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Afternoon Market Recap for June 19, 2018

Trade tensions topple soybeans (again).

Corn and wheat prices also see red Tuesday.

Soybean futures dipped down to reach contract lows before clawing back some of those losses – still finishing down another 2% in a dismal Tuesday session, as trade tensions with China continue to weigh heavily on the market. Corn and wheat prices also slumped, as favorable weather and harvest pressure also figured into the mix.

A cooling trend breaks across the central U.S. over the next several days, with daytime highs dropping 10 degrees below normal in portions of the Northern Plains and upper Midwest later this week stretching into the weekend. The cooler temperatures will bring some rainfall with it, too – particularly over parts of Nebraska, Iowa and Illinois, which could see 3” or more total accumulation between now and Friday.

The current U.S.-China trade tensions continue to escalate. Here’s a rundown of the latest threats levied against China by the Trump, which could levy tariffs on another $200 billion in Chinese imports. On Wall St., the disruption pushed stocks lower, with the Dow ditching nearly 280 points in afternoon trading to 24,708. Embattled energy prices continued to fade lower, too, with crude oil, diesel and gasoline futures all taking moderate hits Tuesday afternoon. The U.S. Dollar continued to firm slightly. 

Corn prices bottomed out early in the session, with nearby futures dropping under $3.40 (a contract low) for a short time before clawing back to more modest losses by the close. July and September futures each finished down 2.25 cents to close at $3.5375 and $3.6325, respectively.

Another day of lower futures prices kept corn basis bids steady to slightly firm Tuesday, ticking 1 cent higher at two Midwestern ethanol plants and 4 cents higher at an Iowa river terminal. 

Is basis strength the only upside to the current grain commodity slump? Find out what exclusive analysis Farm Futures senior grain market analyst Bryce Knorr shares in his latest Basis Outlook.

The 2018 U.S. corn crop has reached 98% emergence as of June 17– up from 94% a week ago, and in line with last year’s pace and the five-year average, both at 97%. Pennsylvania (83%) and Michigan (87%) are the current outliers, with all other major production states at 96% or greater.

Corn condition has started strong and still managed to gain an additional foothold this past week, moving from 77% of the crop rated good-to-excellent the prior week to 78%. Ahead of the report, analysts actually expected USDA to slightly lower that rating to 76%.

Preliminary volume estimates jumped to 722,396 contracts, a nearly 68% increase from Monday’s final count of 430,470.

Soybean prices continue to struggle mightily as a vulnerable pawn in the current trade chess match between the U.S. and China. Prices tanked more than 45 cents at one point Tuesday morning but recovered more than half of those losses – still finishing the session more than 2% down. July futures lost 19.5 cents to $8.89, while August futures dropped 19.75 cents to $8.9425.

Soybean basis bids were mixed but mostly unchanged Tuesday. 

Canadian canola prices found spillover weakness from U.S. soybean’s fall, losing around a half-percent in Tuesday trading.

This year’s U.S. soybean planting pace nears the finish line, reaching 97% – slightly ahead of last year’s pace of 95% and moderately ahead of the five-year average of 91%. Of that, 90% of the crop is emerged, which logically is also ahead of the pace from last year (87%) and the five-year-average (81%).

Unlike corn condition, the soybean crop’s condition degraded slightly – moving from 74% rated good to excellent the prior week down to 73%. That’s still moderately better than this time last year, when 67% of the crop was rated in similar condition.

South Korea has purchased nearly 294,000 bushels of non-GMO soybeans for arrival in November and December. The country purchased an additional 180,000 metric tons of soymeal in private deals Tuesday, sourced from South America.

Preliminary volume estimates reached 513,273 contracts, jumping 50% ahead of Monday’s final count of 341,767.

Wheat prices aren’t as beholden to the current U.S.-China trade spat but still suffered double-digit losses Tuesday, as crop conditions came in better than expected for the spring wheat crop, and as harvest pressure builds for the winter wheat crop. July Chicago SRW prices fell 12.25 cents to $4.7775, July Kansas City HRW prices tumbled 16.25 cents to $4.8325, and July MGEX spring wheat futures dropped 14.25 cents to $5.48.

The 2017/18 winter wheat crop toes the finish line, with 95% of the crop now headed (in line with the five-year average), and with 27% of the crop now harvested (versus a five-year average of 19%). USDA slightly upgraded the crop’s current condition, from 38% good-to-excellent the week prior up to 39%. Analysts were not expecting that number to change. 

For spring wheat, USDA says 97% of the crop is emerged, with 78% of the crop in good-to-excellent condition. That’s a big leap from the prior week’s tally of 70% rated good to excellent.

Egypt’s state grain buyer says it has purchased 8.8 million bushels of wheat in an international tender, sourced from Romania.

Thanks to earlier rains and snowfall this spring, Ukraine’s Agricultural Ministry says current dry conditions in the country won’t have a major impact on grain production there. Ukraine exports around 12% of the world’s corn and 10% of the world’s wheat. 

Argentina is expected to boost its wheat and barley acreage for 2018/19 after drought struggles throughout this past winter and spring cut into corn and soybean yield potential.

Taiwan has issued an international tender to buy 3.5 million bushels of U.S. milling wheat, which closes June 26 and is for shipment in August and September.

Japan is in search of almost 3.4 million bushels of food-quality wheat from the U.S. and Australia in a regular tender that closes Thursday. U.S.-sourced western white, hard red winter and dark northern spring wheat comprises more than 72% of the total.

Preliminary volume estimates were for 247,000 CBOT contracts, a moderate gain over Monday’s final count of 195,426.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

 

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