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Afternoon Market Recap for August 22, 2017

Futures close mixed as large inventories weigh.

Soybeans edge higher thanks to vegetable oil rally

Grain futures closed mixed today, sending corn and wheat to new lows and keeping only soybeans above water.

Other markets showed welcome signs of a return to normalcy, or what passes for it on Wall Street. Stocks rallied in Asia and Europe, helping propel U.S. indexes to gains approaching 1% as the last hour of trading neared. The VIX, or fear index eased back below 12%.

Investors bought dollars and dumped safe havens, including gold and Treasuries, sending interest rates a bit higher. More news on the timing of rate increases may come out later this week at the Federal Reserve’s annual conference in Jackson Hole, Wyoming.

Crude oil firmed ahead of Wednesday’s weekly report on inventories that is expected to show reduced stocks. Ethanol also was higher, continuing to recover from last week’s losses after near-record production increased surpluses.

 

Corn prices finished with modest losses, but that was enough for December futures to edge closer to its worst level in almost a year. An outside day lower reflected bearish sentiment that kicked in as a rally attempt faded ahead of trading in Europe.

December’s break to the $3.60 level came as a storm system moved fairly quickly through the Midwest, keeping precipitation in the eastern Corn Belt limited south of I-70. Much of the growing region outside the Plains will be mostly dry until next week, when tropical moisture could bring some relief north of the Ohio River Valley. 

Questions about the size of the 2017 linger. Monday’s Crop Progress report kept the percentage of corn rated good to excellent unchanged, but our state-by-state analysis showed the crop slipping due to losses in key areas, including Illinois, Indiana and Missouri. 

Demand news was thin, though basis firmed along parts of the river system. Wednesday’s report on ethanol production will show how plants responded to margins that fell last week. 

Volume was fairly steady today. Initial volume was put at 330,968, down from 334,856 on Monday.

 

Soybeans edged higher on Tuesday, fueled by a global rally in vegetable oil. That was one of the few bright spots on a down day that kept November above Monday’s lows.

The extended growing season in soybeans also is helping provide support, following mixed results from Monday’s Crop Progress report. While nationwide ratings improved according to USDA, the state-by-state total fell, leaving the average of the two little changed, with a range of 47.4 to 48.2 bushels per acre. Conditions eased from Wisconsin to Louisiana, with deterioration most noted in the central Midwest.

Basis was mixed in the river system as Gulf bids eased, but processors were stronger on the rally in oil.

Initial volume reported after the close was higher, coming in at 150,211, up from 130,900 on Monday.

 

Wheat prices continued under pressure on Tuesday. Winter wheat contracts posted another in a series of contract lows. Minneapolis slumped to double digit losses, breaking a long-term support line drawn off spring and summer lows and moving closer to its 100-day moving average.

U.S. futures weren’t the only ones in the red. Prices in Paris also slid to fresh contract lows, though that market is still 75 to 80 cents above the U.S. Large supplies out of Russian remain an anchor on prices.

Mixed ratings for spring wheat out Monday failed to provide much help. USDA said the nationwide rating of the spring wheat crop improved, though our state-by-state assessment was slightly lower. Average yield projections made from those ratings are still 1 to 2 bpa below USDA’s yield put out Aug. 12. 

Base prices for winter wheat crop insurance are being set in key states. The average for July 2018 hard red winter wheat futures is $4.92 so far, compared to $4.59 last year. September SRW futures average $5.07 so far in the discovery period, which runs through Sept. 14. Last year’s SRW average was $4.74. 

Initial volume Tuesday was higher at 138,346 contracts, compared to 105,298 Monday. Volume in hard red winter also was higher, rising to 67,050 from 48,134 Monday.

More from Farm Futures:

Corn Outlook
Soybean Outlook
Wheat Outlook

  

 

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