Pressure continues on corn prices Friday morning
Slow exports and weakness spilling over from the soybean market depressed corn futures Thursday, thereby continuing the recent downward trend. The market bounced overnight in response to news that South Korea’s largest animal feed maker had opened a previously issued grain tender to U.S. product after having excluded our corn when it was first announced. This suggests the recent price drop has at least partially reignited export demand. The market was probably due for a bounce anyway, since many in the industry are almost surely going to stay home much of next week, so they are likely taking profits on short positions today. Ideas that the market was also due for a technical bounce may have sparked buying as well. March corn rose 4 1/2 cents to $7.01/bushel and December advanced 3 1/4 cents in overnight trading.
Thursday morning the USDA reported that China had followed Tuesday’s cancellation of 300,000 tonnes of soybean exports by cancelling another 540,000 tonnes from private sources. That news overrode the positive aspects of the weekly Export Sales report and sent prices sharply lower for a third straight session. The fact that January beans rebounded from support just above the pivotal $14.00 level was impressive and could inspire bottom picking from technical traders from this point. Whatever the post-holiday impact of these developments, short-covering seems likely to dominate trading on this last day of the week, especially in light of the supportive corn news. January beans rebounded 13 cents to $14.21 3/4 in early-morning activity, while January soybean oil jumped 0.68 to 48.59 cents/pound and January meal inched $2.7 higher to $430.4/ton.
Despite a supportive result on the weekly USDA Export Sales report, wheat futures dropped rather sharply in concert with corn and soybean futures Thursday. We pointed out yesterday that wheat seemed unlikely to sustain a significant advance until corn and soybeans find their footing, so it is not at all surprising to see wheat prices higher this morning. Indeed, given the corn and bean gains, it is rather surprising that wheat isn’t higher. That is especially true in light of a statement from a major German grain trading firm indicating that U.S. wheat is most competitively priced on the international markets at this time. Ultimately, having the March CBOT contract drop below the psychologically important $8.00 level yesterday may prove a major hindrance to short-term rally attempts. March CBOT wheat rose 3 cents to $7.93 1/2 overnight, while March KCBT wheat gained 2 3/4 cents to $8.46 1/2 and March MGE futures advanced 2 1/2 cents to $8.86 ¼ per bushel.
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