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Closing Grain Comments: 7/13/18

Corn & soybean futures came under renewed pressure on Friday as weather forecasts promised solid Midwestern rainfall & prospects for cooler temps next week.  With traders still concerned about export demand due to Trump’s war on trade, corn followed beans lower as markets built into prices the expectation that US yields would exceed Thursday’s forecasts for corn at 174.0 bu/ac. & soybeans at 48.5 bu/ac. & that US old- & new-crop carryover stockpiles would rise beyond current projections.  Wheat bucked the downtrend & rallied after the Russian ag ministry warned that Russian wheat production could drop 20.6 mmt below last year to just 64.4 mmt.  Citing persistently dry weather, the ministry slashed total Russian grain output to 100 mmt—down 30 mmt below 2017 results.  At Friday’s close, Sept. & Dec. corn futures each declined 4.5c, Aug. & Nov. soybeans each crashed 15c lower, Aug. soymeal lost $4.90/ton, & Sept. soft red winter wheat surged 12.5c higher. The noon expiration of July futures contracts left weekly continuation charts of corn 21.5c lower, soybeans 60c lower & SRW wheat down 31.25c compared to the previous Friday. Soybean futures settled at their lowest weekly close since Dec. 5, 2008—the day that nearly all agricultural commodity futures bottomed during the “Great Recession.”

 

In Sunday night trading, corn & soybeans were fractionally mixed as forecasts for cooler weather in the 6-10 & 8-14 day kept rally attempts muted.  Wheat futures were hit with some profit-taking given Friday’s rally.  Sensing that grains may have overdone the downside, speculative buying surfaced once grain trading resumed at 8:30 am.  By 9 am, corn futures were about 3c higher, soybeans were up about 15c & wheat was fractionally mixed.  USDA will release its weekly export inspections data at 10 am & its weekly crop progress reports at 3 pm on Monday.  Strong weekly export inspections will be needed to justify USDA’s recent boost to its 2017/18 export forecast for corn (2,400 mb, +100 mb), soybeans (2,085 mb, +20 mb) & wheat (975 mb, +25 mb). The National Oilseed Processors Assn. is due to report members’ June crush totals at 11 am with pre-report guesses looking for 159.637 mb—up 15.6% from last year & far above the 145.050 mb previous June record total set in 2016.

 

In export news, USDA did not announce any daily export sales on either Friday or Monday, but the agency’s Commodity Credit Corp. did acquire 1.241 mb of hard red winter wheat for Ethiopia for late August shipment.  CCC was also seeking 2.408 mb of white wheat for Yemen for early August shipment.  South Korean feed mills bought 2.598 mb of optional-origin corn for December arrival over the weekend & 5.433 mb of optional-origin corn on Friday. Taiwan feed mills purchased 2.559 mb of US or Brazilian corn on Friday.  Saudi Arabia’s state-run grain buyer, SAGO, bought 22.965 mb of 12.5% protein wheat over the weekend. China sold 37.098 mb of corn from state-owned reserves on Friday after having auctioned 48.610 mb of corn on Thursday.  In preliminary data that will finalized later in July, China’s General Administration of Customs indicated on Friday that 8.70 mmt of soybeans were imported in June—a new record for that month. That was down from the 9.69 mmt of beans imported in May, but 13% higher than last year.  Cumulative soybean imports for January-June 2018 totaled 44.87 mmt—up just 0.1% compared to last year. China’s overall trade surplus ballooned to $41.61 billion in June—far above the $24.92 billion surplus registered in May—as the nation reduced US imports ahead of the July 6th imposition of retaliatory tariffs. Year-on-year Chinese exports were up 11.3% in June, while imports grew 14.1% compared to last year.  German-based oilseed analyst Oil World forecast that China would eventually import 14-16 mmt of US soybeans between October 2018 & February 2019.  China will attempt to buy most of South America’s soybean exports, & will likely work into carryover stocks to avoid US purchases, too.  Using stockpiles will lower overall global usage in 2018/19, curbing export demand.

 

Friday’s CFTC Combined Futures & Options Disaggregated Commitments of Traders data indicated that managed trading funds added to their net short positions in corn (104,376 contracts net short, 33,566 more) & hard red spring wheat (11,667 contracts net short, 1,003 more) in the weekly period ended July 10th. But funds also reduced their short position in soft red winter wheat (246 contracts net short, 1,679 fewer), in soybeans (53,247 contracts net short, down 430) & in soyoil (85,365 contracts net short, 3,940 fewer ahead of last week’s WASDE report.  Managed funds reduced their net long position in soymeal (51,326 contracts net long, down 4,684), but added to their net long position in hard red winter wheat (19,748 contracts net long, up 2,500).  Managed funds remain heavily net short the grain markets.  In the 6 major non-HRS wheat grain contracts, funds owned 651,462 long positions & 823,622 short positions as of last Tuesday’s close.  The resulting 0.7910 long/short ratio has been lower only 9.03% of the time since June 2006. Given that USDA sees global grain stockpiles falling significantly in the coming year, one must assume that fund managers believe US grain yields will be larger & grain demand will be smaller than USDA currently forecasts.

 

Locally, corn basis tumbled 7c lower, soybean basis declined 3c, & wheat basis ticked 1/2c higher on Friday.  For the week, cash prices for nearby delivery declined 10c on corn & wheat & collapsed 68c lower on soybeans.  

