DTN Grain Close: Optimism on U.S.-China Trade Sends Markets Higher

Soybean harvest. ©Debra L Ferguson Stock Photography

The recent price break has made U.S. corn more competitive into Asian destinations and spurred Mexico to hop in and secure some U.S. ag products as well. A large fund short in all of the markets, along with a bit more optimism regarding a China trade solution, encouraged some short-covering on Tuesday.

 

Corn is 4 to 5 cents higher, soybeans are 6 to 7 cents higher, and wheat is 2 to 6 cents higher. Outside markets are mixed.

CORN

Corn futures are 3 to 5 cents higher at midday with light buying after crop ratings declined and oversold conditions remain firmly in place. Ethanol margins will remain under pressure until we see improvement on the policy or margin side of things with futures slightly higher and unleaded firmer again. Weather remains a short-term non-issue with warm temps for many, along with short-term rains.

Corn basis remains mixed to weaker overall with harvest getting going in more spots but still too far away in some areas with board prices low. USDA announced another 278,000 metric tons (mt) of corn sold to Mexico after seeing sales Monday as well. Weekly crop progress showed 55% good to excellent, 14% poor to very poor, 89% in the dough vs. 97% on average, 55% dented vs. 77% on average, and 11% mature vs. 24% on average.

On the December, nearby chart support is the $3.52 1/4 low with the lower Bollinger Band at $3.43 below that with resistance the 10-day average at $3.63, with the 20-day next at $3.67.

SOYBEANS

Soybean futures are 6 to 8 cents higher with light buying as trade remains firmly range-bound as we head towards the report. Meal is $1.00 to $2.00 higher and oil is 10 to 20 points higher. Crush margins remain positive overall, with oil staying towards the upper end of the range, and meal holding support again to start the week.

Basis remains flat overall. South American currencies remain weak as planting season draws closer. The weather looks to be a short-term non-issue for soybeans as well with maturity the biggest concern with short-term warmth helping. Mexico was an active buyer of soybeans and meal Tuesday with a total of 138,000 mt of soybeans and 195,750 mt of meal sold. Weekly crop progress showed 55% good to excellent, 12% poor to very poor, and 92% setting pods vs. 99% last year.

November chart support is the lower Bollinger band at $8.53, with resistance the 10-day average at $8.65, which we are testing at midday.

WHEAT

Wheat futures are 2 to 6 cents higher with Minneapolis trade leading at midday. The KC/Chicago spread is at 76 cents, towards the top of the recent range but coming off a test of the highs this morning. The corn/HRW spread is wider, back to 44 cents.

KC wheat is now back to competitive on the world market, but has traded back out of rations a bit with Russian exports still working to get moving; a more sustained break is needed in the dollar to help the U.S. Spring wheat harvest is moving into the home stretch. Spring wheat harvest is 71% complete vs. 87% on average.

The December KC chart support is just above the 20-day average at $3.99 3/4, and the 10-day average at $3.96, with the upper Bollinger band the next round up at 4.13.

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