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Afternoon Market Recap for July 27, 2017

Troubles in the Dakotas guide wheat higher.

 

Corn and soybeans continue their recovery

Reports of poor stands and expected low yields in spring wheat preceded more gains in the wheat markets, with spring wheat futures up the most.

Corn and soybeans were higher for the second day as bargain buying continued after the sharp drop early this week. The two crops have recovered about half of what they lost two days ago when fund selling hit a large swath of the markets.

Weather forecasts show drier conditions the next few days for much of the Midwest after recent storms. The latest 6- to 10-day (August 1-4) outlook is cool and dry for most of the Midwest, while the 8- to 14-day (Aug 3-9) outlook favors cool weather for the Midwest with dry conditions for Iowa and Minnesota and wet for Indiana and Ohio.

The dollar is little higher in the afternoon after dropping earlier to a 13-month low. Equities set some record highs today, with the Dow Jones industrials up about 25 points when the crops closed, following bullish business results from Amazon, Intel and Verizon. 

Gold was up about $11.60 an ounce. Crude oil is higher again and at a seven-week high after a government report yesterday showed a larger-than-expected drop in weekly supplies. 

Exports – USDA, Reuters:

  • Weekly export sales, mln bu (estimates) : corn 22.8 (15.7-35.4), soybeans 30.6 (14.7-47.8), wheat 18.3 (12.9-20.2)
  • USDA reported the sale of nearly 9.7 million bushels of soybeans to unknown destinations. The deal included about 7.3 million of the 2016/2017 crop and about 2.4 million of the 2017/2018 one.
  • Iraq tenders 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.

 

Corn closed a little higher but September and December remained well under key moving averages and still lower for the week.

Corn likely got some help from a surge in new-crop export sales and the higher wheat markets. New-crop sales were more than double the previous week’s. Wheat and corn compete for use in feed rations. Funds were net buyers for the second day after selling earlier in the week.

USDA early this week lowered corn’s crop rating 2 points to 62% good/excellent, which was close to trade forecasts. However, investors appeared to react to the expected mild weather for the Midwest and bearish technical signals.

The CBOT estimated Thursday’s volume at 230,481. Wednesday’s actual volume was 389,463. Open interest in Wednesday’s higher market decreased by 3,378 with September’s down 4,457 and December’s down 4,746.

September corn closed up 1-1/2 at $3.74-1/4 and new-crop December up 1-3/4 at $3.87-3/4.

What to Look For: Corn harvest began this week in the south and should soon gain traction in eastern Texas.

 

Soybeans had good gains and have recovered about half of what they lost early this week. New-crop November is now above key moving averages with an RSI near 56. 

Fund buying was noted for the second day after being net sellers in previous sessions. In exports, the sale to unknown destinations provided some news for the market, while weekly export sales were down from a week but about as expected.

Other oilseed markets were mixed. Winnipeg canola for November was higher for the second day while Europe’s rapeseed was lower with selling in August erasing about a third of yesterday’s gains.

The CBOT estimated Thursday’s volume at 179,997. Wednesday’s actual volume was 211,634. Wednesday’s open interest in the higher market decreased by 2,681 with August’s down 7,349 and November’s 3,079. 

August closed up 6 at $9.94-3/4 and new-crop November rose 7-1/4 to 10.07-1/2.

What to Look For – Mild weather appears ahead for Midwest soybeans, which are entering or are close to entering seed production.

 

Spring wheat was higher again following the lower-yield forecasts from the tour. After the close reports say tour participants put out an average spring wheat yield of 38.1 bpa versus 45.4 a year ago.

Social media carried tour pictures of sparsely populated fields of poorly developed spring wheat.

Forecasts put scattered showers in the northern Plains later this week but the rain will not make up for fewer acres and the drought damage early in the growing season.

Weekly export sales were about as expected, but were down from a week ago, with Asian countries the leading buyers.

September spring wheat remained under the 20-day moving average but above other averages and had a RSI near 51. Harvest in the Dakotas is about two weeks away. September SRW and HRW contracts finished under the 20- and 50-day averages.

The CBOT estimated Thursday’s SRW volume at 80,769. Wednesday’s actual volume was 110,631. Open interest in Wednesday’s higher SRW market increased by 1,693 with September’s down 3,390 and December’s up 2,988. KC HRW wheat’s actual volume on Wednesday dropped by about 14,000 to 40,553 with open interest up 2,504.

Chicago’s September SRW wheat closed up 2 at $4.79-3/4. Kansas City’s September HRW rose 5-1/2 to $4.81. Spring wheat for September was up 6-1/2 at $7.36-1/2. 

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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