Session Summary: As discussed Friday morning, the “why” to Thursday’s rally that had carried through the overnight session became known with the announcement that China had offered to increase its imports of U.S. goods over the next six years. The commercial buying left over from the day before was joined by increased noncommercial interest in soybeans. Meanwhile, the energy complex maintained its bullish momentum with solid gains seen in crude oil, distillates (heating oil, diesel fuel, etc.), and RBOB gasoline. On the other end of the spectrum cotton failed to find buying interest in the Chinese announcement while metals were under pressure throughout the session.
Market Summary: March corn was 1 3/4 cents higher with Dec corn 1/2 cent higher. March soybeans closed 9 cents higher while Nov posted a 7 1/2-cent rally. March Chicago wheat was unchanged, new-crop July Kansas City was unchanged, and March Minneapolis was 2 1/4 cents higher. March cotton lost 0.43 with new-crop December down 0.19. Crude oil was $1.67 higher while distillates (heating oil, diesel fuel, etc.) gained 3.37 cents, RBOB gasoline rallied 2.27 cents, and natural gas was able to gain 2.9cents. Feb gold was down $10.20 while March silver lost 13.7 cents, and copper rallied 1.1 cents. The U.S. dollar index was 0.28 higher.
Soybeans: Thursday’s “what” (a late sharp rally) was followed by the “why” Friday as it was announced China had offered to increase its imports of U.S. goods over the next six years. While the U.S. administration hasn’t signaled acceptance of this new development, soybean traders took it as a sign that there was still hope to get 2018-2019 soybean shipments rolling again. A weaker carry in the old-crop forward curve indicates commercial traders were back in the market, though the long-term fundamental outlook remains bearish. Recall that USDA’s last guess on exports was still 1.9 billion bushels while the last reported pace of actual shipments projected total demand nearer to 1.2 bb. Despite Friday’s strength the March-to-July spread closed at a carry of 25 3/4 cents, or nearly 74% of full commercial carry.
Corn: Corn barely moved over the course of Friday’s session, despite the latest headlines regarding China. Old-crop contracts were up about 2 cents, with futures spreads mixed, indicating most of the interest came from noncommercial traders. The commercial side continues to hold a neutral view of long-term fundamentals, despite all the whispers of likely smaller than expected supplies and stronger than expected demand. The March-to-July spread closed the week at a carry of 15 1/2 cents, or roughly 59% of full commercial carry. New-crop December continues to move more in-step with its 6-year seasonal pattern than its 10-year, not all that surprising given the run of record production years the U.S. is in.
Wheat: Winter wheat market bulls had to be disappointed as the closing bell rang with both Kansas City (HRW) and Chicago (SRW) contracts managing fractional gains at best. The latest headlines concerning China looked to have little play in the wheat markets with traders focusing more on renewed strength by the U.S. dollar index. There continues to be talk that demand should be picking up for U.S. supplies, though this hasn’t translated into noticeable market gains. Minneapolis spring wheat was able to rally 2 cents, though there didn’t seem to be an abundance of buying enthusiasm heading into the weekend.