Afternoon Market Highlights
5/21/2020 3:03:05 PM
The row crop prices were weaker on heightened US/Chinese tensions. The wheat market was mixed on crop loss concerns in the EU, Black Sea Region along with beneficial rain events across the Southern Plains and 4-5 good days for planting spring wheat in ND. Crop progress/conditions report, and weekly grain export inspections will be delayed until Tuesday next week.
- There will be a shortened trade day next week with Monday closed in observance of the Memorial Day Holiday. Ag markets will be closed Sunday evening and Monday. Trade will resume Monday evening at 7 PM Chicago Time.
- The energy markets are mixed with crude oil up 53 cents at 34.01/barrel.
- The US$ is up 273 at 99.39, the gold market is down 27 bucks at 1725/ounce, the CD$ is down a hair at 0.71735.
- DJIA rolled over, down 96 at 24479 (24370-24718), S&P down 25-26 at 2943, NASDAQ down 76 at 9299.
The corn market traded in a fairly narrow range ahead of the long holiday weekend. Pressure stems from favorable weather for planting, along with warmer temps and rain events. Weekly export sales were disappointing. The market awaits signs of Chinese interest in US corn. China’s purchases have been mostly non-existent this week.
- Closes: July at $3.18, down 1 ½ cents, September at $3.23, down 1 ¼ cents, December at $3.33, down 1 cent.
- Funds hold a near record short position which could leave the corn market vulnerable to short covering rallies.
- Weekly export sales were reported at 855 tmt (29 tmt cancellations in the new crop category). The trade was expecting sales to be 700 tmt -1.4 mmt.
- The ethanol sector has been percolating, but at a much slower pace that what the trade was hoping for. The crude oil market is higher but is still struggling to regain its full momentum.Feels like this will just take a bit of time to get some legs under it.
- Planting progress was 80% complete through Sunday.Expectations are for the crop to be 95% complete by Monday.
- The first conditions report usually comes once the crop is 90-95% planted. Expectations are that it will be the first week in June.
- China plans to auction nearly 4.0 mmt of their state reserves next week.
- Spreads: N/U 5 ¼ carry, N/Z 15 carry, U/Z 9 ¾ carry, Z/H 12 ¾ carry, Z/N 25 ½ carry.
The soybean market was on the defensive from uncertainty over the continuation of Chinese purchases. Renewed tensions between the US and China have raised concerns about China’s Phase One Agreement to significantly increase their purchases of US goods (which are to include US soybeans). Prices drew additional pressure from mostly favorable weather conditions for the newly planted soybean crop.
- Closes: July at $8.35 ¼, down 11 ½ cents, August at $8.39, down 10 ¼ cents, November at $8.46 ¼, down 7 ¾ cents.
- The products closed lower in sympathy with the soybean market. Soymeal made new contract lows in many months. Soyoil oil was down 26 points.
- Weekly export sales were decent at 1.7 mmt, with most coming from Chinese buys that were announced last week.
- Planting progress was at 53% complete through last Sunday.Progress is expected to be near 60-70% complete by Monday.
- Brazil has been a very aggressive seller of soybeans to China with the sharp drop in the Brazilian Real.Chatter is that they will be out of beans to sell by the end of the year.
- Spreads: N/Q 3 ½ carry, N/X 10 ¾ carry, Q/X 7 ¼ carry, X/F 4 carry, X/H 1 inverse, X/N 5 ½ carry.
The wheat market opened slightly higher but failed to hold at or above those levels. KC and Chicago drew strength from ongoing dryness in EU and the Black Sea Region. Mpls turned lower on a bout of profit taking ahead of the weekend and improving planting progress from this week’s warm/dry weather conditions. Rain events are expected to move across the Northern Plains over the weekend.
- July closes: Mpls at $5.18, down 2 ½ cents, KC at $4.54 ¼, up 2 cent, Chicago at $5.15 ¾, up 2 cents.
- Weekly export sales were reported at 428 tmt, in line with trade estimates of 200-650 tmt.
- Spring wheat planting progress was at 60% complete through last Sunday (ND at 41%). After 4-5 goods days for the farmers of ND I would expect plantings to be near 80% complete (ND at 60%).
- Winter wheat conditions were reported at 52% G/E last week.Would expect them to be unchanged to a percent better after the rains in the Southern Plains area this week.
- EU wheat prices were higher in thin trade ahead of the holiday weekend.Prospects for additional cuts to wheat production in Russia, Ukraine and the EU from extended dryness provided support to the wheat market.
- Russia’s wheat crop was last estimated at 76.2 mmt, down from 77.2 mmt previously. This compares to the most recent USDA estimate of 77.0 mmt. Russia’s wheat production totaled 76.51 in 2019/20........71.69 in 2018/19 and 85.17 in 2017/18.
- Spreads: Mpls N/U 11 carry, N/N 49 ¼ carry, U/Z 13 ½ carry.......Kansas City N/U 7 carry, N/N 39 ½ carry, U/Z 12 carry, Chicago N/U 2 ¾ carry, U/Z 8 ¼ carry.