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Afternoon Market Recap for January 19, 2018

Markets lose steam, close mixed.

Strong export sales for corn and soybeans offset by caution over government shutdown threat

Grain futures closed mixed on Friday, fading early gains by the close. Good export news for corn and soybeans couldn’t sustain most of the day’s rally, with grain traders heading to the exits as uncertainty about a potential government shutdown loomed over the market headed into the weekend.

Other markets seemed to mostly shrug off the latest signs of chaos in Washington, remembering that earlier shutdowns had little lasting effect on prices. Several stock indexes even make new records. The dollar overcame early selling, firming as interest rates rose.

Crude oil slipped but stayed above $63 a barrel despite forecasts for rising U.S. production that could partly offset the impact of cuts by OPEC and its allies. Gold gained on safe haven buying, supported by ideas improved wage growth in the U.S. could finally trigger inflation.

 

Corn prices edged higher on Friday. March futures were unable to take out Thursday’s $3.54 high but held on to a move above the 50-day moving average, a positive sign for chart traders.

A strong week of export sales gave the market a boost into the morning break, but that enthusiasm faded before the first hour of day session trade was over. USDA said exports last week were a stellar 74.4 million bushels, the second best weekly total of the marketing year.

Yet while sales are running better than the rate needed to reach USDA’s forecast for the crop, buyers have been slow to take delivery on those shipments. That could eventually firm basis in the export pipeline if and when they do. Otherwise, basis was flat compared to last week’s level.

USDA doesn’t release a lot of data over the winter, but a shutdown would disrupt normal reports on exports and ethanol production. That could exacerbate the slow tone of news flow over the winter.

March futures closed up a penny at $3.5225, with December up three quarters to $3.8675. Estimated volume was down from 397,992 on Thursday at 163,069.

 

Soybeans closed higher for a fifth day in a row, a rally that moved prices nearly 30 cents off last Friday’s spike low. March futures took a stab at their 50-day moving but eventually settled back below resistance from charts at the start of the session, ending at $9.7725, up 4.25.

November traded above $10 for the first time in a month on the heels of good export news, but the move was short-lived. Total export sales last week came in at 56.2 million bushels, well above expectations. Year-to-date commitments are still below last year’s levels, raising concerns about how much China will buy from the U.S.

The U.S. could get a little business in the short run from a slower than expected start to harvest in the center-west of Brazil, where frequent rains continue to fall. But overall estimates of Brazil’s crop are on the rise, with some local sources forecasting another record.

The rally is also bringing a few more beans onto the cash market, where average basis levels eased around a penny and a half this week.

Initial volume of 149,018 was up 36% compared to Thursday’s total of 109,365.

 

Wheat prices closed lower at all three markets today, breaking soon after the morning session open as the market absorbed the impact of another poor week of export sales.

USDA reported total net new business last week of just 7 million bushels, and 1.4 million of that was for the 2018 crop. New bookings were less than half the weekly rate needed the rest of the marketing year to reach USDA’s forecast, with both commitments and shipments behind average.

Storms moving across the Plains over the next week continue to look like they’ll miss fields on the southern Plains, but Nebraska and South Dakota should see better coverage. Forecasts for February are for below average precipitation in much of Texas, but conditions could be normal elsewhere. Three-month forecasts extend that trend further north along the western Plains.

Winter wheat futures reversed lower, halting their rallies, while Minneapolis slipped to a new one-month low. Chicago March settled at $4.2275, down 2.5 cents. HRW lost 2 cents to $4.275 and Minneapolis March slipped to $6.085, down 2.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

 

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