Afternoon Market Highlights
10/25/2019 2:30:43 PM
The market awaits this weekend’s presidential election in Argentina, to see what changes, if any, to the current export tax policy on corn, beans and wheat might be.Chatter this week has been and apparently still is, that both sides are earnestly looking for a deal to be made on Phase I of the ongoing trade war. There is hope that there can be an agreement made in order for an official signing at the Chili Summit November 16-17.
- September Cattle on Feed report: On feed at 99% (98.9), September placements at 102% (101.6) and September marketings at 101% (100.9).
- Energy markets are mixed with crude oil up 43 cents at $56.66/barrel.
- US$ trading 210 higher at 97.84 (with the US and China getting closer to finalizing parts of the Phase I portion of the trade war) the gold market retreated from earlier highs, up 3-4 bucks at 1504 and the CD$ is up a hair at 0.76605.
- DJIA up 163 at 26968, S&P up 16 at 3020 and the NASDAQ up 50 at 8236.
- First Notice Day for November futures is Thursday, October 31st with all long positions reported after the close on the 30th.
The corn market traded steady to lower on lack of demand, increased harvest activity and spillover weakness in the soybean market. Losses were limited from hopes of a Phase I trade agreement between the US and China and that the US could get in line to export more US products to China in future months. The December corn lost 4 ¼ cents this week.
- Closes: December unchanged at $3.86 ¾, July at $4.09 ¾, down ½ cent, September at $4.03 ½, down ½ cent and red December at $4.07 ¾, down ½ cent. The Dec 2021 settled unchanged at $4.14 ¾.
- Hearting that some farmers have switched from harvesting soybeans to harvesting corn (with moisture in the mid-high 20’s), to give their beans time to dry down from 19-21% moisture.
- Would expect a fairly neutral reaction to the COF report on Monday as the numbers came in pretty much on par with what the trade was expecting.
- Spreads: Z/H 10 ¾ carry, H/K 6 ½ carry, Z/N 23 ¼ carry, Z/Z 20 ¾ carry, N0/Z0 2 ¼ inverse.
The soybean market traded both sides ahead of the weekend and the November options expiration. Prices drew pressure from increased harvest activity and the November options expiration with the lion’s share of the options thought to be near the $9.20 strike. The November traded down to $9.19 ½. November beans lost 13 ¾ cents this week.
- Closes: November at $9.20 ¼, down 13 cents, January at $9.34 ½, down 12 ½ cents, July at $9.67, down 9 ¾ cents, red November at $9.67 ¾, down 6 ½ cents, Nov 2021 at $9.45 ½, down 4 ¾ cents. The products were weaker with meal down 2-3 bucks and oil down 38 points.
- China’s US soybean purchases were 392k tonnes or the week, a bit disappointing after chatter early in the week about them buying $10 million in US goods. The market was looking for higher tonnage announced in the USDA’s daily sales announcements.
- Expectations are for a big harvest weekend with favorable weather conditions for much of the US Midwest until next week.
- Updated weather forecasts suggest a wetter pattern to develop over Brazil’s dry areas next week.
- Spreads: X/F 14 carry, F/K 22 ½ carry, X/H 26 ¾ carry, X/N 46 carry.
The wheat market finished the week out with a bout of intermarket spreading (Kansas City against Mpls). Spot floor was mostly steady with 14.5s 20-40 cents stronger on 40 car receipts.The focus continues to be on the row crop harvest as the last of the wheat in the fields is thought to be of very poor quality. Producers are unwilling sellers at current price levels. For the week Mpls Dec lost 7 ¾ cents, Kansas City Dec lost 12 ¼ cents and Chicago Dec lost 14 ½ cents.
- December closes: Mpls at $5.36 ¾, down 3 ¼ cents, KC at $4.21 ½, up 2 cents and Chicago at $5.17 ¾, up 1 ¾ cents.
- Paris milling wheat prices turned lower on lack of additional export business.Losses were limited from ideas of significant crop reductions in Australia and Argentina, along with firm prices in Russia.
- Spreads: Mpls Z/H 14 ½ carry, Z/Z 48 carry, Kansas City Z/H 13 carry, Z/Z 54 carry, Chicago Z/H 5 ¾ carry, Z/Z 32 ½ carry.
- KC gained on Mpls and Chicago with the Mpls Dec sitting at a $1.15 ½ premium over KC Dec (down 5 cents) and the Chicago Dec sitting at a 94 ½ cent premium over KC Dec (down 2 cents).