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Market Report

Wednesday January 24th, 2018

March 17 corn closed up 5 ¼ at $3.56 ½ and July 18 closed up 5 at $3.89 ½. March soybeans closed up 6 at $9.92 ¼ and July closed up 5 ¾ at $10.07 ½. March wheat closed up 11 ½ at $4.33 and July 18 closed up 10 ¼ at $4.58 ¼. Crude oil closed up $1.05 at $65.36.

The grain markets had a bit of a pulse today, unlike Monday, corn was able to capitalize on an overnight rally. This was only the second time in two months that the market has been able to rally $.05. The funds were viewed net buyers of about 25,000 corn today, which would leave them net short roughly 230,000 futures and options. Corn trade actually started lower overnight, briefly dipping back below the magic $3.50 level.  The appearance of some Chinese corn boats can be credited with the turnaround, potentially confirming some old rumors of export business done. It also doesn’t hurt that the US Dollar is into new lows, which should help US corn continue to flow into Asia over the second half of our marketing year. Note, the weekly export sales data was delayed a day due to the shutdown, and will be released Friday morning.  Mid-day, it was revealed that a 125,000 metric ton reported bean sale to “unknown” this morning was actually a corn sale instead. The weekly EIA data was more bearish than expected. Seasonally weak demand and steady production did ethanol inventory no favor. South American weather remains a rather neutral input; not worrying enough to buy, yet just compelling enough not to completely dismiss.  Argentina’s drier bias during the second week of the outlook puts more pressure on rainfall at the end of this week to bolster soil moisture. 

Soybeans got a boost from the dollar today as the currency dropped to a three-year low lending broader macro support to commodities ranging from grains to metals to energies. Flows of money into commodities has been obvious in the other sectors but funds have been locked into short grains since last summer and more recently short soybeans since December so it will be interesting to see if that negative bias is changing. The weakness in the dollar makes our exports more attractive and at the same time the Brazilian real has rallied to a 4-month high which makes Brazilian corn and beans less valuable to the farmer putting a stop to fresh farm selling down there. It is estimated that farmers in Brazil have only sold 30% of new crop soybean compared with 34.4% a year earlier and 5-year average of 38.2% due to the strength in the real and disappointing prices.  China reportedly bought 11 cargoes of beans last week, mostly Brazilian origin for Feb-March. This morning the USDA reported a 125 mt bean sale to unknown but later corrected that sale to corn.

The wheat complex started the evening slightly lower, but prices began to firm around the time the European markets opened. The modest rally also coincided with the break in the US Dollar, which traded into new contract lows and down to its lowest level since the end of 2014. Keep in mind, a weak US Dollar makes our exports more attractive and therefore is friendly commodities wheat especially. With not a whole lot of other fresh influential news around, the weakness in the Dollar was said to be behind much of the short-covering rally across the wheat complex today. Today’s bounce was much more enthusiastic than the previous few rally attempts.

Anna Kaverman

anna@mercerlandmark.com

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