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Afternoon Market Recap for Dec. 7, 2018

Corn, soybean and wheat all end Friday’s session in the green.

Grain markets entered Friday’s session with some renewed optimism that sent soybeans moderately higher today, with corn and wheat also trending higher thanks to a round of better-than-expected export data from USDA. Winter wheat prices held the hottest hand today, with some contracts up more than 3%.

That optimism did not extend to financial markets, where a selloff on Wall St. con-tinues. The Dow was down more than 500 points in afternoon trading to reach 24,418 – on pace for a weekly drop of more than 4%. In contrast, crude oil rose more than 2% after OPEC and allies agreed to cut output, but prices remain rela-tively low, hovering beneath 453 per barrel. Gasoline and diesel also rose signifi-cantly, as did safe haven gold. The U.S. Dollar softened slightly.

Expect seasonally cool weather to persist for the next several days before giving way to slightly above-average temperatures in the central U.S. by the middle of next week. The latest seven-day cumulative precipitation map from NOAA shows mini-mal rain and snow arriving in the Midwest and Plains through December 14, with the exception of parts of the eastern Corn Belt. Parts of the Mid-South and South-east could see another 4” to 5” of precipitation through the end of next week, meantime.

Corn prices moved moderately higher Friday on a round of better-than-expected USDA export data, with March futures finishing the week 2% higher. Today, De-cember futures gained 2 cents to $3.74, with March futures up 2.75 cents to $3.8550.

Slow farmer sales kept corn basis bids relatively flat Friday, but bids did dip 2 to 3 cents lower across several Midwestern locations today.

USDA’s latest export report, out Friday morning, showed 46.4 million bushels in corn sales for the week ending November 29, moderately ahead of the prior week’s tally of 34.7 million bushels and trade expectations of 37.4 million bushels. The weekly rate needed to match USDA forecasts dropped to 35.8 million bushels. Corn export shipments were for 45.9 million bushels last week.

Are corn prices ready to generate some more excitement? It’s possible, contends Farm Futures senior grain market analyst Bryce Knorr, who says both old and new crop charts show promising signs, as supplies continue to slowly tighten. Get Knorr’s full analysis in his latest Corn Outlook column.

For the week, commodity funds were net buyers of corn futures by about 22,000 contracts.

Preliminary volume estimates were for 142,135 contracts, down significantly from Thursday’s final count of 277,953.

Corn Strategy
-- Price 100% of expected 2017 production at $4.015 basis July 2018 futures or HTAs. 
-- Price 30% of expected 2018 production at $4.306 basis July 2019 futures or HTAs.
-- Price 10% of expected 2019 production at $4.1125 basis December 2019 futures or HTAs.
Current recommendations
NONE

Soybean prices reversed Thursday’s moderate losses on a round of bullish USDA export data and renewed U.S.-China trade optimism, as January futures closed out the week 2.4% higher. Today, January futures added 7.25 cents to $9.1675, with March futures up 7 cents to $9.29.

Soybean basis bids softened 2 to 3 cents at several river terminals and tumbled 10 cents lower at a Nebraska processor Friday but remained steady across most oth-er Midwestern locations today.

Soybean export sales last week totaled 32.9 million bushels, besting the prior week’s total of 25.2 million bushels and trade estimates of 27.6 million bushels. The weekly rate needed to meet USDA forecasts dropped to 26.0 million bushels. Soy-bean export shipments last week totaled 46.0 million bushels.

USDA lowered its assessment of 2018/19 soybean production in India by 1.7%, at 415 million bushels, citing slightly lower planted acres this year.

For the week, commodity funds were net buyers of soybean futures by about 18,500 contracts.

Preliminary volume estimates were for 178,258 contracts, down moderately from Thursday’s final count of 229,325.

Soybean Strategy
Previous recommendations
-- Price 100% of expected 2017 production at $10.276 basis July 2018 futures or HTAs after pro-ceeds from options trade and rolls from prior hedges.
-- Growers following our recommendations priced 60% of 2018 production at $10.36 basis July 2019 futures or HTAs 
Current recommendations
NONE

Wheat prices gained some much-needed momentum Friday on a solid round of USDA export data, as CBOT contracts finished its best week in four months with 3% gains. March Chicago SRW futures finished the session up 15.75 cents to $5.3125, with March Kansas City HRW futures rising 16 cents to $5.1150 and March MGEX spring wheat futures gaining 12.25 cents to $5.7875.

Wheat export sales last week rebounded to 26.2 million bushels, more than dou-bling the prior week’s total of 12.1 million bushels and landing significantly ahead of trade estimates of 16.5 million bushels. The weekly rate needed to match USDA forecasts fell to 17.3 million bushels. Wheat export shipments last week were for 17.8 million bushels.

Private exporters reported to USDA the sale of 8.2 million bushels of hard red win-ter wheat for delivery to unknown destinations for the 2018/19 marketing year, which began June 1.

From January to October, Russia exported a total of 1.352 billion bushels of wheat, trending about 50% higher than the same period in 2017.

Customs data showed France exported 41.5 million bushels of soft wheat in Octo-ber. About 42% of the total was sent to Algeria.

The next best hope for a wheat rally may arrive in January USDA reports, accord-ing to Farm Futures senior grain market analyst Bryce Knorr. That’s because some data suggests winter wheat acres are 2 million acres lower than initial agency ex-pectations. Read more in Knorr’s latest Wheat Outlook column.

For the week, commodity funds were net buyers of CBOT wheat futures by about 11,500 contracts.

Preliminary volume estimates were for 94,400 CBOT contracts, rising nearly 44% above Thursday’s final tally of 65,637.

Wheat Strategy
Previous recommendations
Soft red winter wheat
-- Price 70% of 2018 production that will be stored at $5.93 basis May 2019 SRW including rolls from prior hedges and options transactions.
-- Price 10% of expected 2019 production at $6.0975 basis July 2019 SRW.
Current recommendations:
NONE

Hard red winter wheat
-- Price 70% of 2018 production that at $6.13 basis May 2019 HRW futures/HTAs including rolls from prior hedges and options transitions.
-- Price 10% of expected 2019 production at $6.3375 basis July 2019 HRW.
Current recommendations:
NONE

Hard red spring wheat
-- Price 30% of 2018 production at $6.25 basis Minneapolis September 2018 futures or HTAs 
-- Price 40% of 2018 production at $6.442 basis Minneapolis December 2018 futures or HTAs.
Current recommendations:
NONE

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