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Archive for October, 2017

Market Report

Monday October 30th, 2017

December 17 corn closed unchanged at $3.48 ¾ and March 18 closed unchanged at $3.62 ¾. November beans closed down 2 ½ at $9.72 ¾ and January 18 closed down 2 at $9.84 ½. December wheat closed down 2 ½ at $4.24 ¾ and July 18 closed down 3 ¼ at $4.70 ¾. Crude oil closed up $.27 at $54.36.

Unlike last week, the corn market started Monday in subdued fashion.  utures finished sharply unchanged in a small range.  Corn volumes were light, as the focus felt more on soybeans and “first notice day” in the key November contract. Indeed, funds were suspected to be flat on the day (maybe small sellers?), which would leave their net short in corn close to a multi-year high of 235,000 combined futures and options. Crop Progress report after the close had harvest progress close to expected.  According to the gov’t, 54% of the corn has been harvested, advancing 16% from last week, though still 18-19% behind last year and average. This would imply 42.3 million corn acres have been harvested. There are some big name states with plenty of corn left to harvest; Iowa chief among them at 26% behind average, with Minnesota and South Dakota 35% behind and 31% behind, respectively. Wisconsin is 25% behind average. Though virtually no attention has been paid to it for the last month (or indeed the last year, perhaps), conditions reports were unchanged at 66% Good-Excellent, which compared to 74% last year. The weekend was wet in the far Eastern Corn Belt, but mostly clear over the balance of the Midwest. This week is lining up to be a little wetter, excepting the SW quadrant of the Belt.  Glancing at Southern hemisphere planting, Brazil weekend precipitation was beneficial in center south crop areas and a little erratic and light in center west.

The soybean market was unable to sustain overnight strength and ended the day with a modest reversal lower that has the chart continuing to threaten its uptrend support. If January beans can close below $9.81 it would represent a bad trade by violating trend support. Export demand remains a supportive feature but there were no fresh sales announcements this morning and this market tends to struggle without that headline demand reminder.  With that said the weekly inspections of 2.5 mmt of bean shipments show that we continue to execute new business, primarily to China, even if the announcements have quieted of late. The main reason why we struggle is supply side realities.  US harvest is on the back stretch and we have plenty of hedge sellers waiting above the market. We have seen a favorable turn in Southern Hemisphere planting conditions the past 10 days and forecasts offer a more promising growing season outlook.  Rains continue to expand across C to N Brazil and back off from soggy S Brazil and Argentina. Overall planting and conditions for crop development are trending in a positive direction.

The recent trend across the wheat complex has been defensive price action during the day, and mostly, we saw that again today. Values in Chicago managed to get back to unchanged, but a late morning sell-off took Chicago Dec to contract lows. Mpls was the strongest of the three almost all day and would finish the session a couple cents higher. Crop progress Mond%ay afternoon showed winter wheat planting moving up 9 to 84% complete. This puts us only 1% behind this time last year’s pace of 85%, and not too far behind the five year avg of 87%. Kansas planted 3 mil acres over the past week, but they still have 1 mil left to plant. Have to assume a lot of this will not get planted. Oklahoma is the same with 500,000 left unplanted. Winter wheat emerged is seen at 65% vs 52% last week, 69% this time last year and 68% normal. The first condition report showed winter wheat 52% G&E vs 58% this time last year. Big declines in white wheat and hard wheat states versus this time last year, while soft wheat states improved slightly.

Anna Kaverman

anna@mercerlandmark.com

By~ Jacob Lewis

Sometimes controlling weeds in wheat/cereal rye can be a challenge. I have spotted winter annual weeds, marestail, and curly dock in cover crop fields and wheat fields so far this year. I would ask a  Mercer Landmark Agronomy Advisor for chemical solutions like 2,4-D, Dicamba pre- mix product like Brash, or even Huskie or Quelex for some of these weed problems. It is important to keep these fields clean of weeds as to maximize yields come harvest in July.

Here is a very good article written by Ohio State Professor Dr. Mark Loux giving some insight to these potential wheat and cereal rye questions.

https://agcrops.osu.edu/newsletter/corn-newsletter/2017-36/late-fall-herbicide-treatments-cover-crops

Market Report

Thursday October 26th, 2017

December 17 corn closed down ½ at $3.50 ½ and March 18 closed down ¾ at $3.64 ½. November beans closed down 4 ¼ at $9.71 ¼ and January 18 closed down 3 ¾ at $9.82 ½. December wheat closed down 3 ¾ at $4.31 ¾ and July 18 closed down 2 ¾ at $4.78 ½. Crude oil closed up $.43 at $52.86.

