TFM – This Week in Commodities 9-20-19

Corn finishes lower on the day, but maintains small gains on the week.

The corn market had a fairly quiet week overall, trading mostly sideways for the last five days while chopping back and forth in a 10 cent range. December corn finished 2 cents lower today at 370-3/4, however, prices were 2 cents higher overall for the week. July futures settled at 395-1/4, down 1-3/4 on the week. Prices were able to maintain the bounce from last week, but the market couldn’t manage to muster a strong follow through. December futures tested Monday’s high today, but were unable to break beyond the highs of the week. Getting through the 375-377 range should set the market up to push towards the gap left on the December chart in August, with 392-3/4 at the upper end of that gap. A number of technical indicators are looking positive, suggesting more strength ahead, but it has seemed as though the market is waiting to get a better idea of overall yields as harvest kicks off. Early yield reports have looked strong in a number of areas for corn that was planted on time, but expectations are for yields to drop as harvest progresses into late planted crops. Extended forecasts show little risk of a freeze on late crops in the next week to 2 weeks. The 6-10 and 8-14 day forecasts continue to show above normal temperatures and above normal precipitation for a majority of the corn belt.


Soybeans finish lower, extend losses on week.

November soybeans finished today down 10-1/4 cents at 882-3/4. This was down 16 cents for the week following last week’s solid gains of more than 40 cents. July futures finished at 928-3/4, down 14-1/4 on the week. This week’s pullback put prices near a 50% retracement of the rally off the recent lows. The market was unable to maintain momentum higher as the optimism over what looked like easing trade tensions with China last week has started to wane. Today, it was reported that as trade talks were talking place, the President remarked he wants a complete trade deal, not just an agreement that China will increase purchases of US agricultural goods. A trade advisor to the President commented he is ready to escalate the trade war. On top of continuing trade issues, weather forecasts for Brazil point to improved chances of rain next week. Brazil has been in a dry pattern, leading many farmers to delay planting until soil moistures improve. Currency spreads have pressured soybeans as well, as the US dollar has continued to strengthen versus the Brazilian Real. Despite negative news on the export front, domestic demand for soybeans has remained solid. Earlier in the week, NOPA released their August crush report showing 168.1 million bushels of soybeans used, steady from the previous month and 6 million bushels above trade estimates.


Wheat closes mixed on the day, higher on the week.

While the winter wheat contracts finished Friday lower, all three classes managed to gain overall for the week. Chicago December squeaked out a 3/4 cent gain, KC moved 7-3/4 higher, while Minneapolis led the way higher with a weekly gain of 18-3/4 cents. The Chicago/KC spread remains wide, but did narrow about 7 cents from its widest point this week. KC wheat looks competitive in the world market, but a strong dollar is not helping attract business, while overall demand for wheat on the world stage remains lackluster. Expectations are for fewer winter wheat acres given current prices and late crops in the east. World stocks remain ample.


Spot Cheese Flat but Class III Futures Rise Higher

It looks like the spot cheese market is starting to dig its heels in after the past couple days of aggressive selling. The block/barrel average dropped 0.25 cents today to finish the week at $1.8525/lb. Blocks were up 0.5 cents today, but barrels were down another penny, continuing the trend of a wide spread between the two products. Whey prices have now been unchanged for over a week at $0.3975/lb. Butter prices were bid up slightly to $2.115/lb after a rough week, down 10.75 cents. A strong close on the week for powder at it gained 0.5 cents to settle at $1.0825/lb.

Despite the fact that the block/barrel average was down slightly, futures appeared to be relieved that the bleeding has been stemmed for today in the spot market. Contracts across the board rose higher and the October contract broke its three-day losing streak to close the day 18 cents higher at $18.66. The November Class III contract had the best performance of the day up 27 cents to finish the week at $18.39. We are expecting continued volatility after the breakout of the multiyear range next week.


Lisa Heder

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