Afternoon Market Highlights
1/2/2020 2:42:10 PM
A good ay in the grain markets as farmers entered the New Year taking advantage of the higher prices. There is much speculation in the US that the Phase One Trade Agreement will be signed and the Chinese buying spree will begin. There has been little or no acknowledgement from the other side of the equation to that affect. The purchase details have not yet been released and perhaps the details may not ever come. Next week should see most of the trade back in the game, after the past couple of weeks of thin, holiday trade activity.
- The US$ turned higher, trading up 416 at 96.80, the gold market is 7-8 bucks higher at $1,530/ounce and the CD$ is a bit weaker at 0.7701 (high earlier today was 0.77135).
- The Energy markets are slightly higher with crude oil up 8 cents at $61.13/barrel.
- Weekly export sales report out tomorrow at 730 CST.
- Commitment of Traders report will be delayed until Monday afternoon.
- Biggies on the horizon are the Jan 10th USDA production, grain stocks and winter wheat seedings reports and the Jan 15 signing of the Phase One Trade Agreement between the US and China.
- Other market influencing reports out next week are CONAB’s Brazilian production update and the Malaysian Palm Oil production report on the ninth.
Corn prices were higher on uncertainty about the size of the US corn crop and hopes for increased demand for corn. Gains were limited from lack of details about what China plans to purchase from the US and improving weather conditions in SA. The US$ was also stronger, rebounding from weakness earlier in the week.
- Closes: March at $3.91 ½, up 3 ¾ cents, July at $4.03 ¼, up 2 ¼ cents, September at $4.02 ¼, up 1 ¼ cents and December at $4.03 ¾, up 1 ¼ cents.
- The Dec contract saw a low of $3.87 ¾ on Dec 11 and a high of $4.04 ¾ today, a 17-cent move to the upside. The March contract is still cradling the $3.85-$3.95 range.
- Average trade estimates for weekly export sales: 300-775 tmt.
- Argentina’s corn planting is estimated at 83.5% complete. Recent rain events are thought to be beneficial to the newly seeded corn crop.
- Spreads: H/K 6 ¼ carry (snuck in a bit today), H/N 12 ¼ carry, N/Z ¼ carry.
Soybean prices traded 1-7 cents higher before settling around a penny or so higher at the close. Hopes for big China buys of US beans after the Jan 15 signage and strength in the palm oil world kept the market supported. The market has seen a big move to the upside over the past couple of weeks in thin, holiday trade and weather worries in Brazil and Argentina. Gains were limited from improving weather conditions in SA, a stronger US$ and a few ideas that the market is overbought.
- Closes: March at $9.56 ¼, up ¾ cent, July at $9.81, up 1 ¼ cents and November at $9.80 ¾, up 2 cents.
- Average trade estimates for weekly export sales: 350 tmt-1.0 mmt for beans, 75-250 tmt for meal and 5-30 tmt for soyoil.
- Brazil soybean exports for December were reported at 3.44 mmt, compared to 5.16 mmt in November and 4.07 mmt a year ago.
- Argentina’s soybean plantings are estimated at 84% complete, with recent rains improving crop development in much of the soybean area.
- Consider taking advantage of the Compass Contracts “Price Builder Bonus” with bushel pricing (for November 20 beans) starting Jan 6 at $10.37 with a $9.35 trigger. Contact your broker for more detailed information.
- Spreads: H/K 13 ¼ carry, H/N 24 ¾ carry, N/X 1 cent inverse and X/F 2 ½ carry.
The wheat market traded higher on world crop production concerns (from adverse weather conditions in Russia, Ukraine and Australia). Prices drew additional support form hopes that US wheat hits the Chinese shopping list of US ag products. Funds were long Chicago and short KC and Mpls going into the new year. Prices retreated near the close on a bout of profit taking after seeing gains over the past several sessions.
- March closes: Mpls at $5.58 ¼, down 2 ¾ cents, KC at $4.84, down 2 cents and Chicago at $5.60 ¼, up 1 ½ cents.
- December 2020 wheat hit $6 and March 2021 hit $6.11, before the pullback at the close.
- Average trade estimates for weekly export sales: 250-800 tmt.
- Argentina’s wheat harvest is pegged at 92% complete with total production estimated at 18.5%. The last USDA estimate was at 20.0 mmt.
- EU wheat prices were stronger on borrowed strength in the US wheat market.
- Spreads: Mpls H/K 9 ¾ carry (consider rolling short March hedges at 10-12 cents), Kansas City H/K 8 ½ carry, Chicago H/K 3 ¼ carry.