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Afternoon Market Recap for Dec. 11, 2018

WASDE dials up small price shifts.

Corn and soybeans land modest gains, with wheat futures coming in mixed

Tuesday morning’s World Agricultural Supply and Demand Estimates (WASDE) report from USDA failed rattle or rally grain prices, as corn and soybeans ended the session with modest gains. Wheat futures turned in a mixed session but moved mostly lower today.

A warming trend across much of the Plains and Midwest is expected to continue through at least early next week, with daytime highs reaching 5 to 10 degrees above normal throughout much of the central U.S. for the next several days. The latest five-day cumulative precipitation map from NOAA shows 1” to 2” of additional moisture possible for the eastern third of the country between today and December 16. Much of the upper Midwest and Plains could stay completely dry during this time. 

On Wall St., investors began to flinch at the latest partial governmental shutdown threats, which could happen December 21 if Congress fails to pass another round of spending legislation. The Dow dropped 149 points in afternoon trading to 24,273, with a year-to-date return now slumping to -1.58%. Crude oil futures rebounded nearly 1% this afternoon but remain just above $51 per barrel. The U.S. Dollar firmed slightly. 

Congressional leaders hope to put the proposed farm bill to a vote later this week. "It was certainly a compromise," a staffer at the House Agricultural Committee told Reuters. "We've had significant differences in virtually every title and had robust debate about them."

 

Corn prices moved slightly higher today on some technical buying and spillover strength from soybeans. December and March futures each gained 0.75 cents to close at $3.75 and $3.8475, respectively.

Corn basis bids were largely steady Tuesday but came in mixed at Midwestern elevators today, with an Ohio location trending 1 cent higher as an Indiana location fell 8 cents amid uneven demand needs from end-users.

In today’s WASDE report, corn carryout went up 45 million bushels, with only a small cut in imports offsetting a 50-million-bushel reduction in usage for ethanol – which was twice what Farm Futures expected but easily supported by the 1% drop in demand for corn for the biofuel in the first quarter.

U.S. ending stocks reached 1.781 billion bushels, up from USDA’s November estimates of 1.736 billion bushels. World ending stocks were for 308.8 million metric tons, up from November forecasts of 307.5 MMT.

Brazilian governmental agency Conab estimates the country’s total 2018/19 corn production will reach 3.587 billion bushels, up 12.8% year-over-year on increased acres and better weather prospects. Conab also expects Brazil’s 2018/19 corn exports to rise 34.8% year-over-year, reaching 1.220 billion bushels.

Brazil’s center-south ethanol production, meantime, slowed noticeably during the second half of November, at 196.5 million gallons – versus 286.6 million gallons during the first half of November.

France’s farm ministry increased its 2018 corn production estimates by 1.2% to 488 million bushels, which if realized, still lags around 13% below 2017’s production.

China’s agriculture ministry raised forecasts for the country’s 2018/19 corn imports from 59.1 million bushels and also raised its corn consumption estimates by 196.8 million bushels to 9.874 billion bushels. 

China also hopes to triple its ethanol production capacity by 2020 if it can obtain approval for proposed new ethanol plants that will have an annual production capacity of around 259.8 million bushels. The country’s new blending requirements could create an annual demand of around 590.5 million bushels by 2020, however, which could create additional market opportunities for U.S. and Brazilian ethanol.

The U.S. EPA and Army Corps of Engineers have released a revised “Waters of the United States” rule for purposes of the Clean Water Act. Click here to learn more about the latest proposed changes to WOTUS.

 

Soybean prices moved moderately higher on some fresh optimism that U.S.-China trade negotiations are making suitable progress, and as USDA held steady its forecasts for U.S. ending stocks this morning. January futures gained 5.25 cents to $9.15, with March futures up 5.5 cents to $9.2825. 

Soybean basis bids were steady across most Midwestern locations Tuesday but did fall 4 cents at one Illinois river terminal.

In this morning’s WASDE report, USDA left U.S. soybean ending stocks unchanged, at 955 million bushels. The agency upwardly revised its world ending stock estimates for soybeans to 115.33 million metric tons, versus 112.1 MMT in November. 

President Donald Trump said in a tweet this morning that U.S.-China relations are moving forward: “Very productive conversations going on with China! Watch for some important announcements!” The statement came amid an announcement that the White House will delay a second round of payments that are part of a $12 billion aid package promised to farmers hurt by the current U.S.-China trade kerfuffle. 

Brazilian governmental agency Conab estimates the country’s 2018/19 soybean crop could top 4.412 billion bushels, trending about 0.65% higher year-over-year. The country’s soybean exports are expected to ease 8.5% from 2017/18 – but still reaching a relatively massive 2.756 billion bushels.

France’s winter canola acres are expected to drop 23.6% year-over-year and reaching the lowest levels in more than a decade, according to the country’s farm ministry. Plantings are only expected to reach 3.039 million acres.

Soybean processors have engaged in their largest expansion efforts in 20 years, which could put profitability in jeopardy by the end of next year, according to a new CoBank report. Click here to learn more.

Preliminary volume estimates were for 213,329 contracts, up from Monday’s final count of 199,108.

 

Wheat prices were mixed but mostly lower today, following some bearish supply and demand data from USDA. March Chicago SRW futures dropped 4.25 cents to $5.21, with March Kansas City HRW futures down 4.5 cents to $5.0575. 

In this morning’s WASDE report, USDA raised its forecast of wheat ending stocks by 25 million bushels, right in line with Farm Futures forecasts. Ending stocks climbed from 949 million bushels in November to 974 million bushels. World ending stocks also moved higher, from 266.7 million metric tons in November to 268.1 MMT.

France’s farm ministry expects the country’s winter soft wheat acres to move 3.5% higher year-over-year, which puts 2018/19 acreage just ahead of the five-year average. Plantings could total 12.429 million acres.

Russian consultancy SovEcon slightly raised its 2018 wheat production estimates by 0.3% to reach 2.605 billion bushels. Wheat accounts for nearly two-thirds of the country’s total grain production this year.

Japan seeks to purchase 5.1 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closes Thursday. About 44% of the total could be sourced from the U.S.

Preliminary volume estimates were for 72,174 CBOT contracts, up slightly from Monday’s final tally of 69,685.

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