Blogging by the Bushel
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Market Report

Friday September 8th, 2017

December 17 corn closed up 1 ½ at $3.56 ¾ and March 18 closed up 1 ¼ at $3.69. November beans closed down 6 ¾ at $9.62 and January 18 closed down 6 ½ at $9.72. December wheat closed up ½ at $4.37 ¾ and July 18 closed up 2 at $4.86 ¾. Crude oil closed down $1.47 at $48.06.

FOR THE WEEK ENDED 9-8-17

Corn traders returned from the Labor Day holiday to push prices into the upper half of the previous week’s trading range on short covering.  Good news also greeted the market when Vietnam lifted the ban on US DDG imports.  They are one of the top destinations for our DDG exports. The US dollar index faded to its lowest level since January 2015. The European Union has signaled they will wind down their quantitative easing economic program and there was uncertainty about the US debt ceiling. This has likely provided a level of support for commodities, but was a larger factor in the soybeans. December corn was 1 ½ cents higher for the week. The contract low is $3.44 ¼ per bushel made on August 31st.  Export inspections for the week ended August 31st (the end of the crop year) were 31.4 million bushels, bringing total inspections for the crop year to 2.240 billion bushels.  The current USDA projection is 2.225 billion bushels. Weekly export sales were delayed until Friday in deference to the Labor Day holiday.  Old crop sales were net cancellations of 14.1 million bushels.  New crop sales were 58.3 million bushels.  Total new crop commitments at 334.2 million bushels (not including any old crop rollover) are running 28.2% behind last year. The USDA is currently predicting exports to fall 16.8% year on year. Mexico was a buyer during the week, bringing their purchases to 133 million bushels for new crop, up from the 5-year average for this date at 123 million bushels.  Japan, on the other hand, has only booked 37 million bushels versus the 5-year average of 79 million bushels on the tally at this time of year.  Mexico’s percentage of US corn exports in the last ten years is up 10%, while Japan’s share has dropped 10%.  It could be Mexico making purchases due to uncertainty over the NAFTA talks. The next WASDE report will be released September 12th.  The average trade guesses ahead of the report are as follows (versus the USDA August number):  2017/2018 production 14.035 BB with 168.2 BPA versus 14.153 billion using 169.5 BPA; US 16/17 ending stocks 2.340 BB versus 2.370 billion; US 17/18 ending stocks 2.180 BB versus 2.273 billion; world 16/17 ending stocks 228 mmt versus 228.6 mmt; world 17/18 ending stocks 200.74 mmt versus 200.87 mmt.  With many assuming the average trade guesses have already been incorporated into the market, it may be difficult for corn to extend to the upside.

Soybeans began the week with a blast higher on short-covering, technical buying, and on-going demand.  A dry finish to the crop year also lent support to ideas of a smaller crop.  There didn’t seem to be one outstanding factor that was behind the post-Labor Day surge higher.  November soybeans rallied 12 ½ cents for the week. Weekly export inspections as of August 31st were 23.7 million bushels.  This brings the total inspections for the crop year to 2.120 BB compared to the USDA forecast for 2.150 BB.  Weekly export sales showed net cancellations for old crop, which is normal for the end of the crop year, and the highest new crop sales of the year.  Old crop net cancellations were 13.5 million bushels with new crop sales of 56 million bushels.  New crop total commitments are 478.5 million bushels (not including any old crop rollover), down 30.6% from last year.  The USDA is forecasting exports to be up 3.5% from 2016/2017 to 2017/2018. It will soon be time to begin watching planting weather in Brazil.  Soybean planting can legally begin in Parana September 11th and on September 15th in Mato Grosso.  Planting may be delayed slightly as growers look for some rain.  Average trade estimates for the September 12th WASDE report (versus the USDA August number):  2017/2018 production 4.328 BB using 48.8 BPA versus 4.381 billion using 49.4 BPA; US 16/17 ending stocks 370 million bushels versus 370 million; US 17/18 ending stocks 442 MB versus 475 million; world 16/17 ending stocks 96.8 mmt versus 97 mmt; world 17/18 ending stocks 97.39 mmt versus 97.78 mmt.  The September WASDE report will need to post numbers more bullish than the trade estimates to maintain strength.  Soybeans have a negative seasonal for September.  If the WASDE report can’t generate any buying enthusiasm, the lower seasonal trend will likely take control as we head into harvest.

Wheat prices stayed close to Thursday’s prices. Any short-term gains will continue to be limited by large world stocks. According to the latest USDA export sales report, wheat added another 14.8 million bushels in sales for delivery in 2017/18. That was down 30% from a week ago and 26% off the four-week average. More than one-quarter of the U.S. wheat crop is shipped out of the Gulf of Mexico – a region that has faced numerous logistical disruptions due to flooding and other damage from Hurricane Harvey. Cancellations occurred in Indonesia, unknown destinations and Thailand. Export shipments were down 61% from a week ago and went primarily to Japan, Taiwan, South Korea, Mexico and Indonesia. Exports remain below USDA forecasts.

Anna Kaverman

anna@mercerlandmark.com

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