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Afternoon Market Recap for July 20, 2018

How Friday grains found green.

Technical maneuvering, weather helped move corn, soybeans and wheat higher

More tough tariff talk from the President wasn’t enough to scare down grain prices Friday, as corn and soybean prices each finished with modest gains. And wheat prices grabbed another round of double-digit gains as traders continue to digest ongoing production concerns coming out of the European Union.

Daytime highs in the central U.S. will come in slightly to moderately below normal for the next several days. The eastern Corn Belt has the best chance to see significant rainfall over the next week, with some areas receiving as much as 3” or more of additional accumulation between today and July 27. 

The latest U.S. Drought Monitor, out yesterday, shows the Midwest is largely absent of drought concerns at this time, with the exceptions of eastern Kansas, northern Missouri and a small portion of western Illinois. Nationwide, about 50% of the country is currently affected by some level of drought conditions, with the Southwest and West regions disproportionately affected.

President Donald Trump just pledged he was “ready to go to 500” – a reference to imposing tariffs on the entire amount of imported Chinese goods, valued around $500 billion. The newsthrew stock markets into the red Friday morning, but strong technology stocks pushed the Dow back close to even by Friday afternoon, up around 3 points to 25,067. Energy futures all found healthy gains Friday afternoon, with the U.S. Dollar sliding moderately.

Did you ever wonder how El Niño affects grain production around the world? Take a Deep Dive – the latest podcast from Farm Futures. Episode #5 covers ENSO and contains links to the podcast’s first four episodes.

 

Corn prices attracted technical buyers Friday, pushing futures nearly 1% higher to close the week. September and December futures each rose 4 cents to $3.5525 and $3.69, respectively.

December contracts neared two-week highs, trending 3.9% higher for the week. 

Corn basis bids moved 5 to 7 cents higher in several Midwestern locations, in an effort to boost sluggish farmer sales in some areas.

Ukraine’s final grain production numbers for 2017/18 are in, which include 700.8 million bushels of corn and another 632.0 million bushels of wheat. The country’s grain is primarily exported to China, Egypt and Indonesia.

French consultancy FranceAgriMer estimates that 71% of the country’s corn crop is in good-to-excellent condition as of July 16, slipping from 73% the prior week.

Trade analysts estimate that South Africa’s 2018 corn production is up slightly (0.7%) from prior projections, reaching 523.8 million bushels.

China sold 43.4 million bushels of its state reserves of corn at auction Friday, which was 28.3% of the total available for sale. 

For the week, corn speculators increased their net short position by another 61,175 contracts to reach 134,442. 

Preliminary volume estimates were for 180,974 contracts, falling 25% below Thursday’s final count of 242,307.

 

Soybean prices survived a shaky session, moving moderately higher on a round of technical buying. August futures added 3.75 cents to $8.4975, while September futures picked up another 3.25 cents to $8.5525.

September futures prices ended up higher for a fifth-straight session, gaining about 3.8% this week. But relatively mild weather over the next week could add downward pressure to prices moving forward. 

Soybean basis bids firmed by 2 to 3 cents at several Midwestern river terminals Friday, with most other locations remaining steady to close out the week.

Soyoil prices trended 1.5% higher Friday, with soymeal prices dipping around 0.5% lower – although end-user demand was steady enough to leave soymeal basis bids unchanged.

For the week, soybean speculators increased their net short position by another 11,657 contracts to reach 79,842.

Preliminary volume estimates were for 121,638 contracts, up slightly from Thursday’s final count of 119,453.

 

Wheat prices were lifted double digits after a round of technical buying and continued concerns over EU production. September Chicago SRW prices gained 11.75 cents to $5.16, September Kansas City HRW prices added 11.5 cents to $5.08, and September MGEX spring wheat prices boomed 18.25 cents to $5.5350.

September CBOT contracts neared one-month highs after gaining 3.8% total for the week. 

French consultancy Agritel is again dropping its assessment of the country’s 2018 soft wheat production after heavy rains dampened yield potential. Agritel is now projecting a national yield averaging 102.9 bpa for a total production of 1.256 billion bushels, down 6.5% from 2017’s crop.

France’s soft wheat harvest has quickly accelerated, meantime, with French consultancy FranceAgriMer estimating that harvest has reached 64% completion as of July 16, up from 20% the prior week.

Taiwan issued an international tender to purchase 3.8 million bushels of U.S. milling wheat for shipment in September or October. 

Japan seeks to purchase 2.3 million bushels of western red spring food-quality wheat from Canada in a tender that closes July 24.

For the week, CBOT wheat speculators increased their net short position by another 12,709 contracts to reach 37,402.

Preliminary volume estimates were for 130,001 CBOT contracts, moving 56% above Thursday’s final count of 83,187.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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