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October 19, 2017 : Market Summary

Market Report

Thursday October 19th, 2017

December 17 corn closed up ½ at $3.49 and March 18 closed up ½ at $3.62 ¾. November beans closed up 2 ¼ at $9.86 ½ and January 18 closed up 2 at $9.97. December wheat closed up 2 ¾ at $4.32 ¾ and July 18 closed up 1 ¼ at $4.78 ¼. Crude oil closed down $.71 at $51.55.

Well, at least it didn’t finish lower. Corn actually had a pulse early, trading as much as $.03 higher. The market maintained slight gains for most of the session, but found a little selling into the close, which pared the day’s gains back to fractional levels. Funds likely covered a few shorts taking their overall net position back to 185,000 short futures and options. The early strength in corn was labelled the “Trump Bump”, as news agencies penned stories suggesting the President himself directly intervened to dissuade the EPA from “messing with the RFS”. Rumors had been circulating for the past month that the EPA was looking to ease the compliance burden of refiners in one way or another – either by allowing exported ethanol gallons to count, or by outright reducing biodiesel (and advanced biofuel) mandated volumes. This prompted a political backlash by Midwest Senators, who have been aggressively lobbying against such changes. Though there was no official statement from the White House or the EPA, the stories were enough to rally corn and bean oil, as well as biofuel RIN credits. Ethanol did not respond. In fact, that market actually closed the day 1-2 cents lower. Weekly export sales for corn were as good as advertised, finding 1.255 mmt in new business, which topped the year ago week’s sales for a second time. Mexico was the major buyer of record, taking almost half, while Japan and other Latin destinations filled out the remainder.

The soybean market reversed higher with leadership from the soybean oil market helping to bounce of its initial chart support. Weekly export sales for beans were strong at 1.275 mmt and we backed that up with another daily sales announcement of 384 mt of beans sold to China providing plenty of demand side news. All things considered, a 2-cent rally is not particularly impressive which is reflective of the supply side realities that should continue to create headwinds on strength days. The RFS mandates on biodiesel are intrinsically tied to soybean oil consumption and maintaining current policy would imply increasing our domestic soybean oil usage in biofuels. Last month, we saw the bean oil market sell off sharply from roughly $.36 down as funds liquidated their oversized long position as speculation over whether or when these changes might take place finally led to a rush for the exits. Elsewhere in the news, Informa came out with updated new crop acreage number today where they increased their soybean acres from last month by 1.25 million to 90.347 million.

Spring wheat once again was the leader of the complex. Mpls would finish the day more than a $.05 higher, while Chicago and KC ended the session only a couple cents higher. The theme over the past days has been Mpls stronger than the HRW and SRW wheat markets, and this morning we may have found the reason why as China showed up on the sales report buying two cargoes of HRS. Two weeks ago China popped up on the sales report buying one cargo of HRS. When you combine the Egyptian tender to the strong sales report, the market was given yet another opportunity to rebound and maybe finish the week strong. It was a modest start today, but it was not very convincing.

Anna Kaverman

anna@mercerlandmark.com


October 18, 2017 : Market Summary

Market Report

Wednesday October 18th, 2017

December 17 corn closed down 1 ½ at $3.48 ½ and March 18 closed down 1 ½ at $3.62 ¼. November beans closed down ½ at $9.84 ¼ and January 18 closed down ¼ at $9.95. December wheat closed down 4 ¾ at $4.30 and July 18 closed down 4 at $4.77. Crude oil closed up $.15 at $52.26.

The corn market kept them all snoozing today, down ticking in a two-plus cent range and light volume. Any vigor produced by last week’s positive price reversals appears to be collapsing in a heap of seething disinterest. Fund traders were content to pile on, adding an estimated 8,000 shorts today to take their position back up close to 190,000 short futures and options.  The ethanol section of the weekly EIA report continued the recent trend toward more volatility. Production jumped over 5% this week to 1.019 mil bbl/day, which more than made up for last week’s equally-shocking 4% decline. Roughly 10-15% of plants are breaking even or maybe even losing a little money in the current crush environment. Midwest Senators came away with “warm fuzzy feelings” from their lunch meeting with EPA chief Pruitt Tuesday, but secured precious few concrete promises to shore up RFS support. Support from such Senators is crucial for Trump’s agenda, which gives them a little extra clout in the matter than would ordinarily be expected?  After-hours, wire service reports suggested Trump ordered a “halt” to potential reductions in RFS volumes (thought to be mostly aimed at biodiesel).

