Market Commentary  07/18/18 3:39:41 PM Printer Friendly VersionPrinter Friendly Version

Wednesday, July 18, 2018

Corn futures closed 1 cent higher today in quiet trade. Funds were buyers of 3,000 contracts mid-session and hold a short position estimated at just under 100,000 contracts. So far this week CZ has firmed 6 cents – not impressive but not defensive either and is giving the impression the market will take a pause before a possible new downtrend. Crop conditions faltering in KS and MO are catching some attention as they point to everything isn’t great everywhere – important to possibly temper the arms race to see who can come up with the highest yield projection. Trade probably using something in the 180 bpa range currently which equates to 14.7 bln. bu. of production. Weather is cooler in longer term forecasts but also drying. NOAA has El Nino chances this winter at 70% which usually means warm winters in the upper Midwest and drier weather in the east and southeast corn belts. For S. America, drought in NE Brazil and wet weather for Argentina. Weekly ethanol report showed a 3% increase in production with corn usage at 110.3 mln. bu. vs. 107.1 mln. bu. last week. Weekly export sales in the morning expected in the 300-600 tmt range. The market expects improved corn exports in 18/19 with current USDA projections as a starting point – hard not to expect levels approaching 17/18 (2.4 bln. bu.)

Soybeans closed 3 cents higher, also in a quieter trade. Funds were buyers of 3,000 at mid-day and hold an estimated short position of 60,000 contracts. SX has firmed 23 cents this week but producer selling interest remains light. Trade issues with China remain very much an issue but the trade may be taking a break from using this as a reason to drive futures lower and paying a bit of attention to crop conditions. The U.S. is still selling export beans as Pakistan picked up 199 tmt of coverage for 18/19. World still needs soybean coverage -who gets what from where is what will change. Other trade news includes President Trump talking of a separate trade pact with Mexico with Canadian pact negotiated separately and Japan/EU signing a trade pact. Weekly export sales in the morning expected in the 200-500 tmt range. For 18/19, Brazil offers are hard to find for beans October forward.

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