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Archive for November, 2017

Market Report

Monday November 27th, 2017

December 17 corn closed down 3 ½ at $3.38 ¾ and March 18 closed down 3 ¼ at $3.51 ¾. January 18 closed up 2 ¾ at $9.96 and March 18 closed up 3 at $10.07 ¾. December wheat closed down 6 ¼ at $4.09 ½ and July 18 closed down 5 ¾ at $4.55 ½. Crude oil closed down $.75 at $58.16.

No rest for the weary in corn as futures steadily down-ticked throughout the day, ultimately finishing lower. It felt like the market was trapped between the lower tug of wheat and the better tug of beans (more specifically, meal). CFTC data after the close offered no real surprises. For the week ended Tuesday 11/21, large non-commercial (aka “Fund” or “Large Spec”) traders were net buyers of nearly 15,000 corn contracts, which trimmed their net short back to just under 250k. When including selling over the past several days, we estimate they are heading into Tuesday short just over 260,000. The weekly crop progress update from the USDA found farmers have now harvested 95% of their corn, advancing 5% wk/wk, which was in-line with expected. That compares to 98% average. This would imply there are just under 4 million US corn acres left to harvest. Iowa and Wisconsin are the two largest at 524k and 580k, respectively, with Ohio & Indiana next up (420k and 376k).

The soybean market spent the overnight session trading lower but ended the day in the black in a two-sided trading session.  Beans continue to maintain South American risk premium due to dry conditions in parts of Argentina where the crop is estimated to be around 41% planted as of last Thursday. Over the weekend Argentina saw some rainfall but coverage and totals were not great. Another system is forecast to provide better relief and coverage later this week but there will continue to be areas of concern so the market is likely to maintain some of that risk premium. Conditions in Brazil are mostly favorable with that soy crop estimated to be 84% planted as of Friday. Weekly export inspections in beans totaled 1.578 mmt down from 2.275 mmt last week and compares to 2.243 mmt this week a year ago.

Disappointing overnight price action, with Chicago finishing the night the poorest. Markets were under pressure again for most of the day but the script flipped with Mpls finishing the day the weakest. Trade today seemed to be largely following the weakness that took place Friday. This has really shut off all farmer movement and there was not much to start. Egypt’s GASC announced after today’s close they were in for wheat for Jan 11 thru Jan 20 shipment. Their last purchase was 12 days ago when they bought four cargoes of Russian wheat. This was very similar to their prior tender, but what was shocking was how there was no risk premium built in on any of Russia’s offers after Egypt’s court ruling re-instating its zero level ban of the common grain fungus ergot. Traders selling to Egypt have seemed to grown accustomed to the country’s fickle import rules and irregular inspection procedures, but no risk premium from Russia could turn into a dangerous proposition, especially since there are already around 15 vessels from Russia that still need to go to Egypt while this ergot ban once again goes through the court system. Crop progress this afternoon showed winter wheat emergence at 92% vs 88% last week, 92% this time last year and 92% normal. The two states with the largest acres still awaiting to emerge are Kansas with 487,000 acres and Texas with 376,000 acres. Winter wheat conditions were down another 2% overall (4% in the past two weeks) to 50% G&E. For the third week in a row, the HRW wheat states led the declines as they were off more than 4% from a week ago to 38% G&E.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday November 24th, 2017

December 17 corn closed down 3 at $3.42 ¼ and March 18 closed down 2 at $3.55. January 18 closed down 4 at $9.93 ¼ and March 18 closed down 3 ¾ at $10.04 ¾. December wheat closed down 7 at $4.15 ¾ and July 18 closed down 6 ¼ at $4.61 ¼.

FOR THE WEEK ENDED 11-24-17

CORN – The holiday shortened week did little for corn prices.  The December contract fell just ¾ cents to close the week at $3.42 ¼, the July contract was unchanged at $3.71 ¼, and December 2018 was up ¼ cent at $3.87 ½ per bushel.  There was a shortage of fresh news and the expiration of the December options trapped prices between the popular $3.40 and $3.50 strike prices.

Weekly export sales were within expectations at 42.6 million bushels.  Total export commitments at 843 million bushels is 27% behind last year.  The USDA forecast for 1.925 billion bushels of exports is a 16% year on year decline in exports.   We need to average 26.2 million bushels per week to achieve the USDA target.  There were no new export sales announcements from the USDA this week for corn.  Weekly ethanol production jumped 20,000 bpd to a record 1.074 million bpd!  Ethanol stocks were 400,000 barrels higher at 21.9 million barrels.  This was also a record for this time of year and the highest in 14 weeks.  The 4-week average gasoline demand was 2.6% higher than a year ago.  Ethanol crush margins fell a penny to 8 cents per gallon.

