It's USDA Report Day, Grains Trade Mixed

DES MOINES, Iowa -- On Friday, the CME Group's farm markets move very little, after the USDA/WASDE reports.

At midsession, the March corn futures are 1¼¢ higher at $3.84¾. May corn futures are 1¢ higher at $3.91.

March soybean futures are 2¼¢ lower at $9.41¼. May soybean futures are 2¼¢ lower at $9.54½.

March wheat futures are ¾¢ higher at $5.63.

March soymeal futures are $1.70 per short ton higher at $302.50. March soy oil futures are 0.39¢ at 34.25¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.39 per barrel lower, the U.S. dollar is lower, and the Dow Jones Industrials are 98 points lower.

Separately, the USDA's weekly Export Sales Report Thursday shows weak demand figures.

Corn: 161,900 metric tons (mt) vs. the trade's expectations of between 350,000 and 700,000 mt

Soybeans: 358,900 mt vs. the trade's expectations of 400,000 and 800,000 mt

Wheat: 130,600 mt vs. the trade's expectations of between 200,000 and 550,000 mt

Soybean meal: 74,200 mt vs. the trade's expectations of 75,000 and 250,000 mt

Al Kluis, Kluis Advisors, says investors will play their cards close to the vest until this morning's USDA reports are released at 11 a.m. CST.

"We started off stronger with the de-escalation of the U.S. and Iran tensions. However, by the end of the day, traders took advantage of the higher markets to position. We should trade sideways or mixed until the release of the USDA report at 11 a.m. CST. Once we get the numbers, we will trade off them going forward, " Kluis stated in a daily note to customers.

Kluis added, "Once past the report, pay attention to the demand for U.S. corn and soybeans. If corn exports do not start picking up soon, then we will likely see some reductions in overall demand."

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Thursday's Grain Market Review

On Thursday, the CME Group's farm markets lean on the hot wheat market.

At the close, March corn futures finished 1¢ lower at $3.83¾; May corn futures ended 1¼¢ lower at $3.90.

March soybean futures closed 3¾¢ lower at $9.43¼; May soybean futures closed 3¾¢ lower at $9.56½.

March wheat futures closed 9½¢ higher at $5.62¼.

March soy meal futures settled $1 per short ton lower at $300.80. March soy oil futures finished 0.08¢ higher at 34.64¢ per pound.

In the outside markets, the NYMEX crude oil market is 2¢ per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 205 points higher.

Greg Lumsden, Cargill MarketGuide, says the wheat market is clearly the leader today.

"Beans and wheat have also priced in significantly more upside due to a China deal relative to corn. That will make both vulnerable and potentially volatile until more is known around actual Chinese purchases. Wheat is up again today on technical momentum, bullish acreage expectations, and potential Chinese buying," Lumsden says.

Al Kluis, Kluis Advisors, says investors expect tomorrow's USDA reports to show a cut in corn and soybean production.

"We will need a bullish report for both corn and soybeans to keep prices pushing higher. We are building in risk premium, since many expect the crop size to be cut. If we see minor changes in crop production, then we could see corn and soybean futures pull back," Kluis stated in a daily note to customers.

Kluis added, "What looked to be a very volatile Wednesday trade turned out pretty quiet. President Trump talked about the missile strikes from Iran. However, instead of retaliating with force, the U.S. will make tougher sanctions against Iran. The president also mentioned that Iran is backing down. Once that news was released, grain prices found support and closed mostly positive. With tensions between the U.S. and Iran settling down, this should be positive to commodities."

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Wednesday's Grain Market Review

On Wednesday, the CME Group's farm markets finished mostly higher.

At the close, March corn futures finished ¼¢ lower at $3.84½; May corn futures ended ¼¢ lower at $3.91.

March soybean futures closed 3¼¢ higher at $9.47½; May soybean futures ended 3¢ higher at $9.60¼.

March wheat futures finished 2½¢ higher at $5.52¾.

March soy meal futures closed 50¢ per short ton higher at $301.80. March soy oil futures settled 0.18¢ lower at 34.56¢ per pound.

In the outside markets, the NYMEX crude oil market is $3.16 per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 197 points higher.

Al Kluis, Kluis Advisors, says investors are now eyeing this Friday's USDA reports.

"Grain traders will continue to watch the headlines regarding the U.S. and Iran ordeal. Estimates for the report on Friday suggest traders are expecting smaller crops than were reported by the USDA in December. Will we see small adjustments to yield and more significant changes to harvested acres? This question has been looming since the late-June report on planted acres," Kluis stated in a daily note to customers.

