Blogging by the Bushel
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Market Report

Thursday September 7th, 2017

December 17 corn closed down 5 ¾ at $3.55 ¼ and March 18 closed down 5 ¾ at $3.67 ¾. November beans closed down 2 ¼ at $9.68 ¾ and January 18 closed down 2 ¼ at $9.78 ½. December wheat closed down 8 ½ at $4.37 ¼ and July 18 closed down 8 ½ at $4.84 ¾. Crude oil closed down $.09 at $49.53.

After successfully fighting off the bear Tuesday and Wednesday, few likely would have guessed the market would succumb today.  Yet that is exactly what happened, as a minor overnight pullback extended into the day session. The fund traders returned to the sell side of corn, putting back out 10,000 shorts today. This would plump their overall position back to up to over 100,000 contract net short. Tough to say what exactly triggered today’s break in corn. An early prediction was “start lower, end higher,” given very recent market trends and the sinking value of the Dollar intraday. That clearly did not end up being the case. One culprit may have been a turn in the outlook maps away from “cool and dry” to “warmer and wetter”. This may have reduced “frost risk premiums”, and a little extra moisture could help immature corn. On the world scene, Argentina’s harvest finally appeared to be reaching its conclusion after crawling along for several months (97% done vs. 93.6% last week). China finishing weather looks favorable. There was a marked uptick in interest in this week’s reserve corn auction. China sold 766,122 mt out of a total of 1.3 mmt 2013 & 2014 vintage offered.  Recent auctions have been lucky to clear 25%.

The soybean market continued its two-sided, back and forth trade for a second day. If beans are going to break deeper, support registers in the gap just above $9.50 while another push higher would project a run to the second count and August report-day reversal at $9.90 so for a moment, we are dealing with around $.20 upside and downside risk, at least until we get to the crop report next week. Some interesting currency movement today with the Brazilian real establishing a new contract high while the dollar threatening new lows. In the bigger picture, the US crop size is getting more crystalized by the day. While we have some problems due to the recently drier bias the overall positive August weather helped the crop yields tremendously. If we aren’t looking at a record crop (with lots of help from bigger acreage), then we aren’t very far off either.  We don’t have any frost threats in the forecast.  Southern Hemisphere supplies are robust.  All of this is already priced in. The demand side of beans is very healthy thanks to the early return of China who is the global driver for exports and the US has been able to step in and compete very well with Brazil for those exports over the past 4 weeks thanks to abundant old crop supplies. The resumption of the exports to China have helped stabilize the downside pressure and gives the market more balance to the heavy supplies.

Price action across the wheat complex was mixed overnight. That trend would continue for much of the day, however the weakness in the HRW and SRW wheat contracts did take the Spring wheat futures briefly lower. For now it looks as if the long liquidation in flat price and inter-market spreads involving Mpls wheat has run its course as today’s settle in the Dec is $.24 off this week’s lows. Today’s weakness in both Chicago and KC gave back much of those markets gains over the past three days, and it will be important to see support surface on any further weakness tomorrow or we could go right back down and test the lows.

Anna Kaverman

anna@mercerlandmark.com

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