Spillover weakness contributes to corn, soybean and wheat losses Tuesday
Outside influences infiltrated grain markets Tuesday, as crude oil futures felt the pinch of weakening global demand and high supplies, falling to the lowest prices in about a year. That weakness kicked off a broad selloff in other commodities, including grain markets, which moved lower amid some technical maneuvering. Some wheat contracts fell more than 2.5% today, with corn and soybeans eyeing more moderate losses.
Crude oil’s latest plunge – tumbling more than 7% to just below $56 per barrel Tuesday afternoon – also spilled over into stock markets Tuesday. The Dow dipped 69 points in afternoon trading to 25,317. Natural gas surged, in contrast, reaching the highest levels since 2014. The U.S. Dollar retreated slightly, with safe haven gold down fractionally.
The latest cooling trend continues this week, with sharply below-average temperatures expected across much of the central U.S. for the rest of the week. Some additional rain and snow is expected in the eastern Corn Belt over the next 72 hours, with some light snow also possible in the Northern Plains through Saturday.
Corn prices turned bearish on technical selling spurred by falling crude oil prices Tuesday, dropping nearly 1.5% in the session. December futures fell 4.75 cents to $3.6650, with March futures down 4.5 cents to $3.7775.
Corn basis bids were mixed but mostly steady to firm Monday, trending as much as 15 cents higher at one Ohio river terminal. Other basis bids firmed more moderately, moving between 1 and 5 cents higher across several Midwestern locations.
Corn export inspections reached 44.8 million bushels, down slightly from the prior week’s tally of 50.6 million bushels and landing on the high end of trade estimates, which ranged between 31.5 million and 51.2 million bushels. Japan was last week’s No. 1 destination for U.S. corn inspections, accounting for 10.8 million bushels.
Ahead of this afternoon’s USDA crop progress report, analysts expect the agency to report that the 2018 U.S. corn harvest is now 87% complete, up from 76% a week ago.
France’s farm ministry slightly raised its estimates for the country’s 2018 corn production to 482.3 million bushels, up 0.4% from October.
Indonesia purchased 3.9 million bushels of corn, likely sourced from South America, for arrival by the end of December.
Preliminary volume estimates were for 255,982 contracts, down moderately from Monday’s final count of 339,508.
Soybean prices couldn’t hold onto optimism Tuesday morning over easing U.S.-China trade tensions as they crumbled later in the session on some technical selling and spillover weakness from other commodities. Prices ended moderately lower, with November futures dropping 4.5 cents to $8.6725 and January futures falling 5 cents to $8.7825. Soymeal and soyoil futures also saw moderate losses today.
Amid relatively slow farmer sales, soybean basis bids moved 5 cents higher at multiple Midwestern processors and between 1 and 5 cents higher at multiple Midwestern river terminals Monday, remaining steady across other central U.S. locations.
Private exporters reported to USDA the sale of 10.2 million bushels of soybeans for delivery to unknown destinations for the 2018/19 marketing year, which began September 1.
Soybean export inspections totaled 47.8 million bushels last week, up 6.3% from the prior week and touching the high end of trade estimates. Spain was the top destination for U.S. soybean export inspections last week, with 10.0 million bushels. So far for the 2018/19 marketing year, soybean export inspections have totaled 364.1 million bushels, lagging almost 42% year-over-year.
Ahead of this afternoon’s USDA crop progress report, analysts expect the agency to report 91% of soybeans have been harvested, up from 83% a week ago.
Dry weather in Germany this fall has taken its toll on the country’s winter canola crop, with planted acres reported 18.1% lower year-over-year.
Preliminary volume estimates were for 101,069 contracts, rebounding slightly from Monday’s final count of 89,908.
Wheat prices degraded steadily throughout Tuesday’s session as they followed crude oil futures lower today. Another round of tepid USDA export data added additional downward pressure. December Chicago SRW prices took the biggest hit, with December futures dropping 12 cents to $5.0775, with December Kansas City HRW futures down 8.75 cents to $4.8475 and December MGEX spring wheat futures down 4.25 cents to $5.7725.
Wheat export inspections reached 12.6 million bushels last week, up slightly from the prior week but on the low end of trade estimates, which ranged between 11.0 million and 18.4 million bushels. The Philippines was the top destination for U.S. wheat inspections last week, accounting for 3.5 million bushels.
Ahead of this afternoon’s USDA crop progress report, analysts expect the agency to report that the 2018/19 U.S. winter wheat crop is now 90% planted, up from 84% a week ago. Analysts also expect USDA to report 51% of the crop is in good-to-excellent condition, unchanged from the prior week.
Japan issued a regular tender to purchase 4.4 million bushels of food-quality wheat from the U.S., Canada and Australia, which closes Thursday.
China sold 170,000 bushels of its state reserves of 2013 imported wheat at auction Tuesday, which was just 0.6% of the total available for sale. The country has made a flurry of similar sales in recent weeks.
Preliminary volume estimates were for 211,619 CBOT contracts, down fractionally from Monday’s final count of 213,199.