It was a risk-off day for commodities on Thursday, with energy, metals and grains under pressure, the latter still feeling the sting of Wednesday’s bearish USDA report. This is despite the U.S. dollar index that reached two-week lows on weaker-than-expected inflation data. Hurricane Florence has been downgraded, which has eased concerns in the crude oil market. Equities are trading higher.
Midday: Trade is lower at midday after mixed overnight and early morning change.
Corn trade is 1 to 2 cents lower with trade holding support at the previous low by a quarter cent on the December contract, but we remain near the contract low at midday. Outside markets are providing light spillover pressure.
Early harvest should begin to expand with SE Nebraska/NE Kansas/NW Missouri seeing more progress. Ethanol margins remain tight with futures still hanging around 1.28 with slightly lower production, and higher stocks this week.
Corn basis has held up pretty well in recent days but more harvest pressure will work in but the futures break may limit pressure in the near term. On the WASDE report yesterday the USDA yield estimate went up to 181.3 bushels per acre vs. 177.7 expected, with old crop carryout at 2.002 billion bushels, down 25 million from last month, but new crop up at 1.774 billion bushels up from 1.684 billion bushels last month.
World stocks were 157 million metric tons, up from 155.5 million metric tons. The weekly export sales this morning were at 774,200 tons versus expectations of 1 to 1.5 million metric ton range. The news is not what we call friendly, so new lows seem to be in the cards. Most fundamental arguments are that corn has good value at or below our contract low.
On the December chart support is at the low at $3.50 1/4 with the 10-day at $3.62.
Soybean trade is 2 to 3 cents lower at midday with trade a dime below the overnight high. Meal is $2 lower and bean oil is down 5 points. Outside markets are negative.
Soybean basis is expected to see more pressure as storage space will be at a premium once harvest gets rolling along with the slight bounce in the board. Crush margins remain strong with the recent meal rally, along with outstanding biodiesel margins.
Early planting in South America will be getting underway soon with conditions on the dry side going in, and the Brazil and Argentina currencies remain historically cheap but showing some strength this week. U.S. and Brazil offers are near parity to China even with the tariffs.
The WASDE report moved yield to 52.8, up 1.6 from last month and new crop carryover up at 845 million bushels was not friendly market news. A combination of short profit taking and buying beans versus selling corn spreading has been some of what has been talked about for the market bounce following the USDA bigger supply side numbers. The weekly export sales were 693,500 for beans, within the range of expectations.
On the November chart support is fresh lows at $8.21 scored yesterday, with the 10-day at $8.39 and the 20-day at $8.53 noted resistance levels.
Wheat trade is 2 to 5 cents lower at midday with trade unable to sustain strength. The world numbers remained ample, as expected, on the USDA estimates yesterday morning. The US still struggling to secure export business. The weekly export sales were only 387,600 tons.
The US dollar is chopping along at the lower end of the range with fall offers likely to get more export interest than nearby ones. Russia is expected to catch some rain in the near term while they try to cut spring wheat and plant winter wheat with some snow in Siberia. Australia looks to have more mixed weather in the near term with longer term dryness still an issue as we get closer to harvest there, and crop expectations still dropping.
On the December Kansas City chart we have support at the lower Bollinger Band at $4.95 with resistance the 10-day at $5.25.