Afternoon Market Recap for May 30, 2018

May 31st, 2018


Category: Commentary

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USDA threw some bullish corn crop news into the mix late Tuesday, which weighed corn prices down all Wednesday. Soybean prices continue to be hampered by a lack of progress regarding U.S.-China trade tensions, meantime, and wheat prices are hampered by improving weather forecasts.


Above-normal temperatures the rest of this week and weekend could give way to more seasonally average weather early next week. The latest three-day rainfall maps show moderate rainfall possible in Nebraska, the Dakotas and the Ohio River Valley Thursday through Sunday.


The latest ENSO alert from NOAA expects ENSO-neutral conditions to remain present through the fall, with El Niño conditions more probable this winter.


The Dow bounced back from big losses yesterday, picking up 325 points in early afternoon trading to reach 24,687, thanks in part to strong-performing energy stocks. Energy futures also spiked higher, with crude oil up more than

2% in early afternoon trading to cross $68 per barrel. The U.S. Dollar softened moderately.

Corn prices slumped Wednesday, after technical sellers stepped in due to bullish news from yesterday’s crop progress report. July and September futures each fell 6.5 cents to close at $3.9350 and $4.0250, respectively.


Corn basis bids were steady at most Midwestern locations but firmed 1 to 3 cents in some areas thanks to waning farmer sales after July futures fell back below $4.


The latest USDA Crop Progress report, released Tuesday after the grain markets closed, says that corn planting has reached 92% as of May 27 – up from 81% the week prior and a bit ahead of 2017’s pace and the five-year average, both at 90%. Corn emergence in 2018 is also slightly ahead, at 72%.


USDA began tracking corn crop condition this past week, too – and the agency thinks this year’s crop is off to a strong start, with 16% of the crop rated excellent and another 63% rated good. That total good-to-excellent rating of 79% was significantly higher than industry expectations of 72% and 2017’s start of 65%.


Turkey has purchased 7.9 million bushels of corn from international tenders that closed Tuesday and for shipment in early June.

South Korea issued an international tender for 2.8 million bushels of corn originating from either South America or South Africa, for arrival in late August.


Several ethanol and farm groups (including NCGA) are suing the EPA over the agency issuing controversial “hardship” exemptions to several oil refineries from complying with biofuel requirements.


Preliminary volume estimates were for 479,063 contracts, up 20% from Tuesday’s final count of 398,775.


Soybean prices continue to stress over unresolved U.S.-China trade tensions, with the latest shot fired from President Donald Trump at his own U.S. Commerce Secretary Wilbur Ross, calling the 80-year-old “past his prime” ahead of Ross’ trip to China this weekend. July futures were down 7.5 cents to $10.23, while August futures dropped 7.25 cents to $10.2775.


Soymeal prices also trended about 1% lower, with soyoil contracts ticking nearly 1% higher.


Soybean basis bids were mostly steady across Midwestern locations but did slip 2 to 3 cents lower at two river terminals.


Soybean planting progress, now at 77% complete, is even further along last year’s pace of 65% and the five-year average of 62%. Soybean emergence is also tracking ahead, with 47% this year versus 34% in 2017 and a five-year average of 32%.


Iraq issued an international tender to buy 30,000 metric tons of soyoil from optional origins and for shipment in September.


Preliminary volume estimates were for 276,343 contracts, up moderately from Tuesday’s final count of 223,694.


Wheat prices dropped Wednesday as USDA upgraded the 2017/18 winter wheat crop’s quality ratings, with more rain in the Plains possible over the next several days. July Chicago SRW prices tumbled 14.5 cents to $5.22, July Kansas City HRW prices dropped 15.5 cents to $5.41, and July MGEX spring wheat prices fell 16.5 cents to $6.1225.


The winter wheat crop is progressing physiologically, according to Tuesday afternoon’s USDA Crop Progress report, with 73% of the crop now heading. That’s not significantly behind the pace from a year ago (79%) or the five-year average (75%).


Crop quality continues to edge higher as well, according to USDA, with 38% of the crop rated good to excellent, versus 36% the week prior. Large portions of the winter wheat crop continue to struggle, meantime, with 28% rated fair, 20% poor and 14% very poor.


Spring wheat planting is nearly complete this year, reaching 91% as of May 27. That’s slightly ahead of the five-year average of 89%, but still can’t match 2017’s pace of 95%. Of that, 63% of the crop is emerged.


Ukraine grain exports for 2017/18 are down around 10% from a year ago. Current exports include 595.2 million bushels of wheat, 626.0 million bushels of corn and 192.4 million bushels of barley.


China sold 5.8 million bushels of its state reserves of wheat at auction Wednesday, which was less than 8% of the total available for sale.


Preliminary volume estimates fell to 175,996, dropping 31% from Tuesday’s final count of 256,881.

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