Blogging by the Bushel
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Market Report

Wednesday August 30th, 2017

December 17 corn closed down 3 ¼ at $3.45 ½ and March 18 closed down 3 ¼ at $3.58 ¼. November beans closed down 4 at $9.33 ¼ and January 18 closed down 3 ¾ at $9.42 ¾. December wheat closed unchanged at $4.29 ¾ and July 18 closed up 1 ½ at $4.78 ½. Crude oil closed down $.49 at $46.51.

The corn market finished lower today, extending the slide to ten out of the last twelve sessions. Unlike the past few days, there was not much of an effort to rally the markets intraday, as we seemed to follow a broad “downtick, then stabilize” trend.  The funds were viewed net sellers of roughly 12,000 contracts today, which would take their net short in the market to an estimated 135,000 contracts. Outright volumes were not substantial, but spread volumes were massive. Over 120,000 Sept/Dec corn spreads traded today ahead of First Notice Day for delivery tomorrow. Corn continued its march lower, as we await the start of the Midwest harvest next month. Frost potentials and Hurricane Harvey remain the only two significant weather topics of note.  On the former point, the cold is still in the forecast, but spot checks of some upper Midwest locations show temperature expectations that should stay north of freezing. Still, the potential is there, and the market is very much acting like there is no risk whatsoever. One positive sign of stability in the grain markets came from the European (Matif) wheat, which featured positive trade today and may have left behind an island bottom on the daily chart.

The soybean market continued lower for a fourth consecutive session. While flat price gives back some of its recent recovery the feature trades were all spread related. USDA flashed 131 mt of beans sold to China – in the past week there have been 877 mt of new crop sales announced. Demand is strong at these price relationships. A wildcard on production is the potential for a frost event across the upper Midwest next week as much below normal temps move in from Canada spread out through the Great Lakes region and brings the risk of crop damaging cold.   Looking at the local forecasts for Madison, WI and Marshall, MN we don’t see temps reaching below 44 degrees for a low during this stretch but this cold spell will need to be monitored because a frost ending the soybean growing season early in those areas would change the marketplace.

The wheat complex finished the night higher across the board, but once again we saw the markets struggle to hold overnight strength. Price action today looked very similar to what we saw yesterday, with continued liquidation in the intra-market wheat spreads between Mpls and Chicago and Mpls and KC. Spring wheat prices did not fall as much as they did on Tuesday, but they did slip to almost ten cents lower before rebounding late. Both Chicago and KC hovered around unchanged much of the day, but KC settled the strongest as for the second day in a row we saw strong buying on the close. As we look ahead to tomorrow, it will be interesting to see if we get that late buying again as first notice day tends to be a weak day for trade. Have a little business around as we end the week as Japan is in for their usual weekly tender overnight, and Tunisia is in as well. Data from Stats Can may be a little more influential than normal, with the biggest question being will they trend similarly to the US and be a little higher than expected and adjust later.

Anna Kaverman

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