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Afternoon Market Recap for July 20, 2017

Crops rise as forecasts favor drought, heat.

July 20, 2017

U.S. forecast expands drought area

Soybeans led the crop markets higher with corn also having solid gains as forecasters keep hot weather in the Midwest through August and the latest U.S. Drought Monitor expanded the area of moderate drought into the western Midwest and central Plains. 

The Drought Monitor also added exceptional drought for a small area of southwest North Dakota. 

In addition, the National Weather Service’s 30-day outlook favors above-normal temperatures in August for most of the country.

In the longer term the latest 6- to 10-day (July 25-29) outlook has hot, dry conditions for the central and northern Plains and for much of the Midwest. The 8- to 14-day (July 27-August 2) outlook keeps hot and dry conditions then for the Plains and western Midwest.

The dollar tumbled to its lowest since August following strong gains in the euro as the European Central Bank hinted it may tighten the money supply beginning this fall. 

Equities were a little lower with the Dow Jones industrials down about 6 points when the crops closed. Gold was down $4.40 an ounce and crude down was down about 33 cents a barrel.

Exports – USDA, Reuters:

  • USDA weekly export sales, mln bu (est, prev week): corn 26.7 (21.7, 17.4), soybeans 71 (64.3, 25.1) , wheat 24.6 (11.9, 13.1).
  • Jordan retendered for 100,000 metric tons of wheat after not making a purchase in its previous tender. The current tender closes on July 26.
  • Results are awaited on Japan’s tender to buy 89,443 metric tons of U.S. and Australian wheat. From the U.S. it seeks 17,457 of western white, 10,110 of hard red winter and 32,031 of dark northern spring. Loading is for Aug. 21-Sept. 20. Results are due on Thursday.
  • Iraq is tendering to buy 50,000 metric tons of wheat from the U.S., Canada or Australia. The tender closes on July 31, with offers remaining valid until August 6.
  • Bangladesh issued a new tender to buy 50,000 metric tons of wheat. The tender closes July 26.

 

Corn closed about 8 cents higher, with new-crop December at a one-week high and now farther above key moving averages. The hot forecasts could be a problem for pollinating corn.

Weekly export sales were better than expected and most of the business went to regular customers in Asia and Latin America.

The CBOT estimated Thursday’s volume at 396,577. Wednesday’s actual volume was 390,856. Open interest in Wednesday’s higher market decreased by 9,724 with September’s down 10,848 and December’s down 4,450.

September closed up 8-1/2 at $3.91 and new-crop December rose 8-1/2 to $4.04.75.

What to Look For: Weather remains supportive with hot conditions expected this week and next week.

 

Soybeans posted double-digit gains for the second consecutive day with new-crop November moving farther past $10 and close to last week’s pre-report highs.

Other oilseed markets were mixed, with Winnipeg canola higher to recover all that it lost yesterday. Europe’s rapeseed dipped and is near a two-week low.

Weekly export sales were big but that had been expected as USDA had announced a large China sale last week via its daily reporting system. New-crop sales still trail last year’s levels at this time 

August soybean futures finished above most key moving averages with an RSI of 64.2 on charts. November also stayed above key moving averages with an RSI near 65. 

The CBOT estimated Thursday’s volume at 205,970. Wednesday’s actual volume was 195,555. Wednesday’s open interest in the higher market decreased by 2,018 with August’s down 5,712 and November’s up 2,285.

August closed up 13-1/2 at $10.13-1/4 and new-crop November rose 14-1/2 to 10.27. 

What to Look For – Soybeans are developing about on schedule with 52% at the blooming stage versus the 51% average.

 

The wheat markets were followers of the corn and soybeans, with the winter wheat and spring posting modest gains.

Spring wheat continues to get support from the hot, dry conditions in the Dakotas. The winter wheat harvest is about finished leaving it largely immune to further weather problems.

Wheat export sales at 24.6 million bushels were much better than expected and year-to-date sales are above a year ago.

Spring wheat contracts remain above key moving averages with September’s RSI at 64.35. Harvest in the Dakotas is about two weeks away. 

September SRW and HRW contracts stayed under the 20-day averages but above other averages.

The CBOT estimated Thursday’s SRW volume at 111,616. Wednesday’s actual volume was 195,555. Open interest in Wednesday’s SRW market decreased by 341 with September’s up 368 and December’s down 2,355. KC HRW wheat actual volume on Wednesday increased to 53,052 and open interest decreased by 1,197.

Chicago’s September SRW wheat closed up 2-3/4 at $5.05-3/4. Kansas City’s September HRW rose 3-1/2 to $5.03-3/4. Spring wheat for September rose 2-1.2 to $7.78.

What to Look For – Weather will be key as spring wheat heads into next month’s harvest.

More from Farm Futures:

Weekly Corn Review
Weekly Soybean Review
Weekly Wheat Review

 

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