Closing Comments; Thursday, December 5th, 2019

Trade was mixed for much of today’s session with soybeans becoming the market leader. Continued strong demand and technical short covering gave the soy complex its strength. The grains were pressured today on a lack of demand and improved global weather conditions. The lack of trade deal progress and the developing political issues in the US were negative for all markets.

One of the big stories today came from the political front where it was announced that impeachment proceedings against President Trump would move forward. This has created uncertainty in the markets, both for commodities and financials. The real concern surrounding this development is what it means for foreign trade developments. China and others may not be as willing to negotiate with President Trump with these proceedings taking place. China has already stated they will not sign any deal unless all existing tariffs are removed which the White House has said will not happen.

Export sales for the week ending November 28th fell short of expectations, which was a likely result of the Thanksgiving Holiday. Corn sales for the week totaled 21.5 million bu with 32.7 million bu needed to reach yearly projected totals. Wheat sales also missed the needed amount with 8.38 million bu, 5 million bu short of needs. Soybean sales were lighter than recent weeks but still managed to top the needed volume on a weekly basis with 25.1 million bu. In addition to these sales, the USDA announced 245,000 bu of additional soybeans were sold to an unknown buyer today.

Estimates are being released for next Friday’s WASDE report. On the domestic side, trade is expecting to see ending stocks of 1.92 billion bu on corn, 476 million bu on soybeans, and 1.01 billion bu on wheat. These numbers are little changed from the ones that were released in November. These numbers will hinge on demand as production will not be adjusted until the final report in January.

The real interest in next week’s WASDE report will likely focus on the global numbers, mainly South America. Argentine crops are predicted at 49.8 million metric tons on corn and 53 mmt for soybeans. Brazil production is expected to total 101 mmt on corn and 123 mmt on soybeans. These are also little changed from November. The most interest may be on Brazil, where private analysts this week have predicted larger crops for both corn and soybeans.

Global weather remains a market factor. Wetter conditions have set up in Brazil to at least temporarily relieve dry soils. We are also seeing rains move through Argentina to replenish soil moisture there as well. More attention is on US weather where colder temperatures are forecast for the Upper Plains and Midwest next week. Hopes are this will firm up fields enough to allow harvest to progress. There are precipitation events forecast with this though, and that may further delay any harvest activity.

Census export data for the month of October has been released. The US exported 90.7 million bu of corn in October compared to 79.8 million bu in September. Soybean sales in October were at 218.4 million bu, up from the 142.9 million bu in September. Wheat sales declined in October to 78.7 million bu from the 84.2 million bu the month before. For the year, US corn exports are down 59.3%, soybeans are up 8.9%, and wheat sales are 11% higher.

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com.




 

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Karl Setzer Grain Commentary