Corn futures started the day firmer but quickly faltered, trading lower the majority of the session. However, prices were able to make their way back into the green by the close, though barely. It has been 3 weeks since the highs were made in December corn and the near and intermediate-term trends are bearish. However, the December contract does appear oversold, which could open the door to a consolidation or correction phase. Trade war concerns combined with a favorable forecast for the Midwest continues to hang over the market. The funds have continued with their “risk-off” mentality this week. Today, they were estimated to be early sellers of approximately 6,000 contracts of corn. Their change in position (from long to short) has been mostly in response to rising trade uncertainty following president Trump’s announcement that he will seek tariffs on an additional $200 bln. of Chinese goods. This declaration followed China’s new list of tariffs which was announced late last week. Also in trade news, is the fact NAFTA negotiations remain open. Any new developments on that front will be expected to also influence the market moving forward. Reuters has reported that Mexico is increasing corn purchases from Brazil, knowing that a change in the U.S. trade policy could jeopardize their current import channels. The weekly EIA report was released this morning and showed another strong week of grind. This past week’s total of 110.29 mln. bu. of corn was the highest weekly total since mid-February. Despite the increase in production this week, ethanol stocks declined solidly. Year to date gasoline demand is up 2.0% from last year, while 17/18 corn marketing year-to-date gasoline demand is up 1.9% from a year ago.
This morning, with soybeans trading slightly higher, the sentiment was that the negative trade news had likely been priced into the bean market as futures had traded at two-year lows. However, by mid-morning that appeared not to be the case as bean futures moved lower and traded there the majority of the day; only to climb their way back towards the end of the session and close mixed. Fresh news remains scarce with the focus still on U.S./China trade tensions and its impact on U.S. soybeans. As with corn, the near and intermediate-term soybean trends remain bearish. Although, November bean futures are oversold and overextended technically; leaving the market vulnerable to a correction or consolidation phase. At this point, without favorable trade news, the bulls really need a weather scare to turn things around but with more rain and cooler temperatures currently forecast; that seems unlikely short term. The Midwest weather map is forecasting mostly soaking rains over the next 2 to 3 days, then things are expected to turn quiet over the weekend, followed by rain next week. Yesterday's rain totals were mostly nominal, although coverage was widespread throughout the Corn Belt.
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