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Morning Market Review for Nov. 16, 2018

Markets wait for export news. (Comments are updated by 7:30 a.m. Central Time.)

Overnight Trends
Corn: Steady
Soybeans: Down 1 to 2
Wheat: Steady to down 2

Trade talk and weather highlight questions futures face

Grain futures are steady to a little lower after a back-and-forth overnight session left prices mostly drifting. With conflicting statements on tariff discussions with China coming from Trump administration officials and Brexit turning into a cliffhanger, markets are going their separate ways. 

Stocks traded mixed in Asia before turning lower following more volatile trading on Wall Street yesterday. While stocks recovered losses yesterday U.S. index futures are down again today.

The dollar is firm and gold also attracted safe-haven buying overnight that gave U.S. Treasuries a boost. But crude oil futures continued to rebound after testing $55 earlier this week, despite news of record U.S. production last week and burgeoning inventories. Midwest diesel inventories continued to tighten but are flat despite the rally in crude.

Fertilizer prices also remain turbulent this week. December Gulf urea swaps popped back $8 a ton yesterday to $291 after falling earlier in the week after offers in India’s latest tender dropped.


Corn prices are trying to hold steady as December futures battles to hold its 100-day moving average, which comes in around $3.6725 today, a tick above the overnight low. 

News about exports should stir the pot today. A couple of South Korea feedmakers were in the market overnight, but the deals can be sourced from around the world. USDA’s export tally from last week comes out at 7:30 a.m. CST, delayed by observance of Veterans Day. Traders expect the total to run around last week’s 27.6 million bushels, which is below the rate forecast by USDA for the marketing year.

Ethanol production is also problematic for corn usage. Production rose last week but so did stocks, and output for the first nine weeks of the 2018 marketing year is down 1% year-on-year, suggesting USDA may be too high with its forecast for corn usage unless E15 comes to the rescue next summer.

Storms moving through the Dakotas this morning are providing more snow to an area where harvest is already slow, on top of a wintery blast through Missouri and Illinois yesterday. However, the weather over the next week looks clear, though the official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning call for a return to wetter conditions. 

Farmers reporting Feedback From The Field reported lower yields for both corn and soybeans this week.

What’s happening in your fields? Let us know by clicking this link to enter your data and comments and check out the latest reports by scrolling down to our updated interactive map. We’ll be putting out our final report soon, so get your estimates in. 

Overseas markets were mixed today. January futures in China lost 2.5 cents to $6.898 and March Paris futures in midday trade are unchanged at $5.098 after adjustments for volumes and currencies. 

The preliminary report from the CBOT showed daily futures volume up 28% to 371,910 while open interest fell 5,161 despite flat trade from funds.

Options volume was up 29% to 51,702, 64% of it calls as traders liquidated December options that expire Nov. 23. Implied volatility in at-the-money December options that expire Nov. 23 edged fell to 13.38, suggesting the market sees little prospect for big price changes short term. 

Bottom line: Corn has trouble rallying seasonally in November, and the bearish soybean situation could hold prices back. But a move above the Nov. 8 high of $3.79 would be bullish, opening up hedging opportunities. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.


Soybeans are a little lower today, keeping January futures to an inside day after a failed test yesterday of the trendline off January and October highs.

While trade talks with China remain unclear, weekly export sales are expected to run around 20 million bushels, not far from the rate needed through August to meet USDA’s forecast for the 2018 crop. 

Members of the National Oilseed Processors Association yesterday reported record October crush of 172.2 million bushels. Year-to-date crush is up 10.8%, while USDA’s forecasts only a 1.2% increase for the marketing year. 

Vegetable oil prices overseas were sharply mixed. January soybean oil futures in China gained a quarter cent to 35.459 cents per pound but January palm oil futures in Malaysia lost nearly a penny to 20.53 cents on fears of rising inventories. 

Oilseed markets were mixed. January soybean futures in China gained 5.3 cents to $13.563, February rapeseed futures in Paris midday trade were down 3.9 cents to $9.657 and Winnipeg canola overnight was off 2.2 cents to $8.206 after adjustments for currencies and volumes.

The preliminary report from the CBOT showed daily futures volume 20% higher yesterday at 150,144 while open interest fell 5,789 on light fund short covering. Options volume almost doubled to 65,435, 61% of it calls with more interest noted in the November 2019 $12 call. Implied volatility in January at-the-money options was higher at 18.27. 

Bottom line: Hopes for soybean rallies faded with USDA’s bearish report unless a weather threat emerges in South America or trade talks with China succeed.  For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.


Wheat prices are steady to a little lower this morning, as futures at all three markets test chart supports. Drier weather forecast for the Plains this week could eventually get farmers back into the field, pressing December hard red winter wheat futures to a half-cent of contract lows.

Export sales out this morning are expected to be down from last week’s total but still beat the weekly rate needed to reach USDA’s forecast for the 2018 crop.

Overseas markets are lower. January futures for Eastern Australian Wheat lost another 9.5 cents to $8.10. December futures in Paris midday trade down 1.5 cents despite lower crop ratings for winter wheat in France. 

Volume in soft red winter wheat futures fell 12% yesterday to 160,909 while open interest fell 1,478 on light fund short covering. HRW volume increased 11% to 71,418 on open interest that fell 3,802.

SRW options volume dropped 20% to 20,057, 59% of it calls as traders liquidated December puts and out-of-the-money calls that expire Nov. 23. Implied volatility in at-the-money SRW December 2018 options fell to 18.68.

Bottom line:Wheat is struggling to break free for a rally that could be a selling opportunity. For more details on the outlook, see the Wheat Outlook.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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