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Afternoon Market Recap for June 25, 2019

Drier forecasts burden grain prices

Corn treads water Tuesday, soybeans down moderately, wheat mixed

Tuesday saw mixed results for grain prices, as traders turned to drier forecasts that may help farmers get a few more acres planted this week. Corn ended the session with small gains, while soybeans took a moderate cut. Wheat was narrowly mixed on some uneven technical maneuvering.

Producers may hope to see relatively drier conditions this coming week, with another 1” or so possible across the upper Midwest but markedly less than that across the rest of the Corn Belt through July 2, per the latest seven-day cumulative precipitation map from NOAA. Daytime highs are expected to gradually warm and reach slightly above-normal temperatures by the end of this weekend.

The latest consumer confidence index slumped below analyst expectations, which had Wall St. on its heels Monday. The Dow dropped 150 points in afternoon trading to 26,545. Investors are also concerned the Federal Reserve may be souring on the prospect of lowering interest rates later this year. Energy futures were narrowly mixed, with crude oil slipping back below $58 per barrel while gasoline and diesel moved moderately higher. The U.S. Dollar firmed slightly.

Corn prices faces downward pressure on drier forecasts but held on for small gains in Tuesday’s session. July futures inched ahead 0.75 cents to $4.4750, with September futures picking up 1.25 cents to $4.53.

Corn basis bids were steady to firm Tuesday, spiking as much as 13 cents higher at an Ohio elevator today. Gains of 1 to 5 cents were more common elsewhere across the central U.S.

Corn planting progress is now at 96%, up from 92% a week ago, per the latest USDA crop progress report out late Monday afternoon. More states crossed the proverbial finish line, with Indiana (91%), Michigan (91%) and Ohio (80%) still the farthest behind so far. Among the top 18 production states, 89% of the crop is emerged, versus 100% last year and a five-year average of 99%.

“USDA updates its acreage estimate Friday and could cut another 2.8 million off its already reduced forecast from earlier this month,” according to Farm Futures senior grain market analyst Bryce Knorr. “And historical trends suggest the final number could be down 2 million from that, with lower than normal harvested acreage whittling down potential production further.”

Corn crop quality took a big step back last week, meantime, moving from 59% in good-to-excellent condition down to 56% last week. Another 32% of the crop is rated fair (up a point from a week ago), with the remaining 12% rated poor or very poor (up three points from last week). Analysts were expecting USDA to hold quality ratings steady.

Ahead of the highly anticipated annual acreage report from USDA, out Friday morning, analysts are expecting the agency to show 87.03 million corn acres. That’s sharply below USDA’s March estimates of 92.79 million acres and 2018’s tally of 89.13 million acres.

Taiwan purchased 2.6 million bushels of corn, likely from Brazil, in an international tender that closed earlier today. The grain is for shipment in October.

Preliminary volume estimates were for 368,520 contracts, sliding moderately below Monday’s final count of 478,222.

Soybean prices faced moderate cuts Tuesday amid drier forecasts that could help speed up planting progress and firm up yield potential. July futures dropped 5. Cents to $9.0350, with August futures down 6 cents to $9.0875.

Soybean basis bids were mixed Tuesday, falling by as much as 5 cents at an Iowa processor but firming by as much as 5 cents at an Indiana processor today.

Soybean planting progress remains significantly behind the pace of recent years after reaching 85% last week. That was a small improvement over the prior week’s tally of 77% but much slower than 2018’s mark of 100% and the five-year average of 97%. Missouri (66%), Michigan (69%) and Ohio (65%) are the farthest behind so far.

Soybean emergence has reached 71%, up from 55% a week ago but far behind 2018’s pace of 94% and the five-year average of 91%. USDA says 54% of the crop is in good-to-excellent condition, shrinking below analyst expectations of 59%.

Analysts expect USDA to report 84.68 million soybean acres in its upcoming acreage report, out Friday morning. If realized, that total would be mostly steady from the agency’s March estimates of 84.62 million acres but moderately below 2018’s total of 89.20 million acres.

Preliminary volume estimates were for 334,276 contracts, moving moderately higher than Monday’s final count of 232,539.

Wheat prices were mixed Tuesday, with winter wheat down slightly on the prospect of improving harvest weather, while spring wheat firmed on a round of technical buying. July Chicago SRW futures fell 2.25 cents to $5.3575, July Kansas City HRW futures slipped 0.5 cents to $4.65, and July MGEX spring wheat futures gained 5 cents to $5.4925.

Winter wheat harvest progress remains slow for now, with USDA reporting 15% completion last week. That nearly doubled the prior week’s tally of 8% but remains significantly slower than 2018’s pace of 39% and the five-year average of 34%. USDA says 61% of the crop is in good-to-excellent condition, down from 64% a week ago.

Spring wheat crop quality dropped as well, moving from 77% in good-to-excellent condition a week ago down to 75%. Another 22% of the crop is rated fair, with the remaining 3% rated poor. Physiologically, 7% of the crop is headed, versus 30% last year and the five-year average of 29%.

Analysts expect USDA to show slightly lower all wheat acres when it releases its acreage report this Friday, falling from March estimates of 45.75 million acres down to 45.61 million acres. There were 47.80 million all wheat acres last year.

Ukraine has kicked off its wheat and barley harvest, with progress of around 5% so far. The country’s ministry of agriculture anticipates slightly higher grain production in 2019.

Bulgaria’s wheat harvest is expected to top 198 million bushels this year, which would fall around 7% below 2018’s total, if realized.

Preliminary volume estimates were for 114,776 CBOT contracts, down about 10% from Monday’s final count of 127,268.


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