June 17, 2013
Morning Price Trends
Corn: Steady to down 5
Soybeans: Down 8 to 12
Wheat: Down 1 to 3
Grain futures traded mostly lower this morning, with corn, soybeans and wheat all battling to hold the line against chart-based selling as the planting season winds down. Erratic moves continue in financial markets – the direction is higher today on broad-based buying in stocks.
Corn prices are mixed headed into the end of the electronic-only trade. Bull spreading is again trying to support the July contract, as tight old crop supplies keep futures above their 50-day moving average. December gapped lower overnight, and tries to regain Friday's $5.305 low.
Demand is starting to surface internationally on lower prices, but Black Sea exporters appear to be getting many of the deals. South Korea is tendering for 5.5 million bushels of corn and 2 million more of feed wheat, deals not likely to be originated from the U.S.
Weather news is mostly supportive for early crop development. Storms moving out of Kansas today should bring more precipitation to Missouri and much of Illinois, though Iowa looks dry until the end of the week, according to the seven-day coverage map. Official 6- to 10 and 8- to 14-day forecasts out yesterday continue to show a warming trend, with drier conditions starting to spread from the Plains into the western Corn Belt. However, latest American model run is wetter for this weekend storm into next week.
Big speculators cut their small net long position even more, taking 7,555 lots off the total according to Friday's Commitment of Traders. Funds were light buyers on Friday, though total volume in corn fell 23% on the session. Open interest was also down, falling 1,583.
Overseas markets are mixed today. Futures on the Dalian exchange in China for September delivery edged 1.2 cents higher to $10.06, while August corn in Paris morning trade was off 1.7 cents to $7.324, after conversions to bushels and adjustments for currency valuations.
Financial markets are bouncing back from Friday's losses. Stocks moved mostly higher in Asia and Europe, with U.S. stock index futures pointing to triple digit gains on the Dow today. Nervous trade should peak on Wednesday, when the Federal Reserve wraps up a two-day meeting with its latest statement on monetary policy, updated economic forecasts and a press conference by Chairman Ben Bernanke.
Data today includes the Fed's Empire State Manufacturing Survey and the Housing Market Index, which could show modest improvement. Reports out Friday helped trigger the downdraft on Wall Street. Producer Prices rose more than expected in May, though the core rate was unchanged. Industrial Output and Capacity Utilization were flat to lower in May, while Consumer Sentiment fell.
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 lower this morning, with both old and new crop contracts under pressure. July beans battled back from a sharp break below $15 overnight, but still face double digit losses, while the November contract tries to avoid its first close below the $12.87 Revenue Protection base price since gapping higher after Memorial Day on planting concerns.
May crush data released today by the National Oilseed Processors Association could be the lowest in almost two years, around 118 million bushels, according to a survey by Reuters. July CBOT markets are extremely weak as the market tries to ration very tight old crop stocks.
Friday's CFTC report showed big speculators buying 13,419 contracts in the week ending Tuesday to extend their bullish bet. However, funds were selling later in the week, dumping most of those contracts.
Volume in soybeans was down 35% on Friday to just 142,108, while open interest fell 319.
Oilseed markets around the world are mixed today. July futures on Malaysian palm oil edged fractionally higher to 35.6 cents/lb, and September soybean oil in China gained to 55.1 cents. Soybeans for September delivery in China fell 2.7 cents to $21.267, August rapeseed in European morning trade was off 4.5 cents to $12.558, and July canola in Winnipeg was 4.7 cents lower overnight to $13.316. 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 struggling this morning, as the market confronts harvest lows. Kansas City July made new lows overnight, but is trying to reverse higher on the potential for harvest delays this week.
Rains will slow harvest of the hard red winter wheat crop today, and the seven-day coverage map shows chances for showers persisting this week. Official 6- to 10 and 8- to 14-day forecasts out yesterday forecast a drying trend for the Plains, while the latest American model shows heavy rains could slow early soft red winter wheat harvest.
Fields in Australia will be mostly dry this week, with the wheat belt in Argentina also turning dry after modest weekend rains. Ukraine and Russia saw good rains over the weekend, though the moisture could slow early harvest in the southern part of the Black Sea region.
November futures for milling quality wheat in Paris morning trade are down 2.5 cents to $6.622, after conversions to bushels and adjustments for currency valuations.
Big speculators continued to trim their big net short position in Chicago, buying back 1,684 contracts according to Friday's CFTC report. However, hedge funds more than doubled their bearish bet in hard red winter wheat. Total volume in Chicago was off 10% on Friday to 127,459, with open interest falling 5,267 on light fund selling. Volume in Kansas City eased to 27,605, while open interest fell 39.
Bottom line: Growers with good potential should have added Chicago put protection if needed to guard against lower prices. 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.