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Thursday October 25th, 2018

December closed down 7 ¼ at $3.61 and March 19 closed down 7 at $3.73 ½. November beans closed down 8 ½ at $8.41 ¾ and January 19 closed down 9 at $8.54 ½. December wheat closed down 12 ¼ at $4.87 ¼ and July 19 closed down 11 at $5.28 ¼. Crude oil closed up $.48 at $67.44.

It was a tough day for the grains with the markets under pressure all day. The weakness comes from a combination of harvest pressure on corn and soybeans, the dollar trading back near contract highs and a very poor export sales report underlining weakening demand. Technically, corn and beans were pushed to the edge at $3.60 and $8.40 respectively but managed to defend those levels into the close which is not so much a victory as we avoided a complete wipeout, for now. Light rains fell across parts of the western belt from NE and the Dakotas and moving into IA and MN as our brief stretch of dryness ends.  The forecasts show we will have some rain around for the next couple of weeks which may cause some harvest disruptions – at times – but nothing like we saw in the first half of the month in the western belt with only limited delays expected.

Today’s export sales report featured very underwhelming business for corn and beans both at just 350 mt old crop corn and 213 old crop beans. In the case of corn, this is a big change where we just about had the world market to ourselves for around 90 days and now we have some competition from the Ukraine who grew a record 31 mmt crop as well as some southern hemisphere supply available which is also competitive. Most of this week’s sales were destined to Mexico and Central America while the absence of far East trade was noticed with cancellations from unknown, South Korea and Vietnam 60. The recent push back to the year’s highs in the US Dollar is not helping matters. U.S. sales will eventually perk back up, though it could be more of a fight for business the balance of the year.

Elsewhere in the news, the International Grains Council left their world corn production estimate unchanged from last month at 1.074 compared to 1.048 in 2017 while lowering their soybean production est. by 1 mmt to 370 mmt compared to 340 mmt in 2017.  China will halt its tax rebate for soybean meal exports on November 1 in an effort to keep as much supply in country as possible.

For a second consecutive day we have seen an unraveling in the wheat complex, with today’s losses surpassing Wednesday’s dismal performance. At that point you knew it was just a matter of time before Chicago Dec would make a run at their summer lows of $4.90, especially since trade had moved to within only a nickel of those lows during the overnight session. Shortly into the day session, a headline came across that said the IGC raised their global wheat production estimates by more than 12 MMT up to 728.8 MMT. That was more than enough of an influence to give the Chicago market the power to push through their summer time lows, and once those lows were violated, trade remained below the $4.90 level the rest of the day. Trade tried to bounce late, but it was quickly met with selling and the markets finished down around their session’s lows. Chicago finished the poorest at twelve cents lower, while KC ended the day around ten cents lower and Mpls finished nine cents lower.

Export sales this morning were a little better than most thought they were going to be. To probably no one’s surprise, after the close the GASC announced they were in for wheat, and next week Taiwan is in for US wheat and with that we can probably expect to see the Asian Flour mill demand pick up more as our futures board goes lower. This week’s sales were at the high end of expectations coming in at 443 MT, with an additional 6 MT of new crop for combined sales of almost 449 MT. Total sales to date are 461 mil bu vs 557 mil bu last year.

Anna Kaverman

anna@mercerlandmark.com

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