Floor Talk, May 28, 2020
The International Grains Council released new crop estimates Thursday.
The outlook for the U.S. 2020 corn crop is lifted by 3.0 million tons, to 345 million tons vs. 366.0 mmt. last year.
Total 2019/2020 grains consumption is predicted to climb to a new high of 2,188m t (+1% y/y), including gains for food, feed and industrial uses. Global stocks of grains are projected to contract by 26m t, to a five- year low of 594m. The fall is entirely linked to a drop in maize inventories (-39m t y/y), including reductions in the USA (-7m), China (-21m) and the EU (-2m)
The Council’s outlook for world soybean output in 2019/20 is maintained at a peak of 341 million tons, the 5% y/y contraction reflecting a plunge in U.S. output. Consumption is seen broadly unchanged from before but, due to a higher figure for opening stocks, carryovers are lifted by 3 million tons, to 35.0 million. This is still almost one-third lower y/y, mostly tied to a steep drawdown in the US. With a modest upgrade for forecast deliveries to China offset by reductions for others, the trade projection is kept at 151 million tons, steady y/y.
At the close:
At the close, the July corn futures finished 7¢ higher at $3.27 1/2. Dec. corn futures ended 5 3/4¢ higher at $3.40 1/2.
July soybean futures closed 1 1/2¢ lower at $8.47. November soybean futures closed 1/2¢ higher at $8.56.
July wheat futures ended 10¢ higher at $5.14.
July soymeal futures closed $2.30 per short ton higher at $284.30. July soy oil futures are 0.21 cent lower at 27.39¢ per pound.
In the outside markets, the NYMEX crude oil market is $1.21 per barrel higher at $34.02 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 180 points higher.
Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that the corn market finally got out of its 5¢ trading range.
"Couple things at play here, today, pushing corn. It seems like beans and wheat are playing follow the leader today. With the funds carrying a fairly hefty short position - call it 250,000 contracts short - you may be seeing a bit of short covering here. Weather forecast is calling for hotter and dryer in parts of Western Corn Belt.
The Energy Information Administration's ethanol report, this morning, continued to show a drawdown in stocks, with demand outpacing current outputs, she says.
"We've thrown a lot of bad news at the corn market the last few months and for the meantime it seems there isn't more to throw at it. This time of year, we typically build a little risk premium into the grain markets and maybe, just maybe, we can get some more juice out of this move," O'Connell says.
From a technical view, a close above $3.30 per bushel could invite a move to $3.40, where the next resistance is parked, O'Connell says.
At midsession, the July corn futures are 8¢ higher at $3.28 1/2. Dec. corn futures are 6¢ higher at $3.40 1/2.
July soybean futures are 4 1/2¢ lower at $8.44. November soybean futures are 2 3/4¢ lower at $8.52 3/4.
July wheat futures are 8¢ higher at $5.12 3/4.
July soymeal futures are $1.60 per short ton higher at $283.60. July soy oil futures are 0.39 cent lower at 27.21¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.03 per barrel lower at $32.78 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 123 points higher.
In early trading, the July corn futures are unchanged at $3.20 1/2. Dec. corn futures are 3/4¢ lower at $3.33 1/2.
July soybean futures are 5 1/2¢ higher at $8.43 3/4. November soybean futures are 5¢ lower at $8.50 3/4.
July wheat futures are unchanged at $5.04 3/4.
July soymeal futures are $0.20 per short ton lower at $281.80. July soy oil futures are 0.37 cent lower at 27.23¢ per pound.
In the outside markets, the NYMEX crude oil market is $0.13 per barrel higher at $32.94 per barrel, the U.S. dollar is lower, and the Dow Jones Industrials are 170 points higher.
Al Kluis, Kluis Advisors, says that investors are watching the soybean market's ability to move above technical signals.
"July soybeans are within striking distance of the 50-day average. A convincing move through this line is important because the last time prices traded over this line was in mid-January," Kluis told customers in a daily note.
Kluis added, "Traders are trying to avoid the headlines involving further trade tensions between the US and China. However, the headline of rumored purchases by China (from Brazil, for shipment this fall or winter) is hard to ignore. Those sales are likely being sourced from Brazil to avoid any possible tariffs or sanctions that could result from further tensions this summer."
Export Sales Report delayed until Friday, due to the Memorial Day holiday.