Corn fully reverted to form Thursday, putting in a snoozer of a performance. Markets finished a penny lower in a tight range.  The chant of, “$3.50 corn forever and ever,” in Chicago today.  The funds were small net sellers, as they take their net short in corn farther north of 200,000 futures and options. The weather picture continues to exert a modestly negative pull on corn. Harvest weather in the United States, portions of Europe, China and India, will be mostly favorable, although too much moisture in the U.S. Great Lakes region and cool conditions will limit fieldwork for a while. Another good week of export sales did not seem to inspire the market much. For the third week in a row, net new sales for the current 17/18 marketing year topped 1 mmt (1,288,300 MT, to be exact). Major buyers of note this week included “Unknown”, Japan, Mexico, Korea, Spain, and Peru.  The marketing year got off to a sluggish start, but has been catching up nicely this month.

The soybean market slipped to a new low for the break that has the chart threatening to break the uptrend as we take aim at the downside. Unable to sustain modest overnight strength the market continues to struggle with the weight of its supply side realities as harvest gets into the final stretch and the Southern Hemisphere weather outlook takes a promising turn. The weekly export sales report showed that demand is strong despite the absence of fresh daily sales announcements this week. China has tremendous needs to cover and they are not going away.  It will be interesting to watch if anything trade related comes from the President’s visit to China in two weeks. One factor today that isn’t helping prices is the sharp rally in the dollar trading +73 pts higher which has the currency at a 3-month high.  The currency strength comes on the house passing its 2018 budget proposal that puts the tax reform bill in the sights for next week.

The wheat complex entered the morning slightly higher across the board and remained a little better as export sales were in line with expectations and fresh business around was though to keep the wheat complex from breaking down. However, similar to yesterday, around an hour into the day the rally stalled and prices abated. Futures stayed on the defensive the rest of the session before settling lower. With the potential increase of export business, an export lineup that is getting healthier and cash for hard wheat continuing to firm, we should start finding support on breaks. Export sales this morning were not as strong as last week’s 615 MT, but they were solid nevertheless, coming in at 361 MT with an additional 30 MT of new crop sales for a combined total of 391 MT.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday October 24th, 2017

December 17 corn closed up 1 ½ at $3.52 ¾ and March 18 closed up 1 ½ at $3.66 ¾. November beans closed down 5 ¼ at $9.75 ½ and January 18 closed down 5 ¼ at $9.85 ¾. December wheat closed up 1 ¼ at $4.38 and July 18 closed up ½ at $4.82. Crude oil closed up $.59 at $52.67.

A “Turnaround Tuesday dip” seemed to be the universal consensus for trade today. Given steady/lower trade overnight and most of the day, it sure looked like the crowd was going to be right.  One more time, the market defied expectations, albeit without much excitement. Fund traders likely covered up a few more shorts today, and are now likely less than 200,000 contracts short in corn. Overall, it was a very light news day in the corn market. Harvest “catch-up” in the Western U.S., relative to the soggy East, seemed to be the primary talking point. Though 30 million corn acres have been harvested to date, progress is running more than 20% behind normal. A dry 6-10 day outlook map, along with continued clear skies in the West, should promote a much more aggressive pace in next week’s USDA report. The other major focus of the markets – South American planting – has seen Brazil turn more favorable in recent days, though it will be some time before we learn of the extent of a late soy planting pace on Brazil safrinha (second crop) corn acres.

The soybean market resumed its slide in a light volume session that featured a battle between corn and wheat building on their reversal trades as beans tried to poison the well with its weakness. Late buying in the grains gave corn and wheat a victory with a higher settlement while beans settled lower but avoided another outside day down. The US weather forecast does start to dry down with rains lingering some in the eastern belt into later this week but overall, we look to be much drier across the entire belt for next week as we get into the tail end of soybean harvest. Yield reports have been a little lower compared to some of the earlier beans but overall continue to impress considering some of the challenges during the growing season. The improved conditions and improved near-term weather outlook for Brazil allows the market to give back some of its weather premium. Speaking of Brazil, their currency has started to unravel some as the real has fallen out of its 3-month range.  This is important because it takes the value of soybeans priced in reals to a 3-month high for the Brazilian farmer which incentivizes fresh sales and refills their pipeline. The US continues to sell beans to China at a good pace for now. China has lots to buy in order cover their substantial consumptive needs for the coming months but the market needs this export business to continue in order to help balance the weight of excessive supplies both domestically and globally.

