December 13, 2013
Morning Price Trends
Corn: Down 1 to 2
Soybeans: Down 5 to 10
Wheat: Down 2 to 4
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Grain futures are mostly lower this morning, keeping the market unable to break free of recent trading ranges. More pressure is coming to bare on financial markets ahead of next week's meeting of the Federal Reserve.
Corn prices are a little softer as overnight trading begins to wind down. March was unable to hold a move above its 40-day moving average, turning lower with the start of trading in Europe.
Better news about demand, at least domestically, supports prices. Ethanol production soared to its highest level since January 2012, reaching 944,000 barrels a day, up 31,000, keeping corn usage above the 50-million bushel increase forecast Tuesday by USDA.
Export Sales reported this morning could come in around 25 million bushels, decent but not great. Taiwan bought 905,000 bushels of corn overnight along with 441,000 bushels of soybeans. USDA also announced the sale of 4.725 million bushels of U.S. corn to unknown destinations yesterday, under its daily reporting system for large purchases.
There were no deliveries again today against December futures, and nothing is still registered for delivery as it prepares to go off the board on Friday. Basis slipped below option yesterday along the Illinois River. Open interest in December futures fell by 1,132 Wednesday, leaving 1,645 contracts still open. The preliminary report from the CBOT showed daily total volume in corn falling 45% to a very light 116,182. Open interest fell 875 on modest buying from funds, suggesting at least some short covering was in play yesterday.
Prices elsewhere are weaker. Futures for May delivery on the Dalian exchange in China were off 2.1 cents to $9.839, and March corn in Paris was off almost a penny at $6.194, after conversions to bushels and adjustments for currency valuations.
Financial markets are also off today on follow through selling in Asia and Europe on the heels of yesterday's break on Wall Street. While a move by the Federal Reserve to start tapering its financial stimulus is still a long shot, it's becoming more inevitable, triggering profit taking after this year's big rally in stocks. After a slow start to the week, the flow of data picks up a little today. Retail Sales could be up .6% in November, while Weekly Unemployment Claims adjust higher.
Wednesday's Petroleum Inventory showed a big drop in crude oil stocks last week, as refineries increased production, boosting diesel supplies and lowering some wholesale prices to our buying target for an increment of spring fuel needs. For more, see my Weekly Energy Review.
Bottom line: Growers should be looking for basis pushes, carefully analyzing whether it pays to hold grain into 2014. Farmers have sold less of their 2013 crop than normal, leaving an avalanche of corn to hit the market after the first of the year. 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, giving back yesterday's gains. Futures saw light but steady selling early in the overnight session, before trimming losses some at the start of trading in Europe.
Export sales reported this morning could top last week's total of 29.6 million bushels, if only because 22.2 million bushels were already confirmed by USDA under its daily reporting system for large purchases.
After receiving good rains this week, southern Brazil and Argentina are forecast to turn dryer over the next two weeks. That should allow for final planting to proceed, but may also raise a few moisture concerns.
Oilseed markets around the world today are mostly lower. February futures on Malaysian palm oil eased to 36.7 cents/lb, while soybean oil for May delivery in China was also lower at 53.8 cents. May soybeans in China gained 1.8 cents to $20.017, February rapeseed in Europe was off $11.443, and January canola in Winnipeg was 3.9 cents lower to $9.785 overnight. Note: all prices are in bushel or pound equivalents including currency adjustments to U.S. dollars for contracts with significant volume.
No soybeans are registered against January futures later this month, with basis remaining well above option along the Illinois River, where deliveries focus. Strong domestic demand for meal also is pushing prices, with nothing delivered again today against the December contract. Soybean oil deliveries increased to 73 lots. Daily volume in soybeans was off 38% Tuesday to 197,590, while open interest gained 2,495 on light fund buying.
Bottom line: Growers should use rallies over the next few weeks to wrap up sales. A close below $12.90 January futures means the trend is moving lower. 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 trying to turn higher, clawing back from this week's break to new contract lows at all three exchanges.
Export sales reported this morning should be modest, but still better than last week's disappointing totals. Japan filled 59% of its regular weekly tender today for 4.9 million bushels from the U.S., with the rest going to Canada and Australia. Japan earlier this week held a special tender for Canadian wheat only, after prices plunged on the huge increase in production reported by the government in Ottawa.
Egypt bought 11 million bushels of French and Romania wheat yesterday, even as U.S. prices became more competitive on this week's break. Futures on milling quality wheat for March delivery in Paris were up 1.2 cents today to $7.639, while futures for eastern Australian wheat gained 3.9 cents to $7.386, after conversions to bushels and adjustments for currency valuations.
This week's cold weather on the Plains is easing, with no threat of winterkill seen over the next week to hard red winter wheat. However, hopes for precipitation are waning, according to today's seven-day coverage maps. Official 6- to 10 and 8- to 14-day forecasts out yesterday look a little wetter for the northern part of the growing region, while the latest American Model put out before 6 a.m. this morning was wetter for the eastern Plains overall in the second week.
In other growing regions around the world, Argentina's southern wheat area could see a few light showers into the weekend, while southern fields across Australia's wheat belt turn drier into next week, aiding harvest there. Winter wheat in South Russia and Ukraine looks drier over the next two weeks after this week's precipitation, and China's major wheat also should remain dry.
There were 51 contracts delivered today against Chicago wheat. Only 163 Chicago December futures are still open, down 23 Wednesday. Total volume in Chicago was off 41% yesterday to 59,606, with open interest gaining 246 on light fund buying. There were no deliveries again today against Kansas City futures, with total volume down 17% to 18,419. Open interest was up 735 on the session. Open interest in December hard red winter is at 60 contracts, down 22 Wednesday. No contracts were put out again today in Minneapolis.
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, sales of 2013 inventory should be down to gambling stocks. 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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