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Afternoon Market Recap for May 21, 2019

Corn climbs, soybeans slide.

Grain markets continue to attempt to balance weather and trade factors

Corn prices carved out another round of solid gains Tuesday as this spring’s historically sluggish planting season drags on. But soybeans nearly dropped double digits on the heels of an announcement that USDA could pay out another $2 per bushels in aid to combat the effects of the ongoing U.S.-China trade war. Wheat also reversed lower on a round of profit-taking and technical selling today.

Another round of rain and severe weather is raking its way across the Midwest today. The middle third of the country could see another 1” to 2” of additional accumulation through May 24, per the latest 72-hour cumulative precipitation map from NOAA. Daytime highs in the Midwest and Plains will be mostly cooler-than-normal for the rest of this week.

On Wall St., stocks moved higher after the U.S. said it will ease restrictions on Chinese tech company Huawei. The Dow moved 191 points higher in afternoon trading to 25,871. Concerns over U.S.-China trade negotiations continue to loom, however, with speculation that China could ban rare earth exports to the U.S., which would be devastating to smartphone and computer manufacturers.

Energy futures were narrowly mixed this afternoon, with crude oil dipping just below $63 per barrel while diesel and gasoline firmed slightly. The U.S. Dollar also firmed slightly today.

Corn prices moved more than 1% higher today after the latest crop progress report from USDA shows a historically slow planting pace this spring. July futures gained 5.25 cents to $3.9425, with September futures up 6 cents to $4.0275.

Corn basis bids were mixed again on Tuesday, trending as much as 4 cents higher and 4 cents lower across the central U.S. as buyers deal with uneven supply and demand issues.

USDA estimates 49% of the U.S. corn crop has now been planted as of May 19. That’s a big jump from 30% the week prior but remains significantly behind 2018’s pace of 78% and a prior five-year average of 80%. Analysts expected USDA to report progress of 50%. Only nine of the top 18 production states have planted at least half of their corn crop so far this spring.

Production now faces “uphill odds” unless weather turns out perfect for the rest of the season, according to Farm Futures senior grain market analyst Bryce Knorr. “Planted acreage could fall to 90 million, 2.8 million less than USDA estimated in March,” he says. “And yield potential with normal summer weather could drop nearly 7 bushels per acre, from 176.4 to 169.5 bpa.”

Farm Futures wants to know what field conditions you’ve seen as the spring unfolds. Click this link to tell us what’s happening in your area, and we’ll publish regular updates featuring firsthand accounts from growers with an interactive map of conditions. Farmer reports this spring have been an accurate predictor of what USDA reports in its weekly crop progress updates.

The European Union’s Coceral raised its estimates for 2019 corn production by 3.1% from March projections, now topping 2.476 billion bushels.

The Philippines plans to purchase as much as 11.8 million bushels of corn, with the government blaming drought from El Niño conditions creating a production shortfall.

Preliminary volume estimates were for 675,836 contracts, easing 7% below Monday’s final count of 727,086.

Soybean prices fell more than 1% today over speculation about a new round of USDA aid, although no official announcements have been made at this time. July and August futures each dropped 9.75 cents to close at $8.22 and $8.2875, respectively.

Soybean basis bids were largely unchanged Tuesday but dropped by a penny at an Ohio elevator and 5 cents at an Ohio river terminal today.

Soybean planting progress is off to a sluggish start, with just 19% planted. That’s up from 9% the prior week but well below 2018’s pace of 53% and the prior five-year average of 47%. Analysts expected USDA to show progress reaching 22% this past week. Emergence is at 5%, compared to 24% in 2018 and the prior five-year average of 17%.

The Trump administration is considering soybean payments of up to $2 per bushel to aid farmers hurt by the ongoing trade war with China. Other payments on the table include 63 cents per bushel of wheat and 4 cents per bushel of corn. Total aid could total $20 billion, according to Bloomberg.

Preliminary volume estimates were for 317,452 contracts, moving 84% higher than Monday’s final count of 172,054.

Wheat prices were narrowly mixed but mostly lower on some profit-taking and technical selling Tuesday after booming 3.5% higher yesterday. July Chicago SRW futures inched a half-cent higher to $4.7875, July Kansas City HRW futures fell 1.5 cents to $4.33, and July MGEX spring wheat futures eased half a penny to $5.4350.

Spring wheat planting progress managed to exceed analyst expectations of 63% after USDA reported that 70% of the crop is now in the ground. This year’s pace is still moderately behind 2018’s 76% and the prior five-year average of 80%, however.

And although analysts expected winter wheat crop quality to decline to 63% rated good-to-excellent, USDA raised its forecasts to reach 66% rated good-to-excellent. Another 26% of the crop is rated fair (down from 28% a week ago), with the remaining 8% rated poor or very poor (unchanged from last week).

The European Union’s Coceral slightly upped its March estimates for 2019 soft wheat production, to 5.155 billion bushels. EU barley production is expected to ease slightly, meantime, to 2.710 billion bushels.

Ethiopia purchased 22.0 million bushels of wheat from optional origins in an international tender that closed late last month. Drought continues to hamper the country’s domestic production.

Taiwan has purchased 4.1 million bushels of milling wheat from the U.S. in an international tender that closed earlier today. The grain is for shipment starting in July.

Japan has made offers to purchase 4.5 million bushels of food-quality wheat from the U.S. and Canada. Of the total, 73% is expected to be sourced from the U.S.

Preliminary volume estimates were for 154,432 CBOT contracts, rising 15% above Monday’s final count of 134,368.


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