January 17, 2020

CORN

Corn closed 12-14 cents higher in the nearby contracts and 8-9 cents higher in the deferred contracts. For the week CH gained 3 cents. Funds were probably as heavy buyers today as they were sellers yesterday and held an estimated short position of 116,000 contracts as the day started. Funds holding short positions are balanced between ample world stocks, a large S. American crop on the way, and what happens if China does indeed become an active buyer of U.S. corn? It was an interesting week as the trade tries to decipher expectations now that the U.S. and China have signed Phase 1. It wasn’t expected that they’d buy corn but somehow a surprise yesterday that they didn’t. Today, 2-4 cargoes of corn were reportedly sold off the PNW to China but there is also talk that they are destined for S. Korea or Japan. Also, the EU is questioning the U.S./China trade deal and WTO trade rules. On and on it goes.

SOYBEANS

Soybeans closed 6 cents firmer today on a rebound from yesterday. Funds were on the sidelines for the most part today and held an estimated short position of 19,000 contracts this morning. SH lost 16 cents this week. No big Chinese purchases and no large weather concerns in S. America weigh on futures. China must balance buying U.S. beans to honor trade agreements with buying S. American beans at cheaper values in the soon to ramp up harvest. China starts their Lunar New Year celebration on the 25th, so if they don’t buy U.S. beans next week, we may not see much activity until that ends. (You’ve probably noticed various market articles over the past few weeks regarding China releasing frozen pork reserves for the holiday period.) Generally, over the next two weeks, northern Brazil expecting above normal precip, southern Brazil a bit dry as is southern Argentina, with northern Argentina expecting above normal precip.