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Market Report

Monday November 5th, 2018

December closed up 2 ¾ at $3.74 and March 19 closed up 2 ½ at $3.85 ¾. January beans closed down 2 at $8.85 ¾ and March 19 closed down 1 ¾ at $8.98 ¼. December wheat closed down 1 ½ at $5.07 ¼ and July 19 closed unchanged at $5.42 ¾. Crude oil closed down $.07 at $63.21.

Mixed overnight trade gave way to a “slightly firmer” day.  Managed Money traders were viewed net buyers of about 10,000 futures today, which would leave them as “small net longs” in the corn market for the first time since early summer. Trade had a sluggish feel today, as many are likely waiting for the mid-term elections tomorrow before taking any serious stands.

Crop Progress data after the close pegged U.S. corn harvest progress at 76%, advancing 13% from the prior week. Progress is 8% ahead of last year, but is now 1% behind normal. The report implies just under 20 million total acres left to harvest, over half of which are in five western Belt States (Iowa 3.6 mil, MN 1.6 mil, NE 3.2 mil, and a combined 3.5 mil in both Dakotas).  Harvest weather is due to become more challenging, particularly in the soggy (and soon to get soggier) Eastern Belt. South American weather remains favorable overall. Strong early soy planting pace in Brazil bodes quite well for second crop (safrinha) corn planting in a few months.

Weekly Grain Inspections found their rally caps.  For the week ended 11/1, U.S. exporters shipped 1.25 million metric tons of corn. This was almost double the prior week pace, and a nearly three-fold leap from the prior year period. It is also barely above the pace needed to meet current USDA sales goals. The pace of booking new business in corn has slowed dramatically in recent weeks, as Ukraine and South American sellers compete more aggressively into Asia. Latin buyers remain captive to U.S. markets; Mexico picked up another two cargos of U.S. corn under daily reporting today.

The soybean market had a back and forth, two-sided session that slipped back into negative territory and stayed there when meal gave up its gains mid-morning. Volumes were very light and with no China trade news whiplash around the price action was mostly driven by pre-report positioning. The selling in meal came after a report that Brazil was in talks with China looking for ways to increase meal exports seeking a better balance of soybean and product trade as a way to help their domestic crushers.

Weekly grain inspections data was better than expected in beans with 1.229 mmt but down slightly from last week at 1.329 mmt and well behind this week last year where 2.493 mmt was inspected.  Inspections to date stand at 8.578 mmt compared to 14.869 mmt this time last year representing a deficit of 231 million bushels. Soybean harvest progress advanced to 83% from 72% last week and 89% avg. for this date. This leaves just over 15 million acres left to cut with MO (2.081 mln), KS (1.743 mln) and IA (1.193 mln) with the most crop still in the field.

AgRural reports that Mato Grosso has planted 60 percent of its estimated soybean area of 35.8 million hectares, above a 5-year average of 41 percent and higher than last year’s 43 percent. This record early pace will have some producers harvesting their beans in some areas of Mato Grosso well ahead of normal in mid-December.  The weather forecast shows Brazil rains shifting to the North of the country where some drying would be welcomed in the South.

Wheat continues in a repeating pattern. A surprisingly firm start to the overnight was unable to carry through the entire night. Trade seemed unenthused throughout the day after a weekend absent of any business or fresh, influential news and that is exactly what is needed if the wheat complex wants to take that next step forward.

Black Sea prices for Russian wheat looked to be up a little week over week and are said to be at roughly $224/mt which is a positive sign moving forward. Russian wheat is not the cheapest in the World anymore, and it looks as if the shift away from other countries only looking to the Black Sea for wheat might be in its early stages. Crop progress this afternoon continues to show winter wheat planting in some states such as Kansas, Oklahoma, Texas, Michigan, Arkansas and Missouri lagging. But keep in mind, last Monday afternoon’s crop progress did not influence price direction at all that night or the following day, so hard to see today’s report being too much of an influence. Most feel the winter wheat planting will eventually get done. There is just nothing around at this time that looks to be powerful enough to ignite such a move. Maybe the crop report Thursday could be that influence.

Looking ahead to the crop report Thursday, the bull will be once again be hoping for World production downgrades. Australia is the obvious reduction, as the USDA will no doubt lower production there around 1.5 to 2.0 MMT from 18.5 MMT down to maybe 17.0 or 16.5 MMT. Everywhere else though is a toss of the dice. Can they lower Argentina? Will they finally lower the EU that is so long overdue? They should, but they probably will not. Russia could be the wildcard. The Russian Ag Ministry continues to raise its wheat production estimate, so I would not be surprised if the USDA offsets any reductions with an increase in Russia’s crop estimate. So, with that being said, World ending stocks should be similar to last month’s 260.18 MMT.

Anna Kaverman

anna@mercerlandmark.com

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