Afternoon Market Highlights
12/16/2019 3:52:03 PM
Welcome Back! Spent last week driving across the great state of North Dakota. Lots of corn and sunflowers were still standing in the fields, up to their wastes in snow and the temperatures were bitter cold. The rally caught the attention of the US farmer as increased sales were noted. Lots of uncertainty about the exact details of the Phase One trade deal. The energy markets were mostly firmer, Wall Street was on a stronger note, the US$ and the gold market is weaker and the CD$ is a bit stronger.
- The grain markets found strength from talk of a done deal for Phase One of the trade dispute with China.Caution remains in tact from the fact that the deal has not actually been signed yet and lack of clarification from China as to the breakdown of what commodities and how much of what commodities they will be seeking.
- January options expiration takes place on December 22 for canola and December 27 for corn, wheat, soybeans, soymeal and soyoil.
- First Notice Day for January futures takes place on December 31, with all long positions being reported after the close on December 30.
- The newly elected government in Argentina raised export taxes on grains: Soybeans at 30% versus 25% previously with corn and wheat at 12% versus 7% previously.
- The November Cattle on Feed report is scheduled for this Friday at 2 PM Chicago Time.
Corn prices traded higher again today on borrowed strength in the wheat market and optimism over Chinese trade agreement to purchase even more US ag products, of which many are hoping that will include corn and ethanol. China has been auctioning off their reserve corn supplies over the past year, so maybe they will look to replenish their inventory.
- Closes: March at $3.88, up 7 cents, July at $4.00 ¼, up 6 ½ cents, September at $3.98 ½, up 5 ½ cents and December at $4.00 1/4, up 5 cents.
- CIF premiums were steady to 1 cent firmer for December.
- March corn traded above its 50-Day MA of $3.89 but failed to hold at or above that level.
- Weekly export inspections totaled 687 tmt. This compares to trade estimates of 400-650 tmt.
- Spreads: H/K 7 carry, K/N 5 ¼ carry, H/N 12 ¼ carry, N/Z ¼ carry.
Soybean prices traded higher on hopes of increased demand for US soybeans, with the recent chatter about finalizing the Phase One agreement. Soyoil climbed to levels not seen since February of 2018 on ideas of tight supplies. Prices saw light pressure from less beans crushed in November that what the trade was expecting.
- Closes: January at $9.22, up 14 ½ cents, March at $9.36, up 14 ½ cents, July at $9.62, up 14 ½ cents and November at $9.62 ½, up 11 ½ cents. The products were firmer with meal up 4-5 bucks and oil up 54 points.
- CIF premiums were steady to 2 cents firmer for December.
- Weekly export inspections were reported at 1.3 mmt versus expectations for 900-1.6 mmt.
- Argentina bean areas are expected to see good rains during the week with a drier pattern developing the week after.
- Brazil beans have received beneficial moisture and are said to be in good shape.
- NOPA soybean crush for November came in at 165 million bushels, below trade guesses near 171-172 million bushels. Soyoil stocks were reported at 1.4 billion pounds and soymeal exports were reported at 869 tons.
- The canola market traded higher on borrowed strength from related oil markets. Gains were limited from strength in the CD$ and increased farmer selling.
- Spreads: F/H 13 ¾ carry, F/K 27 ¾ carry, F/N 39 ¾ carry, N/X 3 ½ carry, X/F 2 ¾ carry.
Wheat prices rose on hopes of increased demand. With out clarification of just what makes US ag products in the eyes of the Chinese, there was optimism that wheat could possibly make their shopping list. The wheat market has been under serious pressure over the past month, which could have played a part in the rally.
- March closes: Mpls at $5.37, up 11 ¼ cents, Kansas City at $4.60, up 17 ¼ cents and Chicago at $5.49 ¾, up 17 ¼ cents.
- The March Mpls broke through many of its MA’s and settled levels not seen since late October/early November.October 29 close was at $5.43 and November 1 high was $5.48 ¾.
- Weekly export inspections came in at 506 tmt versus trade estimates from 300-500 tmt.
- Last Friday the COT report showed funds short at record 23k contracts in Mpls (as of December 10) and short 24k contracts in KC), which leaves the market vulnerable to short covering rallies.
- Ukraine winter wheat area experienced or is experiencing a very dry fall season, resulting in expectations for a 10% drop in winter wheat plantings.
- Spreads: Mpls H/K 8 ¼ carry, Kansas City H/K 7 ¾ carry, Chicago H/K 1 ¾ carry. Kansas City gained on Mpls with the MWH at a 74 ½ cent premium to the KWH.