Afternoon Market Highlights


Highlights

The grain markets took to higher ground today on trade war optimism and uncertainty about crop sizes for the row crops after last week’s big snow event. China officials say they want to get something resolved soon on the trade war phase I agreement.     

  • CHS Hedging is offering an “Introduction to Technical Trading” class on January 10th and “Energy Hedging I & II” classes on January 23rd at the Inver Grove Heights office.Check the website for registration and agenda at www.chshedging.com.
  • Energy was mostly higher with crude oil up 72 cents at $54.08/barrel.
  • The US$ was weaker, down 398 at 97.60, the gold market was a bit stronger, up 1-2 bucks at 1492 and the CD$ was up 0.0031 at 0.76165.
  • DJIA up 23 at 27025, S&P up 7 at 2998 and the NASDAQ up 32 at 8156. 

Corn

Corn prices were higher in sympathy with the wheat and bean markets. Harvest progress is picking up in parts of the US Midwest. There is talk that the USDA will re-survey MN and ND for potential crop losses from last week’s winter storm.  

  • Closes: December $3.94 ¾, up 3 cents, July $4.17 ¾, up 3 cents, September $4.07 ¼, up 2 cents
  • Weekly export sales estimates are at 400-800 tmt.
  • Weekly ethanol production saw an 8k barrel per day increase to 971k barrels per day. Inventories saw a 900k barrel increase to just over 22.0 million barrels.
  • The Argentine corn crop wrestles with lack of moisture.The Rosario Grain Exchange has lowered their crop estimate from 50.0 mmt to 47.5 mmt on dryness and worries about their upcoming presidential election near the end of the month.
  • Spreads: Z/H 11 ¾ carry, H/K 6 ¼ carry, Z/N 22 ¾ carry, Z/Z 15 ½ carry, N0/Z0 6 ¾ inverse. 

Oilseeds

Soybean prices drew support from worries about possible crop losses, technical buying and a bit of optimism over the trade war with China.  

  • Closes: November $9.31 ½, up 3 ½ cents, January $9.45 ¼, up 3 cents, July $9.73 ½, up 1 ¼ cents and red November $9.70 ½, up ½ cent. Products were mixed with meal up 2 bucks and oil down 1 point.
  • Weekly export sale estimates: 900 tmt-1.6 mmt for beans, 150-400 tmt for meal and 0-25 tmt for soyoil.
  • Brazil is expected to receive some beneficial moisture next week, which should help with seeding their bean crop and aid in the germination of what has already been seeded.
  • Argentine farmers are said to be making the shift from corn to beans, which are less expensive to grow.Concerns are that their current president will not be re-elected, and taxes could be implemented on grains once again.
  • Spreads: X/F 14 carry, F/K 20 ¼ carry, X/H 25 ¾ carry, X/N 42 ½ carry. Consider rolling short November hedges to the Jan at current levels.  

Wheat

The wheat market got legs today from a bout of short covering in Chicago and stronger world prices. Prices drew additional support from potential reductions to the Australia, Argentina and Canadian wheat crops, because of prolonged adverse weather conditions. There has been light chatter that China may be in the market for US wheat. 

  • December closes: Mpls $5.52, up 1 ½ cent, KC $4.30 ¼, up 5 ¼ cents, Chicago $5.25 ½, up 12 ¼ cents (it climbed to $5.27, matching the July 19 high).
  • Weekly export sales estimates are at 250-550 tmt.
  • Strategy Grains raised their EU soft wheat exports 1.6 mmt on expectations for a drop in the Australian and Argentine exports because of extended dry conditions throughout their growing seasons.
  • Spreads: Mpls Z/H 13 ¾ carry, Z/Z 43 carry, Kansas City Z/H 12 ¾ carry, Z/Z 52 carry, Chicago Z/H 4 ¾ carry, Z/Z 25 ½ carry.
  • Kansas City gained on Mpls with the MWZ at a buck nineteen premium over the KWZ.
  • There are ideas the variable storage rate in KC could turn back to a nickel a month with the U/Z KC ranging from 42-53% of full carry since September 19, 2019. The calculation period runs through November 22nd so we have some time in front of us on this topic.