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Afternoon Market Recap for April 18, 2018
Why soybean prices stalled today.
Prices crumble, while corn and wheat found some traction
Soybean prices started Wednesday’s session with some light optimism, testing fractionally higher prices, only to sour as profit takers stepped in, compounded by worries over U.S.-China trade relations. Prices ended down around 0.5% by the close. But wheat prices trended as much as 1.9% higher after rain forecasts for the central U.S. might not deliver as much moisture as initially promised. Corn caught some spillover gains, moving moderately higher.
The weather outside is frightful, as many Farm Futures readers have recently shared in the first 2018 installment of Feedback from the Field. “Cold and wet” has been the mantra from farmers across much of the upper Midwest over the past few days. Moving forward, NOAA anticipates much of the U.S. will experience warmer-than-normal weather on average through June, however.
After starting April at a three-month low, the Dow continues to build strength throughout the month, picking up another 63 points in late morning trading to reach 24,770. Lower inventories of crude oil have those prices at their highest since the summer of 2014, with May futures testing near $68 per barrel. That 2% price jump Monday morning had other energy stocks trending higher, too.
Today, commodity funds were net buyers of corn (+10,000) and wheat (+6,500), but they were net sellers of soybeans (-5,000).
Corn prices enjoyed some spillover strength from wheat gains, tracking almost 0.6% higher. May futures added 2.75 cents to $3.83, while July futures gained 2.5 cents to $3.9175.
Slower farmer sales plus export demand worries left corn basis bids mixed Wednesday, trending as much as 3 cents lower and 5 cents higher across Midwestern locations.
Ahead of Thursday morning’s next round of USDA export data, trade analysts estimate corn exports for the week ending April 12 will range between 27.6 million and 55.1 million bushels.
Ethanol prices trended higher Monday morning, reaching $1.488, after EIA reports declining ethanol output in its latest weekly report. Ethanol production dropped by 25,000 barrels per day from a week ago, reaching a three-month low of 1.009 million barrels per day. And ethanol supplies, at 21.344 million barrels, are at six-month lows.
Grain traveling U.S. railways last week totaled 22,559 carloads, which was 4.6% higher versus the same week a year ago. Cumulative totals for 2018 have reached 338,181 carloads, which is 2.5% slower than the pace of 2017, however.
Preliminary volume estimates were well short of Tuesday’s final count of 525,694 contracts, landing at 243,358.
Soybean prices tested an early rally that crumbled as the day progressed weighed down by profit-taking and trade concerns. May futures lost 4.25 cents to $10.4175, while July futures slipped 4 cents to $10.5325.
Soybean basis bids were largely unchanged Wednesday across Midwestern locations, although they did slump 3 to 4 cents at two Illinois river terminals and 6 cents higher at an Ohio elevator. Barge freight costs are also trending lower this week.
Despite the ongoing trade spat with China, analysts are expecting USDA to report a solid round of exports for the week ending April 12 after private exporters reported multiple large sales last week. For Thursday morning’s report, analysts estimate the agency will announce total sales somewhere between 51.4 million and 80.8 million bushels.
Analysts also estimate USDA will report between 150,000 and 400,000 metric tons of soymeal export sales for last week, with another 12,000 to 34,000 in soyoil export sales.
Due to high prices, South Korea passed on its tender to purchase around 367,000 bushels of non-GMO yellow soybeans in a tender that closed Tuesday. The grain would have been for arrival between June and October.
Preliminary volume estimates were for 213,404 contracts, up around 10% from Tuesday’s final count of 194,772.
Wheat prices have been most sensitive to weather news over the past few sessions, and Wednesday was no exception. With not as much rain as originally anticipated headed to the U.S. Plains, some prices shot up nearly 2%. May Chicago SRW futures were up 9 cents to $4.7525, May Kansas City HRW futures climbed 8.5 cents to $5.08, and May MGEX spring wheat futures added 5.5 cents to $6.1775.
Ahead of Thursday morning’s next round of USDA export data, trade analysts estimate potentially lackluster exports for wheat, with guesses that range between 3.7 million and 20.2 million bushels.
Jordan has purchased 1.8 million bushels of wheat in a tender that closed Wednesday, for shipment in early August.
Algeria has issued a tender for optional-origin durum wheat with a deadline of April 19 and for shipment in July.
Japan received no offers in its buy-and-sell auction for 4.4 million bushels of feed-quality wheat and 9.2 million bushels of feed barley, which closed Wednesday.
China sold nearly 11.5 million bushels of its state reserves of wheat auction Wednesday, which was 15.6% of the total available for sale.
Preliminary volume estimates were for 98,087 CBOT contracts, down moderately from Tuesday’s final count of 139,528.
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