Weekly export inspections (what is actually shipped) were 24.9 million bushels, staying below the weekly figure needed to reach the USDA export projection. In fact, there hasn’t been a week yet in this marketing year that weekly inspections have reached the “needed” number to hit the USDA projection of 1.925 billion bushels of exports.  We now need to average 39.3 million bushels of inspections per week to satisfy the USDA forecast.    Cumulative inspections for the year are down 44% from last year, while the USDA is predicting a drop of 16% in year on year exports.  For the second week in in a row, there were no shipments to Japan.  This hasn’t happened in at least the last ten years.  Brazil’s corn has been competitive into Japan, replacing US purchases.

OUTLOOK:  December corn settled at $3.45 or $3.45 ¼ for the first three days of the week, before closing at $3.42 ¼ in post-Thanksgiving trading.  Unless fund short covering increases, we could likely see more sideways action until the end of the year, or at least until the December 12th WASDE report.  Basis levels have improved to attract bushels out of storage and into the pipeline, but so far not enough to overwhelm the market.  Yawn and carry on.

SOYBEANS –  Soybeans edged higher this week on the seasonal tendency for soybean prices to trade higher during the week of Thanksgiving.  Added concern over longer term La Nina inspired dryness in Argentina lent support during the shortened trading week, but there is rain in the coming forecasts.  In some areas of Argentina, farmers have delayed planting as they await rain.  Brazil’s weather is a moot issue with favorable crop conditions.  Fund buying and a lower US dollar index contributed to the better  soybean tone as well.  For the first time since October 27th, the USDA flashed a sale of 130 tmt of soybeans to China.

Weekly export sales were the lowest of the marketing year at 31.9 million bushels.  This brings total commitments to 1.229 billion bushels and 17% behind last year. The USDA is forecasting a 3.5% increase in year on year exports to 2.25 billion bushels.  Of the total, China has purchased 18.6 mmt compared to 24.7 mmt last year at this time.  We need to average 25.5 million bushels of sales per week to hit the USDA’s projection.  This would be a 42% increase over last year’s 18 million bushels per week average.  Historically, our exports are at 72% of the outlook by now.  We’re at 55% currently.  Weekly export inspections were 78.3 million bushels.  Total inspections so far this marketing year are down 13%, or 101 million bushels, from last year.  We need to average 36 million bushels in weekly inspections to achieve the USDA’s estimate. With our normally peak shipping season coming to an end, it may be difficult to play catch up.  Many will begin to expect the USDA will lower the export category on the December 12th WASDE report.

Concerns about dryness in Argentina expanding has led to some trade chatter about a 52-54 mmt soybean crop.  The USDA is currently estimating their bean crop at 57 mmt.  If temperatures continue to be normal, it may be premature to write the crop off.  The 6-10-day forecast does have rain in it, but the trade would like to see confirmation.  AgroConsult left their Brazilian soybean crop estimate unchanged at 111 mmt compared to the USDA’s 108 mmt prediction.  AgRural pegged Brazil’s bean crop at 84% planted versus 79% on average. The USDA is expected to release their 10-year forecast on November 28th.  This may give us a sneak preview of what they are thinking about acreage for their February Outlook Conference.  Last year, they underestimated soybean acreage by 5 million acres from the November release to the final acreage number.

OUTLOOK:  The uncertainty over rain chances in Argentina provided support this week, but increasing worry about the pace of our exports limited the upside.  We teased the $10 level this week, but were unable to punch through it.  Resistance will remain at the $10 level, then $10.08 ¼ per bushel.  Short-term support in the January contract is seen at $9.87 ½, then about every dime lower.  Basis levels have been firm as soybeans will need to be coaxed to the market.  Without a verified weather problem in South America, the outlook is not encouraging for higher prices in the short run.

