May 23, 2013
Morning Price Trends
Corn: Down 1 to 3
Soybeans: Up 1 to down 2
Wheat: Up 1 to 5
Market Analyst Paul Burgener is filling in for Bryce Knorr today.
The big news in the markets overnight has been the selloff in foreign stock markets after the Federal Reserve minutes were released yesterday showing that some of the committee members are in favor of beginning to reduce bond purchasing as soon as June, in an effort to start unwinding their monetary easing policies. This comes on the heels of yesterday's selloff in U.S. markets at the close after the minutes were released.
Wheat markets continued to rally overnight as harvest gets underway in the South, and the Plains remain dry for another day. Better ethanol production and more exports interest rallied both corn and soybeans yesterday with some carryover into old crop soybeans today. The markets are looking for the export sales report this morning to lend a little direction.
Corn prices are steady to down slightly this morning after the rally on Wednesday driven by much better ethanol production numbers and a large sale of new crop corn to China and unknown destinations. Ethanol production increased by 18,000 barrels per day, to 875,000 barrels per day last week as higher gasoline prices and lower corn prices have increased margins at the plants. Inventories were also down another 200,000 barrels, leaving ethanol inventory at 16.2 million barrels, showing demand outpacing the increased production. USDA announced another sale of 14.17 million bushels of new crop corn to China and 7.09 million bushels to unknown destinations yesterday, bringing more bullish news to the corn markets.
July futures broke above the 50-day moving average yesterday and have held that support overnight as the markets await this morning's export sales report with expectations of 100,000 to 200,000 metric tons for old crop and 100,000 to 300,000 metric tons for new crop.
Planting has slowed in much of the Corn Belt, depending on location and the path of this week's severe weather. Worries that the last 29% of the corn crop might yet be a while getting in the ground has also helped to rally this corn market. It is expected that much of the remaining crop will be planted, even if it take until early June to get it seeded. Lower yields are likely from this late planted corn, possibly changing the overall yield for this year's crop. The western part of the Midwest is in line for more rain through the weekend as another round of storms is set to move into the region carrying moisture across Iowa into Illinois by early next week. The 6 to 10 day forecast is looking wetter in the Northern Plains and Canadian Prairies with the biggest chances for rain staying mostly north of I-80 late next week. Tuesday's holiday delayed crop progress report will let us know how much this week's rains have slowed planting progress.
Total volume on Wednesday moved down to 246,095, according to the preliminary report from the CBOT. Open interest decreased by 678.
Overseas markets are mixed to lower today. Futures on the Dalian exchange in China for September delivery were down 3.3 cents to $9.829, while June corn in Paris morning trade was up 0.3 cents to $7.119, after conversions to bushels and adjustments for currency valuations.
The dollar is off sharply today after yesterday's news from the Fed and pressure from both European and Asian currencies. Crude oil is trading lower again today on the market selloff yesterday afternoon and disappointing news from China on manufacturing output. For more, see the 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 July futures testing the $15 level overnight as news of a port strike in Argentina has Chinese buyers poking around for additional soybean availability in the U.S. New crop prices are holding steady this morning as we await the export sales report where expectations are for less than 100,000 metric tons of old crop and 350,000 to 450,000 metric tons of new crop soybeans sold.
Tuesday's delayed crop progress report will be telling for soybeans as the corn and soybean planting numbers through Memorial Day will give us a better idea of how many acres might be making the shift after this week's rains slowed planting progress in many areas.
Volume in soybeans yesterday was down to 200,832 and open interest gained 2,988 on the day's trading.
Oilseed markets overseas were mixed today. September soybean oil in China was down 0.4 cents to 54.8 cents/lb, and July futures on Malaysian palm oil were steady at 34.9 cents. September soybeans in China were up 2.6 cents to $21.541, August rapeseed in European morning trade was down 3.8 cents to $12.669, and July canola in Winnipeg was up 5.9 cents to $14.14. 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 higher again this morning, as the market continues to trade dry weather in the Plains and rain in spring wheat country. Export sales for wheat are expected to be lower than last week with less than 200,000 metric tons of old crop sold and 300,000 to 400,000 metric tons of new crop wheat moved in the past week.
Futures prices rallied back yesterday as Texas wheat growers are finally in line to pick up some heavy rains today with warm moist air coming out of the tropical Mexico makes its way into the area. It is likely too late to help the wheat crop, and is more likely to cause delays in the early harvest activities that are just underway.
Total volume was up in Chicago Wednesday to 71,021, with open interest up 2,884. Volume in Kansas City was down to 11,584, on rising open interest of 439. November futures on milling quality wheat in morning Paris trade was up 4 cents to $7.233, 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.
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