The soybean market closed a shade weaker in a quiet, two-sided trade giving us three days in a row of weakness since settling at a recovery high of $10.03 November on Friday. Trade volume on was only 90,000 which is especially light when compared to Thursday’s USDA report day surge of 294,000 followed by 225k the following day. There were no fresh export sales announcements today. Tomorrow we’ll get the USDA weekly export sales report where we are looking for corn and beans sales of 1.0 to 1.2 mmt. Brazilian weather forecasts are suggesting an improvement in conditions for the center to northern growing regions for the back end of October with the improving trend carrying into November – as rains start to break through and temps back off.  This moisture is badly needed and will allow planting and replanting to accelerate. Elsewhere in the news, rumors about the potential for EPA changes to the Renewable Fuels Standard heated up again today with an RFS press conference in IA and a Bloomberg report that the Administration told the EPA to halt any changes to the current mandates. There is a Nov 30 deadline to set the final biofuel quotas for 2018 so some regulatory guidance is very much needed.

Both Chicago and KC wheat were under a little bit of pressure throughout much of the night and that trend continued during the day. Mpls was once again a little stronger and managed to settle the day only around a penny lower. Today’s defensive price action follows two consecutive session’s that saw both Chicago and KC wheat unable to hold early morning gains, so it cannot be too much of a surprise to anyone. Although news has been limited this week, there have been a few headlines that tried to stimulate some buying. Now we have another one with the GASC in for third consecutive week. Their tenders over the past few weeks have seemed to give the market at least a little bit of a spark, however they have been short-lived – something that trade seems to be getting use to as recent efforts to rally have been met with frustration.

Anna Kaverman

anna@mercerlandmark.com


October 17, 2017 : Market Summary

Market Report

Tuesday October 17th, 2017

December 17 corn closed down ½ at $3.50 and March 18 closed down ½ at $3.63 ¾. November beans closed down 6 ¼ at $9.84 ¾ and January 18 closed down 6 ¼ at $9.95 ¼. December wheat closed down 1 ¾ at $4.34 ¾ and July 18 closed down ½ at $4.81. Crude oil closed down $.03 at $52.11.

The corn market didn’t quite complete a “Turnaround”, but did fight off the bears. In the end, futures would close fractionally lower up-front in another relatively subdued day of “action”. The funds were not much involved in today’s trade, and were estimated still net short 175,000 futures and options tonight. Weather influences have been trending a touch bearish to start this week. After some growing areas of Brazil suffered through near-historic early season dryness, forecasters have been building in greater odds of improved weather into November timings. Given some of the extremes seen over the past two weeks, it remains to be seen if some of the early acres will need to be replanted. Such timings are important for the second crop corn in particular, which goes in behind soy once it is harvested. There was some good news on the export front today. USDA reported not one, but two, daily announced sales (115k to Mexico, 146k to Unknown). South Korea picked up a batch of assorted feedstuffs, including 69,000 MT of optional origin corn.

The soybean market continued lower leaving a close for a second consecutive session as we retreat from what appears to be a recovery high with Friday’s settlement above $10. The rally in beans found renewed farm selling that slowed the momentum of what we view primarily as a technically inspired move as the post USDA report buying ran stops but the report itself failed provide any statistical support to sustain those gains. The US farmer wasn’t the only producer to get a nice marketing opportunity as beans priced in Brazilian reals also surged allowing the Brazilian farmer to extend sales as well. Elsewhere in the news, South American crop scout Cordonnier described the start to the Brazil growing season as “problematic” – noting a dry central Brazil and wet southern Brazil, but has stopped short of changing his estimates at 109 MMT of soybean production. He said the crop is still in early stages and noted the blocking weather pattern is expected to break down in some weather models. He characterized the start of the Argentina soybean growing season as average and slowly improving, leaving his soybean production estimate at 55 MMT.

