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Market Report

Thursday February 1st, 2018

March 17 corn closed up ¼ at $3.61 ¾ and July 18 closed up ½ at $3.77 ¾. March soybeans closed down 10 ¾ at $9.85 and July closed down 10 ¼ at $10.06. March wheat closed down ¾ at $4.51 and July 18 closed down 1 at $4.78. Crude oil closed up $.99 at $65.55.

Corn made another brave stab at a correction today, though much like Wed, the bear was unable to stick the landing. Corn finished fractionally better, very nearly posting an outside day reversal higher on the daily chart. Managed Money traders were viewed net buyers of 5,000 corn today, which would leave them short close to 190,000 corn futures and options.  CFTC report tomorrow night could offer surprises, given the “two sided” fund activity seen of late. Ideas of an early end to Argentina’s ridge applied some pressure to the markets early in the morning.   Make no mistake, stress will be serious over the next week, with temperature extremes getting well over 100 degrees Fahrenheit for multiple days. Better rainfall and greater cooling in the week of Feb.12 will offer pockets of some improvement, though.  The most recent report from exchanges in the country suggest planting is complete. Early planted corn (which is one-third tasseled) is 28% G-E and 39% P-VP, while the late-planted stuff is 50% G-E and 21% P-VP. Brazil remains in much better shape overall, though overall production potentials will still depend on how many safrinha acres end up getting planted.  Time will tell there.

Back at home, export sales were quite strong for corn for a third week running. Net new corn sales of 1,850,600 MT for 17/18 were up 28% from the prior week. One-quarter of the business went to unknown, along with usual suspects Mexico, Japan, Colombia, and South Korea. Shipments for the week were a marketing year high, surprisingly enough, which is probably more of an indictment on how awful the export pace has been to date.  The report takes total sold + shipped to 32.25 mmt for the current marketing year versus 40.25 mmt in the year ago period.

The soybean market continued to ease off it recent highs as an improved weather forecast for Argentina has been noticed. The mid-day GFS model reduced the rains in the second week of the forecast for Argentina. There is still rain showing but totals were reduced as the model continues to oscillate. Weekly export sales report fell short of expectations for soybeans. The meal and oil exports both came in well above trade estimates at 468 mt and 59 mt respectively. Soybean exports totaled just 410 mt (359 old crop) which was a disappointment relative to even modest trade expectations. Sales were -42% from a week ago and -50% from the 4-week avg. Buyers of note include China (457 including 198 moved from prev. announced unknown sales and a -126 tmt cancellation). Soybean sales on the books trail last year’s pace by -46 mb while soybean shipments trail last year’s pace by a whopping -203 mb.  The USDA currently is projecting sales to come up short of last year by -14 mb.  The seasonal window for stronger US export trade is closing as Brazilian harvest advances.

Price action throughout the night saw Mpls trading much better than Chicago or KC, and that trend continued throughout the day. Mpls would finish the day almost a nickel higher, but once again the KC market was the star of the show. Trade in the HRW wheat contract saw an impressive finish to the day, settling $.10 off its early lows. In Chicago wheat had a solid day today as well, despite its slightly lower finish, as it settled $.08 off its lows. Weather may have been partly responsible for the overnight and early weakness as light showers showed on radar screens across northern Kansas this morning. But trade continues to show its resiliency, finishing the day strong. Egypt’s GASC announced after the close they were in for wheat for the March 5th thru 15th time frame.  Their last purchase was back on January 16 when they bought five cargoes of Russian. Average freight for the Russian wheat was $.85 cheaper than their previous tender. The USDA weekly export sales report this morning was expected to show a week of sales similar to last week, but the data was a little disappointing as sales came in at only 289 MT. Total sales to date are 750 MB vs 841 MB last year.

Anna Kaverman

anna@mercerlandmark.com

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