Afternoon Market Highlights
2/13/2020 2:30:57 PM
Boy! Not a lot different to say, that we have not already said over and over again. The corn market is rangebound in search of some fresh supportive news, the soybeans continue to perk up on hopes for a Chinese buying spree and wheat continues to be unhappy on plentiful world supplies and mostly routine export demand.
- There will be no grain markets on Sunday night or Monday, in observance of the President’s Day Holiday. Trade will resume Monday evening at 7 PM CT.
- The USDA Ag Forum is scheduled for February 20 & 21.
- March options expiration takes place at the close on Friday, February 21st.
- First Notice Day is scheduled for Friday, February 28, with all long positions reported after the close on February 27th.
Corn prices were on the defensive from big South American crop ideas. Prices drew additional pressure from technical selling and weakness on Wall Street. Export sales are still lagging as we are just over the 50% mark with a little over 6months left in the marketing year.
- Closes: March at $3.79 ½, down 3 ½ cents, July at $3.88 ¾, down 1 ½ cents, September at $3.87 ½, down 1 ¼ cents and
- Weekly export sales came in at 969 tmt, in the upper range of the trade estimates but did not quite hit the 1.0 mmt mark.
- The Rosario Grain Exchanged raised their Argentine corn production estimate 1.0 mmt to 50.0 mmt. The BA Grain Exchange pegs the Argentine crop at 49.0 mmt.
- Agroconsult estimates the Brazilian Safrinha corn crop at 74.7 mmt, up from 74.0 mmt previously.
- Spreads: H/K 5 carry (consider rolling short March hedges to the May at current levels), H/N 9 carry, N/Z 3 ¼ carry, Z/N 14 ½ carry (widest has been 23 ¼ cents carry).
The soybean market opened lower on worries that China will delay their proposed buying spree and the ongoing spread of the coronavirus. Prices turned higher on reports that China has put nearly 80% of their work force back in operation and renewed hopes of increased demand from China. The funds were said to have a short position in the soybean market, leaving some room for short-covering spurts. Position squaring was noted, ahead of the President’s Day Holiday on Monday and the potential opening of the Chinese markets next week.
- Closes: March at $8.96 ¼, up 3 ¾ cents, July at $9.18, up 3 ¼ cents, August at $9.21 ¾, up 2 ¾ cents and November at $9.23 ¾, up 2 ½ cents. The products were mixed with meal up 20 cents and oil down 31 points.
- Weekly exports came in at 645 tmt for beans, below the trade estimates. Mela sales were at 234 tmt and oil sales were at 39 tmt.
- The Rosario Grain Exchange raised their Argentine soybean production estimate 1.0 mmt to 55.0 mmt. The BA Grain Exchange did not report on the Argentine soybean crop at this time.
- Agroconsult estimated the Brazilian soybean crop at 126.3 mmt, up from 124.3 mmt previously. This compares to 125.0 mmt by the USDA earlier this week.
- Canada could see significantly lower soybean acres for 20/21 in Manitoba and Saskatchewan because of less than favorable weather conditions and declining yields over the past few years.
- Yields in Manitoba were said to have gone from 40 bushels per acre in 2015-2016 to 28 bushels per acer in 2019 and Saskatchewan has only been able to muster yields of 10-20 bushels per acre in much of the area. Edible beans and peas are expected to take over the acres not planted to soybeans.
- Spreads: H/K 9 ¾ carry (definitely going the wrong direction for the shorts). Consider rolling short hedges at current levels, or at least some). H/N 21 ½ carry, N/X 6 carry, X/F 3 ½ carry.
Wheat prices slumped on technical selling, plentiful global supplies and spillover weakness in the corn market. Prices drew additional pressure from strength in the US$.
- March closes: Mpls at $5.26 ¾, down 4 ½ cents, KC at $4.66 ¾, down 4 ¼ cents and Chicago at $5.44 ¼, down 3 ¼ cents.
- Weekly export sales came in at 643 tmt, the top end of the trade estimates.
- Jordan re-tenders for 120k tonnes of optional hard mill wheat.
- Japan is in for their routine food tender this week. The breakdown consists of 15k US spring, 19k US HRW, 49k Canadian and 27k Australian.
- Spreads: Mpls H/K 9 ½ carry, I am still in the camp that we can get a dime on this one.I am not thinking many will risk taking delivery and end up with two grade spring wheat and rally low falling numbers.