Blogging by the Bushel
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Market Report

Wednesday October 24th, 2018

December closed down 2 at $3.68 ¼ and March 19 closed down 2 at $3.80 ½. November beans closed down 7 ¼ at $8.50 ¼ and January 19 closed down 7 ½ at $8.63 ½. December wheat closed down 9 ½ at $4.99 ½ and July 19 closed down 9 ¼ at $5.39 ¼. Crude oil closed up $.34 at $66.96.

Corn featured a more defensive dynamic today, spending the day slightly lower in a very tight range. The market would ultimately close two cents lower, erasing a decent chunk of the week’s gains.  Managed Money traders were viewed net sellers of about 5,000 corn today, which would leave them net short 40,000 combined futures and options.  Cash markets were a little less dynamic Wed, though we saw more gainers than losers.  This may reflect the early week tendency to harvest more beans or lower-than-expected farmer selling across the scale in corn.

Today was another “macro day”, though we feel the ag complex was likely focused more on a rising dollar this particular day than position rebalancing tied to the stock market break. The Dollar appeared “headed to zero” in late September, but quickly snapped out of it, rallying 3% off that base to match recent highs for the year made in August. Such moves will do the exporter no favors, as he jockeys for position with Black Sea and South American sellers. South Korea was back in for more corn overnight, picking up a couple cargos for Dec/Jan; likely Brazil or Argy origin. They bought Ukraine origin yesterday for early spring ship. Export sales in the morning could be another subdued affair.

Soybeans continued to struggle as a combination of gut slot harvest pressure, excessive supply and insufficient demand weigh on prices. This has beans pressing $8.50 chart support and threatening to break down for a deeper retracement of the recent rally where a 62% target lies below at $8.42 ½. Western belt harvest has been slowed by an excessively wet fall to date while eastern harvest has been much more active. This was apparent today as LD Claypool announced they would stop taking in new bean deliveries starting Wednesday afternoon and reopen Sunday evening as space is chuck a block. They lowered their bids through the end of the month by $.18 to -60. There is talk of other plants following suit on slowing deliveries in the eastern belt but have not confirmed any others to this point.

Our open harvest window is going to close to some degree over the next couple of weeks as the return of rains in the forecast will create some delays at times for just about everybody although no washouts are expected this time around. There are still some parts of the Midwest that are fighting muddy and wet conditions from the last round of rains from late September through the first half of October. At this point, some are hoping for a hard freeze to firm up soils enough to get back into their fields.

There was nothing positive to come from today’s performance across the wheat complex. Overnight we saw both Chicago and KC trade through initial support, but again the second line of support held, and prices firmed into the morning pause. Algeria looked as if they bought mostly French, and maybe some Argentina. Bangladesh will most likely buy all Russian, with an outside chance of a cargo or two of European (remember, just a couple weeks ago they bought US). With the US probably missing out on most of this business, it was hard to imagine the rally into the morning break was going to continue once we moved into the day session. Prices quickly moved back down to its overnight lows, and shortly thereafter trade was testing the $5.00 level.

It has been talked about over the past several months that the wheat market needs export demand to surface before it could have any thoughts of a sustained rally. Trade has had their fair share of bounces, but they have never been able to follow through and make that good trade. Early last week was the latest one of those moves. And early last week we mentioned US prices were still too high, and it may be too tough for the markets to rally too much more than where we were at, at that time. With a settle below $5.00 we are getting closer to where we need to be. That does not mean business will be knocking on the US door any time soon. Could the markets bounce, sure, but expect those rallies to be sold until some of that business finally surfaces.

Anna Kaverman

anna@mercerlandmark.com

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