December 4, 2013
Morning Price Trends
Corn: Up 1 to 2
Soybeans: Up 4 to 6
Wheat: Up 2 to 4
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Grain futures are trying to move higher across the board this morning, with both bullish and bearish news buffeting the market.
Corn prices turned around overnight, bouncing back from selling in Europe. The market reversed higher quickly, as March futures try to confirm yesterday's move off new contract lows set on Monday.
News that China rejected another 4.75 million bushels of U.S. corn shipments containing an unauthorized GMO variety weighed on prices early. China also stopped delivery on 2.4 million bushels last month, and the latest move prompted worries the government is trying to slow down imports due to the large crop harvested there this fall. U.S. farmers are hoping Chinese buying can help sop up some of their own record crop.
In other demand news, Ethanol production reported this morning should show strong production last week as margins held up thanks to cheap corn prices.
There were no deliveries again today against December futures, and nothing was registered for delivery. Basis along the Illinois River was weakened Tuesday, with bids falling below option as the Mississippi River shuts down for the season along northern stretches.
Open interest in December futures fell by 4,052 Tuesday, leaving 12,366 contracts still open. The preliminary report from the CBOT showed daily total volume in corn steady at a thin 173,442 contracts. Open interest was off 3,417 on active short covering by funds, which entered the week with a huge short position on the books.
Prices elsewhere today are mixed. Futures for January delivery on the Dalian exchange in China fell 1.7 cents to $9.627, but the market moved the same higher in Europe, where January corn in Paris morning trade was at $6.281, after conversions to bushels and adjustments for currency valuations.
Financial markets are trying to bounce back from losses this week, with mixed trade in U.S. stock index futures seen overnight. While a stronger dollar pressured gold to new fall lows, energy prices are headed in the other direction.
Crude oil rallied sharply overnight after the American Petroleum Institute said supplies dropped a whopping 12.4 million barrels in the latest week, bucking calls for a modest increase ahead of today's official Petroleum Inventory from the government. News another pipeline would begin draining stocks from the hub at Cushing, OK, where U.S. futures are settled, also firmed prices on ideas the big spread with international prices could narrow.
Bottom line: Growers should be looking for basis pushes, carefully analyzing whether it pays to hold grain into 2014. With carry tightening, potential basis appreciation should guide the decision. Upside in futures remains limited without weather problems in South America or a surge in Chinese buying. 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 higher, continuing the bounce off Tuesday's lows. Profit taking pulled prices lower yesterday following Monday's bearish reversal from 10-week highs, while traders waited for more news about Chinese demand and South American weather.
Another 21 lots of soybeans registered for delivery along the Illinois River were taken off the shelf Tuesday, with cash above option there and January retaining a premium to deferreds. Strong domestic demand for meal also is pushing prices, with nothing delivered again today against the December contract. Soybean oil deliveries fell to 153 lots, with a couple of stoppers taking all but three of the contracts.
Daily volume in soybean futures rose 8% to 199,498 contracts, topping the total traded in corn. Open interest was down 1,957 on flat action from funds, who are preparing for the start of the official Goldman roll at the end of the week when long-only traders following the index move January positions forward.
Oilseed markets around the world today are mostly higher. January futures on Malaysian palm oil gained a half cent to 36.8 cents/lb, but soybean oil for January delivery in China was a little weaker at 54.1 cents. January soybeans in China gained 19.7 cents to $19.575, February rapeseed in European morning trade was steady at $11.632, and January canola in Winnipeg was up 5.7 cents to $10.319. Note: all prices are in bushel or pound equivalents including currency adjustments to U.S. dollars for contracts with significant volume.
Storms are forecast to move through southern Brazil over the next couple of days, with another system headed for Argentina by early next week.
Bottom line: Growers should use rallies over the next few weeks to wrap up sales unless weather problems in South America develop soon. 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 higher, supported by the first winterkill threat of the season on the Plains. Temperatures could plunge to 15 to 20 below zero in northwest Nebraska tonight, with only light snow forecast ahead of the cold blast. Weather models remain mixed about potential for another front to bring more cold weather further south next week.
Today's seven-day coverage map keeps moisture limited for hard red winter wheat on the western and central Plains, though heavy precipitation could spread from eastern Texas and Oklahoma through the Ohio River Valley. Official 6- to 10 and 8- to 14-day forecasts out yesterday continue to call for below normal temperatures and precipitation across the Plains, and the latest American Model put out before 6 a.m. shows little change to that outlook.
Elsewhere around the world, Argentina could see more rain in its wheat belt, causing harvest delays for a crop whose size is shrinking. Rains are also moving through southeast Australia. In the northern hemisphere, winter wheat in South Russia and Ukraine is picking up a little moisture this week, but China's major wheat belt should remain dry, keeping concerns in play there.
Futures on milling quality wheat for January delivery in Paris morning trade are up 4.9 cents to $7.894, while futures for eastern Australian wheat were steady at $7.366, after conversions to bushels and adjustments for currency valuations.
The U.S. as expected was again shut out of the latest snap tender from Egypt, which was won by Romania. Only 2.2 million bushels was involved, suggesting the state buying agency of the world's biggest importer may be back in the market soon as cheap supplies begin to dry up out of the Black Sea.
Another 184 lots were registered Tuesday for delivery in Toledo, and 607 were put out today. Some 1,367 Chicago December futures are still open, down just 104 Tuesday. Total volume in Chicago futures fell 15% on Tuesday to a thin 55,984 contracts. Open interest was down 2,058 on modest fund short covering.
There were 147 deliveries today against Kansas City futures, where volume was flat at just 11,116 contracts on Tuesday. Total daily open interest rose 298, with open interest in December hard red winter at 560 contracts, down 282 on Tuesday's session. There was no fresh news about deliveries in Minneapolis, after 700 lots were put out yesterday.
Bottom line: A few weather concerns around the world could provide support headed into winter, with good exports of soft red and hard red winter wheat supporting cash markets. But carry won't pay into winter, so plan to wrap up sales of 2013 inventory soon. Use any rallies to extend 2014 coverage. 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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