’s tally of 925 million bushels to 960 million bushels. Global stocks saw a slight downward tick to a total volume of 9.8473 billion bushels. Total world consumption is trending 77.2 million bushels higher, thanks to increases in Indonesia, Canada and the EU. 

Private exporters reported the sale of 4.4 million bushels of hard red winter wheat for delivery to Algeria for the 2017/18 marketing year, which began June 1.

Egypt has purchased 10.8 million bushels of wheat in a tender. One cargo is from Romania, with the remaining volume from Russia.

Morocco has issued a tender to import 13.4 million bushels of soft wheat and 12.4 million bushels of soft wheat from the U.S. Both purchases fall under an annual preferential-tariff quota. The tender closes January 8, 2018, and the grain is for arrival in Morocco no later than May 31, 2018.

Preliminary volume estimates were for 119,584 CBOT contracts, down a hair from Monday’s final count of 122,686.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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