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Afternoon Market Recap for July 29, 2019, 30.07.19

Corn, soybeans and wheat all in the green to start the week

Grains moved uniformly higher Monday, albeit for different reasons. Markets are showing some weather-related concerns regarding this year’s U.S. corn crop. Optimism for U.S.-China trade negotiations lifted soybeans. Overseas weather could be swiping yield potential in Russia and the European Union, which helped wheat prices move higher.

Expect another week of mild weather across the central U.S. this week, with below-normal daytime highs at least through the rest of the week and into the weekend. Some rain will also reach the Central Plains and eastern Corn Belt this week, although the upper Midwest will remain mostly dry through August 3, according to the latest five-day cumulative precipitation map from NOAA.

With the Federal Reserve likely to cut interest rates for the first time in more than a decade, and with a positive jobs report expected later this week, Wall St. was cautiously optimistic, sending the Dow 40 points higher in afternoon trading to 27,231. Energy futures were mixed, with crude oil picking up 1% gains this afternoon. Diesel faced a more modest climb, with gasoline down moderately. The U.S. Dollar firmed slightly.

Corn prices made modest gains Monday on some technical buying inspired by less favorable forecasts this week across the central U.S. September and December futures each added 2.5 cents to close at $4.17 and $4.27, respectively.

Farmer sales were slow this past week, but corn basis bids fell 2 to 12 cents across multiple Midwestern locations Monday after favorable forecasts are convincing more buyers that there will be ample supplies at harvest to meet upcoming demand.

Corn export inspections moved higher for the week ending July 25, with 25.4 million bushels versus the prior week’s tally of 17.3 million bushels – landing on the high end of trade estimates that ranged between 15 million and 27 million bushels. Japan was the top destination, with 10.1 million bushels.

Ahead of this afternoon’s crop progress report from USDA, analysts expect the agency to hold its corn quality ratings steady from a week ago, with 57% of the crop in good-to-excellent condition.

European Union corn imports are up 67% year-over-year so far in the 2019/20 marketing year after reaching 63.4 million bushels as of July 28.

South Korea purchased 2.0 million bushels of corn in a private deal last Friday, for arrival in early December.

Preliminary volume estimates were for 170,045 contracts, falling 33% below Friday’s final count of 256,004.

Soybean prices edged higher Monday on optimism over U.S.-China trade negotiations, which are taking a step forward this week in Beijing, and with an uptick in volume for U.S. export inspections this past week. August futures added 2.5 cents to $8.8575, with September futures up 2.75 cents to $8.9150.

Soybean basis bids were mostly steady to weak Monday, falling 1 to 2 cents across a couple of Midwestern locations today. An Illinois river terminal proved to be an anomaly Monday after tumbling 12 cents lower.

Total soybean export inspections reached 37.9 million bushels last week, nearly doubling the prior week’s tally of 20.6 million bushels and exceeding trade guesses that ranged between 14 million and 29 million bushels. China’s 22.1 million bushels led all destinations for U.S. soybean export inspections last week.

Ahead of this afternoon’s USDA crop progress report, analysts expect the agency to hold its soybean quality rating steady, with 54% of the crop in good-to-excellent condition.

European Union soybean imports are up 19% year-over-year during the first four weeks of the 2019/20 marketing year after reaching 41.9 million bushels. EU soymeal imports are also up 27% so far this marketing year, with EU palm oil imports slumping 33% year-over-year during the same period.

Preliminary volume estimates were for 198,069 contracts, moving 11% above Friday’s final count of 178,674.

Wheat prices moved steadily higher today over production concerns looming in key overseas regions such as Russia and the European Union. September Chicago SRW futures gained 7.5 cents to $5.0350, September Kansas City HRW futures added 3 cents to $4.35, and September MGEX spring wheat futures picked up 8 cents to $5.3275.

Wheat export inspections fell slightly week-over-week, moving from 16.4 million bushels down to 14.4 million bushels. That was also on the low end of trade guesses that ranged between 12 million and 20 million bushels, with them weekly rate needed to match USDA forecasts moving higher, to 18.3 million bushels. Mexico was the top destination, with 2.9 million bushels.

Ahead of this afternoon’s USDA crop progress report, analysts expect the agency to show winter wheat harvest progress at 81%, up from 69% last week. For spring wheat, analysts expect USDA to report 76% of the crop is in good-to-excellent condition, unchanged from a week ago.

Bucking the trend of some other recent projections, Russia’s IKAR consultancy fractionally raised its estimates for the country’s 2019 wheat production to 2.807 billion bushels but said lack of rains in some key production regions could lead to downgrades moving forward.

Over the first four weeks of the 2019/20 marketing year, European Union soft wheat exports are down 22% from a year ago after reaching 28.0 million bushels. EU barley exports are down 58% over the same period.

In Iraq, the agriculture ministry says the country’s wheat production has reached 174.5 million bushels this year.

Algeria issued a tender to buy 1.8 million bushels of milling wheat from optional origins, although the country often buys much more than the nominal volume listed in these tenders. The grain is for shipment in September.

Preliminary volume estimates were not immediately available from CME.

Afternoon Market Recap for July 29, 2019

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