March 23, 2017
Health care vote, wet forecasts, overhang markets
Most crops closed lower again with corn settling at a 2-1/2-month low and hard red winter wheat at a two-month low on continuous charts.
Corn, soybeans and winter wheat are near oversold levels on technical charts with RSIs in the low 30s. Forecasts for rain continue to weigh on winter wheat.
Outside markets were a little more bullish today with equities and the dollar higher. However, all markets are awaiting today’s vote in the House of Representatives on the GOP’s health care measure. A “no” vote would be seen as bearish for the markets as it would signal that President Trump will have difficulty getting passage of economic development plans.
The dollar is higher after falling to an eight-week low yesterday, but remains in yesterday’s trading range. Crude oil was a little lower when the crops closed but remained within Wednesday’s range.
Exports – USDA, Reuters:
- Weekly export sales (estimates): corn 58 million bushels (49.2); soybeans 30.1 million (23.9) and wheat 20.9 million (18.4).
- Japan bought 117,689 metric tons of wheat from the U.S., Australia and Canada. From the U.S. it bought 28,500 of hard red winter and 28,600 of dark northern spring between April 21 and May 20.
- China imported 5.54 million metric tons of soybeans in February, up almost 23% from March, with 4.43 million coming from the United States, up 13.8%.
- Results are awaited on Algeria’s tender to buy 25,000 metric tons of optional-origin corn for April 15-30 shipment.
- Taiwan seeks to buy 98,200 metric tons of U.S. wheat for May-June shipment. Results are due on Friday.
- Jordan did not make a purchase in its tender for 100,000 metric tons of optional-origin feed barley for May shipment.
- Libya extended the deadline for offers in its wheat, durum and corn tender to the end of March. It seeks 100,000 metric tons of wheat, 50,000 of durum and 75,000 of corn for April-May shipment.
Corn futures closed lower for the fourth straight session amid pressure from the harvests in South America. The May contract remained under key moving averages and with an RSI at about 34 on the charts, with 30 considered oversold.
Weekly export sales of old- and new-crop corn last week were better than expected at a total of 58 million bushels, regular customers South Korea, Japan and Mexico the top buyers. Saudi Arabia also bought a hefty amount. The 53 million in old-crop sales exceeded the weekly pace needed to meet USDA’s annual forecast.
Rain forecast this week for the Midwest should build soil moisture for spring planting next month. The 6- to 10-day outlook also is wet for the Midwest.
The CBOT estimated Thursday’s corn volume at 219,021compared with Wednesday’s actual volume of 254,883. Open interest in Wednesday’s lower market increased by 18,047 with May’s up 4,161 and July’s up 2,476.
May corn closed down 2 at $3.56-3/4 and July down 2 at $3.64-1/2. New-crop December also was down 2 at $3.80.
What to Look For: USDA’s annual planting intentions land on March 31 with fewer corn acres expected in 2017.
Soybeans settled a little lower for the second day and at the lowest for the May contract since early January.
The South American harvests continue to weigh on the market. A private estimate early this week put Brazil’s crop at 111 million metric tons. USDA is at 108 million. The Buenos Aires Grain Exchange on Thursday raised its estimate for Argentina soybeans to 56.5 million metric tons from 54.8 million. USDA is at 55.5 million.
The CBOT estimated Thursday’s volume at 154,623 compared with Wednesday’s actual volume of 144,057. Wednesday’s open interest increased by 1,841 in the weak market with May’s up 548 and July’s up 1,587. November’s open interest decreased by1,933.
May soybeans closed down 8-3/4 at 9.91 per bushel and July down 8-3/4 at $10.01-1/2. New-crop November dropped 7-1/2 to $9.91-1/4.
What to Look For – USDA’s planting intentions report, based on farmer surveys, lands March 31. USDA and others have released acreage estimates in recent months and the market has dialed in forecasts for more soybean and fewer corn acres in 2017.
Winter wheat futures finished lower in light trading as forecasts for rain this week and next week weighed on the markets. HRW and SRW wheat futures are both the lowest since early January and in the low 30s on RSI charts.
Severe storms move through Kansas and Oklahoma today, with rain lingering there on Friday. Rain amounts are awaited. The wheat is jointing and its condition declined a little last week because of dry conditions.
Spring wheat futures were higher on Thursday to end three days of declines. The RSI was near 46.
The CBOT estimated Thursday’s soft red winter wheat volume at 88,756 compared with Wednesday’s actual volume of 96,913. Wednesday’s open interest increased by 9,792 in the lower market with May’s up 5,433 and July’s up 3,553.
Chicago’s May soft red winter wheat closed down 1-1/4 at $4.21 and July down 1-1/2 at $4.36. Kansas City’s May hard red winter dropped 4-1/2 to $4.28 and July dropped 4 to $4.40-3/4. Spring wheat for May rose 3 to $5.40-3/4 and July rose 2-3/4 to $5.47.
What to Look For – Winter wheat has started spring growth to put attention on condition reports from the Southern Plains.
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