Grains and oilseeds are mostly higher on Thursday following the overnight session. The U.S. dollar is steady after posting gains overnight gains. Crude oil is down sharply following yesterday’s moderate gains.
CORN
March corn futures posted modest gains on Wednesday after trading 1 cent higher to $4.29 ½. Prices had followed soybeans higher, but struggled to catch a stronger bid.
A move above $4.34 would be a positive signal for the corn market. However, sideways trade between $4.17 and $4.34 seems more likely if the corn market doesn’t receive additional bullish drivers beyond strong demand.
U.S. ethanol production plunged 14.2 percent last week to an average of 956,000 barrels a day. Output was also 14 percent lower than the same week last year, as cold temperatures impacted operations.
The estimated corn crushed for ethanol last week was about 92 million bushels. Cumulative crushings for the marketing year rose to approximately 2.314 billion bushels, reaching 41 percent of the USDA’s target. Ethanol stocks fell 1 percent last week to 25.1 million barrels.
SOYBEANS
March soybeans rallied about 40 cents early on Wednesday before closing 26.50 cents higher at $10.92 ¼. Prices closed well off there highs after the rally likely triggered considerable farmer selling.
Futures extended gains, trying to hold above the $11 handle for the first time since prices surged in November. President Trump posted on social media that China said it would buy up to 20 MMT of U.S. soybeans this season, up from the current 12 MMT.
An additional 8 MMT in Chinese purchases would add up to 315 million bushels of demand, which could help tighten the U.S. balance sheet somewhat. That increase could also cause non-China buyers to look to Brazil for cheaper supplies, as the market would likely try to ration demand with higher U.S. prices.
Additionally, the president said China is considering purchases of 25 MMT next season. However, the 25 MMT China could buy over the next three years is still 4 MMT short of the five-year average.
WHEAT
Wheat futures struggled to find buyers on Wednesday despite gains in corn and soybeans. March Chicago wheat traded 2 cents lower to $5.26 ¾.
Wheat has struggled this week to gather upside momentum following last weeks positive trade on the back of winterkill risks. There is little news that would help trigger a second short-covering rallying similar to last week’s gains.
Russia’s deputy prime minister said that the country produced 93 MMT of wheat this past season. Output was near a record despite unfavorable weather conditions. Recent cold air may have caused some damage to winter wheat in the Black Sea recently.
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.