Blogging by the Bushel
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Market Report

Thursday September 27th, 2018

December closed up 1 ¾ at $3.64 ¾ and March 19 closed up 1 ½ at $3.76 ½. November beans closed up 5 at $8.55 and January 19 closed up 5 ¼ at $8.69. December wheat closed down 4 ½ at $5.13 and July 19 closed down 6 at $5.42 ¼. Crude oil closed down $.55 at $71.96.

The corn market bounced back from a limp Wednesday performance, finishing better. Futures looked set to correct the recent advance a little more overnight, but a strong export sales report halted the decline and revived buy interest. Managed Money traders were viewed net buyers of 5,000 corn today, which would leave them net short about 120,000 combined futures and options.

Exports remain the “go-to” arrow in the quiver of the bulls of late. Given large daily sales announcements, a big week was expected, but this report beat even the highest of expectations.  Net new sales of 1.713 MMT were well above the previous week and year ago week. One-third of the total was to Mexico. This takes the total YTD sold + shipped to 18.3 MMT prior year was just 11.3 mmt and is nearly caught up to 16/17′s stout early pace of 18.5 mmt. The focus of tomorrow will be on the Quarterly Stocks report, which will be released at the usual USDA time.  This is an easy one to cover in corn. Traders are expecting stocks as of Sept 1 to total 2.01 BB, which would be down from the prior year’s 2.293 billion, but nearly unchanged from the USDA’s latest estimate of 2.02 billion. Given the period covered, this will “set in stone” carryout for 17/18 and carry-in for 18/19. A large deviation from expectations could be interesting, particularly if stocks come in sharply below expectations.

The soybean market traded modestly lower in the overnight but firmed up heading into the break and after with support coming from strong exports. Beans continue to capitalize on a series export demand wins (Argentina and Brazil demand) in the headlines this week and today’s sales report kept that streak and momentum alive. As prices have recovered off the very recent contract lows the near term and long-term charts have taken on a constructive look that should help to stabilize the downside for the time being. This is a market with a lot of short open interest and we are seeing plenty of short covering. End of the month/quarter tomorrow could encourage additional position squaring.

Fundamentally, nobody is arguing that we have solved our oversupply issue. What has changed is the attitude of the market place which feels slightly less dire than it did a couple of weeks ago when we were crashing down to new contract lows. Keep in mind, we will be entering gut slot harvest timings. Even if weather will create some delays and we have the October crop report just around the corner which will once again showcase a record yield and record crop that may have grown larger since the previous report and judging by the finishing weather we’ve had this month.

The early gains sustained after a strong export sales report was not very lasting, and by 45 minutes into the session, wheat futures had turned from higher to lower. The rest of the session was spent quietly lower as trade now turns its attention towards the crop report Friday morning. With limited influential news around the marketplace, the theme over the past few days has been no news is bad news for the wheat markets. Not necessarily in a way that trade was going to completely break down, but enough to thwart any rally attempts and push values slightly lower. Better than expected data from the export sales report this morning sparked a rally into the morning break, but the gains were not very lasting once we moved into the day. The one thing that would have made the sales report this morning that much more meaningful would have been to see some of the Saudi business from a couple weeks ago show up on the report.

There was a cargo of HRW wheat sold to unknown. It has been mentioned throughout the week that the recent sales reports are moving in the right direction. But, until we start seeing the export demand surface on a more continual basis, rallies will be met with selling. The data from the crop report could be the influential factor as to whether wheat futures could take that next step forward. For now, price action this week seems to be telling us that there will probably be nothing in the report that will give trade that spark to get prices over those Sept highs. The lower close today after that strong rally into the morning pause only added more credence to that thought process.

Anna Kaverman

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