May 26, 2017
Soybeans: Down 1 to 2
Markets try to stem tide of selling as more rain looms in the forecast
Grain futures are mixed this morning after a fairly quiet overnight session, with markets already showing signs of holiday trade ahead of the long Memorial Day weekend.
Farmers posting Feedback From The Field this week continue to make progress planting despite weather troubles, though their initial ratings for crops are disappointing. Let us know what’s happening in your fields.
Outside markets are turning weaker this morning. Stocks pared gains in European trade after yesterday’s move to new record highs by the S&P 500 Index. Crude oil is also starting to fade on the heels of yesterday hard break following production cuts by OPEC and its allies that disappointed traders wanting more aggressive action.
Corn prices are fighting to recover from Thursday’s bearish reversal lower, trying to move back above key moving averages that come into play around $3.6975 today on the July chart. Old crop prices tend to break after Memorial Day many years, but this year’s wet, cold spring is the best hope for rejecting that pattern.
Rains this week focused on areas of the eastern Corn Belt that were already wet, and maps for the next week show that pattern continuing. Official 6- to 10 and 8- to 14-day forecasts out yesterday showed hope for a somewhat drier pattern north of I-70, but the latest updates this morning rejected that outlook with prevent plant deadlines for crop insurance starting to pass.
Export sales last week totaled 18 million bushels, well below trade guesses and all for old crop. USDA later announced the sale of another 4.5 million bushels of old crop to unknown destinations under its daily reporting system for large purchases.
The preliminary report from the CBOT had futures volume up 12% on Thursday to 187,227 with modest new fund selling adding 7,426 to open interest. Options volume fell 30% to 72,288, 65% of it calls as traders rolled down September calls and rolled up July puts. Implied volatility in corn Thursday dropped almost 2% to 20.80.
Overseas markets are mixed. September futures on the Dalian Exchange in China closed unchanged at $6.002 ahead of a hot weekend in parts of the country’s central growing region. June futures in Paris morning trade were down 2.1 cents to $4.698 after adjustments for volumes and currencies
Bottom line: Large old crop supplies continue to hem in the market. Continue to make sales at the top of the trading range to avoid getting stuck with excess inventory later in the summer. For more, see my Weekly Corn Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Soybeans are posting modest losses, making new lows after Thursday’s break to the lowest level since April 2016. A selloff into Memorial Day isn’t unusual for soybeans, with the downturn yesterday tied in part to weakness in crude oil.
Export sales of 17.4 million bushels of old crop continue to show good strength despite the huge crop coming out of South America. Old crop sales remain minimal, however, which could delay the start of the U.S. selling season this fall.
Vegetable oil markets in Asia broke hard again today. September soybean oil futures on the Dalian Exchange in China lost more than a third of a cent to 38.825 cents/lb while July futures for palm oil in Malaysia were down almost a half cent at 28.452 cents.
Oilseed prices internationally were also lower. September futures in China fell 6.4 cents to $15.261, Paris November rapeseed was 1.3 cents lower at $9.162 and July canola in Winnipeg was down 4 cents at $8.723. 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 up 13% on Thursday to 157,112 with modest new fund selling helping to add 10,379 to open interest. Options volume jumped 72% to 75,380, 51% of it calls as traders rolled down July puts while adding July and August calls. Interest was also shown in the November 2018 $10/$12 call spread. . Implied volatility in soybean options rose 3.5% to 16.58 Thursday.
Bottom line: Large global supplies remain an anchor on prices, Weather rallies could come, but when? Be ready for a bumpy ride over the summer and into the South American growing season next fall. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Wheat prices are mixed today as the market tries to recover from bearish trade in winter wheat. July futures in both markets reversed lower yesterday after touching 50-day moving averages, but spring wheat continues to advance on weather concerns in Canada.
Export sales of 20 million bushels focused on new crop as the 2016 marketing year ends next week.
Overseas markets were quietly mixed today. January futures for Eastern Australian Wheat settled a half cent lower at $4.921 and December futures in Paris morning trade were up a half cent at $5.223 after adjustments for currencies and volumes.
Volume in soft red winter wheat fell 2% Thursday to 73,731 with light new fund selling helping to add 4,445 to open interest. Options volume was 4% higher at 16,157, 54% of it puts as traders liquidated June options that expire today. Implied volatility in wheat rose to 22.90 Thursday. Volume in hard red winter wheat fell 12% to 24,421 on open interest that was up 1,868.
Bottom line: Use any rallies now to add to sales of new crop, using large carries in winter wheat contracts if storage and year round markets are available. 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.
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