Once again, both Chicago and KC wheat were unable to hold early morning gains and finished the day slightly lower. Mpls was the strongest of the complex finishing slightly higher, following a session on Monday that saw trade the weakest of the complex. On Monday the wheat complex was hoping a few bits of new business would be enough to see some follow through buying after Friday’s gains, but was unable to do so. From the condition reports Monday night we saw most HRW wheat states (except Texas) having planting delays. You could put any spin you want on the reason behind that from weather concerns to the farmers pocketbook. Probably was not enough to produce any buying. After all, soft wheat states are actually ahead of normal. However, the efforts to rally the past few days have been met with frustration. So, now the complex is left with looking for something else to stimulate the buying/support. Recent rallies in Chicago have really struggled between $4.45 and $4.50, so until fresh news surfaces how much of a bounce can we expect to see anyways.

Anna Kaverman

anna@mercerlandmark.com


October 16, 2017 : Market Summary

Market Report

Monday October 16th, 2017

December 17 corn closed down 2 ¼ at $3.50 ½ and March 18 closed down 2 ¼ at $3.64 ¼. November beans closed down 9 ¼ at $9.91 and January 18 closed down 8 ¾ at $10.01 ½. December wheat closed down 3 at $4.36 ½ and July 18 closed down 2 ¾ at $4.81 ½. Crude oil closed up $.41 at $52.14.

The corn market started the week in subdued fashion, down ticking $.02 in relatively light volume trade. The markets started lower Sunday night and pretty much stayed that way all day long. The funds were viewed small net sellers today of about 5,000 corn, which would take their net short back up to an estimated 175,000 futures and options. The weekend was a wet one for a handful of states – Iowa, Illinois, Missouri and Michigan.  Thankfully, there is very little precip in sight over the next five days, which should open up harvest for all but the most saturated areas. After the close, the USDA confirmed a continued sluggish harvest pace to date. Just 28% of the US crop was believed harvested by the USDA into the weekend, advancing only 6% wk/wk, and very nearly half the pace seen this time last year. The report implies 22 million corn acres have been harvested to date. Corn conditions improved one more notch (+1%) to 65% Good-Excellent vs. 74% last year. At this point with combines rolling, condition reports don’t hold much weight with many. On the world scene, the focus remains mostly on Brazil’s planting pace. Hot/dry remains the theme in many locations, hampering efforts to expand plantings, particularly in key province Mato Grosso.

The soybean market turned lower to start the week, unable to sustain last week’s rally back above $10 November which saw producers reward the rally with fresh sales in both old and new crop. Today the market had some positive demand news with a flash sale of 227 mt beans to unknown as well as a strong weekly inspections number and while demand has been able to help cushion the breaks in beans it is not enough to sustain strength in an oversupplied market. The breakout trade in beans opens up the potential to go after our third count at $10.23 November but first you have to contend with $10.00 resistance and that is proving to be a significant challenge at this point. Weekly export inspections in beans came in at 1.770 mmt compared to estimates for 1.250 mmt which is up from 1.490 mmt last week and compares to 2.564 mmt this week last year.  Year to date shipments stand at 7.234 mmt compared to 7.828 mmt this time last year. Weather forecasts for Brazil offer some opportunities for rain a week to 10 days out for the northern growing region and temps are expected to moderate.

The wheat complex saw slightly better price action overnight as trade was looking to build upon Friday’s gains. The rally lasted all of twenty minutes. A $.05 break pushed futures lower and the markets never recovered. Both Chicago and KC bounced between $.01- $.04 lower throughout the day before settling around $.03 lower, while Mpls was a little weaker. For the long term, there was nothing in the crop report last Thursday that was very friendly to wheat, but traders seemed to be leaning a little too heavily on a bearish report. That, combined with an influx of tenders with the lower prices helped give the complex a little spark post-report. The follow through today was not very lasting, but given the fact that recent rallies have really struggled between $4.45 and $4.50 area, how much of a bounce can the market expect to see unless other news surfaces? Egypt was in after the close the past two Monday’s, they were NOT back in today. Crop progress Monday afternoon showed winter wheat planting moving up 12% and is now 60% complete vs 70% this time last year and 71% normal. Winter wheat emerged is seen at 37% vs 25% last week, 45% this time last year and 43% normal. So progress continues to lag everywhere.