Kluis added, "With the big USDA report on Friday and continued tensions with the U.S. and Iran, it is a great time to buy put options. There are plenty of strategies available to protect old-crop and new-crop prices."

On Wednesday, private exporters reported to the USDA export sales of 207,000 metric tons of corn for delivery to unknown destinations during the 2020/2021 marketing year.

The marketing year for corn began September 1.

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Tuesday's Grain Market Review

On Tuesday, the CME Group's farm markets close mostly lower.

At the close, March corn futures finished ¼¢ lower at $3.84¼; May corn futures ended unchanged at $3.91.

March soybean futures closed ¾¢ lower at $9.44; May soybean futures closed 1¢ lower at $9.57¼.

March wheat futures ended ¼¢ higher at $5.50¼.

March soy meal futures closed $1.60 per short ton lower at $301.30. March soy oil futures finished 0.22¢ higher at 34.74¢ per pound.

In the outside markets, the NYMEX crude oil market is 60¢ per barrel lower, the U.S. dollar is higher, and the Dow Jones Industrials are 109 points lower.

Greg Lumsden, Cargill MarketGuide, says there's not much going on with trade today, as markets still feel like they are in holiday mode.

"The markets were weaker over the last few days with concerns over Middle East tensions and improved weather in South America. Some market participants are also pointing to China's reluctance to increase annual import quotas on corn/wheat/rice as providing more headwinds to $40 billion in ag purchases," Lumsden says.

Lumsden adds, "Over the next few days, it feels like the market will bide its time waiting for USDA numbers on Friday and additional details of a phase one signing. If we do see specifics on quotas per commodity, the market will take this as a positive to build expectations off of. If the targets remain high level with little detail, we will see disappointment in the grain markets. The report Friday is historically a market mover, but the funds appear to be comfortable with a sizable short position. We could see some fireworks with a surprise on the report or more positive tones on trade."

Al Kluis, Kluis Advisors, says investors are now eyeing this Friday's USDA reports.

"The CFTC report released yesterday showed funds holding a major short in corn heading into Friday's USDA reports," Kluis stated in a daily note to customers.

Kluis added, "The USDA overestimated corn demand by 391 million bushels and soybean demand by 125 million bushels last year in the final crop production report in February (remember the January 2019 U.S. government shutdown). With the phase one trade agreement being signed next week, I doubt if they will make that same error in 2020."

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Monday's Grain Market Review

On Monday, the CME Group's farm markets finished mixed.

At the close, March corn futures finished 1¾¢ lower at $3.84¼; May corn futures ended 1¼¢ lower at $3.91¾.

March soybean futures closed 3¼¢ higher at $9.44½; May soybean futures are 3¢ higher at $9.58¼.

March wheat futures finished 4¼¢ lower at $5.50.

March soy meal futures closed $1.70 per short ton higher at $302.90. March soy oil futures closed 0.56¢ lower at 34.52¢ per pound.

In the outside markets, the NYMEX crude oil market is 25¢ per barrel higher, the U.S. dollar is lower, and the Dow Jones Industrials are 7 points lower.

Jack Scoville, PRICE Futures Group, says investors have their minds on geopolitical events, while awaiting Friday's reports.

"Been a foreign trade kind of day. Wheat prices are suffering, due to the threat to sales to Iraq now with the killing of the Iranian general in Iraq. But soybean prices are heading higher on the promise of a new U.S.-China trade deal being signed on the 15th. All still looks go for that event. So, the markets have reacted accordingly. The volume is pathetic away from the funds, and the funds are slowing down, too," Scoville says.

Al Kluis, Kluis Advisors, says the market is watching to see if the grain traders' nervousness last week from tensions between the U.S. and Iran will carry over to this week.

"The outside markets were rather quiet when trading opened Sunday evening. However, the stock market has drifted lower, and oil has been steadily moving higher. Gold and silver are also seeing big gains, as traders look for a safe place to park their money in the short term. So far, grains have started the week off in a quiet, narrow range, " Kluis stated in a daily note to customers.

Kluis added, "Traders will surely be watching the headlines for any further indications of increasing tensions between the U.S. and Iran. These headlines could impact grain prices if the outside markets start accelerating downward."

The USDA's Weekly Export Inspection Report shows that U.S. soybean shipments are tracking the highest year-over-year pace compared with corn and wheat.

Here are Monday's results:

• Corn: 551,000 tonnes vs. 400,000-600,000 tonnes expected. So far, year-over-year pace is off 53%
• Soybeans: 964,000 tonnes vs. 500,000-1.0 million tonnes expected. Soybean shipments year over year are up 26%
• Wheat: 345,000 tonnes vs. 300,000-500,000 tonnes. For year-over-year pace, this is up 15%