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Morning Market Review for July 24, 2017

Wet forecast dampens crop markets. (Comments are updated by 7:30 a.m. Central Time.)

July 24, 2017

Overnight trade:
Corn:
 Down 7
Soybeans: Down 18
Wheat: Down 6-7

Soybeans lead crops lower

Grain futures are lower this morning as weather maps have more rain and storms moving across the northern Plains and upper Midwest this week. 

Dry conditions would be preferred in flood-ravaged southern Wisconsin and northern Illinois, but elsewhere the rain may help crops.

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.

Outside markets are mixed. U.S. stocks are poised to open lower as political troubles in Washington continue to raise doubts about the administration’s ability to address tax reform and infrastructure improvements. 

Crude oil futures are higher as OPEC renews efforts to extend production cuts. The dollar is struggling higher but remains near its lowest in more than a year. Gold is benefitting from the dollar’s weakness and is up about $1.70 an ounce.

 

Corn prices held losses throughout the overnight session and currently are about 7 cents lower as the rain moves through the Midwest. In addition mild temperatures should top out in the 80s in the Midwest and northern Plains the next few days. 

Maps show showers for the northern Plains today and then storms developing across Minnesota and northern Iowa on Tuesday. The seven-day outlook through July 31 has the heaviest rain amounts in southern Minnesota and most of Iowa likely to have an inch or more.

Official 6- to 10 and 8- to 14-day forecasts out yesterday shifted cooler and drier in the 6-to-10 for the Corn belt. 

CFTC on Friday showed hedge funds reduced their net long position by about 2,200 contracts as of last Tuesday.

The preliminary report from the CBOT had futures volume in corn down slightly on Friday at 405,635. Open interest rose 10,314 indicating the rain forecasts had investors adding short positions.

Overseas markets are lower. September futures on the Dalian Exchange in China lost about a penny to $6.27 after the government last week sold nearly 70 million bushels of corn from its reserves. November futures in Paris are down a few cents at $4.94, 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 are down 1.8% following declines in global oilseed and vegetable oil markets. New-crop November remains above key moving averages, but is nearing support at the 20-day average.

Crop conditions will be updated later on Monday and traders will see if the recent rain improved last week’s 61% good/excellent rating. 

CFTC showed funds reduced their net short positions by about 11,900 contracts as of last Tuesday. 

Vegetable oil markets in Asia are lower. September soybean oil futures on the Dalian Exchange in China are down about a penny at 40.8 cents per pound and September futures for palm oil in Malaysia slipped slightly to 27.2 cents as ample supplies continue to weigh on that market.                                        

Oilseed prices internationally followed soybeans lower. September soybean futures in China lost about 7 cents to $15.24 while November rapeseed was off more than a dime at $9.63 and November canola in Winnipeg also dropped more than a dime to $9.05. 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 increased by about 5,000 contracts in Friday’s lower market 219,538. Open interest decreased by 5,550 indicating long liquidation.

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.

 

Wheat markets are tracking lower with corn and soybeans, with spring wheat likely getting some pressure from this week’s forecasted rain.

Spring wheat’s condition will be updated later on Monday from the 34% good/excellent reading a week ago. This week’s rain may be of some help but the crop is nearing maturity, so it may be too late to correct poor stands earlier in the season.

Funds increased their net short position in SRW wheat by nearly 5,700 contracts as of Tuesday and reduced their net long position in HRW wheat by about 4,000.

Estimated volume in soft red winter wheat on Friday increased by more than 8,000 to 123,991, with open interest dropping a mere 191. Volume in hard red winter increased by about 7,000 to 46,303 with open interest up 1,576 in the lower market.

December wheat futures in Paris morning trade were down a few cents and at a six-week low of $5.56 after adjustments for volumes and currencies.

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. 

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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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