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Afternoon Market Recap for Sept. 25, 2018

Corn’s momentum continues.

Soybean futures also track moderately higher, as wheat prices slip

Grain markets traded mostly in the green Tuesday, with corn futures up almost another 1% and soybeans not far behind with 0.7% gains (reaching one-month highs in the process). Wheat futures bucked the trend, as winter wheat contracts trended about 1% lower, while spring wheat futures slipped around a half-percent.

Seasonally cool weather has arrived in the Midwest and Plains and is expected to persist through this weekend into early next week. The next series of rains in the central U.S. is expected to deliver an additional 1” to 2” or more total accumulation in large portions of Iowa, Minnesota, Wisconsin, Illinois, Indiana and Ohio between today and October 2.

Poorly performing tech stocks overrode a boost in energy futures, causing the Dow to slip 34 points in afternoon trading to 26,527. Crude oil, gasoline and diesel futures all captured small to moderate gains Tuesday afternoon, while the U.S. Dollar softened slightly.

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Corn prices continued to rise to one-month highs Tuesday, as additional export sales triggered more short-covering. December and March futures each added another 3.25 cents to close at $3.6375 and $3.7575, respectively.

Corn basis bids were variable Tuesday, sinking 4 to 5 cents lower at several ethanol plants but inching 1 to 2 cents higher across some other Midwestern locations. 

Private exporters reported to USDA the sale of 9.4 million bushels of corn for delivery to Mexico during the 2018/19 marketing year, which began September 1. 

USDA has the 2018 U.S. corn harvest at 16% complete for the week ending September 23, moving ahead from 9% the prior week. That’s a bit faster than normal, with 2017’s progress reaching 10% at the same time last year, with a five-year average of 11%. 

As for crop quality, USDA rates 69% in good-to-excellent condition, up a point from last week’s rating of 68%. Analysts anticipated no changes between last week and the prior week. Another 19% of the crop is rated fair, with the remaining 12% rated poor or very poor.

Ahead of USDA’s quarterly grain stocks report, out Friday, analysts estimate domestic corn stocks are at 2.010 billion bushels, moderately lower than year-over-year totals of 2.293 billion bushels.

Serbia’s corn production in 2018 boomed 73% higher year-over-year, reaching a total of 274.2 million bushels. 

Preliminary volume estimates were for 184,847 contracts, sliding moderately below Monday’s final tally of 226,571.

 

Soybean prices found some more traction amid a round of bargain buying, pushing prices to the highest levels since late August. Traders tested higher gains this morning, but prices eroded somewhat through the rest of the session. November futures still finished up 4.75 cents to $8.4575, while January futures gained 4.5 cents to $8.5975. 

Soybean basis bids were steady to firm Tuesday, moving 1 to 3 cents higher at a few Midwestern locations and up an anomalous 15 cents at one Iowa processor to drum up additional farmer sales there. 

Soybean harvest reached 14% complete as of September 23, up from 6% the week prior and ahead of 2017’s pace of 9% and the five-year average of 8%. Southern states Louisiana (66%) and Mississippi (47%) lead the charge so far.

USDA also added a point to soybean crop quality, moving it from 67% in good-to-excellent condition for the week ending September 16 to 68% last week. Analysts expected the agency to make no quality adjustments. 

Ahead of USDA’s quarterly grain stocks report, out Friday, analysts estimate domestic soybean stocks are at 401 million bushels, which would be moderately higher than year-over-year totals of 302 million bushels.

China could increasingly turn to Argentina for soybean supplies this fall, with some analysts expecting the country to import around 66 million bushels between September and next February. Argentina, in turn, has been purchasing more U.S. soybeans recently to compensate for its own drought-diminished 2018 production. 

Preliminary volume estimates were for 240,198 contracts, moving significantly higher than Monday’s anemic final count of 116,778.

 

Wheat prices slid moderately on a round of profit-taking Tuesday, with winter wheat contracts down around 1% and spring wheat contracts falling 0.5%. December Chicago SRW futures fell 6.25 cents to $5.2075, December Kansas City HRW futures dropped 5.75 cents to $5.2325, and December MGEX spring wheat futures dipped 3.25 cents to $5.8125. 

With spring wheat harvest effectively complete, USDA turns its sights to the 2018/19 winter wheat planting season and notes progress of 28%, up from 13% a week ago. That pace comes in slightly faster than 2017’s pace of 22% and the five-year average of 26%.

Ahead of USDA’s quarterly grain stocks report, out Friday, analysts estimate domestic wheat stocks are at 2.343 billion bushels, which is slightly ahead of last September’s volume of 2.266 billion bushels.

Serbia’s 2018 wheat production is up 29% year-over-year, reaching 108.1 million bushels. The country’s harvested area was 12% compared to 2017.

Taiwan issued an international tender to purchase 4.0 million bushels of U.S. milling wheat, for shipment between mid-November and early December. 

Japan seeks to purchase 4.0 million bushels of food-quality wheat from the U.S., Canada and Australia in a regular tender that closes Thursday.

Bangladesh issued an international tender to purchase 1.8 million bushels of wheat from optional origins, which closes October 9.

Indonesia, one of the world’s top wheat importers, could import as much as 312 million bushels this year, despite increasing prices, which would top 2017’s imports by 6%. 

China sold nearly 230,000 bushels of its state reserves of 2013 imported wheat at auction Tuesday, which was 0.7% of the total available for sale.

Preliminary volume estimates were for 74,610 CBOT contracts, inching ahead of Monday’s final count of 74,088.

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