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Market Report

Tuesday February 20th, 2018

March 17 corn closed down 2 at $3.65 ½ and July 18 closed down 1 ¼ at $3.81 ½. March soybeans closed up 5 at $10.26 ½ and July closed up 4 ¾ at $10.47.  March wheat closed down 8 ½ at $4.49 ¼ and July 18 closed down 8 ¼ at $4.78 ¼. Crude oil closed up $.36 at $61.56.

The corn market held mixed feature today. Better early, weaker late. The highs were notched shortly after the “day” open and from there, it was a one way street paved with selling. Corn would finish the day lower, and nearly $.05 below the highs of the day. Despite the softer close, traders still estimate the funds were net buyers today, which would put them net long 20k corn heading into tonight. To no surprise, South American weather was the focus coming out of the long weekend. Needed rain fell on important crop areas from central into north-central Buenos Aires during the holiday weekend, but other major growing areas broadly went without.  The next week to ten days are expected to continue a largely dry bias which will maintain pressure on crops. Brazil is having the opposite problem, with too much rain as farmers try to get second crop corn planted. Over the weekend, analysts at Safras pegged the full year Brazilian corn crop at 89.5 mmt, which is significantly behind the USDA’s latest estimate of 95 mmt, and down 16% from last year’s record harvest.

The soybean market opened the overnight session with a gap higher and appeared to be off to the races along with the meal market once again to start the week. Weekend rains in Argentina benefited parts of Buenos Aires as well as some Northern and Western growing areas but the key areas missed out heading into another week of dry conditions. Flat price beans and the spreads weakened throughout the day session and while the close still represents a new 7-month high close, the gap was closed. Cash movement was noted in both old and new crop as futures traded up to 7-month highs and for a moment that was enough to slow our upside momentum.  he mid-day weather outlook showed some better chances for light rains for this coming weekend with another chance for relief the following weekend. The trade has been wary of looking out ahead because similar events have been advertised and largely disappointed this growing season.  Today’s price action does not qualify as a blow off trade but ‘choppy is toppy’ and perhaps cracks are beginning to surface? Elsewhere in the news, an Argentine farm consultant group saw the Argentine soybean crop at 47 mmt compared to the Buenos Aires Grain Exchange at 50 mmt and USDA last 54 mmt.  Many in the trade have been talking 45-47 mmt the past two weeks.  Safras increased their Brazilian soybean crop estimated to a record 115.6 mmt vs. 113.9 mmt est. in December which compares to AgRurual at 116.2 mmt and USDA last at 112 mmt.

The wheat complex started the evening a little better and traded as much as $.06-$.07 higher in both Chicago and KC. The buying returned once the day session started, but it was not as strong and not very lasting. The strength across the soy complex, combined with Russian wheat prices firming another $5.00 week over week may have been behind the early strength. However, rain and snow showers across the HRW belt over the past 24 hours quickly put a ka-bosh on any thoughts of an extended rally. There was one system that developed over eastern Colorado and moved easterly, giving nearly the entire state of Kansas some snow cover. There was also a system that moved up from the Gulf that provided central Oklahoma with much needed precip. The US Dollar continuing its reversal after Friday’s price action and trading a point and a half above Friday’s lows was viewed as a negative to the complex as well. All may have played a role in the HRW and SRW wheat contracts’ reversal today and subsequent settle right off its session’s lows. After the close Egypt announced they were in for wheat. It should not be a Russian dominated market anymore. Thursday and Friday will be the grain outlook conference in which we will get an indication on upcoming acreage intentions.

Anna Kaverman

anna@mercerlandmark.com

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