Additional comments: Contract changes for the week ended November 24th: Minneapolis and Chicago December wheat each plunged 11 ½ cents lower, Kansas City wheat was down 7 ½ cents, crude oil rallied $2.24 per barrel to $58.95, ULSD jumped a nickel higher, RBOB gained 4 ¼ cents, and natural gas nose-dived 28 ½ cents.  The US dollar index tumbled .910 to nearly a two-month low.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday November 22nd, 2017

December 17 corn closed up ¼ at $3.45 ¼ and March 18 closed up ¾ at $3.57. January 18 closed up 8 ¼ at $9.97 ¼ and March 18 closed up 8 ¼ at $10.08 ½. December wheat closed down 2 at $4.22 ¾ and July 18 closed up 1 ¼ at $4.67 ½. Crude oil closed up $1.06 at $57.98.

Happy Thanksgiving!  We have so much to be thankful for, and you as a customer and friend are a part of that.  Thank you!

Grain markets don’t reopen until Friday morning at 9:30 AM.  Friday will also see early closes: Grains 1:05 PM.

Weekly export sales will be released on Friday this week due to the Thanksgiving holiday.  COT report won’t be released until next Monday.

Today’s ethanol report showed the highest ever weekly production at 1.074 million barrels per day!  This was a weekly increase of 20,000 bpd.   Ethanol stocks also were up with an increase of 400,000 barrels to 21.9 million barrels.  Stocks were the highest sin 14 weeks and record large for this time of year.  Net margins were down a penny at 8 cents per gallon.  Corn didn’t get any extra support from the report.

With options expiring on Friday, corn is stuck around $3.45.  December corn only traded a 3 cent range today.  It has closed at $3.45 – $3.45 ¼ every day this week.

Beans, on the other hand, garnered support from fund buying, a sharply lower dollar, concerns about La Nina inspired dryness in Argentina, and a seasonal tendency to be up this week.  Brazilian weather doesn’t seem to be an issue.  There looked to be some buy beans/sell corn spreading also.  January soybeans, however, were unable to clear the $10 hurdle.

Price action the day after Thanksgiving:

Corn has closed lower the day after Thanksgiving in 7 out of the last 10 years and it has closed lower in 4 out of the last 5 years.

Soybeans have closed lower in 6 out of the last 10 years and has closed higher in 3 out of the last 5 years.

Chicago wheat has closed higher in 6 out of the last 10 years and higher in 3 out of the last 5 years.

The 1-5 day map for Argentina has rain coverage at just 25%, but the 11-15 map is wetter.

The USDA is expected to release their long term 10-year projections on November 28th.  This report gives some insight to what the USDA is thinking ahead of their February Outlook Conference.

The funds today were even on corn, bought 7,000 contracts beans and were even on wheat.

December corn:  short term support at $3.41 ¾ – $3.42, then at the contract low $3.36 ¼, then $3.28 ½.  The 20-day MA resistance at $3.45 ¼ was broken (just barely) on today’s close.  The 50-day MA at $3.48 ½ would be next resistance.

January soybeans: The 20-day MA is first support at $9.86 ¾, then $9.82 ½.  Last week’s high at $9.92 was punched through overnight, leaving next resistance at $10.00.  Today’s high was $9.99 ½.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday November 21st, 2017

December 17 corn closed unchanged at $3.45 and March 18 closed down ¼ at $3.56 ¼. January 18 closed down 1 at $9.89 and March 18 closed down 1 at $10.00 ¼. December wheat closed up 2 ¾ at $4.24 ¾ and July 18 closed up 4 at $4.66 ¼. Crude oil closed up $.39 at $56.92.

Corn trade could only be described as sleepy today, finishing near unchanged in a tight range. Bulls can maybe claim a small moral victory today, in that the markets did not retrace its steps on “Turnaround Tuesday”, despite some opportunities to do so. The funds were viewed small net sellers of the day, and they are heading into tonight short an estimated 255,000 futures and options. All in all, it was a very quiet news day. Traders are broadly awaiting confirmation of Chinese corn business, as well as keeping one eye on South American planting prospects and La Nina odds. Brazil weather is expected to remain good over the next two weeks, though some drying is expected in NE growing areas, as well as RGDS province. Argentina weather will be more of a concern with expanding dryness possible in the far south and ongoing dryness in some west-central locations during the two week forecast period. Increased rain odds for Argentina discussed over the weekend did not make it into many conversations today.

The soybean market drifted around in a light volume, two-sided, uninspired trade. Many participants either away from the trade for the holiday this week or keeping new positions to a minimum leaving us with a very thin market. The soybean oil market managed to regain its footing and show some stability following yesterday’s break to a new low. The USDA flashed a 130 mt of beans sold to China. This is the first sale reported for beans since 10/27.

