Farm Futures (13/09/2018) - Exports, trade, weather conspire against grains.
A variety of factors pushed corn, soybean and wheat prices lower Thursday
Grain prices struggled through another embattled session Thursday, with corn, soybean and wheat prices all shifting lower. Wheat is worried about Russian exports, corn is concerned with a large looming U.S. harvest, and soybeans continue to fret over fractured U.S.-China trade relations.
In the Mid-Atlantic, thousands are already without power as Hurricane Florence creeps closer to the mainland. Three-day rainfall totals will exceed 20” or more in some locations. The Midwest is expecting a dry several days, in contrast, with little additional accumulation expected through the weekend outside of parts of Minnesota, the Dakotas and upper Wisconsin. Daytime high temperatures trend significantly higher through much of the central U.S. into early next week.
Inflation concerns subsided somewhat, and China agreed to reopen trade talks with the U.S., leaving Wall St. fairly optimistic Thursday. The Dow climbed another 134 points in afternoon trading to reach 26,133. Energy futures slumped 1% to 2% lower, meantime, with the U.S. Dollar also softening slightly.
For Thursday, commodity funds were net sellers of corn (-10,500), soybeans (-5,500), wheat (-8,000), soymeal (-3,500) and soyoil (-2,500) futures contracts.
From stocks to energy prices to interest rates and much more, there are numerous outside influences that hold some day-to-day sway on grain prices. Learn more about these factors in the latest episode of the Deep Dive podcast. Click here for details, including links to the first eight episodes of the podcast.
Corn prices trended moderately lower Thursday as a near-record U.S. crop begins harvest season. Prices were further pressured by spillover weakness from wheat. September futures dropped 5.25 cents to $3.3625, while December futures slipped 2 cents to $3.5050.
Corn basis bids were steady to narrowly mixed Thursday, trending as much as 3 cents higher and 4 cents lower across Midwestern locations, with harvesttime supplies expected to rise in the near future.
Corn exports tallied 30.5 million bushels in new crop sales last week, with Mexico (8.6 million bushels) as the top destination. Another 115.2 million bushels of old crop sales were carried over from the prior 2017/18 marketing year, which concluded August 31.
Corn export shipments totaled a modest 10.4 million bushels to wrap up the old marketing year, but that brought cumulative totals for 2017/18 to 2.263 billion bushels, which bested the prior marketing year by 4%.
Private exporters reported the sale of 5.6 million bushels of corn for delivery to Costa Rica during the 2018/19 marketing year, which began September 1.
Consultancy Strategie Grains lowered its European Union grain production estimates by 5%, citing drought-stressed crops – falling to 2.299 billion bushels.
China sold 114.2 million bushels of its state reserves of corn at auction Thursday, which was 73.3% of the total available for sale.
Forecasters at the Climate Prediction Center indicated there is a 50% to 55% chance for El Niño conditions to emerge between September and November, which rises to between 65% and 70% this winter.
Preliminary volume estimates were for 362,186 contracts, settling significantly lower than Wednesday’s WASDE-influenced spike of 689,143.
Soybean prices slid lower Thursday, as traders continue to worry about unresolved trade issues with China as a potentially record-breaking U.S. harvest nears. September futures dropped 6.25 cents to $8.2275, while November futures fell 6.75 cents to $8.3325.
Soybean basis bids were mostly steady Thursday, trending 2 cents higher at an Iowa river terminal and dropping 5 cents lower at an Ohio elevator, as other Midwestern locations remained unchanged.
Soybean export sales reached 25.5 million bushels in new crop sales, with Egypt (7.2 million) as the week’s top destination. Another 89.3 million bushels in old crop sales were carried over from the 2017/18 marketing year, which concluded August 31.
Soybean export shipments added another 8.9 million bushels to conclude the 2017/18 marketing year, with accumulated totals of 2.072 billion bushels down 3% from the prior marketing year.
Private exporters reported two large soybean sales to USDA Thursday. The first was for 4.0 million bushels to Mexico during the 2018/19 marketing year, and the second was for 4.4 million bushels to unknown destinations, with delivery split between the 2018/19 marketing year and the 2019/20 marketing year.
Egypt purchased 20,000 metric tons of soyoil and another 11,500 MT of sunflower oil in a tender, for arrival in late October.
Preliminary volume estimates were for 142,829 contracts, nearly half of Wednesday’s final count of 271,878.
Wheat prices were hampered by the prospect of plentiful Russian wheat exports, with USDA expecting higher production for that country. Chicago SRW contracts took nearly 2% losses, with Kansas City HRW and MGEX spring wheat prices down more moderately. December Chicago SRW futures lost 9.75 cents to $4.97, December Kanas City HRW futures slipped 4.75 cents to $5.02, and December MGEX spring wheat futures dipped a quarter-cent to $5.6475.
Wheat export sales topped 14.2 million bushels last week, which inched 2% ahead of the prior week’s total but slipped 16% below the prior four-week average. Wheat export shipments of 15.8 million bushels spiked 50% above the prior week’s total and stayed 6% ahead of the prior four-week average.
Consultancy Strategie Grains lowered its EU soft wheat forecasts for the seventh straight month, now down to 4.659 billion bushels – 11% down from a year ago, and reaching the lowest totals in six years, and with expected carryout stocks only totaling around 367.4 million bushels.
China sold 17.8 million bushels of its state reserves of 2013 wheat at auction Thursday, which was one-third of the total available for sale.
Algeria purchased 23.1 million bushels of milling wheat from optional origins in a tender that closed Wednesday. The wheat – much of which is expected to be sourced from France – is for shipment in November.
Morocco issued a tender to purchase 12.4 million bushels of U.S. durum wheat through an annual preferential-tariff quota, for arrival by the end of December.
Saudi Arabia plans to import another 21.9 million bushels of wheat in November and December to meet local demand and shore up its strategic reserves.
Tunisia issued an international tender to purchase 1.8 million bushels of durum wheat and another 2.5 million bushels of soft wheat. The grain can be sourced from optional origins and is for shipment between October and December; the tender closes Friday.
Jordan cancelled its tender to purchase 4.4 million bushels of hard wheat after receiving only two participants.
Preliminary volume estimates were for 71,330 CBOT contracts, less than half of Wednesday’s final count of 194,360.
Read more at https://www.farmfutures.com/afternoon-recap/afternoon-market-recap-sept-13-2018