Grain Notes 12/13/18 PM Comments 

Bean prices were lower by 10-13 cents while corn was steady to 1 cent lower.  This morning USDA announced the sale of 1.130 million metric tons (41.5 million bushels) of US soybeans to China. This was a little less than the trade was looking for, but the market expects more to come.  To make much of a difference in the US export total, the trade will be looking for China to buy a total of at least 8 million metric tons.  There has been building concern that once sales to China were confirmed the market would trade in the classic “buy the rumor, sell the fact” market.  Corn was stuck between the weaker bean market and the rally in wheat.  The weakly export sales report was also disappointing for corn and soybeans.  

March corn has resistance at $3.87 ¾ and then $3.90.  Support is at $3.82 ¼ and then at last Monday’s gap between $3.78-$3.80.  The contract low is $3.54 ¾.  March futures stuck between $3.80 and $3.90 for now.

For January soybeans the short term resistance is the 200 day Moving Average price of $9.36 ¾.  Next support is at last Monday’s gap between $8.96 ½ - $8.97.  The contract low is $8.26 ¼.

The energy markets were mostly higher with crude oil up more than $1.40/barrel and is back near $53/barrel.  

  • Informa Economics updated their 2018 yield and production numbers for corn and beans:
    Corn yield 178.6 and production at 14.601 billion bushels vs. USDA at 178.9 and 14.626 billion
    Bean yield  51.6 and production at 4.562 billion bushels vs. USDA at 52.1 and 4.600 billion
  • Informa also reported their estimate of US acres to be planted to corn and soybeans next year.  Their 2019 US soybean acreage is estimated at 85.069 million acres. This compares to 89.145 million acres in 2018.  For corn, the acreage was 91.944 million acres. This compares to 89.140 million acres planted in 2018.
  • Secretary of Agriculture Sonny Perdue said today he still expects there to be a second round of tariff mitigation payments despite the purchases made by China yesterday.
  • The weekly export sales for corn was on the upper end of the expected range, but was considered a little disappointing at 903,000 metric tons of old crop and 161,000 of new crop.  Soybean exports were 792,000 metric tons, pretty much all of it was for the 2018/19 crop year.  Year to date soybean exports are 34% behind last year. 
  • Soybean basis levels in Brazil continue to weaken and are threatening to compete with US values whether to China or anywhere else.  One thing to watch on the Chinese sales announcement made today or if any are made in the future, if these are "frame contracts" the export traders would be able to switch the origin of these sales to cheaper origins (Brazil).
  • Wheat prices were double digits higher with today's export sales report being the largest of the year.  Also Russia's Ag Minister is wanting to have internal discussions on future wheat exports leading the trade to believe they want to tax or possibly halt any additional wheat exports.
  • Hot and dry weather is still in the forecast for central Brazil next week while Argentina is expected to receive heavy rains during the same period.