Afternoon Market Highlights


Highlights

US lawmakers were said to have extended the tax credit for biodiesel now through year 2022.  The bill is expected to be retroactive back to 2018.  Tax increases for Argentina exports are supportive to US exports, until higher prices make the US uncompetitive in the world market. The Ag markets are lacking fresh supportive news. Phase One deal is thought to be signed by both parties early next month.

  • January option expiration takes place at the close this Friday.
  • November Cattle on Feed report is expected to be released on Friday at 2 PM CT.
  • Argentina government looks to raise export taxes on corn beans and wheat (corn/wheat from 12% to 15%, soybeans from 30% to 33%).
  • The Energy markets are mostly higher, the US$ is firmer and the gold marketis a tad weaker, along with the CD$.

Corn

Corn prices were mildly higher on uncertainty about possibly seeing fresh demand from China.  No details yet on what they might buy and how much they might buy, but there is chatter that the details will get spelled out (no timeline announced though).

  • Closes: March at $3.90 up 2; May at $3.96 ½ up 1 ¾; July at $4.02 ¼ up 2; December at $4.02 up 1 ¾.
  • Gulf premiums were 2 cents firmer for this week and steady for next week. ECB basis was weaker on increased farmer selling.
  • A private analyst estimates the 2019 corn crop at 13.568 billion bushels with a yield estimate of 167.4, compared to the USDA at 13.661 bb and a yield of 167.0 bpa.
  • This also compares to 2009 when there was a late harvested crop and North Dakota was at 60% harvested by December and updates were made in the March and May USDA reports.
  • Spreads: H/K 6 ½ cent carry; K/N 5 ½ cent carry; N/Z ¼ cent inverse.

Oilseeds

The soybean market enjoyed higher prices from the rally in the soyoil market. Prices were also supported on hopes for a signed Phase One deal with China. Dry weather continues for Argentina, although forecasts suggest a few rain events to develop next week. Brazil soybean crop is developing nicely from timely rain showers across the area.

  • Closes: January at $9.28 ¾ up 6 ¾; March at $9.40 ¾ up 4 ¾; May at $9.54 ¼ up 4 ¼; July at $9.66 up 4; November at $9.66 ½ up 4.
  • Gulf premiums were 2 cents firmer.
  • Argentina struggles with continued dry weather conditions. A private analyst lowered their soybean production estimate to 52.0 mmt versus 53.0 mmt previously.
  • A private analyst estimates the 2019 soybean crop at 3.540 billion bushels with a yield of 46.8. This compares to the USDA at 3.550 bb and 46.9 bpa.
  • Spreads: F/H 12 cent carry; H/K 13 ¾ cent carry; K/N 11 ¾ cent carry; N/X ¼ cent carry.

Wheat

The wheat market traded both sides overnight and early in the morning. Prices bounced midday with both KC and Chicago trading 4-5 cents higher on a bout of fund short covering. Increased selling was noted in Mpls yesterday (pricing out DP stocks at the elevator).

  • March closes: Chicago at $5.56 ¼ up 6 ½; Kansas City at $4.65 ¾ up 3 ¾; Minneapolis at $5.38 ¼ up 1 ¾.
  • Japan seeks 148k tonnes of optional origin wheat for their routine food tender. The US made the shopping list for 16k white, 9k HRW, and 29k HRS.
  • Paris milling wheat traded lower in consolidating type trade after yesterday’s big rally in the US wheat market.
  • Spreads: Chicago H/K 2 ¾ cent carry; Kansas City H/K 8 ¼ cent carry; Minneapolis H/K 8 ¼ cent carry.