Jan. 19, 2017
Corn and soybean prices are at a key turning point
Grain futures are narrowly mixed after fairly quiet overnight trading that belies the importance of recent price movements. Moves to new highs now could steamroll the market to additional gains, while profit taking might trigger a pull back into February.
Farm Futures releases its latest 2017 planting intentions survey at 8:30 a.m. CST today in a special Facebook Live presentation. Go to the Farm Progress Daily Facebook page at https://www.facebook.com/Farmprogressdaily
The dollar remains a key force in financial markets, gaining ground again today. The greenback got a boost from Federal Reserve Chair Janet Yellen, who said interest rate increases are appropriate due to tightening of the jobs market. Interest rates tend to be a key driver of currency values. The dollar retreated to start the week after President-elect Trump said it was too strong.
Stocks look ready to open slightly softer on Wall Street this morning after mixed trade in Asia turned lower overnight.
Corn prices are trying to confirm a move above the resistance line drawn off October and December highs. That support comes in around $3.6275 today.
Ethanol prices are up this morning, getting a boost by stronger crude oil futures ahead of the latest inventory numbers, which are expected to show a drop in U.S. inventories. That report includes data on ethanol production, which will reflect margins that slid deeper into red ink after several weeks of record production. For more, see the Energy/Ethanol Review.
Overseas markets are mixed. May futures on the Dalian Exchange in China gained 6.3 cents to $5.766 but March futures in Paris morning trade were off 1.4 cents to $4.576 after adjustments for volumes and currencies.
The preliminary report from the CBOT showed futures volume down a third at 331,892 with open interest up 10,133 despite only light fund short covering. Options volume fell 45% to 64,320, with a few more puts trading than calls. Liquidation was noted in the July $3.30 put as traders cut February calls and added puts that expire next week.
Bottom line: The huge 2016 crop should continue to provide plenty of headwinds. Lower acres in 2017 could help turn the tide as the market tries to avoid a February break. For more, see my Weekly Corn Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Soybeans are narrowly mixed this morning, with new crop gaining a little on old. Futures are trying to confirm a shift to a bullish seasonal pattern that could attract more buying for another leg higher.
With news from Chinese buyers fairly quiet this week, whether bulls are back could depend on news out of South America, where Brazil’s harvest movement faces the usual hurdles from strikes and traffic jams. Weather in Argentina is drying out after heavy rains, though today’s forecasts show storms returning in the second week of the outlook.
International markets are mostly higher. Those March palm oil in Malaysia eased, May soybean oil in China was higher. May soybeans in China rose 12 cents to $16.944, February rapeseed for delivery in Paris was up 2.4 cents to $10.137 and March canola in Winnipeg gained 3.9 cents to $8.845. 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 a quarter lower at 299,132 with open interest surging 28,062 despite only modest new fund buying. Options volume fell 17% to 106,126, 52% of it puts new interest noted in the September $13 call, which closed at just under 15 cents.
Bottom line: Figuring damage from rains in Argentina will take time as demand slows into the Lunar New Year holidays in Asia at the end of the month. Fears of a huge increase in plantings could hold back rallies, especially in new crop. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Wheat prices are mixed this morning, with Minneapolis regaining some of its huge premium to winter wheat contract after profit taking early in the week.
Rains look like they’ll focus on the Southeast according to maps for the next week, which took some moisture away from the Ohio River Valley. Official 6- to 10 and 8- to 14-day forecasts out yesterday continue to point towards a drying rend on the Plains, which is even more noticeable in the latest updates this morning
Estimates of European production are being cut by effects from winterkill in Eastern Europe earlier this winter, with another cold snap due over the next couple of days. Snow cover is better this time around, however.
Overseas markets today mixed. March futures for Eastern Australian Wheat rose 2 cents to $4.636 while March futures in Paris morning trade were down a penny to $4.91 after adjustments for volumes and currencies.
Volume in soft red winter wheat futures fell 37% lower Wednesday to 115,580 and open interest fell 5,242 despite light new fund selling. Options volume was 46% lower at 20,730, two-thirds of it calls with new interest noted in the December $5.40 call and July $4.20 put. Volume in hard red winter wheat was off 26% to 43,630 on open interest that dropped 873.
Bottom line: the 10% drop in seedings could give new crop futures potential into March, but it’s time to complete sales of 2016 inventory and get a little more protection on new crop. 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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