May 21, 2013
Morning Price Trends
Corn: Down 7 to 13
Soybeans: Steady to down 7
Wheat: Down 8 to 10
Grain futures are trading mostly lower this morning, with only a firm old crop soy market standing in the way of the tide of selling elsewhere.
Corn prices are lower, after Monday's Crop Progress report showed farmers planted 41.8 million acres planted last week, the most ever. The percentage of the nation's corn acres put in jumped from 28% to 71%, though that was still below the average of 79%. Emergence remained slow, with only 19% out of the ground, compared to 46% on average.
July futures are posting double digit losses, testing support at the channel tendline off April and May lows, which comes in around $6.335 today, after failing to hold Monday's lows. December also made new lows overnight, after slipping Monday to its lowest level since the drought began last summer. December's contract lows are at $5.11
Despite last week's planting, progress has come to a halt for now. Storms continue to move through the Midwest, with showers lingering in the Great Lakes and eastern Corn Belt before the next system emerges late in the week. That system could bring more heavy rain to Iowa and Illinois, according to today's seven-day coverage map. More above average precipitation north of I-80 also showed up in official 6- to 10 and 8- to 14-day forecasts out yesterday. The latest American model isn't quite as wet north of I-94, but keeps heavy rains through the I-80 corridor.
Export Inspections of 14.6 million bushels in the latest week were above trade guesses and only slightly below the record low weekly rate forecast by USDA. Israel is tendering today for corn and other feed grains, but new bids remain slow. Year-to-date inspections are 44% below last year, though USDA still forecasts only a 50% drop.
Total volume on Monday eased 13% to 201,889, according to the preliminary report from the CBOT. Open interest jumped 9,174 on only light fund selling.
Overseas markets are also weaker today. Futures on the Dalian exchange in China for September delivery lost 4.6 cents to $10.046, while June corn in Paris morning trade was off 4.9 cents to $6.991, after conversions to bushels and adjustments for currency valuations.
Financial markets pulled back in Asia and Europe today, with a mood of risk aversion seen across an array of markets as investors asses potential for the Federal Reserve to wind down its massive program of quantitative easing, which involves buying debt off the market to keep long-term interest rates low. Various Fed officials are discussing the issue publically, with Chairman Ben Bernanke set to testify before Congress Wednesday, when minutes of its May 1 meeting are due. The data flow is quiet for now; the Chicago Fed's National Activity Index out yesterday fell in April.
The dollar is stronger on risk aversion and potential for higher interest rates, pressuring crude oil and forcing gold to give back some of yesterday's gains. For more, see my Weekly Financial Review.
Bottom line: Fast planting progress the third week of May has removed the planting delay story from the market, though earlier setbacks likely mean 1.5 million acres or more won't get planted. That won't be enough to worry traders until either tight old crop stocks or weather come into play towards USDA's June 28 grain stocks and acreage reports. 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 mixed today, with tight old crop supplies continuing to support July futures. The nearby advanced above yesterday's highs overnight before easing a little on the negative tone in the rest of the market, with November following corn lower.
Farmers also increased soybean seedings last week, boosting the percentage planted nationwide to 24%, though that was off from the 42% pace on average for the week. Only 3% of the beans had emerged, compared to 14% on average.
While export inspections of only 3.3 million bushels were below the weekly rate forecast by USDA for the rest of the marketing year, the year-to-date total remains 11% above last year, though the government still predicts flat exports for all of 2012-2013. The action these days remains in the domestic market, where processing plants are still searching for beans to crush thanks to strong soybean meal prices.
Volume in soybeans yesterday was up slightly to 178,323, though open interest fell 563 on modest fund buying.
Oilseed markets overseas were also lower today. September soybean oil in China was off fractionally to 55 cents/lb, and July futures on Malaysian palm oil eased to 35.2 on worries about export demand. September soybeans in China were off around a penny to $21.36, August rapeseed in European morning trade was down 10.2 cents to $12.644, and July canola in Winnipeg was down almost a penny to $14.044 after yesterday's Canada Day holiday. 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 are lower this morning, though futures have pulled off overnight lows.
Futures reversed higher at all three exchanges on Monday, but failed to follow-through on the heels of weakness in corn. April lows for Chicago July come in at $6.6475, though Kansas City and Minneapolis July so far are holding yesterday's lows.
Winter wheat ratings across the PNW and most of the Plains slipped, knocking a half bushel off yield potential nationwide, though the condition of soft red winter wheat in the eastern Midwest and South improved. USDA reported 43% of the crop is headed, down from 62% on average.
Farmers also improved spring wheat seeding, with 67% of the crop in, down from 76% on average. Only half the crop in North Dakota is planted, however. Emergence is at 22% nationwide, down from the five-year average of 49%, with just 10% of the crop in North Dakota out of the ground. For complete state-by-state winter wheat crop ratings and yield projections, see my Statistical Tables & Charts pages.
Today's seven-day coverage maps suggest potential for more precipitation this week across the Plains, though western areas should receive less. Official 6- to 10 and 8- to 14-day forecasts out yesterday continue to show a drying trend across much of the hard red winter wheat belt, with the latest American model trending even drier.
Across the Atlantic, northern Ukraine and the Volga Valley in Russian have chances for rain this week, but other areas look dry, keeping production potential down. Argentina's wheat belt looks mostly dry over the next two weeks, but rains are falling in eastern Australia, helping improve conditions for seeding there.
Export inspections at 21.1 million bushels in the latest week were at the top end of trade guesses, but still fell below the weekly rate projected by USDA. That could mean the agency's forecast for the 2012 crop year that ends May 31 is too high. Buyers remain restrained in many areas. Jordan is waiting for results of another tender for wheat today, after most of its previous attempts fell through this spring, including one just last week. India, which was trying to put together a deal to export some of its surplus inventory, pulled back from the market instead on low prices.
Total volume was up 7% in Chicago Monday to 71,083, with open interest up 6,561 on light fund buying. Volume in Kansas City rose 10% to 13,314, on rising open interest of 216. November futures on milling quality wheat in morning Paris trade was off 4 cents to $6.591, 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.
Want to receive market commentary by e-mail twice each day? This service includes added information, charts and graphs to explain market trends, and more. Sign up for the FREE service today - just click HERE
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.