Morning Market Review by Bryce Knorr

Rain, fear of Russian export return challenge wheat. (Comments are updated by 7:30 a.m. Central Time)

Published on: Apr 17, 2015

April 17, 2015

Morning Price Trends
Corn: Down 1
Soybeans: Steady to up 1
Wheat: Mixed

Grain futures are mixed this morning, in a mostly quiet overnight trade, despite more volatility in outside markets and a lot of weather news.

Corn prices are a little lower, after trading in very narrow ranges for most of the overnight session. Large old crop stocks continue to weigh on prices, but a wet start to the season has raised a few concerns about planting delays. Much of growing region received only light rain this week, though that could be about to change.

Storms continuing across the central Plains this morning should move slowly east over the weekend, bringing three-quarters of an inch to much of the Corn Belt, according to the latest predictions for the next week. A few areas, including most of North Dakota and Wisconsin, and northern Illinois, should receive lesser amounts, part of a drying trend spread across the upper Midwest in 6- to 10-day and 8- to 14-day outlooks out yesterday.

Export Sales out Thursday totaled 24.3 million bushels, above trade guesses, but shipments remain below the rate needed weekly to reach USDA's forecast for the marketing year.

The preliminary report from the CBOT showed daily futures volume down 53% on Thursday to 251,216 as a drop of almost 60% in May-July spread trade thinned activity. Open interest was up 4,718 on flat trade from funds. Options volume was off 12% at 56,691 and 63% of the trades were for puts as traders liquidated puts and opened new calls.

Overseas prices today were mixed today. September futures on the Dalian exchange in China rose 8.6 cents to $10.314 while June corn in Paris morning trade was off 4.1 cents to $4.462, after conversions to bushels and adjustments for currency valuations.

Bottom line: The market's focus is trying to turn to weather, and as long as much of the Midwest stays wet, prices won't fall apart. But 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 trying to hold on to modest overnight gains but large supplies and weak outside markets provide headwinds.

Export Sales reported Thursday totaled 19.8 million bushels for a mix of old and new crop business, though sales for 2015 production remain at their slowest pace in five years. Old crop commitments are already at 100% of USDA's forecast for the marketing year, which runs through Aug. 31.

Rains moving through Argentina should slow harvest there, but local estimates of production are rising. Rain could also slow the tail end of harvest in southern Brazil.

The preliminary report from the CBOT put daily volume down 40% to 187,844 on Thursday due in part to a drop of almost 60% in in the May-July spread trade. Open interest plunged 20,787 despite only flat trade from funds, with the decline focused in May. Options volume was off 35% at 74,941. Though 59% of the trades were for puts, traders were opening new calls and liquidating puts.

Vegetable oil values in Asia today were narrowly mixed. September soybean oil futures in China edged lower to 40.817 cents/lb and June palm oil futures in Malaysia were higher at 27.081 cents. Oilseed prices internationally were also mixed. September soybeans in China plunged 29 cents to $17.848, August rapeseed in Europe was off 1.2 cents to $8.793 and July canola in Winnipeg was up 1.5 cents overnight to $8.285. 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 mostly higher this morning, trying to turn around after a dismal week that saw more new contract lows in hard wheat Thursday. Reports say the Russian ag minister recommends lifting the export tax this summer, though no final decision has been made by the government. Better conditions this spring and a stronger rouble are easing food inflation concerns.

Rains across the central Plains this morning should provide plenty of moisture to hard red winter wheat, though parts of Texas receive less in today's seven-day weather maps. Official 6- to 10-day and 8- to 14-day forecasts out yesterday continue to call for above normal precipitation  on the southern Plains, though spring wheat areas remain drier, a trend supported by the latest American model run.

Elsewhere around the world, in the main Black Sea winter wheat region has several chances for rain over the next week, while the main winter wheat belt in China should also see showers.

Export sales reported Thursday remain thin at just 5.9 million bushels of old and new crop business.

Daily volume in soft red winter wheat futures fell only 1% on Thursday to 174,708 as spread trade in the May-July remained active. Open interest fell 655 on light short covering from funds, with all the decline in the May. Options volume was off by 24% to 21,445 and 58% of those trades were for calls. Volume in hard red winter wheat futures surged 48% to 47,122 on the market's selloff with heavy trade in May-July noted as open interest rose 1,486.

Prices internationally today were lower. May futures for eastern Australian wheat fell 4 cents to $6.167 and futures on milling quality wheat for December delivery in Paris morning trade were off a half cent at $5.464, 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.