The wheat complex battled both sides of unchanged overnight, with trade staying in a very narrow range and market participants lacking. Holiday markets are upon us, and sometimes during these times rallies extend a little farther than they would normally go, and the same can be said for setbacks, and that is what we may have seen over the past few days. Flat price trade might be lackluster as we move through the balance of the week, but trade in the Dec/March spread in Chicago should remain active. Ukraine winter wheat crop is in better condition than last year, thanks to elevated topsoil moisture levels. An Australia meteorologist put out a forecast for a 70% chance of La Nina, but also says it will be weak and short lived. So it may not turn out to mean very much, but quality concerns have been growing over there. USDA weekly export sales will be delayed until 7:30 Friday morning due to the Thanksgiving holiday this week. A full day tomorrow, but there will be no night trade either on Wednesday or Thursday.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday November 20th, 2017

December 17 corn closed up 2 at $3.45 and March 18 closed up 1 ½ at $3.56 ½. January 18 closed down ½ at $9.90 and March 18 closed down ¼ at $10.01 ¼. December wheat closed down 5 ¼ at $4.22 and July 18 closed down 4 ½ at $4.62 ¼. Crude oil closed down $.28 at $56.53.

Corn extended the short-covering for a second day. Futures were able to fight off pressure in a number of related markets today.  Managed Money funds were believed net buyers of 10,000 corn today, which would leave them net short close to 245,000 futures and options tonight. At least for corn, there was not a lot of fresh news to start the day. It is a short week, with the markets closed Thursday, folding into a “hard” 9:30 AM open Friday along with an early close. A few extra showers in the forecast for dry Argentina sent a few bearish vibes to start, but increasing odds of La Nina (75%) will keep South American traders on edge looking forward. Southern and eastern Mato Grosso benefitted from moderate to heavy rain during the weekend with another area of moderate to heavy rain occurring from central and southern Paraguay into parts of southern Brazil.  This is expected to sustain a trend of improving conditions for Brazil for at least the next two weeks. Crop Progress data after the close confirmed U.S. harvest progress at 90% complete, which was close to expected. This would imply there are still 7.8 million acres left to collect, including just over 1 mil in Iowa, and over 0.5 mil in a handful of states:  WI, OH, NE, MN, IN, and IL.

The soybean market failed to sustain the rally momentum from Friday’s $.20 move and gave back some of those gains as we start our holiday shortened trading week. It wasn’t a wipeout however as meal rallied late in the session – as the beneficiary of an active oil share spread trade – and this helped beans close near the top of the day’s range. Forecasts show rains bringing some partial relief to Argentina this week while conditions in Brazil continue to improve with a more regular rainfall patter that has developed in the Center to North in that country.

The wheat complex started the night a couple ticks better. When the day session started, the defensive price action continued with futures mostly staying between $.04-$.06 lower. There was not a whole lot in the way of fresh news around this morning. There probably will not be a lot of export business this week. It is a shortened week with the Thanksgiving Holiday on Thursday and no overnight trade on either Wednesday or Thursday. Russian wheat prices were basically unchanged from a week ago despite another Egyptian tender that saw the GASC purchase four more cargoes of Russian wheat. US prices are not very competitive, which is one factor behind the markets inability to sustain any upward momentum. Export inspections this morning were light, but that is not a very influential report. Winter wheat conditions this afternoon were down 2%, however, it is still too early in the season to get too excited about conditions. Crop progress Monday afternoon showed winter wheat emergence at 88% vs 84% last week, 88% this time last year and 88% normal. Winter wheat conditions were down 2% overall to 52% G&E. Expectations were for conditions to be unchanged.

Anna Kaverman

anna@mercerlandmark.com

By ~ Jeff Prickett
Are you a resistance fighter? Have you identified the weed species on your farm that are resistant to group 9 or group 2 chemistries? Do you know what these site of action groups even mean? If not, now would be a good time to consult with your local Mercer Landmark agronomist to become familiar with the Corn and Soybean Mode of Action Chart and start planning for an effective herbicide plan for 2018 crops.

As a resistance fighter, you will want to layer in chemistries that have effective multiple sites of action that will control resistant weeds. Look at past, current, and future chemistry plans and identity what sites of action have been used in the past and what sites of actions may be used in the future. Always try to change up sites of actions and have at least 3 different effective sites of action for the target resistant weeds in any given crop year. NOTE- GROUP 9 doesn’t count! A great way to change it up is to make sure you are rotating your crops. This will give you more choices in changing up your multi-year sites of action plan.

