April 26, 2017
Corn: Steady to up 1
Soybeans: Down 1 to 2
Wheat: Up 1 to 3
Cold, wet forecast keeps corn firm after Tuesday's surge
Grain futures are mixed after a fairly quiet overnight session that saw attempts to extend Tuesday’s rally mostly give way to firm trade. Traders liquidated May contracts actively on Tuesday ahead of first notice day at the end of the week, with short covering helping to boost corn and wheat.
Weather continues to be the driving force in the grain market as farmers try to plant 2017 crops. What’s happening in your area with planting? Let us know with Feedback From The Field.
Outside markets are also holding following yesterday’s big surge on Wall Street. President Trump is expected to outline his tax plan today while talks continue to avert a government shutdown at the end of the week.
The dollar is stronger today, keeping crude oil under a little pressure. The latest government data on crude oil inventories, due out at 9:30 CDT, will decide whether stocks rose, as a private industry survey suggested, or fell again last week, as analysts expect. Diesel supplies could drop as Ag use ratchets higher seasonally.
Corn prices are a little stronger after jumping to test 50- and 100-day moving averages on Tuesday. While much of the focus is on weather, some demand news is also in play.
Today’s report on ethanol production will show how plants reacted to margins than improved last week thanks to lower cash corn prices. Taiwan closed a tender for 2.4 million bushels overnight, though that corn may be coming from Brazil, where prices delivered are cheaper even after higher freight costs.
Still, with huge supplies for 2016 corn overhanging the market, recent gains are all about weather. Storms are moving across the Midwest today, part of a system expected to dump one to three inches or more over most of the growing region according to maps for the next week. The outlook for the second week is a bit murkier. Forecasts agree on more below average temperatures. But while official 6- to 10 and 8- to 14-day forecasts out yesterday show a dry spell on the Plains giving way to more rain, the latest updates this morning show drier weather expanding as far east as Illinois.
The preliminary report from the CBOT had futures volume jumping 40% to a heavy 670,472, with very active fund short covering taking 23,892 off open interest. Options volume was 62% higher at 119,430, 58% of it calls with buying continuing in old crop strikes. Implied volatility in corn Tuesday jumped another 8% Friday to 19.20.
Overseas markets were firm. September futures on the Dalian Exchange in China gained 1.1 cents to $6.026 while June futures in Paris morning trade were steady at $4.786 after adjustments for volumes and currencies.
Bottom line: Wet, cold forecasts should provide some support for now, but large old crop supplies continue to hang over the market. Continue to move old crop corn to avoid getting stuck if the hoped for weather rally never comes this 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 ebbing lower again this morning. Large old crop supplies and fears of rising acres weigh on prices as traders wonder if wet corn ground could wind up in soybeans.
Vegetable oil prices in Asia were mixed today. September soybean oil futures on the Dalian Exchange in China edged lower to 38.37 cents/lb but July futures for palm oil in Malaysia gained back more than a quarter cent of their recent decline to 26.21 cents.
Oilseed prices overseas were also mixed. September soybeans in China lost 1.2 cents to $14.71, Paris futures for November rapeseed was off 1.9 cents to $9.114 and July canola in Winnipeg was up less than a penny to $8.703. 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 off 8% on Tuesday to 254,511, with most fund liquidation helping to take 16,441 off open interest.
Options volume rose 16% to 44,996, 56% of it calls as traders continue to liquidation November $11 calls. Implied volatility in soybean options edged lower to 14.54 Tuesday.
Bottom line: While large world supplies hang over the market for the 2016 marketing year, the balance sheet for 2017 hasn’t changed that much. 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 firm today, given a boost by weather and ability of nearby winter wheat futures to hold a test of $4 Tuesday.
Cold, wet weather this week, including some more snow, should limit seeding of spring wheat, though rains in maps for the next week should help hard red winter wheat. Heavy rains from the Delta into the lower Mississippi River Valley could flood some soft red winter wheat fields. Official 6- to 10 and 8- to 14-day forecasts hinted at a little drier weather on the Plains and the latest updates this morning are more evident with that feature.
Overseas markets area mixed. January futures for Eastern Australian Wheat eased 1.4 cents to settle at $4.868 after rains this week in southern and eastern parts of the continent ahead of seeding. May futures in Paris morning trade were up 3 cents after adjustments for volumes and currencies. Much needed rain is in the forecast for France but freezing temperatures are also being seen in parts of Western Europe.
Volume in soft red winter wheat was 43% higher on Tuesday to 208,964 with moderately active fund short covering helping trim 17,053 off open interest on May liquidation ahead of first notice day. Options volume fell 18% to 28,845, 69% of it calls, with some new interest noted in the September $5 call. Implied volatility in wheat was 2% higher Tuesday to 23.92. Volume in hard red winter wheat as up 69% to 99,808 on open interest that dropped 9,662.
Bottom line: It’s now or never for rallies in wheat. Large carries in winter wheat contracts could be a marketing opportunity for those with storage. 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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