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Closing Grain Comments: 2/20/18

Overnight gains of about 1.5c in corn & 3c in wheat fizzled after USDA’s midmorning release of Weekly Grain Export Inspections data showed cumulative shipping trends for corn, soybeans & wheat fell farther behind the 2016/17 pace. Farmers were willing sellers of both old- & new-crop grains as Dec. corn futures traded to $3.99, Nov. soybeans exceeded $10.25 & July SRW wheat exceeded $4.90 during the morning rally.  Once the rally stalled, prices faded throughout the rest of the session to settle well off their highs.  News from Asian markets was limited due to Lunar New Year celebrations, & that was a reminder that US corn & soybean exports have a lot of heavy lifting to do during the last half of the 2017/18 marketing year to reach USDA’s export forecasts.  At the close, March corn futures were down 2c & Dec. corn lost a penny with each posting potential key day downward reversals.  March beans settled 5c higher, but failed to maintain its Monday night up-gap & settled 12.5c off its morning high.  March soymeal gained $3.20/ton, but $9 below its high.  March soft red winter wheat futures declined 8.5c & 14c off its peak as heavy rainfall moved into the Midwest wheat belt.  

 

In export news, USDA did not announce any daily export sales on Tuesday or Wednesday. Grain merchants reported on Tuesday that Iraq bought 1.837 mb of milling wheat from each of the US, Canada & Australia over the weekend.  USDA’s Commodity Credit Corp. purchased 1.264 mb of US hard red winter wheat for Ethiopia for mid-April shipment.  Algeria’s state grains agency, OAIC, bought at least 16.902 mb of optional-origin milling wheat in a tender that closed on Tuesday. After Tuesday’s close, Egypt’s state grain buyer, GASC, tendered for optional-origin milling wheat for March 22-April 1 shipment. 

 

Tuesday morning’s holiday-delayed USDA Weekly Export Inspections data for the week ended Feb. 15 were within trade expectations, but corn, soybean & wheat shipments were below last year. Cumulative shipments of those grains each fell farther below their 2016/17 rates.    

 

Weekly corn export inspections improved to 36.931 mb—up 10.9% from the previous week's upwardly revised total (33.310 mb, +0.432 mb), but 9.601 mb (-20.6%) below last year's comparative weekly shipments.  Traders had forecast inspections at 31.5-39.4 mb.  Japan (8.723 mb), South Korea (8.071 mb), Peru (8.024 mb) & Mexico (6.952 mb) topped the list of 7 nations taking at least .602 mb of corn shipments.  Cumulative corn inspections since Sept. 1 have reached 655.269 mb—307.281 mb (-31.9%) behind last year's pace. In its Feb. 8th WASDE report, USDA upped its 2017/18 US corn export forecast by 125 mb to 2,050 mb--243 mb (-10.6%) below last year.  With half the marketing year nearly completed, corn shipments must improve sharply during the remainder of the season. 

 

Last week's grain sorghum exports rebounded sharply to 7.683 mb—up six-fold from the previous week’s upwardly revised 5-week low (1.302 mb, +0.728 mb) & .589 mb (+8.3%) above the same-week total of last year.  China (7.656 mb) took nearly all of last week’s shipments. Cumulative 2017/18 milo inspections now total 98.981 mb--down 20.895 mb (-17.4%) from last year. With US-Chinese trade relations at risk, it remains to be seen whether China will be as aggressive buying US milo in the last half of the marketing year

 

Inspections of soybeans dropped to a 20-week low of 35.276 mb—down 28.3% from the previous week's upwardly revised total (49.195 mb, +0.009 mb), & 4.873 mb below the same-week total of 2017.  Weekly US soybean inspections have still been higher year-on-year only 6 times since July 6th. Traders had expected 27.6-40.4 mb of inspections.  China (22.304 mb) dominated the list of 9 nations that took at least .276 mb of soybeans last week.  Twenty-four weeks into the 2017/18 marketing year, soybean inspections total 1,359.933 mb—209.834 mb (-13.4%) below last year's record pace. USDA’s Feb. 8th WASDE report decreased new-crop bean exports by 60 mb to 2,100 mb--74 mb (-3.4%) below last year's record.  Trade tensions with China & large Brazilian soybean supplies could make the latest projection difficult to reach. 

 

Inspections of wheat decreased to 15.517 mb last week—down  28.3% from the previous week's upwardly revised total (20.974 mb, +0.438 mb), & 5.457 mb below last year's same-week shipments. Trade expectations for wheat inspections had ranged 11.9-21.1 mb.  Japan (3.702 mb), Mexico (2.829 mb) & China (2.315 mb) led the list of 10 nations that took at least .495 mb of wheat last week.  With 37 weeks of the 2017/18 wheat marketing year now completed, wheat inspections have reached 644.713 mb--down 30.949 mb (-4.6%) from 2016/17.  On Feb. 8th, USDA lowered its forecast for 2017/18 US wheat exports by 25 mb to 950 mb--105 mb (-10.0%) below last year's results.  US wheat exports averaged 22.57 mb/week from mid-February thru May 2017.  Unshipped export sales data do not suggest we’ll see similar shipments during the balance of 2017/18.

 

Dry weather dominated most of Argentine growing regions yesterday, but 0.10-.50” rain fell across around 45% of the Brazilian growing regions. High temps were in the 80s in Argentine growing region & 70s & 80s in Brazil.  Forecasts look for limited rains across most of Argentina for the next 7-10 days that will worsen dry conditions, especially across central growing regions. Limited rains are also seen for the southern Brazilian states of Rio Grande do Sul, Santa Catarina & Parana over the next 7-10 days, but tropical activity should bring healthy totals north of Parana. The northern rains will keep soil moisture mostly in good shape, but may interfere with early corn harvest. Southern Brazilian growing regions currently have decent soil moisture, but the lack of rains will draw that down in the next 10 days. Temps look to run below average in Argentina & S. Brazil for most of the next 7-10 days.  Nearly average temps are seen across the rest of Brazil.

 

Locally, corn & soybean basis levels improved 2c, & wheat basis edged 1/2c lower on Tuesday as lower barge freight costs help support regional basis values.  Cash corn & beans remain at prices last seen in July.

 

Would you like CBOT futures prices reported to your phone? Top Ag can send you nearby & harvest futures prices for corn, soybeans & wheat at 9:45 am, 11:15 am & 1:45 pm each day.  We provide the service for free, but you may have to pay for text messages--depending upon your phone plan. Call Scott or Seth at Okawville at 243-5293 or Mike at Trenton at 224-7332 & we'll get you set up! 

 

"Closing Comments" are written by David Marshall, First Choice Commodities LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@firstchoicecommodities.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness.  Commodity trading involves risks. You should fully understand those risks before trading.

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