A great resource to familiarize yourself with chemical sites of actions is the Corn and Soybean Mode of Action chart which can be found at iwilltakeaction.com. There you will find many useful tools to educate yourself on becoming a resistance fighter. Myself and the rest of the Agronomy Staff here at Mercer Landmark would be glad to share our knowledge and experience with you to help you define what the right multi-site of action plan would be most effective for your farm. We would take into consideration historic weed pressure, past herbicide programs that may have let escapes come through and the current technologies you are considering for 2018. Just know that we stay on top of the resistant weed species that have moved into the area. Whether it’s ALS (group 2) or Glyphosate (group 9) resistant giant ragweed, marestail or waterhemp – we have a plan and solution that will be effective for your farm. As a resistance fighter – we will be a part on your successful team. Together, we will win the resistance battle to achieve weed free fields with high profit potential. As always- We are here to help!

Market Report

Thursday November 16th, 2017

December 17 corn closed down 1 ¾ at $3.36 ½ and March 18 closed down 2 at $3.49. January 18 closed down 4 ¼ at $9.72 and March 18 closed down 4 at $9.83 ¼. December wheat closed up 1 ½ at $4.21 ½ and July 18 closed down ¾ at $4.62 ¾. Crude oil closed down $.17 at $55.35.

The corn market returned to ‘bear business’ Thursday, pressing another two cents lower to new contract lows. Heading into “Big Friday”, the corn market is sporting $.07 losses, and is less than a dime away from the Sept lows on the weekly chart.  The funds viewed net sellers of about 15,000 corn today, which in our view would raise their new record high short to 275,000 futures and options. Most of the news today tended to focus on exports. As broadly expected, corn sales in the weekly report were less-than-half of the MT. The lion’s share was booked to Japan, while the remainder was to Latin destinations and “unknown”. Total sales + ship now stands at 20.35 mmt, which is not all that far off from 27.65 mmt on the books at this time last year. Unfortunately, sales could dip again next week, given less daily sales activity announced of late. South Korea was in overnight for another cargo of corn. Other than exports, it was a very, very quiet day. Despite a better-than-expected EIA report yesterday, the ethanol market did not betray any hint of excitement, tending to downtick along with corn.

The soybean market was unable to hold small overnight strength and reversed back to the downside after the morning break.  During the break, the USDA weekly export sale report was released. Bean sales were within trade expectations but the reality is those expectations are well below the level of sales that we should and need to be executing in order to come close to current USDA balance sheet expectations. Granted last year’s export program was very front end loaded so the gap may not be as large as it appears today but we have stiff competition from Brazil and soon Argentina will re-emerge as their tax structure changes to the exporter’s benefit beginning in January – so the competition isn’t going away. The best way to stimulate more trade is through lower prices so for now, as long as there is no weather threat to Southern Hemisphere crops, the path of least resistance is lower. Trade volume remains light overall with January futures only trading 85,000 times compared to 218,000 on the big report day reversal last week which was a contract high for volume. Since that report day reversal a week ago soybeans priced in Brazilian reals are 1.9% lower while US values are 3.5% lower the currency play is making us more competitive but the slowing pace of sales suggests we still have work to do.

The wheat complex saw slightly higher price action overnight. As we moved into the day session those gains initially disappeared. USDA weekly export sales this morning were at the high end of expectations, coming in at 489 MT with an additional 30 MT of new crop for a combined sales total of 519 MT. Total sales to date are 617 MB vs 649 MB last year. Following Egypt’s court ruling re-instating its zero level ban of the common grain fungus ergot, the GASC looked to test the waters announcing after the close yesterday they were in for wheat for Jan 1 thru Jan 10 shipment. The thinking was it was going to be interesting to see how many or how much risk premium any offers will have. Traders selling to Egypt seemed to have grown accustomed to the country’s fickle import rules and irregular inspection procedures. The last time Egypt tried to do business with as much uncertainty around, the risk premium in the offers were between 8 and 10 dollars. Egypt ended up buying four cargoes of Russian wheat.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday November 13th, 2017

December 17 corn closed down 1 ¼ at $3.42 ¼ and March 18 closed down 1 ¾ at $3.55. January 18 closed down 12 ¾ at $9.74 ¼ and March 18 closed down 12 ½ at $9.85 ½. December wheat closed down 7 ¼ at $4.24 ¼ and July 18 closed down 4 ½ at $4.68 ½. Crude oil closed down $.01 at $56.97.

