TFM This Week In Commodities 1-10-20

Monotonous USDA report holds corn market steady

Friday’s USDA January crop report was rather uneventful for the corn market. The corn market traded lower immediately following the report given the increased yield number, but the market rallied back positive before the end of the day. The increase in yield was more than offset by lowered harvested acres and increased feed and residual use. For the week, March corn was down 3/4 of a cent to close at 385-3/4. December corn was up 2 cents this week to close at 402-3/4. Export sales this week were down 70% from last week and came in at a marketing year low. As of 1-2-20, accumulated corn exports vs last year are 54% lower. Exports estimates were again lowered by the USDA on Friday to a five-year low of 1.775 billion bushels. All in all, the balance sheet adjustments brought US ending stocks down 18 million bushels and kept the corn market within its tight ten-cent trading range from the last four weeks. South American weather will be the dominant market mover going forward for the corn market. March planting intentions will be released in mid-March. With today’s price levels, corn acres are expected to increase in 2020.


Soybean market looks ahead to “Phase one” signing next week

The January USDA crop report brought practically no changes to the US soybean supply and demand balance sheet. Harvested acres were decreased by 600,000 acres while yield was increased by 0.5 bushels per acre. The bean market finished a few pennies higher on the day as well as slightly higher for the week. March soybeans were 4-1/2 cents higher this week to close at 946. November soybeans followed suit closing at 974-3/4 up 3-1/4 cents on the week. As of last Thursday, accumulated soybean exports vs last year are 23% higher, keep in mind exporters saw little to no business to China in the 2019 marketing year. The anticipated signing of the Phase One trade deal with China continues to bring optimism to the soybean market. The two countries are set to sign the trade pact next week. Details of the deal have yet to be made public. Friday’s price action following practically unchanged USDA numbers is rather promising, November soybeans ended the week just 8 cents off their recent highs.


Wheat continues its move higher

US winter wheat seedings were pegged at 30.8 million acres. This is 350,000 less than last year and the lowest in 110 years. Wheat ending stocks were lowered 9 million to 965 million bushels. December 1 stocks were 1.83 billion. Via this morning’s export sales numbers, accumulated wheat exports vs last year are 16% higher. Overall world wheat ending stocks were slightly lower but still higher than the pre-report trade estimate. For the week March wheat was 10 cents higher this week to close at 564-1/2. March KC wheat was up 19-3/4 cents to close at 494-3/4 this week while March MPLS spring wheat futures closed up 10-3/4 finishing at 558-1/4.


Barrels Fall to Lowest Level Since June

Cheese futures had their first up day of 2020 as blocks rose 4.5 cents and barrels came up 0.5 cents. It appears that the block/barrel average has once again found support near the 2018 highs. Finishing out next week higher would look supportive that the short-term trend could be looking to turn. If not, the short-term trend will remain lower. Whey and non-fat powder prices finished at the highs of the week, with powder trading just slightly over the 2019 high on the spot market. Butter prices recovered slightly today but still finished the week down 3 cents.

Price action continues to consolidate as the market searches for a direction. As we get halfway through January it is likely the price action will break congestion and start trending up or down. The market could still absorb more downside on the Class III 2020 average before breaking the pivotal area of support at $17.00. Class III and Class IV prices finish the week almost at parity on the 2nd-month continuous chart. The futures market is currently expecting Class IV prices to overtake Class III prices in months further out.



Carol Tillmann

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