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Afternoon Market Recap for January 17, 2018

How grain prices found green today.

Corn, soybeans and wheat all saw modest gains in Wednesday’s session

Short-covering and other technical maneuvering helped most grain prices Wednesday, with most corn and winter wheat contracts up around 1%. Soybeans and spring wheat prices saw much more modest gains of around 0.1%.

Cooler-than-average weather will prevail across the eastern Corn Belt and southern Midwest Thursday, but a warming trend is descending across much of the central U.S. heading into the weekend. Dry conditions will persist in much of the Plains and Midwest until early next week.

On Wall Street, the Dow barreled ahead, picking up another 150 points to 25,969 in late morning trading, with technology and industrial stock strength leading the charge. Energy prices trended moderately higher, with crude oil just under $64 per barrel in late morning trading. Ethanol prices continue to recover, trading 0.5% higher Wednesday to nearly reach $1.37.

 

Corn prices found support Wednesday through a round of short-covering and concerns over dry weather in Argentina. Prices pulled ahead for most of the morning before leveling off around 4 cents higher for the remainder of the session. March futures closed at $3.5225, and May futures finished at $3.6025.

Cold weather made for sluggish farmer sales and heated up spot basis bids for corn Wednesday, with prices 1 to 3 cents higher at Midwestern river terminals, and 1 to 5 cents higher at Midwestern ethanol plants.

USDA farmer surveys indicate U.S. corn acreage could be an estimated 88.752 million acres in 2018. Estimates from a year ago were significantly higher, at 91.066 million acres.

Brazil’s agricultural minister says the country is exploring the possibility of ending its current 20% tariff on ethanol imports from the U.S. The tariff is imposed on U.S. ethanol imports that exceed an annual quota of 158.5 million gallons. That decision would likely depend on the U.S. eliminating its ban on fresh beef exports from Brazil, however. 

Analysts in Argentina have reduced 2017/18 corn production projections there by about 145.7 million bushels after drought continues to pinch yield potential.

South Korea has purchased around 5.4 million bushels of corn in an international tender that closed Wednesday. The grain is for delivery in April and May. South Korea also purchased 2.4 million bushels of feed wheat for delivery around May 5.

Rising fertilizer costs are expected to significantly boost 2018 farming costs in China. Domestic urea prices were up 34% year-over-year, and compound fertilizer prices were up 17.1% year-over-year. Overall grain production costs could be 2% to 3% higher based largely on these higher fertilizer costs.

Grain shipped via U.S. rail continues to see a slower year-over-year pace to start 2018. Cumulative volume so far is 41,595 carloads, which is 9.5% lower than the first two weeks of 2017.

Preliminary volume estimates were for 235,663 contracts, down around 7% below Tuesday’s final tally of 253,896.

 

Soybean prices settled into Wednesday’s session with moderate losses, only to fight their way back into small gains by the close. March futures tacked on 0.75 cents to close at $9.6875, while May futures added a half-cent to close at $9.80 for the first time in nearly a month.

Soybean spot basis bids Wednesday were largely flat, with one Illinois river terminal reporting a 1-cent gain and an Ohio elevator reporting a 2-cent drop.

USDA farmer surveys indicate 2018 soybean acres could be 88.752 million acres, substantially higher than January estimates for the 2017 crop a year ago, which came in at 82.106 million acres.

Private exporters reported to USDA the sale of 4.8 million bushels of soybeans for delivery to unknown destinations during the 2018/19 marketing year, which begins September 1.

Low prices have Brazilian farmers hesitant to sell new-crop soybeans. In Mato Grosso, farmers are 42% sold versus 55% a year ago. Production is expected to be the second largest on record, meantime, with the latest estimates landing at 4.1925 billion bushels.

Preliminary volume estimates were for 140,340 contracts, down slightly from Tuesday’s final total of 144,117.

 

Wheat prices found favor during a round of short-covering, with March Chicago SRW prices rising 5 cents to $4.2150 and March Kansas City HRW prices gaining 4.25 cents to close at $4.2625. MGEX Spring Wheat finished close to unchanged, with March futures adding 0.25 cents to close at $6.1150. 

USDA farmer surveys indicate all wheat acres for 2018 could reach 43.235 million acres, nearly 10% lower than January estimates for the 2017 crop, which was 47.896 million acres.

Ukraine wheat exports are down around 5% year-over-year and have reached 429.9 million bushels so far for its 2017/18 marketing year, which began July 1. The country’s 2017 harvest was about 5.6% lower than 2016’s record-breaking effort.

Japan failed to receive any offers in a tender for 4.4 million bushels of feed wheat and 9.2 million bushels of feed barley. The grain was intended for March 9 delivery; this tender is typically issued each week.

Preliminary volume estimates were for 64,745 CBOT contracts, less than half of Tuesday’s final count of 148,556.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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