June 19, 2013
Morning Price Trends
Corn: Down 2 to 4
Grain futures are mixed this morning, following choppy overnight trade in many markets. While concerns over weather keep traders nervous, Wall Street waits for news out of Washington, where the Federal Reserve ends a two-day meeting with release of its statement on monetary policy at 1 p.m. Chicago time, followed by Chairman Ben Bernanke's quarterly press conference.
Corn prices are a little weaker today, on profit taking from this week's rally. Both old and new crop futures made impressive runs at chart targets yesterday, providing a natural place for a pause.
While July corn finally filled the gap at $6.76 from the bearish March 28 USDA report, December rallied back to its 100-day moving average, which is providing a support level today for old crop. A surge in corn basis this week helped fuel the move Tuesday in old crop, while new crop balances good growing conditions with questions about how many acres were planted this spring.
A few storms over the Plains this morning will gather steam as they move north and east this week, bringing heavy rains to the northwest Corn Belt, according to today's seven-day coverage maps.
Official 6- to 10 and 8- to 14-day forecasts out yesterday remain warm and wet for much of the Midwest, though the latest American model run pushes the heaviest rains over the next week north of I-90.
Ethanol production totals from last week released at 9:30 today could still be strong, though margins are off this week. The volatility index for corn moved to its highest level since the August 2012 USDA report, as July options prepare to go off the board at the end of the week. Traders were mostly liquidating calls on yesterday's rally. Total volume in corn jumped 30% Tuesday to 403,785, according to the preliminary report from the CBOT. Open interest fell 913 despite good fund buying.
Overseas markets are mixed today. Futures on the Dalian exchange in China for September delivery lost fractionally to $10.061, while August corn in Paris morning trade was up 3.4 cents to $7.424, after conversions to bushels and adjustments for currency valuations.
Financial markets are on hold ahead of today's Fed meeting. While investors don't expect any changes from the policy statement, Bernanke could tip the central bank's hand about the timing of its pullback from easing at his press conference. In data out yesterday, the Consumer Price Index remained at a 1.7% annualized rate, while Housing Starts rose less than expected.
Crude oil supplies are expected to decline in today's Petroleum Inventory, though ideas on product stocks are mixed.
Bottom line: Even with some lost acreage, production looks more than adequate to meet demand unless damaging weather emerges this summer. Figure now how much you want to risk on weather rallies. For more information, see the Weekly Corn Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily
Soybeans are firm this morning, rejecting attempts to sell off after yesterday's volatile session. November futures overcame another attempt to break it below the $12.87 Revenue Protection base price, with the market conflicted about acreage and tight old crop inventories. USDA announced the sale of another 8.8 million bushels of new crop beans to China yesterday, under its daily reporting system for large purchases.
Volume in soybeans rose 18% Tuesday to 175,646, while open interest gained 686 on light fund buying. Traders were mostly liquidating July soy options yesterday, though buying was noted in the out-of-the-money $15.40 call.
Oilseed markets around the world today were mixed. July futures on Malaysian palm oil were flat at 35.5 cents/lb, and September soybean oil in China lost fractionally to 55.3 cents. Soybeans for September delivery in China were off less than a penny to $21.284, August rapeseed in European morning trade was flat at $12.592, and July canola in Winnipeg gave back 8 cents overnight to $13.364. Note: All prices are in bushel equivalents including currency adjustments to U.S. dollars for contracts with significant volume.
Bottom line: Futures are threatening a break that could signal the market believes enough acres are being planted. Funds could trigger liquidation on those fears ahead of USDA's June 28 reports. The move above the Revenue Protection base price was an opportunity to protect bushels that will be produced above the crop insurance guarantee. For more information, see the Weekly Soybean Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily
Wheat prices are mixed this morning, reflecting the same choppy trading seen in other markets. News of fresh export deals remains quiet, as futures try to avoid a break to new harvest lows.
The seven-day coverage maps show better conditions for harvest of hard red winter wheat, though late seeding of spring wheat could be difficult on the northern Plains. Official 6- to 10 and 8- to 14-day forecasts out yesterday project a drying trend for the Plains, though the latest American model is a bit wetter for the two-week period.
Russia is picking up good rains this week in the Volga valley but showers in the south could slow early winter wheat harvest. Fields in eastern Australia will see a few showers over the next week but other areas look dry, while the wheat belt in Argentina should also be dry
November futures for milling quality wheat in Paris morning trade were down 2.5 cents to $6.67, after conversions to bushels and adjustments for currency valuations.
Volume in the $6.65 July CBOT wheat put was noted yesterday, as they prepare to go off the board Friday. Total volume in Chicago futures rose 4% to 117,306, with open interest off 677 on light fund buying. Volume in Kansas City fell 30% to 21,020, with open interest up 64.
Bottom line: Growers should be ready to step up sales if the markets can't hold. 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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