May 17, 2013
Morning Price Trends
Corn: Up 1 to 2
Soybeans: Up 4 to 9
Wheat: Steady to down 2
Futures are mixed this morning, with gains from a hot old crop soybean market firming prices ahead of what could be another stretch of wet weather for the Midwest.
Corn prices are posting modest gains, as the overnight session winds down in very quiet trading. This week's sell off has old crop futures in a wedge, while new crop tries to hold its lows.
Tight old crop stocks benefited from good news about demand this week. Export Sales of old crop were better than expected yesterday at 8.7 million bushels, but sluggish new crop business kept the total for the week subdued, giving traders a rationale for selling. Traders believe as much as 60% of the crop could be planted in time for Monday's crop progress report, though the total could be in the low 50% range.
Storms are firing up this morning along the upper Mississippi River Valley, the advance force of a system that will slowly work through the Corn Belt through the middle of next week. Today's seven-day coverage map give most of the region a chance for an inch or more, while official 6- to 10 and 8- to 14-day forecasts out yesterday suggest above normal precipitation for northern and eastern fields in the second week of the outlook. The latest American model shifts some of the rains from the northern Plains east into Iowa, Illinois, and Wisconsin over the next week, though the second week of the outlook is a little drier for those states.
Total volume eased 9% Thursday to a very light 164,647, according to the preliminary report from the CBOT. Open interest was up 3,587 on moderate fund selling.
Overseas markets were stronger today. Futures on the Dalian exchange in China for September delivery rose 2.5 cents to $10.12, while June corn in Paris morning trade was up almost a penny to $7.063, after conversions to bushels and adjustments for currency valuations.
Financial markets are stronger today. Stocks moved higher in Asia and Europe, and stock index futures suggest Wall Street will recovery yesterday's modest losses. Consumer Sentiment and Leading Indicators could show improvement today.
Data out Thursday was mixed. The Consumer Price Index fell in April, with a core rate excluding weaker food and energy prices up only 1.7% on a year to year basis. Housing Starts fell 16.5% in April, though building permits rose 14.3%. Weekly Unemployment Claims rose 32,000 last week, more than expected and the Philadelphia Fed Survey of business conditions fell, despite expectations for an increase.
Still, central banks around the world are flooding the financial system, triggering more buying in the dollar. That's hurting gold, but crude oil is a little stronger on hopes for a gradual improvement in the world economy.
Bottom line: Planting delays should keep corn from falling apart, but USDA's bearish 2013 forecast should also limit rallies. The battle for tight old crop stocks will play out in the cash market until USDA's June 28 grain stocks report, which will also update acreage. Growers should use planting rallies to make sure bushels above the Revenue Protection guarantee are protected, as well as winding down old crop sales. 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 leading the market again Friday, with July futures enjoying a move above its 200-day moving average overnight at $14.3175.
Old crop export sales continue to wind down, falling to just 600,000 bushels in the latest week, though China continues to book new crop. Concerns about labor problems at Brazilian ports added to the uncertainty of near term supplies, though the U.S. is supposed to importing from the south, too.
Volume in soybeans rose 18.5% yesterday to 146,590, on open interest that jumped 9,497 on modest fund buying.
Oilseed markets overseas worked higher today. September soybean oil in China was up almost a penny to 55.3 cents/lb, and July futures on Malaysian palm oil gained fractionally to 35.2 cents. September soybeans in China were up 7.5 cents today to $21.26, August rapeseed in European morning trade gained 2.9 cents to $12.771, and July canola in Winnipeg was up 5.8 cents overnight to $13.914. Note: All prices are in bushel equivalents including currency adjustments for contracts with significant volume.
Bottom line: Old crop soybeans remain in tight supply, but the market is anticipating rising production ahead. 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 steady to slightly weaker today, with a nervous weekend of weather forecasts competing with bearish charts for traders' attention.
Futures at all three exchanges broke through April-May trendline support this week, as time for seasonal rallies before harvest is running out. Old crop sales continue to slow as business rolls to the 2013 marketing year that starts June 1. Total old and new crop sales were just below 20 million bushels, above trade guesses. But old crop shipments continue to lag the pace forecast by USDA, suggesting the government may be too high in its forecast. Japan did fill 57% of its regular weekly tender from the U.S. today, with the rest going to Canada and Australia.
Today's seven-day coverage maps continue to call for heavy rains that will stall spring wheat planting, while official 6- to 10 and 8- to 14-day forecasts out yesterday show a drying trend for the rest of the Plains. The latest American model is drier for the southern half of the hard red winter wheat belt.
Across the Atlantic, the Black Sea region is cooling with Ukraine and southern Russian seeing some rain. Other areas look mostly dry for the next two weeks, which could lower production estimates of both winter and spring wheat. Argentina's wheat belt wheat belt looks dry over the next two weeks after light coverage this week. South Australia should see rain over the weekend, with the system moving into the eastern part of the continent next week to provide essential rain for seeding the crop.
Total volume in Chicago jumped 32% Thursday to 107,572, with rising open interest of 6,824 suggesting modest new fund selling. Futures on milling quality wheat in morning Paris trade were steady at $6.817, after conversions to bushels and adjustments for currency valuations.
Bottom line: Wheat is at a turning point. Failure to hold chart trendline support at all three exchanges may begin the slow slide into harvest lows, despite production concerns, both in the U.S. and around the world. 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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