Afternoon Market Highlights


Highlights

Weakness across the row crops on favorable crop ratings and more rain in the forecast this week. Month-end positioning was noted ahead of first notice day for September and the long (3-day) holiday weekend. No fresh news on the trade war front.  All yesterday’s hype was deflated today as Chinese officials deny talk of their making a phone call to Washington this past weekend. The focus seems to be on weather and improving crop conditions.  There is chatter about a possible frost threat in September, but the market does not appear to be ready to react to that kind of chatter.    

  • First Notice Day for September contracts is this Friday.Longs are scheduled to be reported after the close on Thursday.Consider taking the time to clean up any unwanted open orders, in your deck, over the next couple of days.
  • The energy markets are stronger this afternoon, with crude oil up over a buck, and just shy of $55/barrel.
  • The US$ is off a freckle, the gold market is up 11-12 bucks at $1,539/ounce and the CD$ is slightly weaker at 0.7524.
  • DJIA down 86 at 25812, S&P down 13-14 at 2869 and the NASDAQ down 21 at 7832. 

Corn

The corn market traded lower on improved crop conditions from the recent rain events. Prices saw additional pressure from weakness in the soybean market. The Sep and Dec are sitting a few cents above their respective contract lows while Mar-Jul are sitting right at their respective contract lows. Argentina corn values are said to be at a discount to US values and are expected to stay that way for the balance of the year. 

  • Closes: September at $3.57, down 1 ½ cents, December at $3.66 ¼, down 2 cents, July at $3.93, down 2 ¾ cents and red Dec at $4.03 ¼, down 1 ¼ cents.
  • Gulf premiums were mostly unchanged.
  • Farm Futures acreage survey for 2020 pegs corn acres at 94.1 million. This compares to another private estimate of 95.0 million acres. The 2019/20 USDA acreage estimate at 90.0 million.
  • Spreads: U/Z 9 carry, Z/H 12 carry, Z/N 27 ¼ carry, Z/Z 36 ¾ carry. 

Oilseeds

The soybean market traded lower on beneficial rain events across the US Midwest and lack of fresh news about future trade talks with China. Some weather models are suggesting a late September to an early October freeze. The canola market closed lower in sympathy with the US soy complex. 

  • Closes: November at $8.59 ¼, down 8 cents, January at $8.73, down 7 ½ cents, July at $9.08, down 6 ¾ cents and red November at $9.25 ¼, down 5 ¾ cents. The products were weaker with meal down 1-2 bucks and oil down 32 points.
  • Gulf premiums were 1 cent weaker for Sep through Jan.
  • Brazil farmers have been big sellers of beans with the sharp weakness in their currency recently. China continues to be a significant buyer of South American beans.
  • Farmers could be looking to begin fieldwork and planting soybeans for the next season over the next few months.
  • Farm Futures acreage survey for 2020 pegs soybean acres at 83.6 million. This compares to 2019/20 USDA acreage estimate at 76.7 million.
  • Spreads: U/X 13 ¼ carry, X/F 14 carry, F/K 24 ¼ carry, X/N 49 carry. 

Brazilian Real

  • Weak, weak, weak.  Seeing big time weakness in the Real lately.  The Real gets weaker as the chart goes up.  The Brazilian farmer get paid US dollars so when the currency weakens the same sale as a few months ago nets them more and more Real.
  • BRASILIA/SAO PAULO, Aug 27 (Reuters) - The Brazilian central bank intervened in the foreign exchanges on Tuesday, offering to sell dollars on the spot market after the real had slid to its weakest level against the greenback in almost a year and to within sight of its all-time low.
  • The move was not part of the changes announced earlier this month to the central bank’s day-to-day foreign exchange management, traders said, and was instead outright selling of dollars from its international reserves.
  • The central bank offered to sell a minimum $1 million in the spot market at a minimum rate of 4.1250 reais per dollar. The exact amount sold is unknown but should be apparent in the central bank’s weekly FX flows data next week, traders said.
  • The announcement caused a sharp rebound in the real to around 4.1340 per dollar from an 11-month low of 4.1940 per dollar, which was within sight of its record low of around 4.25 in September 2015 when Brazil was in one of its worst recessions.

 

 

Wheat

The wheat market finished the day mixed with the spring wheat market being the weakest link.  The Mpls December through May contracts are sitting at contract lows while the Sep and Dec 20 are sitting at new contract lows(ugh!). The KC and Chicago markets were victims of light technical buying, allowing both to close in positive territory.

 

  • September closes: Mpls at $4.94 ½, up 1 ½ cents, (the Dec at $5.11, down ¾ cent), KC at $3.93 ½, up 4 ½ cents and Chicago at $4.73 ¼, up ¾ cent.
  • Farm Futures 2020 wheat acreage estimates: All wheat at 45.1 million, All winter at 32.1 million, spring wheat at 11.6 million, Durum at 1.3 million.
  • Egypt’s GASC bought 365k tonnes of wheat from Russia, France and Ukraine at $215.09/t-$217.30/t C&F.Russia was the biggest player with 230k tonnes. Shipment is for FH Oct.
  • Paris mill wheat prices rise from aggressive French wheat offer to the Egyptian tender.
  • The US spring wheat harvest has basically come to a halt from rain events over the past several days. There are concerns of loss of crop quality from continued rain showers.
  • Duluth stocks increased nearly 2.0 mb over the past week.Total stocks in Duluth sit at 17.2 mb. Mpls stocks increased slightly to 2.5 mb.
  • Spreads: Mpls U/Z snuck into a 16 ½ carry, Z/H 13 carry, Kansas City U/Z 11 ½ carry, U/U 60 ¾ carry (lost ground from yesterday’s 66 cent carry).