Blogging by the Bushel
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Market Report

Tuesday March 19th, 2019

May 19 corn closed down ¼ at $3.71 ¼ and December 2019 closed up ½ at $3.95 ¼. May beans closed down 1 ¾ at $9.04 and November 19 closed down ¾ at $9.38 ¼. May wheat closed down ¼ at $4.56 ½ and July 19 closed down ¾ at $4.62 ¾. Crude oil closed down $.09 at $59.29.

Choppy day overall for the markets, though much like yesterday, the feature in our view was the inability to sustain downside momentum. Corn finished near unchanged. Managed Money players remain firmly ensconced on the short side. They sold 7,000 corn (to take them to 240k+ net short).

The “Trade War Sentiment Wheel” spun again, and one could argue that it did so twice in the same day. Around noon, one news service reported that China was “walking back” some of the concessions made in past negotiations. This tended to drive markets down to session lows. Not fifteen minutes thereafter, another news service report signaled a U.S. and China trade deal was entering the “final” phase, which firmed markets right back.  President Trump called China trade talk progress “very well”, and also labelled ongoing discussions with Brazil as “great”.  Sigh. At least we know the next ministerial level talks will occur March 25th, as negotiators are due to take turns shuttling back and forth between DC and Beijing.

Also helping the corn market in particular is the shift in model runs suggesting a continued wet bias to weather into late March and early April. For now, the markets are not pricing in much risk of any weather event, let alone delayed U.S. planting, but such premiums will likely take root should current trends continue. Note as well that U.S. farmers were not able to do much of their fall prep due to an unusually early cold snap this November. The risk is not only that plantings get delayed, but also potentially that yields could suffer due to less inputs applied. Texas corn planting was pegged at 26%, which is close to average, but lagging behind last year’s 34%. Brazil weather remains mostly favorable, while Argentina has evolved into a more mixed situation as the week drags on. In particular is a dry pocket in SW Cordoba province. Crop Scout Cordonnier did not change his estimates much

Soybean prices turned lower on disappointment in trade war outcome and lack of Chinese purchases for US soybeans. Trade guesses are starting to surface with reductions in acres planted coming in less than earlier thoughts. Weather patterns are expected to change for the better in Brazil, which should allow active harvest progress to resume.

It was a back and forth trading session wheat, which at the end of the day turned out to be rather disappointing as the market settled marginally lower. For the second day in a row Mpls wheat has separated itself from the other two and has traded higher throughout. Trade there has been influenced more on the extreme flooding seen across many parts of the northern plains. There continues to be limited influential news around for both the HRW and SRW wheat markets, and after a short covering bounce that has taken futures some $.30 off their contract lows. At some point we were eventually going to see the funds say enough is enough and start defending their position. This has kept a lid on rallies over the past week, and until some new development surfaces, this trend will probably continue. World wheat prices have been flat to a little lower over the past several weeks, and the export lineup is rather bare. Not too concerned at these prices that the US is not securing any business, but with World prices as low as they are, trade is not expecting huge export sales data in the coming weeks either.

Anna Kaverman

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