The grain markets finished the day negative across the board today. Funds were sellers of 10,000 contracts today, bringing their estimated position to net short 250,000 contracts with options and futures. The weekly CFTC report was delayed from Friday to today and they could just wait until next Friday, as the reporting period (up through Tues 11/7) does not include any of the pre/post report activity. Regardless the commitment of traders report showed the large specs were short 237k contracts as of last Tuesday. Weekly USDA crop progress report was released this afternoon and estimated Corn harvest progress at 83% complete (last week 70%), compared to the year ago week 92%. Looks like significant progress was made in the Dakotas, Nebraska, and Colorado last week meanwhile, Wisconsin continues to lag behind the rest of the country as it still sits at just 56% complete vs 81% last year. In the weather, the 6-10 Day Forecast for Temps is shown to be below normal for much of the northern and eastern corn belt, while the southwest US is warmer than normal. Dry weather across most of the corn belt is allowing for fieldwork to move along, especially in the upper Midwest.

The soybean chart broke down key near term support and ran some sell stops as the charts deteriorate and are showing signs of capitulation. Jan beans violated key near term support at $9.81 and closed below the 100 and 200 day moving averages. A trigger for the selling today was the broad coverage of rains over the weekend in Brazil across the states of Mato Grosso where 1-3 inch totals were reported in major soybean production areas.   These are the areas that have been dealing with a moisture deficit but the return of rains in recent weeks have been helpful and over the weekend we went much further in erasing that deficit as conditions continue to improve. Harvest progress this afternoon shows beans 93% harvested vs. 90% last week and 95% 5 yr avg. The states with the most bean acres left to harvest are MO (826k), NC (768k), IN (648k), KY (586k) and IL (517k).

The start of the overnight session was the only time you had a chance to sell unchanged or better as trade quickly broke down and remained on the defensive throughout the night. That trend continued throughout the day. Today’s losses not only wiped away all of Friday’s gains, for Chicago, it also erased last week’s entire gains. However, trade was never in any danger of taking out last week’s lows at $4.19, but we never really saw a bounce either. The active export lineup last week, along with the continued strength in the cash markets and the subsequent strength in Spring wheat was able to help the SRW and HRW wheat markets eke out some minor weekly gains last week. This afternoon the COT report showed the funds increased their short position more than most anticipated. A little supportive maybe. It is hard to think that the condition reports in wheat during this time of year holds any water, but if they did, at least on paper they would look to be a little supportive to trade as well. Their net short position through Nov 7 increased to just over 144,800 contracts

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday November 10th, 2017

December 17 corn closed up 2 at $3.43 ½ and March 18 closed up 2 at $3.56 ¾. January 18 closed up 2 at $9.87 and March 18 closed up 2 at $9.98. December wheat closed up 2 ½ at $4.31 ½ and July 18 closed up 4 at $4.73. Crude oil closed down $.41 at $56.98.

Weekly Market Re-cap

Corn

China is planning to remove a value added tax on DDGs.  China was our main export customer for several years but tariffs have reduced exports to China to basically zero for the past year.  This is great news for the DDG market.  US corn inspections were terrible with the 2nd lowest total of the year.  Inspections are well behind the USDA pace and have fallen behind the 5 yr average.  Corn export sales were a different story posting an enormous number.  Sales of 2.4 million tons were almost double expectations.  Mexico was a huge buying taking 1.2 million tons this week.  The WASDE report was a surprise for the corn market.  The USDA raised yields way above expectations to 175.4 bpa.  This is a new all-time high record yield.  Big jumps were seen in every Corn Belt state except Nebraska between the October and November reports.

Soybeans

Soybean planting in Brazil is now right about average, but behind the pace of last year. Seasonal rains are forecasted for the main growing areas in the next couple of weeks but a return to a dryer pattern is seen longer term.  The US has finalized duties on imported bio-diesel from Argentina and Indonesia.  The duty on Argentine biodiesel jump up sharply from those originally proposed to roughly 72%. US soybean inspections were very strong at nearly 2.5 million tons.  This is the third straight week of inspections over 2 million tons.   Soybean export sales dropped off sharply this week to register the 2nd lowest total of the year.  The WASDE report was very uneventful for soybeans as the government left everything unchanged except a minor 6 million bushel cut to total production.  The market was looking for a slight cut to bean yields so an unchanged numbers was looked at negatively by traders.

