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Afternoon Market Recap for Aug. 16, 2018

Trade optimism stretches elastic soybean prices.

Corn and wheat futures also finish Thursday’s session with significant gains

Trade with China (or lack thereof) have caused soybean futures to stretch higher and lower throughout the summer months. The latest optimism from the White House over resolving the current U.S.-China trade conflict helped fuel a 3% price gain on Thursday. Corn and wheat prices also trended significantly higher in the session, thanks in part to technical maneuvering and spillover strength from soybeans.

Easing trade concerns were also felt on Wall St., with the Dow up more than 430 points in afternoon trading to 25,593. Energy futures were mixed after oil and diesel prices trended moderately higher, with gasoline futures taking moderate losses. The U.S. Dollar softened slightly. 

Drought’s footprint leaped ahead several percentage points last week, now covering nearly 58% of the U.S., according to the latest U.S. Drought Monitor, out Thursday morning. In the Corn Belt, Missouri continues to be the most afflicted state, with almost 98% in abnormally dry conditions or worse – although moderate rainfall in the Show-Me State this week may bring some relief moving forward.

Grain price volatility makes more than a few farmers nervous, but it doesn’t have to be that way. In the latest episode of the Deep Dive podcast, we talk through some important distinctions regarding this important grain marketing concept. Click here to learn more.

 

Corn prices grabbed modest gains on a round of technical buying Thursday, with September and December futures each up 3.75 cents to close at $3.6525 and $3.7975, respectively. 

Corn basis bids were mostly unchanged but mixed Thursday after trending 4 cents lower at a Nebraska elevator and 5 cents higher at an Iowa ethanol plant.

Corn exports found 13.3 million bushels in old crop sales and another 41.1 million bushels of new crop sales last week, for a total of 54.5 million bushels. That is moderately ahead of both the prior week’s result of 47.7 million bushels and trade estimates of 43.3 million bushels.

Corn export shipments last week reached 48.0 million bushels, with Mexico as the top destination (18.2 million bushels).

The EPA reports that the U.S. generated 1.37 billion ethanol blending credits in July, up from the 1.26 billion generated in June.

China sold 60.4 million bushels of its state reserves of corn at auction Thursday, which was 38.4% of the total available for sale.

Preliminary volume estimates were for 181,313 contracts, slipping moderately below Tuesday’s final count of 243,428.

 

Soybean pricesfound favor Thursday on news that U.S.-China trade talks are expected to resume later in August, helping prices to rise sharply at the open and hang on to big gains of more than 3%. September and November futures each gained 28 cents to close at $8.8550 and $8.97, respectively. 

Soybean basis bids dropped 5 cents at several Midwestern elevators and between 5 and 9 cents across several river terminals Thursday, with a seasonal influx of farmer sales expected soon in some areas.

White House economic advisor Larry Kudlow confirmed U.S. and Chinese officials will meet later this month in their latest attempt to resolve the current trade conflict between the two countries.Kudlow told CNBC he’s optimistic that the talks may “produce better outcomes than expected.”

Meantime, the Star Jennifer shipping vessel docked at a Chinese port earlier on Thursday, with a reasonable assumption it will unload its cargo of U.S. soybeans despite current tariffs of 25% by China on those goods. 

Soybean exports added 4.9 million bushels in old crop sales plus another 21.0 million bushels in new crop sales for a total of 25.9 million bushels. That nearly matched trade estimates of 27.6 million bushels but slipped moderately behind the prior week’s tally of 35.1 million bushels.

Soybean export shipments were for 21.6 million bushels last week, with Iran (4.9 million bushels) occupying the No. 1 position.

The EPA reports that the U.S. generated 310 million biodiesel blending credits in July, down from the 318 million generated in June. 

Private exporters reported to USDA the sale of 5.7 million bushels of soybeans for delivery to Mexico for the 2018/19 marketing year, which begins September 1. 

Preliminary volume estimates were for 206,019 contracts, up moderately from Wednesday’s final count of 133,720.

 

Wheat prices benefitted with some spillover strength from soybeans Thursday, plus some additional technical maneuvering from short-covering. The result was gains of approximately 2% for both winter and spring wheat contracts. September Chicago SRW prices gained 10 cents to $5.4225, September Kansas City HRW prices added 12.25 cents to $5.4750, and September MGEX spring wheat prices rose 12.75 cents to $5.9675.

Wheat export sales more than doubled the prior week’s total of 11.7 million bushels and trade estimates of 12.9 million bushels with an impressive 29.5 million bushels in sales last week – a marketing year high. 

Wheat export shipments were also a marketing year high last week, reaching 17.0 million bushels. Mexico was the No. 1 destination, with 3.7 million bushels.

Private exporters reported the sale of 7.3 million bushels of hard red winter wheat for delivery to Iraq during the 2018/19 marketing year, which began July 1. Iraq recently purchased a total 11.0 million bushels of wheat from the U.S. and Canada via direct negotiations (no international tenders were issued). 

Egypt’s state news agency reported that the country’s wheat reserves are at four months. Egypt has been the world’s No. 1 or No. 2 wheat importer recently (trading the top spot on and off with Indonesia). 

Preliminary volume estimates were for 139,599 CBOT contracts, sinking moderately below Wednesday’s final count of 185,393.

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