The wheat complex started the evening a little better, but prices weakened over the final few hours of the night and ended the session slightly lower. As we moved into the day session, the markets lacked any motivation to move in either direction. The few times trade looked as if it would break down a bid surfaced that helped futures bounce back. A positive sign after Monday’s strong gains as the lack of fresh news could have very easily been a detriment to trade today. The last time Chicago wheat saw consecutive higher closes was over a month ago, Sept 20 and 21 and the last time we saw three consecutive higher closes, something the market will be shooting for on Wednesday, was back during the first week of September. Wheat export prices from Russia were mostly flat last week, despite another tender that saw Egypt pick up another four cargoes of Russian wheat.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday October 23rd, 2017

December 17 corn closed up 6 ¾ at $3.51 ¼ and March 18 closed up 6 ¾ at $3.65 ¼. November beans closed up 2 at $9.80 ¾ and January 18 closed up 1 ¾ at $9.91. December wheat closed up 10 ¾ at $4.36 ¾ and July 18 closed up 9 at $4.81 ½. Crude oil closed up $.04 at $52.08.

Given Friday’s poor close and a soft overnight start, traders were likely bracing for an ugly day. The market had other ideas. Corn threw a curveball today, finishing $.06-$.07 better. Traders believe today was the best single day of gains seen since August 31st. The funds were estimated net buyers of about 15,000 corn today, which would pare their net short back to roughly 200,000 futures and options combined. To no real surprise, the U.S. corn harvest continues to lag significantly behind average, though once again the actual amount done was also below expectations. According to the USDA, 38% of corn acres were harvested, implying nearly 30 million acres have been cut to date, though this lags last year and the five year average by 21%. Bean harvest progress rocketed to 70% done, implying corn will be next on the “to do” list for many.  Harvest activity should be picking up serious momentum in the Western half of the Corn Belt. Most of this region is expected to stay dry in the week ahead, which should give harvest numbers a major boost next week.  The East will be soggy, which will park combines.  Note, the western states are the most significantly behind average.

The soybean market followed the lead of the corn and wheat markets, reversing higher on the day after a weaker overnight trade. The reason for the overnight weakness was the return of rains in Brazil where most of the dry central to northern growing regions received needed relief leaving only the north east untouched. Forecasts suggest we have seen a change in pattern with more and improving moisture in the outlook. A stronger dollar trade and lack of any new export sales announcements had the market poised for a deeper test of support today but that was not meant to be. The COT report showed the funds (through Tuesday) soybeans were net long around 68,000 contracts.

The wheat complex finished the evening flat to a little better across the board. But once the day session started, the recent pattern of overnight gains not holding came to the forefront. Last week was disappointing in that the wheat complex had several opportunities to finish the week strong but couldn’t, and after today’s price action there will be plenty of thoughts behind its strong performance. Technical, we have seen support before down around these contract lows. Fundamentally, cash for hard wheat continues to firm, and there is the growing concern that we may have less acres planted for a third year in a row. Crop progress Monday afternoon showed a nice jump in winter wheat planting, moving up 15 to 75% complete. Although we are still behind last year’s pace of 78%, and the five year avg of 80%, planting progress did come in above expectations. Winter wheat emerged is seen at 52% vs 37% last week, 58% this time last year and 57% normal. Kansas continues to be the laggard as it is 19% behind normal. Soft wheat states were near normal or above.

Anna Kaverman

anna@mercerlandmark.com

By~Ryan Edwards

With corn harvest well under way and many of the soybean fields hauled in, the question becomes, what about the rest of the standing corn? Should it stand a few more days or should it be harvested right away? A study by Ohio State showed that there is a 10% yield loss in corn that is harvested after the middle of November which will soon be here. This loss is mainly attributed to standability either from disease such as fusarium or anthracnose and/or stalk quality. While there is some disease in the corn contributing to overall standability the lack of rain in August has been a major factor in the standability for fall 2017. The corn plant has pushed as much nutrition as possible in to the ear leaving the stalk vulnerable to mother nature and the weather events. If the moisture in your grain is farther from 15% or 16% than you would like to see it may be time to go ahead and pull it out of the field. For additional information concerning late season corn harvest timing for this fall contact your local Mercer Landmark representative.

