Jan. 19, 2017
Corn inches higher
Crops took a breather from recent torrid gains with soybeans and winter wheat lower on Thursday and corn about a penny higher.
Market-moving news was fairly light with one corn export sale on Thursday while weekly export sales have been delayed until Friday. Rain and thunderstorms are forecast for much of the Midwest and Plains the next few days with winter wheat welcoming the moisture.
Argentina is dry this week but should have rain next week. Reports of excess rain in the northern growing regions there and drought in the southern regions supported Chicago soybeans this month.
Investment money has moved into the crop markets from other assets to lift open interest in corn and in the soybean complex.
Farm Futures released its planting survey on Thursday, which said growers want to plant a record 90.52 million acres of soybeans in 2017, up 8.5% from 2016. Corn acreage is expected at 90.49 million, down 3.7% from 2016. The switch was attributed to better profit potential for the oilseed.
In other markets, equities were lower with the Dow industrials down about 90 points when the crops closed and ahead of Friday’s inauguration. The dollar is higher for the second day, but still down from the 14-year high earlier this month.
Exports – USDA, Reuters:
- USDA said on Thursday unknown destinations bought 4.35 million bushels of 2016/2017 corn.
- Japan bought 117,605 metric tons of U.S. and Canadian wheat. From the U.S., it bought 14,160 of western white, 19,505 of hard red winter and 34,390 and dark northern spring for Feb. 21-March 20 loading.
- South Korea’s state run fisheries corporation bought 140,000 metric tons of non-GMO U.S. soybeans for arrival there in 2018.
- Egypt seeks to buy a variety of wheat from a number of sources including the United States. Results are due on
- Taiwan seeks to buy 93,605 metric tons of various classes of U.S. milling wheat for shipment in March and April. The tender deadline is Jan. 20.
- Ethiopia seeks to buy 720,000 metric tons of optional-origin milling wheat, with offers due by Feb. 3. Shipment will be within three months of when letters of credit are opened, which could be March to May.
Corn closed about a penny higher as trading volume eased. The March corn remained within a few cents of chart resistance at the 200-day moving average near $3.70.
Open interest has been increasing and speculation is investment funds are adding long positions. Funds entered the week net short corn, but have reduced those short positions in recent weeks.
Corn harvest begins in Argentina and Brazil in a few weeks, which may pull export demand away from the U.S. USDA last week left Argentina’s and Brazil’s corn crops unchanged from December at 86.5 million and 36.5 million metric tons, respectively.
The dollar-value of corn at China’s Dalian market for March was firm at $5.53 a bushel. European corn for March was about unchanged at $4.59. The prices reflect conversions from local currencies and metric tons.
The CBOT estimated Thursday’s corn volume at 271,970 compared with Wednesday’s actual volume of 331,892. Open interest in Wednesday’s flat market increased by 9,874 with March’s up 110 and May’s up 8,209.
March corn closed up 1-1/4 at $3.66-1/4 per bushel and May up 1 at $3.73-1/4.
What to Look For: Weekly export sales on Friday are expected to be up significantly from last week’s light volume.
Soybeans retreated a few cents after previous gains but still remain near their recent six-month high.
Open interest increased again in Wednesday’s higher market and likely involved fund buying as they increased long positions in the crops. Soymeal eased on Thursday after recent gains. Its open interest also increased this week.
China’s soybeans at the Dalian market closed flat with the actively traded May contract at the equivalent of $16.93 a bushel.
The CBOT estimated Thursday’s volume at 205,020 compared with Wednesday’s actual of 299,132. Wednesday’s open interest increased by 27,459 contracts in the higher market with March’s up 11,211 and May’s up 7,287.
March soybeans closed down 4-3/4 at $10.70-1/4 per bushel and May down 5-1/4 at $10.78-1/2. New-crop November was up 1-1/2 at $10.29-3/4.
What to Look For – Weekly export sales on Friday are expected to be up from last week’s small amount.
Winter wheat closed lower to set back after recent gains, while spring wheat was higher in nearby months.
Kansas City’s HRW had the largest set back with nearby months down 10 cents. The HRW had sped higher early this week to it highest since June following USDA’s recent report showing a larger-than-expected drop to winter wheat acres.
Parts of the High Plains winter wheat areas should have some rain the next few days as well as the Midwest. Egypt joined the export line up for wheat but it previously has favored lower-priced wheat from other origins. Taiwan’s seeks U.S. wheat with results expected on Friday and Japan bought U.S. and Canadian wheat in this week’s tender.
The CBOT estimated Thursday’s soft red winter wheat’s volume at 109,543 compared with Wednesday’s actual of 115,580. Wednesday’s open interest decreased by 5,503 in the lower market with March’s down 6,431 and May’s down 476.
Chicago’s March soft red winter wheat closed down 7-1/2 at $4.23-1/2 per bushel and May down 6-3/4 at $4.39-1/4. Kansas City’s March hard red winter dropped 10 to $4.42-1/4 and May fell 10 to $4.54-1/4. Spring wheat for March rose 3 to $5.76-1/2 and May rose ¼ to $5.64-1/4.
What to Look For – Forecasts in a Reuters poll for weekly export sales were on both sides of last week’s moderate sales.