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Morning Market Review for July 28, 2017

Wheat higher after tour, remains lower for the week. (Comments are updated by 7:30 a.m. Central Time.)

 

Overnight trade:

Corn: Down 1/4
Soybeans: Down 2
Wheat: Up 3 to 4

Corn, soybeans weak ahead of mild weather

Wheat markets are a little higher after this week’s crop tour in northern Plains confirmed long-held suspicions that spring wheat yields will be down this year. However, gains may be tempered by traders having priced in lower yields ahead of the tour.

Corn and soybeans moved up to about unchanged near the end of the overnight session after trading a little lower at the start. Both markets currently are on track to be lower for the week.

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

Maps show mostly dry conditions over the Midwest the next few days, although rain may be moving through by Sunday. A break from the rain will be welcomed in eastern Iowa and northern Illinois, where recent rain left water in crop fields and filled creeks and rivers to flood levels.

The official 6- to 10-day forecast out yesterday has seasonal temperatures and dry conditions for the Midwest but warm and dry for the northern Plains. The 8- to 14-day outlook has seasonal moisture and temperatures for much of Midwest but keeps warm and dry for the northern Plains. 

In outside markets U.S. stocks are poised to open lower following disappointing results from online retailer Amazon and lower tech stocks. However, that could change as traders await second quarter GDP data due this morning ahead of the U.S. market’s open. The trade is looking for 2.5% to 2.6% growth. The Amazon results were blamed for declines in some Asian markets.

The dollar is lower to set a new 13-month low. Gold also is lower as traders expect stronger GDP numbers.               .

 

Corn futures are about unchanged after starting the overnight session a penny lower.

Weather forecasts for the Midwest are mostly dry for the weekend with no extreme heat expected next week. Highs in the mid-80s are forecast early next week for the Midwest, while the low 90s could be reached in the western Dakotas.

The preliminary report from the CBOT had futures volume in corn down on Thursday at 243,067. Open interest ticked up by 62 in the higher market.

Overseas corn markets were unchanged to firm with September futures on the Dalian Exchange in China were up a few cents at about $6.26. November futures in Paris were flat at $4.93, after adjustment for volumes and currencies.

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 a fraction lower late in the overnight session. The lack of threatening weather ahead of the weekend is keeping traders quiet. The crop is moving through its seed production phase with cool conditions expected next week.

Old-crop and new-crop soybean export sales on Thursday were lower, but about as expected.

Vegetable oil markets in Asia are lower with Malaysian palm oil being hit by a stronger ringgit. September soybean oil futures on the Dalian Exchange in China dropped to 40.9 cents per pound and September futures for palm oil in Malaysia dropped 1% to 28.16 cents.                                        

Oilseed prices internationally rose a little. September soybean futures in China were firm at $15.36 while November rapeseed in Paris was up a penny at $9.88. November canola in Winnipeg continued its rebound from recent to trade up a little at $9.11. 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 Thursday down a little at 192,974 contracts. Estimated open interest declined 4,350.

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 are being led higher by the spring wheat, which is up for the third day, but still lower for the week.

The crop tour in the northern Plains confirmed the expectations for lower yields for spring wheat. The worst fields were in the southwest and the best along the Red River Valley in the east. The tour calculated an average yield of 38.1 bpa, compared with the year ago tour average of 45.7. Most of the fields were in North Dakota with a few in Montana and Minnesota.

Estimated volume in soft red winter wheat for Thursday was 84,627, down from Wednesday with open interest down by 2,820. KC HRW wheat volume on Thursday slipped to 33,124 and open interest increased by 2,798.

December wheat futures in Paris morning trade were a little higher at about $5.57, 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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