Anna Kaverman

anna@mercerlandmark.com


October 12, 2017 : Market Summary

Market Report

Thursday October 12th, 2017

December 17 corn closed up 3 at $3.49 and March 18 closed up 3 ¼ at $3.62 ¾. November beans closed up 26 ¾ at $9.92 and January 18 closed up 26 ½ at $10.02 ½. December wheat closed down 2 ¾ at $4.30 ½ and July 18 closed down 3 ¼ at $4.75 ¼.

Corn traded unchanged to 2¾-3½ cents higher today, bouncing from contract lows in the December contract month following the release of the WASDE report. Most of the strength in corn can be attributed to the rally in the soybean market.

Soybean futures traded 27¼-27¾ cents higher today rallying from a lower bean yield number in today’s WASDE report. The rally in beans sparked a large amount of cash bean selling from producers today.

The wheat markets traded lower today following the release of the somewhat bearish (but expected) WASDE numbers that confirmed large domestic and world wheat stocks.

October 2017 USDA Crop Production, World Supply/Demand Report Headline Recap

US Production

**USDA October US 2017 Corn Production: 14.280 mln bu.; expected 14.2 mln bushels; prev rpt 14.184

**USDA October US 2017 Corn Yields: 171.8 bpa; expected 170.0 bpa; prev rpt 169.9

**USDA October US 2017 Soybean Production: 4.431 mln bu.; expected 4.45 mln bushels; prev rpt 4.431

**USDA October US 2017 Soybean Yields: 49.5 bpa; expected 50.0 bpa; prev rpt 49.9

**USDA October US 2017 Corn Used for Ethanol: 5.475 bln

US Carryout

**USDA October US Corn 17/18 Carryout: 2.340 bln bu; expected 2.29 bln bu; prior rpt = 2.335

**USDA October US Wheat 17/18 Carryout: 0.960 bln bu; expected 0.945 bln bu; prior rpt = 0.933

**USDA October US Soybean 17/18 Carryout: 0.430 bln bu; expected 0.447 bln bu; prior rpt = 0.475

**USDA October US Soyoil 17/18 Carryout: 1.537 bln lbs; prior = 1.757

**USDA October US Soymeal 17/18 Carryout: 300,000 T; prior rpt = 300,000

USDA World Carryout

**WASDE October World 17/18 Wheat Carryout: 268.1 mmt; expected  mmt; prior rpt = 263.1

**WASDE October World 17/18 Corn Carryout: 201.0 mmt; expected  mmt; prior rpt = 202.5

**WASDE October World 17/18 Soybean Carryout: 96.1 mmt; expected  mmt; prior rpt = 96.0

USDA WASDE World Production

**WASDE October China 17/18 Corn Output: 215.0 mmt; prior rpt = 215.0

**WASDE October S Africa 17/18 Corn Output: 12.5 mmt; prior rpt = 12.5

**WASDE October Argentina 17/18 Corn Output: 42.0 mmt; prior rpt = 42.0

**WASDE October Brazil 17/18 Corn Output: 95.0 mmt; prior rpt = 95.0

USDA October 2017 Crop Production – Highlights

Corn Production Up 1 Percent from September Forecast

Soybean Production Down Slightly

Corn production is forecast at 14.3 billion bushels, down 6 percent from last year but up 1 percent from the September forecast. Based on conditions as of October 1, yields are expected to average 171.8 bushels per acre, up 1.9 bushels from the September forecast but down 2.8 bushels from 2016. If realized, this will be the second highest yield and production on record for the United States. Area harvested for grain is forecast at 83.1 million acres, down less than 1 percent from the previous estimate and down 4 percent from 2016.

Soybean production is forecast at a record 4.43 billion bushels, down slightly from September but up 3 percent from last year. Based on October 1 conditions, yields are expected to average 49.5 bushels per acre, down 0.4 bushel from last month and down 2.5 bushels from last year. Area for harvest in the United States is forecast at a record high 89.5 million acres, up 1 percent from September and up 8 percent from 2016.  Acreage updates were made in several States based on a thorough review of all available data.

Anna Kaverman

anna@mercerlandmark.com


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