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Afternoon Market Recap for April 23, 2018

Mixed Monday markets ponder exports, weather.

Planting pace for corn and exports for soybeans begin to turn heads

Midwestern farmers are itching for planters to roll, but will cooler, wetter weather keep them sidelined for a few more days? And are lower U.S. soybean exports to China an unwelcome pattern that is beginning to intensify? Those are two big questions that helped shape grain markets Monday, with corn trading slightly higher, soybeans incurring moderate losses and wheat prices finishing the session with mixed results.

Expect a mixed bag temperature-wise this week, but the central U.S. for the most part will see a lot of cooler-than-normal weather into this weekend. The latest seven-day cumulative precipitation forecast from NOAA shows some drought-replenishing moisture possible in the Northern and Southern Plains and ample rainfall along the East Coast. Parts of Minnesota, Iowa, northern Missouri and western Illinois could receive little to no rainfall between now and April 30, however. 

Growing U.S. government debt has Wall St. feeling jitters, with the Dow shedding 89 points in early afternoon trading to 24,344. Energy prices are trading unevenly higher Monday, with crude oil fractionally up, while diesel has grabbed moderate gains and gasoline prices have trended more than 1% higher in early afternoon trading.

 

Corn prices endured a choppy session but found some support with a positive round of export data and lingering concerns over a slow start to the 2018 planting season. May and July futures each finished 2 cents higher, closing at $3.7850 and $3.8750, respectively.

Corn basis bids were steady to firm Monday, as farmers may have planting ahead of sales on their minds this week. Prices firmed between 1 and 9 cents across multiple Midwestern locations.

The next USDA Crop Progress report is Monday afternoon after the markets close, but a group of trade analysts estimate that 7% of U.S. corn planting is complete, with most of the progress across southern states. The five-year average for this time of year is 14%.

Corn export inspections notched slight improvements from the prior week, with 67.7 million bushels versus 62.1 million bushels. That also bested average trade estimates of 47 million to 66 million bushels, and stays ahead of the weekly rate needed to reach USDA forecasts, now at 57.8 million bushels.

South Korea was the No. 1 destination for corn export inspections last week, with 10.8 million bushels, with 13 additional countries taking at least 1 million bushels apiece.

Preliminary volume estimates were for 321,671 contracts, down moderately from Friday’s final count of 376,724.

Soybean prices slumped as low trade expectations for the latest round of USDA export data came to pass. China continues to dial back its purchases, and worries over a continued slump in overall soybean exports pushed May and July futures 8 cents lower to close at $10.2075 and $10.3225, respectively.

 

Soybean basis bids were largely unchanged Monday, although they inched 2 cents higher at an Ohio elevator and were mixed at Midwestern river terminals – up 5 cents at one Iowa location but down 3 cents at an Illinois location.

Soybean inspections ended up slightly up compared to the prior week, with 17.3 million bushels versus 16.4 million bushels. Trade analysts were expecting another low volume last week, with a guess that ranged between 11 million and 22 million bushels. Last week’s totals didn’t keep up with the weekly rate needed to reach USDA forecasts, now at 24.6 million bushels.

China was the No. 1 destination for soybean export inspections, but only accounted for a little more than one-fourth of the total amount, with 4.7 million bushels. 

China’s Ministry of Agriculture and Rural Affairs estimates the country’s output from October 2017 to September 2018 will grow 12.8% year-over-year, with a total production of 536.5 million bushels. China was the world’s No. 1 soybean importer last year, with 3.547 billion bushels.

Canadian canola futures firmed nearly 1%, thanks in part to a weakening Canadian dollar and positive crush margins.

Preliminary volume estimates were for 228,288 contracts, slightly ahead of Friday’s final tally of 225,029.

 

Wheat prices endured a mixed, choppy session on Monday, with Kansas City futures edging higher, supported by a solid round of export data. But technical maneuvering got the best of Chicago SRW futures, and MGEX spring wheat futures sagged on improved planting forecasts. May Kansas City HRW prices finished a half-cent higher to $5.0250, while May Chicago SRW prices fell 1.75 cents to $4.6150 and May MGEX spring wheat prices tumbled 12 cents to $5.88. 

Wheat export inspections last week bested average trade guesses (12 to 20 million bushels,), with 22.8 million bushels. That was moderately higher than the prior week’s total of 18.6 million bushels, and it barely exceeded the weekly rate needed to meet USDA forecasts, now at 22.5 million bushels. Japan was the No. 1 destination, with 4.3 million bushels. 

Total Russian grain exports for April are estimated to come in just a hair under March totals, slipping about 1.2% month over month. Those totals include projected wheat exports of 141.6 million bushels. 

The latest grain production estimates from Morocco include 176.7 million bushels of soft wheat, 83.8 million bushels of hard wheat and 125.4 million bushels of barley, according to the country’s agriculture ministry. Production exceeds earlier forecasts thanks to rainfall up 16% above average levels this year. 

China appears to be swapping sorghum for barley after levying steep tariffs on U.S.-bound sorghum imports. In March, China imported about 40.7 million bushels of barley, which is 22% higher year-over-year. Chinese sorghum imports dipped 21% lower in March, meantime. 

China sold 36,700 bushels of its state wheat reserves at auction Monday, which was only 0.05% of the total available for sale. 

Preliminary volume estimates were for 167,288 CBOT contracts, up 11% from Friday’s final count of 150,298.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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