Afternoon Market Highlights
1/29/2020 2:29:06 PM
The grain markets were on the defensive on lack of fresh supportive news and technical selling in modest volume. The Managed money crowd seems to have moved to the sidelines to assess their next move. The big unknown is whether the Chinese virus will deter them from following through on their pledge to increase purchases of US ag products.
- Energy markets are mostly weaker with crude oil down 30 cents at $53.18/barrel.
- The US$ moved higher, popping up over 98 points, the gold market is stronger, up 6-7 bucks at 1579/ounce and the CD$ is weaker at 0.7577.
- The DJIA up 92 at 28815, S&P down 1 at 3277 and NASDAQ up 34 at 9303.
- The USMCA trade agreement was thought to be signed by President Trump today.
The corn market traded lower on a bout of profit taking and spillover weakness in wheat. Losses were limited from technical buying and improving demand. Farmers still waiting to get in the fields to harvest the balance of the corn.
- Closes: March at $3.84 ¼, down 2 ¼ cents, July at $3.94 ½, down 2 ¾ cents, September at $3.92, down 2 ¼ cents and December at $3.95 ¼, down 2 ¼ cents.
- Weekly ethanol production declined 20k barrels per day to 1,029,000 barrels per day. Stocks rose slightly to 24.2 million barrels.
- South Korea bought 133k tonnes of US corn.
- Argentina’s corn crop looks ok for the moment, but forecasts suggest a drier weather pattern to develop next week. Ideas are that there could be significant crop losses if dryness continues across Argentina.
- Average trade estimates for tomorrow’s export sales report: 600 tmt-1.3 mmt.
- Spreads: H/K 5-5 ¾ carry......would like 6 cents but may not get back to 6-7 cents till mid- February. Perhaps we see what comes of the Feb 11 USDA monthly S&D report. Consider having order in place at 5 ½ and 6 cents.
Soybean prices were lower on lack of Chinese demand for US soybeans in modest volume. Losses were kept at bay as the bargain buyers surfaced. Brazil is expected to see a drier pattern develop over the weekend, which should allow harvest activity to pick up in the northern areas.
- Closes: March at $8.93, down 2 cents, July at $9.20 ¾, down 1 ½ cents, August $9.25 ¾, down 1 ¾ cents, November at $9.29 ½, down 1 cent. The products were mixed with meal down 1-2 bucks and oil up 6 points.
- Soyoil opened lower but got some legs form strength in the Malaysian palm oil market.
- Average trade estimates for tomorrow’s export sales report: 400 tmt-1.1 mmt for beans, 200-500 tmt for meal and 8-40 tmt for soyoil.
- Spreads; H/K 14 carry, not a bad place to start rolling short hedges to the May. The carry has been around 7 cents a month for much of the past year.
Wheat prices traded lower, with KC taking the lead to the downside from recent rain events. Chicago March dipping down toward last week’s low of $5.60. Egypt is in for a jag of optional origin wheat for LH March shipment. This comes after they have ample supplies until June and at the same time have lock in bin space for another 330k tonnes of wheat.
- March closes: Mpls at $5.35 ¾, down 6 ½ cents, KC at $4.72, down 10 cents, Chicago at $5.62 ½, down 7 ½ cents.
- Average trade estimates for tomorrow’s export sales report: 300-750 tmt.
- Spreads: Mpls H/K 9 ½ carry, consider rolling some at current levels but would like to see if we could get a dime out this.