By Steve Freed
May soybeans settled at 909 ¼, up 10 ¾ cents on the day leaving the market up 13 ½ cents on the week. May soybean meal settled at $310.80, up $4.90 on the day leaving the market up $7.10 on the week. May soybean oil settled at 29.43, down 0.14 points on the day which left the market down 0.22 points on the week. May crush settled at 98 ¼ cents down ¼ cent on the week. The strength in the market is tied to positive signs on the US/China trade front this morning. News this morning have Chinese state media outlets reporting that China’s Parliamentary meetings concluded today with new laws in place regarding the main issues of the US/China trade war. The new laws protect intellectual property protection/forced technology transfers, and opening foreign investment into Chinese markets which should bode well for a conclusion of the talks.
The February NOPA crush report came in at 154.5 million bushels versus the average estimate of 159.1 million bushels (154.7-164.0 million range) and compared to the January NOPA crush at 171.63 million bushels. The average estimate was too high as it implied an average daily rate of 5.67 million bushels per day. December and January saw an average daily rate of 5.54 million bushels per day. Oil stocks came in at 1.752 billion pounds versus the average estimate of 1.612 billion pounds (1.490-1.680 billion range) and compared to January’s 1.549 billion pounds. The Buenos Aires Grains Exchange left their soybean production unchanged at 53.0 million tonnes while the Rosario Exchange estimate is 54.0 million tonnes. The number of breeding sows in China declined by 19.1% in February versus last year and dropped by 5% in January according to a survey of 400 counties by the Minister of Agriculture and Rural Affairs. February hog inventories are down 16.6% versus a year ago and down 5.4% versus last month. African swine fever has spread to almost every province in China, the world’s largest pork producer. The open interest in soybeans went down 1,113 contracts on Thursday with soybean meal down 5,440 contracts and soybean oil down 856 contracts.
May corn settled at 373 ¼, up 3 cents on the day leaving the market up 9 cents on the week. Positive developments in the US/China trade negotiations have supported prices. News today that China’s Parliamentary meetings concluded with substantial progress made on new foreign investment laws and intellectual property rights that restrict forced technology transfer should smooth the way to a new trade deal with the U.S. The market is also still garnering support from mid-week rumors that China bought as much as 3.0 million tonnes of US corn off of the Pacific Northwest (PNW) which has not been confirmed. It has been reported from cash sources that China is actively watching corn offer prices and are likely waiting for a break in prices. Recall, the initial import total that sources were using for Chinese corn imports was 7.0 million tonnes. It does look like China bought up to 3 cargoes of sorghum this week which is also a positive sign for the US/China trade negotiations. The bullish sentiment continues for corn with potential Chinese buying, saturated fields in the western belt and near record managed money shorts. The Buenos Aires Grains Exchange left their corn production estimate unchanged at 45.0 million tonnes. The Rosario Exchange pegged the Argentine corn production at 47.3 million tonnes. The open interest in corn went up 4,606 contracts on Thursday.
Chicago May wheat settled at 462 ¼, up 9 ½ cents on the day which left the market up 22 ¾ cents on the week. Kansas City May wheat settled at 443 up 6 ½ cents on the day leaving the market up 12 ¼ cents on the week. Matif May futures settled at 189.25 Euros, up 3.0% on the week and put in a bullish outside week higher close. The massive late winter storm has moved out of the Plains and western corn-belt and into the Great Lakes states, but the heavy snows and high winds have caused some stress on winter wheat. Monday’s state crop reports may decline from the extreme conditions. There has been a flurry of wheat business this past week, with Algeria, Turkey, Bangladesh and Tunisia all buying. This has been supportive to world wheat offers. French, German and US offers have rallied some $7-$10 dollars per tonne this week, but they remain below Russian offers.
The makeup of the market should also be supportive, as managed money traders have pressed the short side of the Chicago and Kansas City wheat markets over the past few weeks. In Kansas City, managed money traders reached a record net short position of 44,870 contracts as of March 5th. Open interest has increased over the past five sessions, implying that have added to their net short. For Chicago wheat, the managed money net short position was 72,449 contracts as of March 5th, well below the record 153,577 contracts. Still, open interest in Chicago wheat was nearly unchanged over the last five sessions, so very little short covering has taken place. Open interest in Chicago went down 1,719 contracts on Thursday with Kansas City up 145 contracts.
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