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Market Report

Monday September 10th, 2018

December closed up ¼ at $3.67 ¼ and March 19 closed unchanged at $3.79 ¼.  November beans closed up 1 ¼ at $8.45 ¼ and January 19 closed up 1 ¾ at $8.59.  December wheat closed up 17 at $5.28 ¼ and July 19 closed up 17 ¾ at $5.60 ½. Crude oil closed down $.14 at $67.41.

The corn market was a bit of a snoozer Monday. Futures opened Sunday night lower and spent most of the day “in the red”, too.  Corn received a very small boost from an intraday rally in wheat, and the markets would end unchanged. Managed Money traders mostly stuck to their guns and will head into tonight net short about 85,000 combined corn futures and options. Most of the corn-specific news had to do with exports. First and foremost, U.S. trade negotiators have many balls in the air.  Canada is still trying to negotiate its way into “New NAFTA”, Trump stands ready to wield another $200 billion plus in new tariffs on China (but has not yet done so), and apparently Japan’s trade terms are next on the docket to be revisited.  U.S.-EU talks have been deathly-quiet, while South Korea eyes their earlier accord nervously. Speaking of the Koreans, all the heavy-hitter corn buyers were in for small cargos overnight.

The weekly crop progress report was unexpectedly delayed late afternoon. Trade cannot recall a time when the USDA was forced to delay a Crop Progress report with no prior notification. The trade was looking for solid early harvest progress of about 5-6%, along with a small seasonal downtick (-1% G-E) in national corn ratings. Weather watchers are eyeing Hurricane Florence, which is expected to wreak havoc on the U.S. East Coast, particularly the Carolinas. This theoretically could impact some corn and soy crops, but the area is a fairly minor producer at best. Over the weekend, the remnants of Tropical Storm Gordon brought heavy rain and some flooding to a large part of the lower and eastern Midwest. Fortunately, the next five days are expected to be bone dry for the Midwest.

The soybean market closed higher for a third consecutive session but struggled to hold gains above $8.50 and settled off the day’s high. You would expect this market to struggle in front of Wednesday’s crop report which will likely reinforce the bearish supply side realities. The lack of enthusiasm on the rally certainly reflects that. Meal extended its recovery, the absence of fresh swine fever headlines helped. Hurricane Florence was upgraded to a cat 4 storm today and is expected to make landfall near the Carolinas on Thursday. Forecasters are talking about 20+ inch rain totals similar to Hurricane Harvey in 2017.  The EU model hints at some 40-inch totals as the hurricane stalls near or over the coast. N Carolina is home to 1.6 million soybean acres, S Carolina 420k and Virginia 620k. There was a frost/freeze in NE China which may have hurt crops in that part of the country this caused Dalian soybean futures to rally and was a supportive feature to start the day. In export news, The USDA flashed 132 tmt of 18/19 soybeans sold to unknown.

After a back and forth night session that saw trade finish a little higher, the markets were able to extend those gains once we moved into the day session. By midday the rally had reached double figures. One of the bigger influences in today’s trade may have corm from ABARE. Even though most private expectations are for the Aussie crop to be between 18 and 19 MMT or less, when ABARE came out this morning and reduced the crop 2.8 MMT to 19.1 MMT, it increased speculation that the USDA is going to have to take down the Aussie wheat crop a notch or two come Wednesday morning. Keep in mind, we already know EU production will be lowered again, but September is when wheat yields are made or lost for our friends down under, so despite the USDA’s most recent forecast of 22 MMT, the thought was they may wait until the October report to adjust their Australian wheat production expectations. Lowering Australia probably means more shifting of export expectations.

Anna Kaverman

anna@mercerlandmark.com

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