Wheat

Egypt bought more Russian wheat in their latest tender with the US not even submitting an offer.  However, there have been strong rumors of increased high protein wheat business done elsewhere which has helped support the Mpls. wheat market.  US wheat export sales showed up in force with the highest sales total of the year at almost 800,000 tons.  The WASDE report was uneventful for wheat as the focus was on the row crops.  The USDA did raise exports by 25 million bushels from 975 million to 1 billion bushels.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Thursday November 9th, 2017

December 17 corn closed down 6 ¾ at $3.41 ½ and March 18 closed down 6 ½ at $3.54 ¾. January 18 closed down 13 ½ at $9.85 and March 18 closed down 13 ½ at $9.96. December wheat closed up 2 ¼ at $4.29 and July 18 closed down ½ at $4.69. Crude oil closed up $.34 at $57.39.

The corn market was bracing for bad news in today’s report, and the USDA gave it to them in spades. An already-heavily-short corn market sank another 6-7 cents, reeling from another larger-than-expected uptick in USDA yield projections. The funds continue to pile in, and were believed to have sold another decent chunk of corn today. They could be very close to a record-high short position. CFTC data tomorrow will not be particularly helpful, as it does not encompass any of the report day action. The feature of trade today was no doubt U.S. crop production. Heading into the report, analysts were expecting a small 1 bpa uptick in yield relative to October. The USDA exceeded even the most bearish expectations, raising it 2.6 bpa from October to 175.4 bpa – a new record high. The highest guess on the range of analyst estimates was 174. With harvested acres unchanged at 83.1, the USDA “found” almost 300 MB, though that mercifully fell shy of last year’s record high production tally.  The USDA managed to throw chastened bulls a few bones, raising US export forecasts 75 MB, and feed/residual 75 MB as well. On the world scene, they left most estimates unchanged with the exception of Ukraine, which they trimmed back 2 mmt from prior to 25 mmt. As broadly expected, the USDA produced a monster export sales week for corn. Net sales of 2,364,500 MT for 2017/2018 were easily a marketing year high and nearly double the four week average of sales. Note, nearly half was the Mexican business announced last week, so this should not be a surprise.

The soybean market spent the morning trading higher, enjoying support from the Chinese soybean headlines (12 mmt in frame contracts for future business) as well as the anticipated reduction in US yield in the crop report. The USDA did not deliver for the bull and the market reversed sharply lower on an outside day that has the soybean chart breaking down its uptrend and threatening to further deteriorate. US soybean yields were left unchanged at 49.5 bpa while the trade on average was looking for a reduction to 49.3 bpa. Production came in at a record 4.425 bb which was about 17 mb above the average trade estimate. Carryout tightened by 5 mb to 425 mb while the trade was expecting a 420 mb carryout. Hardly a shocking report but the spec soybean market was positioned too heavily for another yield reduction and when the USDA didn’t deliver the longs headed for the exits which can get pretty tight in these situations. The demand side of the balance sheet was left untouched. In the world numbers, the soybean carryout increased by 1.85 mmt to 97.90 while the trade was looking for a reduction to 95.5 mmt on average. They increased Brazilian soy production by 1 mmt to 108 mmt while leaving Argentina steady at 54 mmt.

Overnight price action saw much of the same type of trade as Wednesday. As trade drew closer to report time, prices in Chicago and KC started to slip a bit, and the knee-jerk reaction to the crop report data was additional pressure. But with the data rather benign for wheat, those markets gradually recovered, eventually moving back higher on the day and settling slightly better. There were not a lot of surprises in today’s crop report for wheat. Traders were anticipating both US carryout and World stocks to be lowered slightly from last month’s estimates, and the USDA obliged. The USDA lowered 2017/18 US ending stocks 25 mil down to 935 MB. The only change in the S&D’s was an increase of 25 mil in exports, which gave us the 25 mil reduction in ending stocks. After the ebb and flow of the summertime growing season and harvest, this is not too far off from what the USDA first pegged US ending stocks back in the May report of 914 MB. The USDA lowered 2017/18 World wheat ending stocks less than 1 MMT to 267.53 MMT, with only marginal changes to Brazil, Russia, the EU and the FSU.

Anna Kaverman

anna@mercerlandmark.com