Market Commentary  08/16/19 4:08:42 PM Printer Friendly VersionPrinter Friendly Version

Friday August 16, 2019

Corn futures closed the session firmer on consolidation and shortcovering following this week’s steep sell-off which pushed futures to their lowest levels since mid-May.  As of midday, funds were estimated to have bought approximately 7,200 contracts of corn.  The nearby September contract lost 39 ¼ cents from a week ago while December corn futures were 37 cents lower.  Thursday's low at $3.69 is initial support for the December corn contract followed by $3.63 ¾.  On the upside, minor resistance lies at $3.81 with additional resistance at $3.88 - $3.92 ¾.  Traders continue to bemoan Monday’s corn production number for 2019/2020.   Market participants will be looking to ProFarmer’s annual crop tour (which will take place next week) for direction.  That tour begins Monday with the traditional east and west legs.  The two groups will then meet in Minnesota next Thursday night and on August 23rd they will put out their crop production estimates.  The expectation is to see plenty of variability on this tour.  Weather continues to remain important to crop development.  Currently, the forecast looks favorable across much of the Midwest near-term.  The GFS midday maps looked wetter across IL/IN/MO & OH the next 72 hours with another system expected to bring moisture late next week. The long-range weather maps however differ, with the EU model looking much drier.  Monday afternoon NASS will be out with updated crop progress numbers. Last week the U.S. corn crop was rated at 57% good/excellent. 
Soybean futures ended the day higher on consolidation.  As of midday, fund were estimated to have bought approximately 4,700 contracts of beans.  November futures closed out the week down 12 cents from last Friday.  Indications today were that export demand for U.S. beans is improving with big loadouts noted this week.  Traders will be looking to Monday’s weekly export inspections for confirmation.  This scenario is not unlikely as the spread between the U.S. & Brazil fob continues to widen.  USDA reported a flash sale this morning of 296,500 metric tons of beans for delivery to unknown destinations for 19/20.  The key is "unknown destinations”, as that is often used to reference China; suggesting the possibility that China is still buying U.S. beans (just under different names).  Most recently, China has vowed to counter the latest U.S. tariffs on $300 bln. of Chinese goods but have also called on the U.S. to meet it halfway on a potential trade deal.  News has been circulating this week that China booked 20+ cargoes of Brazilian beans this week.  Moving forward, the trade will continue to keep a close eye on S. American currency values as both the Brazilian Real and Argentine Peso have seen their value erode compared to the U.S. dollar, which will likely elevate export sales from those countries and could lead to elevated plantings with the S. American planting season just weeks away.  Monday afternoon NASS will be out with updated U.S. crop progress numbers. Last week The U.S. soybean crop was rated at 54% good/excellent.

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