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Afternoon Market Recap for Oct. 18, 2019

Futures end week on mixed note

Hedge pressure and poor exports sink corn

What a difference a week makes! Last Friday markets were obsessed with China trade talks and the blizzard in North Dakota. Those snows are melting quickly as temperatures warm, while financial markets focus on Saturday’s Brexit vote in Britain.

To be sure, China is still making headlines today, but of a different sort. Economic growth in the third quarter there slipped top its lowest level in nearly 30 years as U.S. tariffs bit hard. That negative data spurred more concerns about slowing world growth, with added pressure coming from bad news for a couple big companies, including a recall of tainted baby powder by Johnson & Johnson.

Selling on Wall Street ended an otherwise up week on a sour note, with investors also cautious about the UK. Prime Minister Boris Johnson faces a very uncertain outcome in Parliament, with potential for the Brexit drama to drag on for weeks and perhaps months.

Farmers on the northern Plains face another storm, this one from the remnants of the typhoon that slammed Japan last week, which will move across the northern U.S. into next week Tropical Storm Nestor will soak the Southeast over the weekend, with more Gulf moisture working up from the Delta into the eastern Corn Belt later next week. But the rest of the central Plains and western Midwest could receive fairly light coverage, helping growers get caught up on harvest.

Corn prices slipped lower today, pressured by another poor export sales report and increasing harvest activity after a dry week. December futures remain in an uptrend off September lows but failed to break through chart resistance this week.

Basis slipped at the Gulf today, reflecting weekly sales of just 14.5 million bushels. That total is less than half the rate needed weekly to reach USDA’s forecast for the marketing year. Buyers mostly continue to take small amounts, if they’re buying anything at all. South Korea is still buying corn from South America, where Argentine farmers reportedly are pushing deals ahead of elections later this month. A huge Brazilian crop has dominated global business this summer and fall.

December futures closed off 3.75 cents to $3.91 with July off 2.4 cents at $4.1525. Initial volume was 199,618, compared to 243,892 yesterday.

Soybeans eked out small gains today after holding another test of the support line from their three-week channel. Selling on the close knocked three cents a bushel off the board, likely from pre-hedging by elevators looking to take in more soybeans over the weekend.

Futures got a boost early from another strong week of export sales, though many more will be needed after a slow start to the selling season this summer. Net new booking of soybeans came in at 58.8 million bushels, including 31.3 million done by Chinese buyers. The total was down from the huge numbers the previous week, but better than trade expectations and appeared to include around 10 million bushels to China not previously reported by USDA under its daily wire for announcing large purchases.

While combines roll in the U.S., farmers in Brazil made good progress seeding their next crop following improving rains. Stronger futures in the U.S. and weak local currencies are giving South American growers incentive to plant all the beans they can this year.

November soybeans ended 2.5 cents higher at $9.34, with January up 2.25 at $9.475. Initial volume was 228,657, compared to 251,866 Thursday.

Wheat prices closed mixed today in trading that continues to reflect what’s happening on price charts just as much as wheat fields around the world. A move by the dollar to 11-week lows didn’t hurt either in the currency sensitive market.

Winter wheat posted gains, led by more buying in SRW when December futures blew through resistance at the contract’s 61.8% selloff from June highs and the top of its channel off September lows. The HRW nearby followed with a new two-month high, but spring wheat slipped after failing to break through resistance on its chart this week, including the 200-day moving average.

Export sales last week totaled 14.5 million bushels, close to trade estimates and a little above the weekly rate forecast by USDA for the 2019 marketing year that began June 1. The U.S. remains mostly shut of big import markets like Egypt, which bought French and Black Sea wheat again this week. But end users may be getting a little nervous about next year’s crop in Ukraine and Russia, which look drier for the next couple of weeks after only light rain this week.

December SRW closed up 6.75 cents at $5.3225, December HRW gained 1.25 cents to $4.3375 and Minneapolis December was off 7.5 cents to $5.445.

Initial SRW volume was 90,692, down from 118,069 yesterday. HRW volume was 47,961, compared to 49,150 Thursday.

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grainstable

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