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Morning Market Review for January 19, 2018

Can soybeans finish with best week since October? (Comments are updated by 7:30 a.m. Central Time.)

Overnight Trends:
Corn:
 Up 1 to 2
Soybeans: Up 4 to 5
Wheat: Up 1 to 2

Weather market giving back some of the 60 cents it took in December and early January

Dryness in Argentina has provided enough fuel for soybean prices to find footing with multiday gains this week, giving prices the biggest weekly gains in three months if they can hold through Friday’s session. Technical maneuvering also have corn and wheat prices slightly higher overnight as the grain markets are set to close out a shortened week following the Martin Luther King, Jr. holiday on Monday.

Is a government shutdown tonight at midnight still looming? The House of Representatives Thursday evening approved to extend federal funds through February 16, but Senate approval remains unresolved. Wall Street fed on this uncertainty, with the Dow closing down nearly 70 points on Thursday but remaining just below record-breaking levels. Overnight trading helped reverse this trend, however, tilting the total back above 26,000 points heading into Friday.

Overseas, stock markets were mostly in the green, with most European markets up between 0.25% and 1%, with Asian markets picking up more modest growth. 

Energy markets were all down 0.5% to 1% in overnight trading, and the U.S. Dollar continues to soften, continuing a five-week downward trend that has mostly stabilized in the past week.

 

Corn prices continue a choppy four-week ride, with March futures bouncing between about $3.46 and $3.53. Futures sit at the high end of that range Friday looking to break higher after testing gains of around 1.5 cents overnight to $3.53. May futures also added around 1.5 cents overnight to $3.61.

USDA’s Crop Production 2017 Summary, released yesterday, indicates U.S. corn production last season reached 14.6 billion bushels, which was 4% lower than 2016’s record-breaking effort. Per-acre yields were an all-time high at 176.6 bpa, but harvested acres (82.7 million acres) were down 5% from 2016.

Trade analysts expect the next round of USDA export data, out later this morning, to show weekly corn exports between 19.7 million and 31.5 million bushels.

In overseas markets, March futures on the Dalian Exchange in China were up nearly 4 cents to $7.66, and March futures in Paris added 1.5 cents to $4.74 after adjustments for volumes and currencies.

The 5- and 7-day precipitation forecasts shows wetter forecasts most possible in the upper Northest, Pacific Northwest, South, eastern Corn Belt and Great Lakes states.

The official 6- to 10 and 8- to 14-day forecasts, out yesterday, shows  warmer, wetter weather likely east of the Rockies to close out January.

The preliminary report from the CBOT showed daily futures volume was 297,992. Options volume tilted roughly two-thirds in favor of calls (33,985) versus puts (22,769).

Implied volatility fell nearly fell 2.15% Thursday to reach 11.39, hovering near some of the lowest levels of the past five years.

Bottom line: Supplies are big and corn could struggle into February before the market starts to focus on acreage and the size of the Brazilian crop. For more, see Bryce Knorr’s Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Soybeans look to finish the week with some modest gains via a mini Argentina weather rally. March prices started the four-day trading week at $9.65 and have fought their way up to $9.78 to start Friday’s session after picking up 5 cents overnight. May futures have reached $9.89, meantime.

According to USDA’s Crop Production 2017 Summary, last season’s U.S. soybean production hit a record 4.39 billion bushels, 2% above 2016 levels. Harvested area (89.5 million acres) was 8% higher year-over-year and enough to overcome the +2.9 bpa higher yields from 2016 to result in record production. 

Trade analysts expect the next round of USDA export data, out later this morning, to show weekly soybean exports between 29.4 million and 51.4 million bushels.

In Asian vegetable oil markets, March futures for palm oil in Malaysia remained near 28.575 cents. March soybean oil futures in China reached 38.385 cents.

As for oilseed prices internationally, May soybean futures in China were 5.5 cents higher, while February rapeseed futures in Paris slipped nearly 3 cents to $9.55. March canola futures in Winnipeg reached $8.88. Note: International prices are converted to bushel or pound equivalents after conversions for currencies.

The preliminary report from the CBOT showed daily futures volume was 119,082, with a total options volume of 44,787 split between 63% calls and 37% puts.

Implied volatility in options fell 3.3% to 10.86 Thursday to its lowest levels since mid-November.

Bottom line: Soybeans face a make-or-break moment trying to hold Friday’s bullish reversal to mount a counter-seasonal rally. If successful, use gains to wrap up 2017 sales and get started on 2018. For more, see Bryce Knorr’s Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Wheat prices made some small technical adjustments ahead of Friday’s session, with most contracts moving around 0.2% to 0.3% higher in overnight trading. March Chicago SRW reached $4.2650, March Kansas City HRW hit $4.3075, and March MGEX Spring Wheat reached $6.1275.

Trade analysts expect the next round of USDA export data, out later this morning, to show weekly wheat exports between 7.3 million and 18.4 million bushels.

In overseas markets, March futures for Eastern Australian Wheat was down fractionally to $5.1850, with March futures in Paris morning trade still steady at $5.19 after adjustments for volumes and currencies.

Preliminary volume in soft red winter wheat reached 85,146. Options of 39,327 favored calls (31,139) over puts (8,188) by nearly 3:1.

Implied volatility fell 1.1% to reach 16.57, its lowest level in more than three weeks.

Volume in hard red winter wheat winter wheat was 32,345, with options volume more than 86% calls.

Bottom line: Wheat typically loses ground after the January reports and appears to be following that trend this year. For more details on the outlook, see the Wheat Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Explanation of pivot points. 

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This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.
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