May 24, 2013
With the long weekend looming, traders were actively squaring positions in the pending weather market while waiting for the next crop progress report to be released on Tuesday afternoon. Better planting weather is helping corn and soybean farmers in the Midwest get some additional acres in the ground before chances of rain increase over the long weekend. Showers are expected to help the winter wheat crop in the Plains where the crop is not too mature for moisture to improve yields.
Profit taking ahead of the long weekend seems to be moving stocks today as the market moves lower despite better than expected durable goods orders. The major indexes are poised to end the 4-week winning streak if things do not turn around before the close. The Census Bureau released its report on durable goods orders with a better than expected 3.3% increase. The major stock indexes were trading from 0.1% to 0.3% lower at the commodity close.
The dollar index was down again as the U.S. stock market continues to move lower and foreign markets were volatile overnight. Crude oil tested the $93 level this morning before gaining back most of the losses and the commodity close.
Corn traded mixed today as some profit taking and positioning ahead of a long weekend in a weather market has the market looking to be cautious heading into Memorial Day. Ethanol production is picking up as we head into summer driving and export sales are beginning to increase for new crop corn. Delayed planting will continue to be an issue through the summer as yield estimates seem to be a little high considering the late crop and continuing drought issues from Central Iowa on west. The next crop progress report will be out on Tuesday afternoon because of the holiday.
July corn futures were down 4.75 to $6.5725. December corn was up 1.75 on the day to close at $5.365.
Bottom line: Exceptional planting progress has brought the crop closer to normal, but emergence is still well behind but better weather in the Corn Belt is helping get things started. Reduction of corn acres from 0.5 million to 1.5 million acres is rumored, helping to hold December futures above $5 for the time being.
Soybeans traded mixed today with July futures double digits lower and the November contract trading higher. Profit taking ahead of the holiday weekend may have as much to do with the big fall in old crop beans after a six trading day rally moved beans to nearly $15 again. Yesterday's export sales report brought unexpected old crop sales, momentarily pushing July soybeans to the $15.50 level in volatile trading. Better planting weather has moved to the Midwest as the weekend approaches bringing an opportunity to gain on delayed planting progress in Tuesday's crop progress report.
July soybeans closed down 23.25 today at $14.7625. The November soybean contract was up 4.75 to close at $12.4775.
Bottom line: Tight supplies and planting issues are playing into soybean prices. New crop soybeans tested the $12.50 level again today before closing just lower. Prices may strengthen if export sales continue and later planting impacts yield expectations. Old crop soybeans are near $15, presenting cash opportunity to move beans near $16 in many locations as basis slips a little but remains strong.
Chances for rain in the Plains has wheat markets lower today as the winter wheat harvest gets underway in Texas with fewer acres to cut than originally expected. With poor moisture through the fall and winter and late frost in the spring some of these acres have been abandoned, grazed out, or baled for hay this year. Yield reports should begin to come in soon. See the discussion and chart blow to see what kind of impact this weekend's rains might have on the Plains wheat crop.
July wheat on the Chicago board was down 5.75 to close at $6.975. The July 2014 contract closed the day down 5 to finish at $7.4175.
July KC wheat was down 9.75 to close at $7.4475. The July 2014 winter wheat contract was down 8.75 to finish at $7.865.
July Minneapolis wheat was down 8.25 today to close at $8.05. The September contract was down 6 to close at $7.99.
Bottom line: Wheat markets are pricing weather and export sales into the spring as new crop wheat is on the horizon. Opportunities for more wheat sales may come as harvest moves north and wheat yields are reported.
Chances of rain showers are forecast for the Plains through the weekend as warm moisture from tropical Mexico moves north into Texas, Kansas, Oklahoma and Colorado. Any moisture will be a welcome sight for winter wheat growers in the region as the late developing crop can use the help. Southern growers are nearing harvest, so there will be minimal benefit from the rains, and any severe weather included with the moisture could actually be detrimental to the crop. As rains move further north, the benefit from rains will increase in areas where the wheat is less mature.
Recent showers in China have been light, but any moisture is welcomed by most farmers. Upcoming rains will be beneficial to recently planted corn and soybeans, but cause harvest delays for wheat and rapeseed crops that are reaching maturity.
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