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Morning Market Review for July 26, 2017

Corn, soybeans turn lower as early overnight gains dissipate. (Comments are updated by 7:30 a.m. Central Time.)

July 26, 2017

Overnight trade:
Corn:
 Down 1-1/2
Soybeans: Down 2
Wheat: Up 3 to 5

More rain for the Midwest

Corn and soybeans futures traded near unchanged late in overnight session as they were unable to hold onto the modest gains earlier in the trading.

Early gains in the two crops had a hard time getting traction with forecasts putting more rain in the Midwest the next few days and possibly light showers in western North Dakota. 

Wheat markets remained higher, with spring wheat traders monitoring a scouting trip moving through the Dakotas this week. 

Farmers posting Feedback From The Field this week point to stress from hot, dry conditions in some areas with crops delayed in development. Let us know what’s happening in your fields.

Maps have storms over Iowa and Illinois today, which may not be welcomed in eastern Iowa and northern Illinois, where recent rain has left water in crop fields and filled creeks and rivers to flood levels.

In outside markets U.S. stocks are poised to open a little higher ahead of the Federal Reserve’s afternoon announcement that follows its monthly two-day meeting. An interest rate hike is not expected but, as usual, traders will look for clues in Wednesday’s post-meeting commentary about the likelihood of future increases.

The dollar is higher for the third day as it claws back from the one-year low set last week. Gold is a little lower. Crude oil futures also are higher for the third day as OPEC makes a push to extend production cuts.

 

Corn futures moved lower as the overnight session headed into the close. The forecasted rain and cool conditions should help much of the crop as it moves through pollination.

USDA did drop the crop rating 2 points on Monday to 64% good/excellent, a reduction that was close to expectations.

Official 6- to 10-day forecast out yesterday is cool and dry for the Midwest and central Plains but warm and dry for the northern Plains. The 8- to 14-day outlook is drier for the Midwest and northern Plains with mostly seasonal temperatures. 

The government’s weekly energy report lands later this morning with the trade looking for declines in crude oil and gasoline stocks.

The preliminary report from the CBOT had futures volume in corn down on Tuesday at 364,382. Open interest increased by 11,886 in the lower market.

Overseas corn markets are weak with September futures on the Dalian Exchange in China at about $6.23. November futures in Paris also were weak at $4.92, after adjustment for volumes and currencies, as France made no change to its crop ratings this week. 

Bottom line: While yields may wind up lower than USDA projects, specifics won’t be known for a month or more. Charts show classic signs of a top but ratings will have to improve to confirm. This is a rebound rally for now; use it to step up protection. For more, see my Weekly Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Soybeans also are a little lower as they lost the earlier upward momentum. The lack of threatening weather as the crop moves through its seed production phase may be keeping a lid on the market. 

USDA did lower the crop rating to 57% good/excellent from last week’s 61%. New-crop November remains above most key moving averages with an RSI of 52. 

Vegetable oil markets in Asia are a little higher. September soybean oil futures on the Dalian Exchange in China inched up to 40.8 cents per pound and September futures for palm oil in Malaysia improved a little to almost 28 cents.                                        

Oilseed prices internationally were mixed. September soybean futures in China up a little at $15.28 while November rapeseed were a few cents lower at $9.66. November canola in Winnipeg continued to drop and at $8.87 is near a one-month low. Note: International prices are converted to bushel or pound equivalents including currency adjustments to U.S. dollars for contracts with significant volume.

The preliminary report from the CBOT showed daily futures volume on Tuesday increased to 327,391 contracts in the lower market. Estimated open interest decreased by 4,857 as traders exited long positions.

Bottom line: Soybeans still have plenty of weather to trade but ability to hold now is key. Large global supplies remain an anchor on prices appears to have limited gains to short-covering for now. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

The three wheat markets have modest gains.

A tour traveling through the Dakotas found lower yields, as expected, for spring wheat. The tour will soon move through western North Dakota where the drought-hit fields are. Scouts found decent wheat in the Red River Valley on the eastern border where rain was more frequent.

Spring wheat’s condition was lowered a point by USDA late on Monday to 33% good/excellent. This week’s rain may be of some help but the crop is nearing maturity, so it may be too late to correct for the poor stands earlier in the season.

Reports say Algeria bought about 500,000 metric tons of wheat overnight with eastern Europe and South America the likely suppliers. Bangladesh is working a deal to buy about 50,000 metric tons and reports say it may be filled by Russian wheat. 

Egypt on Tuesday bought Russian, Romanian and Ukraine wheat its regular wheat tender passing on a offer of U.S. wheat.

USDA said the winter wheat harvest was 84% done, compared with 80% average. The Kansas harvest was finished, which was a little ahead of the five-year average.

Estimated volume in soft red winter wheat on Tuesday increased by about 20,000 to 185,944 with open interest down 5,351. KC HRW wheat volume on Tuesday was 54,417 and open interest rose 1,395 in the lower market.

December wheat futures in Paris morning trade were a fraction higher at $5.52, after adjustments for volumes and currencies, after their recent fall to a six-week low.

Bottom line: Seasonal trends suggest wheat may have more time to rally. Make sure you have sufficient protection in place in case a rebound fails. For more details on the outlook, see the Weekly Wheat Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Explanation of pivot points. No pivot points today.

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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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