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Afternoon Market Recap for June 27, 2017

Corn falters late, ends a fraction higher.

June 27, 2017

Spring wheat charges to more contract highs

The corn market lost some its luster as late selling erased most of the early gains, while soybeans held on to close about 4 cents higher.

Corn and soybeans both received a lift much of the day from USDA’s crop ratings that came out late on Monday. USDA left corn unchanged and dropped soybeans one point on the good/excellent rates, while the trade expected some improvement for both crops. Spring wheat’s ratings dropped 1 point and that triggered more buying and contract highs in that market.

The gains in the crop markets came despite forecasts for rain this week for much of the Midwest. Maps show storms developing today in Nebraska and South Dakota and then spreading east to Iowa and northern Illinois on Wednesday and then stretching from Kansas to Ohio on Thursday.

The 6- to 10-day outlook (July 2-6) is mild and wet for the Midwest but the 8 to 14-day outlook (July 4-10) is hot for much of the country with the Midwest being wet and the northern Plains dry.

Equities had turned lower when the crops closed on selling that followed news the U.S. Senate delayed a vote on its health care bill until after July 4. In a speech, Fed Chairman Janet Yellen said the U.S. economy and banks are in good shape and emerging markets are improving. The Dow Jones industrials were down 43 when the crops closed, the dollar was lower, while crude oil and gold were up a little.

Exports – USDA, Reuters:

  • South Korea’s corn processing group bought about 60,000 metric tons optional-origin corn overnight for arrival about mid-October. The deal follows Monday’s purchases of about 625,000 tons of corn by other South Korean groups.
  • Iraq seeks to buy 50,000 metric tons of hard wheat from the U.S., Canada or Australia. The tender closes July 3 with offers valid until July 9. Shipment details were not published.
  • Bangladesh is in the market for 50,000 metric tons of wheat. The tender closes July 11, with shipment 40 days after deals are signed.

 

Corn closed a fraction higher, but well down from the session’s highs. The wet forecasts through early July are mostly favorable for the crop.

Temperatures are expected to rise about the second week of July, but that did not appear to be a concern for traders. Corn is developing a little behind the five-year average, with USDA reporting 4% was silking as of Sunday versus the 5% average. Corn in Iowa, Illinois and Indiana were all behind their respective averages for that stage of development.

The seven-day forecast favors beneficial rain for the Midwest with total amounts of five inches or more from Iowa to Indiana.

Temperatures appear to be moderating in France and Germany from the recent heat wave, but the weekly forecasts show crops in eastern Ukraine and southwest Russia will continue to have hot weather. The recent heat wave in Europe had some authorities dialing back estimates for this year’s grain production.

The CBOT estimated Tuesday’s volume at 597,854. Monday’s actual volume was 529,297. Open interest in Monday’s firm market decreased by 15,253 with July’s down 49,309 and December’s up 10,566. 

July corn closed up ¼ at $3.59-1/4 and new-crop December rose ½ to $3.77-1/2. 

What to Look For: Attention will be on the Midwest storms this week. Farm Futures expects Friday’s planting report to keep corn acreage near USDA’s current 90 million estimate and June 1 stocks at 5.095 billion versus USDA’s year ago number of 4.72 billion.

 

Soybeans closed higher for the third straight day, but remain under key moving averages and well down from a week ago.

The lower crop rating prompted buying, but gains were kept in check by the wet forecasts for this week and next week.

The CBOT estimated Tuesday’s volume at 240,905. Monday’s actual volume was 234,900. Monday’s open interest in the higher market increased by 1,315 with July’s down 22,598 and November’s up 14,786.

July soybeans closed up 4-1/2 at $9.11-1/4 and August up 4-3/4 at $9.16. New-crop November rose 3-3/4 to $9.17-1/2. 

What to Look For – Rain amounts and breadth of coverage the next few days will be at the forefront of traders’ minds. Farm Futures expects Friday’s planting report to show a few more soybean acres than what USDA’s current 89.48 million. It expects June 1 stocks at 986 million versus the 870 million a year ago.

 

Spring wheat led the wheat markets higher, with July spring wheat peaking near a three-year high after USDA lowered the crop rating.

The winter wheat markets closed higher but had lesser gains than the spring. USDA kept the national rating unchanged for that crop. Winter wheat harvest is under way in the Plains and Midwest with custom harvesters reporting a wide range of yields for the HRW wheat.

The latest forecasts show the heat moderating in western Europe. Wire reports last week said hot conditions in France, Spain and eastern Europe raised concerns for wheat and others crops there.

The CBOT estimated Tuesday’s SRW volume at 109,184. Monday’s actual volume was 138,020. Open interest in Monday’s lower SRW market decreased by 15,208 with July’s down 20,778 and September’s up 3,839.

Chicago’s July SRW wheat closed up 3-1/4 to $4.53-1/4 and September rose 3-1/2 to $4.69. Kansas City’s July hard red winter wheat rose 4-1/4 to $4.57-1/4 and September rose 4-1/4 to 475-3/4. Spring wheat for July rose 17-3/4 to $6.81-1/2 and September rose 17-1/4 to $6.86. 

What to Look For – The Kansas harvest was 48% done as of Sunday versus 53% a year ago and the 47% average. Farm Futures expects USDA’s stocks report on Friday to show about 1.164 billion bushels of wheat as of June 1 versus 981 million a year ago.

More from Farm Futures:

Weekly Corn Review
Weekly Soybean Review
Weekly Wheat Review

 

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