By~ Rick Mollenkopf

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Market Report

Thursday October 19th, 2017

December 17 corn closed up ½ at $3.49 and March 18 closed up ½ at $3.62 ¾. November beans closed up 2 ¼ at $9.86 ½ and January 18 closed up 2 at $9.97. December wheat closed up 2 ¾ at $4.32 ¾ and July 18 closed up 1 ¼ at $4.78 ¼. Crude oil closed down $.71 at $51.55.

Well, at least it didn’t finish lower. Corn actually had a pulse early, trading as much as $.03 higher. The market maintained slight gains for most of the session, but found a little selling into the close, which pared the day’s gains back to fractional levels. Funds likely covered a few shorts taking their overall net position back to 185,000 short futures and options. The early strength in corn was labelled the “Trump Bump”, as news agencies penned stories suggesting the President himself directly intervened to dissuade the EPA from “messing with the RFS”. Rumors had been circulating for the past month that the EPA was looking to ease the compliance burden of refiners in one way or another – either by allowing exported ethanol gallons to count, or by outright reducing biodiesel (and advanced biofuel) mandated volumes. This prompted a political backlash by Midwest Senators, who have been aggressively lobbying against such changes. Though there was no official statement from the White House or the EPA, the stories were enough to rally corn and bean oil, as well as biofuel RIN credits. Ethanol did not respond. In fact, that market actually closed the day 1-2 cents lower. Weekly export sales for corn were as good as advertised, finding 1.255 mmt in new business, which topped the year ago week’s sales for a second time. Mexico was the major buyer of record, taking almost half, while Japan and other Latin destinations filled out the remainder.

The soybean market reversed higher with leadership from the soybean oil market helping to bounce of its initial chart support. Weekly export sales for beans were strong at 1.275 mmt and we backed that up with another daily sales announcement of 384 mt of beans sold to China providing plenty of demand side news. All things considered, a 2-cent rally is not particularly impressive which is reflective of the supply side realities that should continue to create headwinds on strength days. The RFS mandates on biodiesel are intrinsically tied to soybean oil consumption and maintaining current policy would imply increasing our domestic soybean oil usage in biofuels. Last month, we saw the bean oil market sell off sharply from roughly $.36 down as funds liquidated their oversized long position as speculation over whether or when these changes might take place finally led to a rush for the exits. Elsewhere in the news, Informa came out with updated new crop acreage number today where they increased their soybean acres from last month by 1.25 million to 90.347 million.

Spring wheat once again was the leader of the complex. Mpls would finish the day more than a $.05 higher, while Chicago and KC ended the session only a couple cents higher. The theme over the past days has been Mpls stronger than the HRW and SRW wheat markets, and this morning we may have found the reason why as China showed up on the sales report buying two cargoes of HRS. Two weeks ago China popped up on the sales report buying one cargo of HRS. When you combine the Egyptian tender to the strong sales report, the market was given yet another opportunity to rebound and maybe finish the week strong. It was a modest start today, but it was not very convincing.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday October 18th, 2017

December 17 corn closed down 1 ½ at $3.48 ½ and March 18 closed down 1 ½ at $3.62 ¼. November beans closed down ½ at $9.84 ¼ and January 18 closed down ¼ at $9.95. December wheat closed down 4 ¾ at $4.30 and July 18 closed down 4 at $4.77. Crude oil closed up $.15 at $52.26.

The corn market kept them all snoozing today, down ticking in a two-plus cent range and light volume. Any vigor produced by last week’s positive price reversals appears to be collapsing in a heap of seething disinterest. Fund traders were content to pile on, adding an estimated 8,000 shorts today to take their position back up close to 190,000 short futures and options.  The ethanol section of the weekly EIA report continued the recent trend toward more volatility. Production jumped over 5% this week to 1.019 mil bbl/day, which more than made up for last week’s equally-shocking 4% decline. Roughly 10-15% of plants are breaking even or maybe even losing a little money in the current crush environment. Midwest Senators came away with “warm fuzzy feelings” from their lunch meeting with EPA chief Pruitt Tuesday, but secured precious few concrete promises to shore up RFS support. Support from such Senators is crucial for Trump’s agenda, which gives them a little extra clout in the matter than would ordinarily be expected?  After-hours, wire service reports suggested Trump ordered a “halt” to potential reductions in RFS volumes (thought to be mostly aimed at biodiesel).