 

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.

Corn & soybean futures came under renewed pressure on Friday as weather forecasts promised solid Midwestern rainfall & prospects for cooler temps next week.  With traders still concerned about export demand due to Trump’s war on trade, corn followed beans lower as markets built into prices the expectation that US yields would exceed Thursday’s forecasts for corn at 174.0 bu/ac. & soybeans at 48.5 bu/ac. & that US old- & new-crop carryover stockpiles would rise beyond current projections.  Wheat bucked the downtrend & rallied after the Russian ag ministry warned that Russian wheat production could drop 20.6 mmt below last year to just 64.4 mmt.  Citing persistently dry weather, the ministry slashed total Russian grain output to 100 mmt—down 30 mmt below 2017 results.  At Friday’s close, Sept. & Dec. corn futures each declined 4.5c, Aug. & Nov. soybeans each crashed 15c lower, Aug. soymeal lost $4.90/ton, & Sept. soft red winter wheat surged 12.5c higher. The noon expiration of July futures contracts left weekly continuation charts of corn 21.5c lower, soybeans 60c lower & SRW wheat down 31.25c compared to the previous Friday. Soybean futures settled at their lowest weekly close since Dec. 5, 2008—the day that nearly all agricultural commodity futures bottomed during the “Great Recession.”

 

In Sunday night trading, corn & soybeans were fractionally mixed as forecasts for cooler weather in the 6-10 & 8-14 day kept rally attempts muted.  Wheat futures were hit with some profit-taking given Friday’s rally.  Sensing that grains may have overdone the downside, speculative buying surfaced once grain trading resumed at 8:30 am.  By 9 am, corn futures were about 3c higher, soybeans were up about 15c & wheat was fractionally mixed.  USDA will release its weekly export inspections data at 10 am & its weekly crop progress reports at 3 pm on Monday.  Strong weekly export inspections will be needed to justify USDA’s recent boost to its 2017/18 export forecast for corn (2,400 mb, +100 mb), soybeans (2,085 mb, +20 mb) & wheat (975 mb, +25 mb). The National Oilseed Processors Assn. is due to report members’ June crush totals at 11 am with pre-report guesses looking for 159.637 mb—up 15.6% from last year & far above the 145.050 mb previous June record total set in 2016.

 

In export news, USDA did not announce any daily export sales on either Friday or Monday, but the agency’s Commodity Credit Corp. did acquire 1.241 mb of hard red winter wheat for Ethiopia for late August shipment.  CCC was also seeking 2.408 mb of white wheat for Yemen for early August shipment.  South Korean feed mills bought 2.598 mb of optional-origin corn for December arrival over the weekend & 5.433 mb of optional-origin corn on Friday. Taiwan feed mills purchased 2.559 mb of US or Brazilian corn on Friday.  Saudi Arabia’s state-run grain buyer, SAGO, bought 22.965 mb of 12.5% protein wheat over the weekend. China sold 37.098 mb of corn from state-owned reserves on Friday after having auctioned 48.610 mb of corn on Thursday.  In preliminary data that will finalized later in July, China’s General Administration of Customs indicated on Friday that 8.70 mmt of soybeans were imported in June—a new record for that month. That was down from the 9.69 mmt of beans imported in May, but 13% higher than last year.  Cumulative soybean imports for January-June 2018 totaled 44.87 mmt—up just 0.1% compared to last year. China’s overall trade surplus ballooned to $41.61 billion in June—far above the $24.92 billion surplus registered in May—as the nation reduced US imports ahead of the July 6th imposition of retaliatory tariffs. Year-on-year Chinese exports were up 11.3% in June, while imports grew 14.1% compared to last year.  German-based oilseed analyst Oil World forecast that China would eventually import 14-16 mmt of US soybeans between October 2018 & February 2019.  China will attempt to buy most of South America’s soybean exports, & will likely work into carryover stocks to avoid US purchases, too.  Using stockpiles will lower overall global usage in 2018/19, curbing export demand.

 

Friday’s CFTC Combined Futures & Options Disaggregated Commitments of Traders data indicated that managed trading funds added to their net short positions in corn (104,376 contracts net short, 33,566 more) & hard red spring wheat (11,667 contracts net short, 1,003 more) in the weekly period ended July 10th. But funds also reduced their short position in soft red winter wheat (246 contracts net short, 1,679 fewer), in soybeans (53,247 contracts net short, down 430) & in soyoil (85,365 contracts net short, 3,940 fewer ahead of last week’s WASDE report.  Managed funds reduced their net long position in soymeal (51,326 contracts net long, down 4,684), but added to their net long position in hard red winter wheat (19,748 contracts net long, up 2,500).  Managed funds remain heavily net short the grain markets.  In the 6 major non-HRS wheat grain contracts, funds owned 651,462 long positions & 823,622 short positions as of last Tuesday’s close.  The resulting 0.7910 long/short ratio has been lower only 9.03% of the time since June 2006. Given that USDA sees global grain stockpiles falling significantly in the coming year, one must assume that fund managers believe US grain yields will be larger & grain demand will be smaller than USDA currently forecasts.

 

Locally, corn basis tumbled 7c lower, soybean basis declined 3c, & wheat basis ticked 1/2c higher on Friday.  For the week, cash prices for nearby delivery declined 10c on corn & wheat & collapsed 68c lower on soybeans.  

 

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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