June 18, 2013
Morning Price Trends
Soybeans: Up 2 to 4
Wheat: Up 2 to 5
Grain futures are cautiously higher this morning across the board, trying to halt their recent weakness. Financial markets are choppy as the Federal Reserve starts a two-day meeting in Washington.
Corn prices are a little stronger as the overnight session winds down, with concerns about tight old crop supplies and new crop acreage discouraging selling at the moment. Bull spreading helped lift July corn near three-month highs, with the nearby moving past its 100-day moving average overnight, still trying to fill the March 28 gap above the market at $6.76. December corn saw only modest buying after Monday's bullish reversal higher, capped by its 50-day moving average at $5.4125.
Monday's Crop Progress report showed emergence remains slow in the northwest Corn Belt, with Iowa at 89%, Minnesota 86%, North Dakota 81% and Wisconsin 75%. Overall, USDA said 92% of the U.S. corn crop is out of the ground, compared to 97% on average.
Conditions improved, adding .8 of a bushel to yield potential, taking our current forecast to 156.4 bpa. For state-by-state charts of crop ratings and yield projections, see the Statistical Tables & Charts pages
Another system is beginning to move through the far western Corn Belt this morning, with storms bringing more rain to the rest of the region later this week. Heaviest totals are forecast for the northwest Midwest, including key states where delays are already a concern, including Iowa, Minnesota, Wisconsin and North Dakota, according to the seven-day coverage maps. Official 6- to 10 and 8- to 14-day forecasts out yesterday show warm and mostly wet conditions continuing, though drier weather will be seen on the Plains. The latest American model run pushes the heaviest rains north of I-80, potential giving a little relief to southern Iowa.
Buyers in Asia appeared ready to jawbone prices lower. South Korea filled only part of a tender for optional origin corn, opening offers to the Black Sea, and passed on taking feed while, while Taiwan also backed away from offers on a small tender for U.S. corn and soybeans. Still, Export Inspections reported Monday of 14.1 million bushels were above both trade guesses and the rate forecast by USDA for the rest of the marketing year. Year-to-date inspections are down 56%, while the government predicts a 53% decline.
Funds were buying corn Monday, covering some of their bearish bets in the market. Total volume in corn was up 19% to 291,373, according to the preliminary report from the CBOT. Open interest fell 10,916.
Overseas markets are higher today. Futures on the Dalian exchange in China for September delivery rose almost a penny to $10.054, and August corn in Paris morning trade gained 4.2 cents to $7.393, after conversions to bushels and adjustments for currency valuations.
Financial markets traded mostly higher today following Monday's rebound on Wall Street. The Federal Reserve's Empire State Manufacturing Survey and the Housing Market Index out Monday were surprisingly strong for June, helping spur a rally back in equities, but overall the trend remains choppy, waiting for the Fed meeting that wraps up Wednesday. The Consumer Price Index out today could remain restrained for May while and Housing Starts may be up despite a drop in building permits.
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 stronger this morning, supported by yesterday's strength in old crop and slow planting progress. July soybeans reversed higher, holding their May breakout, though November futures posted their first close below the Revenue Protection base price of $12.87 since Memorial Day.
Soybean planting continues to lag at 85% nationwide, compared to 91% on average. Delays continued not only in the northwest Midwest, where Iowa was 77%, Minnesota 84% and Wisconsin 72%, but also from Arkansas to North Carolina. Emergence nationwide was 66%, down from the five-year average of 80%. The first crop ratings for the season shoed 64% of the crop rated good to excellent, the lowest since 2008. Still, that correlates with average or better yield potential – if conditions hold.
Demand data out Monday was mixed. May crush data released Monday by the National Oilseed Processors Association totaled 122.6 million bushels, towards the high end of trade guesses, leaving the year-to-date total up 3% on the year. USDA currently forecasts a 2.5% drop after raising it projections.
However, Export Inspections out Monday continue to show rationing in that sector. The total for the week fell to 2.8 million bushels, below the rate forecast by USDA for the rest of the marketing year. Still, year-to-date inspections are up 7%, while the government sees a 1% decline for the marketing year.
Volume in soybeans rose 5% Monday to 148,679, with open interest up 5,451 on moderate fund selling.
Oilseed markets around the world today are stronger. July futures on Malaysian palm oil were firm at 35.4 cents/lb, and September soybean oil in China were up a half-cent to 55.4 cents. Soybeans for September delivery in China gained almost a penny to $21.264, August rapeseed in European morning trade gained 3 cents to $12.665, and July canola in Winnipeg was almost 9 cents higher overnight to $13.369. 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 stronger this morning, as the market tries to hold the line against harvest weakness. Futures slumped to new lows at all three exchanges Monday, but were able to finish off lows in Chicago and Kansas City.
Spring wheat planting advanced last week in North Dakota, but 14% was unplanted, 10% below normal, dragging the national rate to 92%. Only 74% of the wheat in North Dakota has emerged, but ratings improved, ironically, thanks to gains in North Dakota. Overall yield potential was up a bushel nationwide, though winter wheat slipped slightly. Harvest advanced in Texas and Oklahoma, but remains stalled in Kansas so far, according to USDA, which reported nothing combined there.
The seven-day coverage maps remain wet for the northern Plains, but show only light precipitation for the winter wheat harvest on the southern Plains. Official 6- to 10 and 8- to 14-day forecasts out yesterday show a drying trend for the Plains, which is supported in central and southern areas by the latest American model
Wheat harvest also has begun in southern Russia, with rains in the rest of the region feeding the Black Sea helping maintain yield potential at decent levels. Fields in eastern Australia are picking up a few showers this week, but most of the continent looks dry. The wheat belt in Argentina is also turning dry after light weekend rains. November futures for milling quality wheat in Paris morning trade were up almost 6 cents to $6.707, after conversions to bushels and adjustments for currency valuations.
Export inspections reported Monday of 21.6 million bushels were in line with trade guesses and beat the rate forecast by USDA for the rest of the marketing year.
Total volume in Chicago fell 12% Monday to 112,330, with open interest falling 6,774 on light fund buying ahead of expiration of July options Friday. Volume in Kansas City was up 10% to 30,246, while open interest was off 468.
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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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.