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Afternoon Market Recap for January 16, 2018

Short week kicks off with mixed results.

Short-covering lifts corn and soybean prices, while wheat struggles 

Friday morning’s USDA World Agricultural Supply and Demand Estimates (WASDE) data included a bearish prognosis for U.S. winter wheat acres – coming in nearly 1 million acres higher than trade estimates. Markets took a breather Monday for the Martin Luther King Jr. holiday but returned Tuesday with those higher-than-expected acres in mind, trimming wheat prices by another 4 cents. Corn and soybean prices, on the other hand, found small gains after completing a round of short-covering.

Monday’s deep freeze conditions across the central U.S. will recover to more seasonally typical weather later in the week, even trending toward warmer-than-average temperatures into the weekend. The 7-day precipitation outlook shows the Pacific Northwest and the eastern half of the U.S. most likely to see some moderate precipitation through next Tuesday.

The Dow reached a new milestone, surpassing 26,000 for the first time ever Tuesday morning. Energy prices fell by early afternoon trading, although crude oil hovers near $64 per barrel. The U.S. dollar also weakened moderately, with gold and copper prices fractionally lower.

 

Corn prices ticked up slightly after a round of short-covering. Marchand May futures each added 2 cents to close at $3.4825 and $3.5675, respectively.

Corn spot basis bids were mostly steady Tuesday but down 1-2 cents in several Midwestern locations. 

Corn export inspections totaled 23 million bushels for the week ending January 11. That was below the average trade guess, which ranged between 27 million and 39 million bushels, and it was well below the pace needed to match USDA’s forecast, now at 42.7 million bushels. Marketing year-to-date totals have reached 473 million bushels, which is 36% behind the pace of 2016/17. Mexico was the No. 1 destination

Ukraine analyst Ukragroconsult has trimmed its forecast of 2017/18 corn exports from 767.7 million bushels to 747.9 million bushels. Production estimates were lowered by another 11.8 million bushels.

Preliminary volume estimates were for 255,681 contracts, moderately lower than Friday’s final tally of 323,690.

 

Soybean prices, like corn, benefited from a round of short-covering in Tuesday’s session, gaining almost equal amounts of about 0.65%. Dry weather in Argentina lent additional support to the gains. March and May futures both increased by 7.5 cents to close at $9.68 and $9.7950, respectively. 

Soybean spot basis bids were largely unchanged Tuesday, although an Illinois processor reporting 3 cents higher and an Illinois river terminal reporting 3 cents lower.

Soybean crush reached a record high in December, with 116.382 million bushels, more than 6 million bushels higher year-over-year, and besting the all-time December high from 2013 by nearly 1 million bushels. 

Soymeal exports have risen for four consecutive months and has reached the largest total volume since March. Soyoil stocks, at 1.538 billion pounds, are at the highest levels since July. 

Soybean export inspections reached 45.2 million bushels – on the high end of the trade range of 36 million to 46 million bushels. That total was also slightly higher than a week ago (44.6 million bushels), but could not reach the total from this week a year ago (52.3 million bushels). As it often is, China was the No. 1 destination and accounted for more than half the total amount. 

Preliminary volume estimates were for 145,631 contracts, down considerably from Friday’s final count of 289,953.

 

Wheat prices continued to crumble following Friday’s WASDE report that showed continued ample U.S. and global stocks, along with more U.S. winter wheat acres than previously anticipated. March Chicago SRW prices fell 4 cents to close at $4.1650, and March Kanas City HRW prices dropped 4.25 cents to close at $4.22. MGEX Spring Wheat prices took a smaller hit, with March futures easing 1.25 cents to close at $6.1175. 

Wheat export inspections were also on the high end of the trade guess range (7 to 14 million bushels), with 13.5 million bushels. That’s better than last week’s tally of 8.6 million bushels, but behind the total this week a year ago, with 14.2 million bushels. The weekly pace needed to meet USDA’s forecast is now 20.9 million bushels. The year-to-date total for 2017/18 is 6.5% behind the pace set in 2016/17.

China has sold 16.2 million bushels of wheat at auction, which was a little more than 21% of total wheat available for auction.

Japan issued a regular tender to buy around 3.4 million bushels of food quality wheat from the U.S., Canada and Australia. 

Egypt has purchased around 10.8 million bushels of wheat from Russia in an international purchasing tender. The country’s state grain buyer did not provide additional details such as price or shipment date at this time.

Tunisia is in search of 3.4 million bushels of oft milling wheat, 2.8 million bushels of durum wheat, and 2.3 million bushels of barley for shipment in March or April.

Preliminary volume estimates were for 148,556 CBOT contracts, down moderately from Friday’s final count of 206,276.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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