Grains Futures Prices
- Daily Technical Spotlight - March Soybeans
Bulls fade badly as technical damage inflicted to suggest retest of December low.
- Adding to My Bearish Soybean Oil Spread
Soybean Oil formed a bearish engulfing candle on Tuesday
- Middle Class Tax Cut on the Horizon? Great News! The Corn & Ethanol Report 01/22/2020
We started the day with MBA Mortgage Applications coming in at -1.2% with the previous marked at 30.2% while the MBA 30-Tear Rate came in [...]
Futures Market News and Commentary
Wheat retreated from the double digit gains on Tuesday, with HRW futures the weakest. KC wheat futures closed down by 7 1/2 cents, and Chicago wheat futures were down by 3 3/4 cents. MGE HRS wheat futures closed with losses of 5 to 6 3/4 cents in the front months. Impacts on wheat production and output from the Australian bush fires have not been calculated yet, but approximately 16 million acres have been burned so far with at least some portion of that crop land. Algeria purchased at least 400,000 MT of optional origin wheat for delivery in March. Japan issued a tender for 108,926 MT of wheat, with 82,692 MT of U.S. specific. Results are expected tomorrow.
Mar 20 CBOT Wheat closed at $5.77 3/4, down 3 3/4 cents,
Mar 20 KCBT Wheat closed at $4.92 1/2, down 7 1/2 cents,
Mar 20 MGEX Wheat closed at $5.55 1/2, down 6 3/4 cents,
--- provided by Brugler Marketing & Management
Soybean futures closed with red on the board as futures were down 2 to 2 1/4 cents. Soy meal futures were down by $1.20/ton in the March futures. March bean oil futures were 27 points higher. Malaysian palm oil was up 87 ringgits, yesterday there was reporting of Indian ports full 30,000 MT of unloaded palm oil, as customs were blocking the freight that had been purchased prior to the import curb. MPOA reported that the Jan 1-20 palm oil production was down 17%. Argentina’s Vicentin SAIC halted soybean crushing last month and is still re-organizing. EPA reported the D4 RIN production in 2019 totaled 4.13 billion gallons, with 2.57 billion generated by domestic producers.
Mar 20 Soybeans closed at $9.13 3/4, down 2 1/4 cents,
May 20 Soybeans closed at $9.27 1/2, down 2 1/4 cents,
Jul 20 Soybeans closed at $9.41 1/4, down 2 1/4 cents,
Aug 20 Soybeans closed at $9.46, down 2 cents,
Mar 20 Soybean Meal closed at $297.90, do... Read more
Corn ended the Wednesday session mixed. July futures remained UNCH, there were 3/4 cent losses in the Sep contracts, and nearby Mar and May posted gains. The EIA’s weekly update containing ethanol production data will be delayed by a day due to the MLK federal holiday on Monday. The national corn basis from cmdtyView was at -0.1388 for 01/22. Compared to last year it’s .1891 cents firmer, and 9 out of the past 10 trading days it has tightened. The latest rounds of RIN generation were released, non-cellulosic (corn based D6) ethanol received 1.286 billion RINs from December production. The year’s total was 14.7087 billion gallons, and an average monthly generation rate of 1.225 billion. Total RINS for 2019 topped 19.75 billion gallons.
Mar 20 Corn closed at $3.88 3/4, up 1 1/4 cents,
May 20 Corn closed at $3.94 1/4, up 3/4 cent,
Jul 20 Corn closed at $3.99 1/4, unch,
Sep 20 Corn closed at $3.98, down 3/4 cent,
--- provided by Brugler Marketing & Management
As I talked about on my website Wednesday morning, Tuesday was not a good day for the soybean market. Coming out of a U.S. 3-day holiday weekend, hopes were high that follow-through buying from Friday would be seen. However, Friday’s rally in soybeans wasn’t as impressive as what was seen in the neighboring corn market, if for no other reason than soybeans did not see the commercial buying that drove corn to double digit gains. In fact, futures spreads closed flat to a slightly stronger carry indicating the commercial side of soybeans was actually selling. Additionally, trade volume was down once again indicating the buying that was there wasn’t enthusiastic. Then came Tuesday’s sharp sell-off driven by strong selling from both noncommercial and commercial traders. Regarding the latter, not only did futures spreads show a stronger carry, with the March-to-May closing at 13 3/4 cents and covering roughly 61% of calculated full commercial carry (based on CME’s 8 cents per bushel per month storage rate), but the cmdty National Soybean Basis Index (NSBI, weighted national average) weakened as well. The latter is the more concerning given the normal inverse relationship between basis and futures. Yet, Tuesday’s NSBI was calculated at 55 1/4 cents under March futures as compared to the previous Friday’s calculation of 55 cents under. Granted, this isn’t a huge move but the fact it weakened at all while following the plummet in futures has to be a bit disheartening for market bulls. Particularly with Brazil’s harvest drawing closer every day. Darin Newsom President Darin Newsom Analysis Inc.
This was the week that was for U.S. ag markets, starting with the previous Friday’s (January 10) overhyped USDA monthly Supply and Demand, WASDE, and Quarterly Stocks reports. Of the three, the one receiving the least attention, and possibly rightfully so this year, was the Q1 stocks number (as of December 1) of 3.3 bb that in years gone by would’ve been enough to lock the market limit down at least one day. Why, you ask? If we apply average demand over the remaining three quarters of the marketing the Q1 stocks number would project ending stocks of about 1.1 bb. This past Wednesday was signing day of the phase-one trade agreement between the United States and China, an agreement that prompted an immediate announcement from China’s Vice Premier Liu stating China would import U.S. ag products if market forces were favorable, other commodities could be substituted, and it would not affect the country’s other ag product suppliers (read this as Brazil for soybeans). This contributed to the 16-cent lower weekly close by the nearby March contract. Given the break in futures, it isn’t overly surprising the cmdty National Soybean Basis Index (NSBI, weighted national average) strengthened 1 cent for the week. The U.S. continues to ship soybeans while China waits for Brazil’s next crop, with harvest expected to begin in mid to late February. Until combines start rolling in South America, look for the NSBI to remain stable, though plateauing near this past Friday’s 55 cents under (March) level. Darin Newsom President Darin Newsom Analysis Inc.
One key aspect of the market I was anxiously awaiting following the 13-cent sell-off in corn futures Thursday was the calculation of the cmdty National Corn Basis Index (NCBI, weighted national average). Recall from numerous discussions over the past year how the strength of the NCBI has reflected the tighter real supply and demand situation of corn, both domestic and global, often flying in the face of what is released in government reports. Also remember that there is often an inverse relation between basis and futures as grain merchandisers either allow the futures market to do some of the work for them or push back against futures to keep enough supplies coming in to cover demand. That’s why I was interested in Thursday’s NCBI. Would merchandisers push basis after a double-digit meltdown by the futures market? The answer was – No. A look at the NCBI daily chart shows Thursday’s calculation at 14.36 cents under the March as compared to Wednesday’s 14.29 cents under. If I round to the nearest quarter-cent, as I normally do when commenting on basis, the NCBI could be considered unchanged from Wednesday. However, the number was actually fractionally lower. I know, I’m splitting hairs when talking about 7-hundredths of a cent. The bigger picture, though, is the NCBI did not strengthen following a breakdown in the futures market. This could be considered an early warning that the NCBI is possibly peaking, a waving flag we need to be aware of and keep a close eye on if continuing to hold hedges against 2019 production. Darin Newsom President Darin Newsom Analysis Inc.