May 20, 2013
Morning Price Trends
Futures are trading mostly mixed as a quiet overnight session winds down to start the week. Storms moving through the Midwest this week will again slow planting, after mostly open weather last week helped farmers catch up.
Corn prices are mixed this morning. Old crop prices are posting modest gains on follow-through buying from Friday's rally, but new crop remains lower after farmers benefited from mostly open weather for planting last week.
July tested its 50-day moving average at $6.5625 again during the screen trade, trying to prove Friday's reversal higher was for real. Tight stocks and decent demand from domestic end users continues to support the market.
Traders have mixed ideas about how much of the crop was planted last week. Some believe the rate could top 70%, though a reading around of 61% could be more in line with actual conditions in today's Crop Progress report.
Planters will be slowed this week, as storms move across the Corn Belt. Today's seven-day coverage map brings heaviest coverage to Iowa, Illinois, Missouri and Michigan, where as much as three inches could fall. Overnight maps showed another system developing this weekend, though official 6- to 10 and 8- to 14-day forecasts out yesterday calling for above normal precipitation over much of the region. However, the latest American model flipped significantly drier for the next week.
Speculative hedge funds added 12,737 to their small net long position, according to Friday's Commitment of Traders. Total volume on Friday rose 41% though it remains subdued at 231,931. The CBOT's preliminary report showed daily open interest gaining 4,707 on moderate fund buying Friday.
Overseas markets are weaker today. Futures on the Dalian exchange in China for September delivery lost 6.6 cents to $10.058, while June corn in Paris morning trade was off almost a penny to $7.10, after conversions to bushels and adjustments for currency valuations.
Financial markets are also fairly quiet, with gains in Asia giving way to mixed trading in Europe. Currency issues remain at the forefront, with the yen seeing some short covering after recent weakness, weakening the dollar. Gold prices are down sharply again on ideas the Federal Reserve could begin easing some of its flooding of the financial system.
Consumer Sentiment and Leading Indicators showed strong gains on Friday, helping send stock prices to new records. The Chicago Fed's National Activity Index out this morning could provide additional data on the pace of the recovery.
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. 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 also mixed this morning. July futures saw modest follow-through buying after Friday's rally pushed prices above their 200-day moving average, but the momentum fell well short of March highs at $14.635.
Very tight remaining inventories kept buyers scrambling to find old crop bushels. New crop sold off, after breaking through chart resistance last week but stopping short of its 50-day moving average.
Speculative hedge funds were buying in the latest week, adding 10,796 contracts to their net long position, according to Friday's commitments report, and also reducing their short position in soybean oil. Funds bought more beans after the CFTC data was collected, with volume jumping 20% Friday to 175,197. Open interest gained 3,074 to end the week.
Oilseed markets overseas were mostly higher today. September soybean oil in China was up fractionally to 55.3 cents/lb, and July futures on Malaysian palm oil were flat at $35.3. September soybeans in China gained 8.9 cents to $21.344, August rapeseed in European morning trade was up 2.9 cents to $12.72. July canola in Winnipeg is closed for Canada Day on Monday. 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 quietly mixed to start the week, with little direction evident in the overnight trade. Futures at all three exchanges are struggling to avoid a test of April lows after selling off last week.
Decent rains from eastern Oklahoma and Kansas into most of Nebraska and South Dakota helped winter wheat fields, though rains again slowed planting of spring wheat.
Today's seven-day coverage maps show that pattern continuing this week, with official 6- to 10 and 8- to 14-day forecasts out yesterday calling for above normal precipitation across the northern Plains. The latest American model remains very wet for spring wheat areas, though it's a little drier for the southwest Plains.
Across the Atlantic, wheat fields in Russia and Ukraine are benefiting from modest rains, which could be key to stabilizing production out of the Black Sea. Argentina's wheat belt also picked up a little moisture over the weekend, while Australia could see crucial rains this week to aid planting.
Speculative hedge funds extended their short position in Chicago, but bought back some of their small bearish bet in K.C. in the latest week, according to Friday's CFTC report. Total volume in Chicago fell 38% on Friday to 66,520, with open interest off 298 on light fund selling. Volume Friday in Kansas City was 12,198.
November futures on milling quality wheat in morning Paris trade were off 1.63 cents to $6.719, after conversions to bushels and adjustments for currency valuations. Prices fell to their lowest level in almost a year on better conditions across Western Europe, though many countries are on holiday today.
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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