The soybean market closed a shade weaker in a quiet, two-sided trade giving us three days in a row of weakness since settling at a recovery high of $10.03 November on Friday. Trade volume on was only 90,000 which is especially light when compared to Thursday’s USDA report day surge of 294,000 followed by 225k the following day. There were no fresh export sales announcements today. Tomorrow we’ll get the USDA weekly export sales report where we are looking for corn and beans sales of 1.0 to 1.2 mmt. Brazilian weather forecasts are suggesting an improvement in conditions for the center to northern growing regions for the back end of October with the improving trend carrying into November – as rains start to break through and temps back off.  This moisture is badly needed and will allow planting and replanting to accelerate. Elsewhere in the news, rumors about the potential for EPA changes to the Renewable Fuels Standard heated up again today with an RFS press conference in IA and a Bloomberg report that the Administration told the EPA to halt any changes to the current mandates. There is a Nov 30 deadline to set the final biofuel quotas for 2018 so some regulatory guidance is very much needed.

Both Chicago and KC wheat were under a little bit of pressure throughout much of the night and that trend continued during the day. Mpls was once again a little stronger and managed to settle the day only around a penny lower. Today’s defensive price action follows two consecutive session’s that saw both Chicago and KC wheat unable to hold early morning gains, so it cannot be too much of a surprise to anyone. Although news has been limited this week, there have been a few headlines that tried to stimulate some buying. Now we have another one with the GASC in for third consecutive week. Their tenders over the past few weeks have seemed to give the market at least a little bit of a spark, however they have been short-lived – something that trade seems to be getting use to as recent efforts to rally have been met with frustration.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday October 17th, 2017

December 17 corn closed down ½ at $3.50 and March 18 closed down ½ at $3.63 ¾. November beans closed down 6 ¼ at $9.84 ¾ and January 18 closed down 6 ¼ at $9.95 ¼. December wheat closed down 1 ¾ at $4.34 ¾ and July 18 closed down ½ at $4.81. Crude oil closed down $.03 at $52.11.

The corn market didn’t quite complete a “Turnaround”, but did fight off the bears. In the end, futures would close fractionally lower up-front in another relatively subdued day of “action”. The funds were not much involved in today’s trade, and were estimated still net short 175,000 futures and options tonight. Weather influences have been trending a touch bearish to start this week. After some growing areas of Brazil suffered through near-historic early season dryness, forecasters have been building in greater odds of improved weather into November timings. Given some of the extremes seen over the past two weeks, it remains to be seen if some of the early acres will need to be replanted. Such timings are important for the second crop corn in particular, which goes in behind soy once it is harvested. There was some good news on the export front today. USDA reported not one, but two, daily announced sales (115k to Mexico, 146k to Unknown). South Korea picked up a batch of assorted feedstuffs, including 69,000 MT of optional origin corn.

The soybean market continued lower leaving a close for a second consecutive session as we retreat from what appears to be a recovery high with Friday’s settlement above $10. The rally in beans found renewed farm selling that slowed the momentum of what we view primarily as a technically inspired move as the post USDA report buying ran stops but the report itself failed provide any statistical support to sustain those gains. The US farmer wasn’t the only producer to get a nice marketing opportunity as beans priced in Brazilian reals also surged allowing the Brazilian farmer to extend sales as well. Elsewhere in the news, South American crop scout Cordonnier described the start to the Brazil growing season as “problematic” – noting a dry central Brazil and wet southern Brazil, but has stopped short of changing his estimates at 109 MMT of soybean production. He said the crop is still in early stages and noted the blocking weather pattern is expected to break down in some weather models. He characterized the start of the Argentina soybean growing season as average and slowly improving, leaving his soybean production estimate at 55 MMT.

Once again, both Chicago and KC wheat were unable to hold early morning gains and finished the day slightly lower. Mpls was the strongest of the complex finishing slightly higher, following a session on Monday that saw trade the weakest of the complex. On Monday the wheat complex was hoping a few bits of new business would be enough to see some follow through buying after Friday’s gains, but was unable to do so. From the condition reports Monday night we saw most HRW wheat states (except Texas) having planting delays. You could put any spin you want on the reason behind that from weather concerns to the farmers pocketbook. Probably was not enough to produce any buying. After all, soft wheat states are actually ahead of normal. However, the efforts to rally the past few days have been met with frustration. So, now the complex is left with looking for something else to stimulate the buying/support. Recent rallies in Chicago have really struggled between $4.45 and $4.50, so until fresh news surfaces how much of a bounce can we expect to see anyways.

Anna Kaverman

anna@mercerlandmark.com