Closing Comments; Thursday, August 22nd, 2019

Trade was on both sides of unchanged today as position squaring dominated the markets. Selling pressure has stalled for now as the markets are sitting near over-sold levels. Soybeans showed the most strength early on today as even though old crop export sales were light, we did see solid new crop demand. China was listed as a buyer of new crop soybeans as well, albeit a minimal 66,000 metric tons. This demand faded as the session progressed and profit taking surfaced. Advances were also held in check today by a lack of buying enthusiasm and renewed concerns over the state of the US economy.

Export sales for the week ending August 15th were met with little reaction today. Corn sales were split with 4.7 million bu on old crop and 11.9 million bu of new crop. Soybean bookings were a light 950,000 bu on old crop but a solid 29.1 million bu of new crop. While China did take a small amount of new crop soybeans, a large amount was sold to an unknown buyer, which trade automatically pegged as China. Wheat sales were again a respectable 21.8 million bu.

While the United States did show some business was done with China recently, it pales in comparison to the purchases China has made from Brazil. In the past week China has booked a reported 50 vessels of Brazilian soybeans. Just yesterday China was thought to have locked in 12 cargoes of Brazilian soybeans. China is now thought to be covered on soybeans through mid-October, which is limiting their soybean demand at this time.

The weekly drought monitor map was released today with mixed indications. Drought conditions have been partially remedied in Central Iowa over the past week, but conditions persist in Western Iowa and Eastern Illinois. More rains have moved through this region though, and thoughts are conditions will continue to improve. With below normal temperatures, additional crop stress has also been limited.

When it comes to weather, more interest has been placed on long-range outlooks. The US is currently forecast to experience normal to below normal temperatures for the next two weeks. This is already generating concerns over a potential early frost or freeze. While this is possible, it is unlikely to happen in the next two weeks. Still, many field scouts claim the US crops will need to get to mid or late October before their first frost, which is unlikely for many regions.

President Trump was scheduled to meet with Secretary of Ag Purdue and EPA Administrator this afternoon to discuss the US biofuel industry. The main topic of discussion is to be the recent 31 blending waivers that were granted to refiners. These waivers have been under intense scrutiny as they are being blamed for the poor economics in the ethanol industry. Hopes are these waivers may be rescinded or at the least reallocated.

Livestock futures were mixed today with cattle on the plus side and hogs under pressure. Cattle took their support from the spread between futures and the cash market, and how futures need to close the gap. Cash trade remains light on cattle though, with packers passing on many offers. Hogs were under pressure today from high slaughter numbers and lackluster demand.

This commentary is the sole opinion of Karl Setzer, Commodity Market Risk Analyst for AgriVisor. 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. You may also follow Karl on twitter; @ksetzergrains




 

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