April 20, 2015
Morning Price Trends
Corn: Down 1 to 2
Soybeans: Up 1 to 3
Wheat: Up 1 to 3
Grain futures are mixed this morning as a fairly quiet overnight session begins to wind down. Outside markets are recovering from Friday's sharp selloff on Wall Street, despite little apparent progress on the Greek debt issue. China slashed reserve requirements for banks over the week, and the stimulus seemed to cheer investors a bit.
Corn prices are a little softer this morning, after a good week for planting eased concerns about the slow start to the season. This afternoon's Crop Progress report could show around 12% of the nation's corn planted.
Rains over the weekend should stall tractors in Iowa, Nebraska and Kansas and showers are moving though Wisconsin and northern Illinois this morning. Total accumulations don't look big over the next week as a drying trend begins to kick in. Official 6- to 10-day and 8- to 14-day outlooks out yesterday remain cool for much of the Midwest.
The corn market could be hindered by expiration of May options at the end of the week. Friday's Commitment of Traders showed big speculators were heavy sellers in the latest week, adding 47,462 net shorts to bring their bearish bet on corn to its biggest level since January 2014. Before buying the rest of the week. The preliminary report from the CBOT showed daily futures volume up 27% on Friday to 319,863 with modest fund buying noted. Open interest fell 17,926 as traders liquidated May ahead of options expiration at the end of this week, with 70,225 done in the May-July spread. Options volume fell 20% to 45,102 and 55% of the trades were for calls.
Overseas prices today were mixed. September futures on the Dalian exchange in China lost 4 cents to $6.132 while June corn in Paris morning trade was up 1.4 cents at $4.45, after conversions to bushels and adjustments for currency valuations.
Bottom line: Corn planting is a little slow but at long as 80% of the crop is planted by mid-May the market won't get alarmed. Large old crop carryout won't go away, and farmers are ready to plant enough acres to meet demand with only average yields, keeping stocks burdensome and prices low. For more, see my Weekly Corn Review. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Soybeans are extending last week's gains in a quiet overnight session, with the market finding some support from a faster pace of corn planting last week.
U.S. export business remains good, despite a faster pace expected this week in Argentina, where around a third of the crop is harvested. Showers could slow final cutting in southern Brazil a bit this week.
Big speculators added another 27,845 contracts to their bearish bet in soybeans as of Tuesday, according to the CFTC tally, though they were net buyers the rest of the week. The preliminary report from the CBOT Friday had open interest up 13% to 212,968 on flat trade from funds. Open interest was down a mere nine contracts despite ongoing liquidation of May contracts, with 42,242 done in May-July. Options volume eased 5% to 71,152 but 66% of the trades were for calls, which accounted for 96% of the of the net increase in open interest.
Vegetable oil values in Asia today were higher today. September soybean oil futures in China ended at 41.237 cents/lb and June palm oil futures in Malaysia were at 27.198 cents. Oilseed prices internationally were mixed. September soybeans in China continue their recent decline, falling another 26.3 cents to $17.554. August rapeseed in Europe was up 1.2 cents to $8.798 and July canola in Winnipeg gained 1.7 cents overnight to $8.368. Note: International prices are converted to bushel or pound equivalents including currency adjustments to U.S. dollars for contracts with significant volume.
Bottom line: If acreage doesn't increase this spring from USDA intentions, carryout could range from 340 million to 440 million bushels in the year ahead, depending on the final size of the 2014 crop. That's the difference between $10 cash soybeans and $9, which the market is debating right now. 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, with slow but steady buying seen for most of the overnight session. A pickup in export demand out of North Africa and the Middle East appears to be helping prices, though the U.S. is unlikely to get much if any of the business.
Egypt bought 11 million bushels of wheat from France, Russia and Romania over the weekend, and Russian wheat reportedly was the cheapest offered in a tender from Iraq. While the government has made no official announcement stopping its tax on exports, the ag ministry there recommended lifting the curbs last week.
Conditions of the winter wheat crop in Russian have improved. Rains are moving through Russia and Ukraine today, with more expected this week. The main winter wheat belt in China is also seeing some rain today in areas.
Gains in wheat overnight also come despite very good precipitation over the central and southern Plains. Some 89% of the hard red winter wheat crop received an inch or more of precipitation over the past week.
Today's seven-day weather maps show the region calming down briefly, before the next system fires up in Oklahoma. Those storms will mainly benefit the eastern Plains, and official 6- to 10-day and 8- to 14-day forecasts out yesterday show a somewhat drier pattern emerging. The latest American model run reinforced that trend.
Big speculators were selling both hard and red winter wheat last week according to Friday's commitments report. Daily volume in soft red winter wheat futures fell 26% to 129,422, while open interest fell 1,205 on light fund selling. Traders continued to cut back on May-July spread trade with open interest in the September as well as the May. Options volume jumped 42% to 30,496, and 79% of the trades were for calls. Net open interest in calls increased more than three times more than for puts. Volume in hard red winter wheat futures was off 37% to 29,824, while open interest rose 2,336.
Prices internationally today were mixed. May futures for eastern Australian wheat lost 4 cents to $6.13 on a stronger Australian dollar, while futures on milling quality wheat for December delivery in Paris morning trade were a penny higher at$5.417, after conversions to bushels and adjustments for currency valuations.
Bottom line: Get ready to price 2015 wheat over the next three weeks on weather-related rallies, either on the way up or with a trailing stop when the party's over. 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.