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Afternoon Market Recap for April 24, 2018

Tuesday grain markets fight back.

Technical maneuvering and weather factors reverse some of Monday’s losses

A relatively slow planting pace gave corn prices a small reprieve Tuesday, while technical maneuvering gave soybean prices a slight boost. And bargain buyers stepped in for wheat futures after they fell to nearly three-week lows Monday.

Mostly cooler-than-normal weather prevails across the central U.S. for the rest of this week, although the weekend begins to bring some seasonally average or even warmer-than-normal temperatures. The latest three-day precipitation forecast maps from NOAA show mostly dry weather across the I States through Saturday, with some light (but measurable) precipitation most other places across the Midwest and Southern Plains. 

Wondering how soil temperatures are looking in your area? The North Central River Forecast Center (NCRFC) collects soil temperature data at various depths (2”, 4”, 8”, 20” and 40”) and shares its findings on this website, which covers much of North Dakota, Minnesota, Iowa, Wisconsin, Michigan, Illinois, Indiana and Missouri.

On Wall St., sinking technology stocks caused the Dow to slide more than 2%, dropping 568 points in early afternoon trading to 23,846. Energy prices retreated Tuesday, with crude oil down 1.3% in early afternoon trading to back under $68 per barrel. Diesel and gasoline prices were also down moderately, and the U.S. Dollar softened slightly.

For Tuesday, commodity funds were net buyers of corn (+9,500), Soybeans (+3,500) and wheat (+6,500).

 

Corn prices benefited largely from spillover strength in wheat, bolstered by a relatively slow planting pace to start the season. May futures gained 2.75 cents to $3.8125, while July futures picked up 2.5 cents to $3.90.

Corn basis bids were steady to firm, especially at Midwestern river terminals (up 3 to 6 cents) and ethanol plants (up 1 to 3 cents) as farmers begin to turn their focus from grain sales to spring planting.

Warmer weather is on its way in the Midwest and Plains in the near future, which could bode well for the current sluggish planting pace. As of April 22, 5% of the U.S. corn crop had been planted, versus a five-year average of 14%. 

Some southern states, including Texas (65%), North Carolina (48%) and Tennessee (30%) lead the way, but further north, precious little of the crop is in the ground. In Illinois, just 4% of the crop has been planted, for example, and 1% of Indiana’s planting is complete.

Brazil’s government is estimating a total ethanol output for 2017/18 to reach 7.33 billion gallons, virtually unchanged but slightly lower than 2016/17’s total of nearly 7.40 billion gallons.

Preliminary volume estimates were for 270,734 contracts, down nearly 29% from Monday’s final count of 379,436.

 

Soybean prices scored a technical bounce after dropping 8 cents in Monday’s session. A round of bargain buying lifted May futures 1.5 cents to $10.2225 and July future 1.75 cents to $10.34. 

Soybean basis bids were mostly steady but mixed Tuesday, down as much as 3 cents at an Iowa river terminal but up as much as 5 cents at an Illinois river terminal and Indiana processor.

Private exporters reported to USDA the sale of 4.8 million bushels of soybeans for delivery to Argentina. Approximately 46% is for delivery for the 2017/18 marketing year, with the remainder for delivery in 2018/19. The marketing year for soybeans began September 1.

As has been typical the past few years, U.S. share of soybean imports to China peaks in the winter months, with Brazilian imports to China peaking in the summertime. However, the U.S. share of Chinese soybean imports never exceeded 70% (versus 80%, 90% or higher in recent years) in any given month last winter.

Brazilian share of Chinese imports overtook the U.S. in mid-February, several weeks earlier than normal. From February to Mach, U.S. soybean imports to China fell 27% while Brazilian imports to China grew 66%.

Total Chinese soybean imports from the U.S. exceeded those coming from Brazil from September to March, however, with 896 million bushels versus 741 million bushels. Argentina soybean imports came in a distant third, at 105 million bushels.

Preliminary volume estimates were for 254,369 contracts, moderately higher than Monday’s final count of 222,905.

 

Wheat prices found bargain buyers, lifting spring wheat prices as high as 0.8% and some winter wheat contracts more than 2%. May Chicago SRW prices finished up 11 cents to $4.7250, May Kansas City HRW futures added 9.5 cents to $5.1225, and May MGEX spring wheat futures tilted 4.75 cents higher to $5.9050.

Winter wheat yield potential continues to be in flux as winter and spring precipitation have fallen unevenly across major production areas. Some areas of the Plains are trending lower compared to the prior week, including South Dakota (-0.4 bpa), Nebraska (-0.3 bpa), Kansas (-0.7 bpa), Colorado (-1.0 bpa) and Texas (-0.2) bpa. Farther east, yield potential has improved somewhat in certain states, such as Oklahoma (+0.4 bpa), Missouri (+0.3 bpa), Arkansas (+0.9 bpa) Illinois (+1.6 bpa), Michigan (+1.5 bpa) and Ohio (+1.1 bpa).

Overall, the latest state-by-state and national yield models for this year’s U.S. winter wheat crop continue to trend moderately lower than a year ago. Current state-by-state models project yields around 45 bpa (49 bpa last year), with the national yield model projecting closer to 43 bpa (46 bpa last year).

Algeria has purchased 7.3 million bushels of durum wheat from optional origins (but likely sourced from the U.S., Canada and/or Mexico), for shipment in July.

Jordan looks to buy 3.7 million bushels of wheat in a tender that closes Wednesday, for shipment in September or October. The country issued a separate tender for 4.6 million bushels of barley that closes Tuesday, for shipment in July or August, that was later cancelled.

Bangladesh issued an international tender for 1.8 million bushels of milling wheat. The offer closes May 10, with grain to ship no more than 40 days after signing the deal.

China has sold 59,745 bushels of wheat from its state reserves at auction Tuesday, which was just 0.08% of the total available for sale.

Preliminary volume estimates were for 135,298 CBOT futures, down moderately from Monday’s final count of 167,284.

 

Corn Outlook

Soybean Outlook

Wheat Outlook

 

 

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