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Morning Market Review for Aug. 21, 2019

Markets face long wait for news. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls:
Corn: Up 1
Soybeans:  Up 3 to 4
Wheat: Down 1 to 3

Mild end to August won’t end debate over yields

Grain futures are mixed this morning as markets continue to struggle with lack of news about the size of corn and soybean crops. USDA won’t weigh in with updated yield forecasts until Sept. 12 and forecasts so far don’t look threatening.

Another big storm in the central Plains this morning will provide more rain to much of the growing region before a second system moves in from the northwest next week. The official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble models show cooler temperatures spreading with drier weather working in from the west. European models are coming into alignment with that outlook as well.

Growers posting Feedback From The Field this week reported corn yields from 75 to 200 bushels per acre, with soybeans ranging from 25 to 65 bpa. Uneven development is a widespread with dry conditions a factor in some areas, too.

“Our corn cobs look like polish sausages,” said a grower in northeastern North Dakota. “There is a big northern chunk of North Dakota that is in bad drought.”  Click this link to tell us what’s happening in your area.

Financial markets are trying to recover from selling on Wall Street Tuesday, with mixed trade in Asia giving way to buying in Europe that points U.S. index futures to a stronger open today. Safe havens, including the dollar, gold and Treasuries are all weaker as investors get ready for a busy second half of the week. Minutes of July’s meeting at the Federal Reserve could shed light on the central bank’s internal debate over monetary policy as the discussion over interest rates from governors showed public dissent this week. Fed Chairman Jerome Powell speaks Friday at the Kansas City branch’s annual retreat in Jackson Hole, WY, and President Trump meets in France with G-7 leaders to talk Brexit and more.

Crude oil prices are stronger this morning, eying a return to $57 a barrel. Crude oil supplies likely fell last week but diesel inventories rose. The government release its latest update on petroleum at 9:30 CDT.

Corn prices are a little stronger as futures try to bounce back from new summer lows posted Tuesday. While the trade believes yields are lower than USDA reported Aug. 12, there are no indications the decline is enough to affect overall production yet. Vegetation Health Index analysis today could provide a little more clarity after a decline in crop ratings this week.

Demand news is also thin. Corn basis was stronger on average Tuesday as some buyers held cash prices firm despite the break on the board. Ethanol plants in the eastern Corn Belt also had a firm tone ahead of today’s report on production for last week, which will show how the industry responded to better margins helped by low corn feedstock costs. Bids on the river system were mixed as lower barge freight costs yesterday were offset by a weak tone at the Gulf as export demand remains lackluster.

The preliminary report from the CBOT showed daily futures volume up 36% yesterday to 393,671 while open interest fell 6,548 on active fund short covering, and likely some new selling too.

Options volume rose 44% to 109,941, 55% of it calls as traders liquidated deep out-of-the-money December calls and added strikes close to the money, while also dumping September puts that expire at the end of the week.

Implied volatility in at-the-money December options was increased a half of 1% to $20.50.

Overseas markets are also lower today. September futures in China lost 5.6 cents to post another new contract low, closing at $6.606. November Paris futures in afternoon trade are off a penny to $4.66 after adjustments for volumes and currencies.

Bottom line: Stability is the best hope now once selling from the USDA report subsides. Without clear damage to yields the size of the 2019 crop won’t be known for months, leaving the market to fester. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans posted modest gains overnight as November tries to keep to another inside day and avoid a break to new two-week lows. The only weather question in play for soybeans right now is whether rains will be too heavy in the western Midwest into the end of the month.

Rhetoric between the U.S. and China continues to churn, with no indication of any progress – or new threats, either.

The preliminary report from the CBOT showed daily futures volume up 7% yesterday at 122,393 while open interest was 3,168 higher despite light fund short covering. Options volume dropped 29% to a thin 27,440, 66% of it calls with new interest seen in the November 2020 $9.40 call. Implied volatility in November at-the-money options edged lower to 15.24%.

Vegetable oil markets in Asia were higher today. September soybean oil futures in China settled at 38.789 cents per pound while September palm oil futures in Malaysia gained more than a third of a cent to 23.47 cents.

Oilseed markets internationally are mixed. September soybean futures in China were down 3.1 cents to $13.018, November rapeseed futures in Paris rose 1.3 cents to $9.60 and November Winnipeg canola overnight is up 1.7 cents to $7.718 After adjustments for volumes and currencies.

Bottom line: Soybeans got friendly news from USDA on acreage but not enough to change the landscape unless yields suffer too. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices are lower as the market continues to deal with bearish charts threatening further losses. Soft red winter wheat broke below a bear flag yesterday that could bring contract lows into play, while the other two markets just try to hang on to the bottom of their ranges.

Lack of big export news and better weather in the southern hemisphere added more pressure to prices today, though rains could stall harvest on the Plains.

The preliminary report from the CBOT showed daily volume down 3% to 112,102 though open interest fell 1,271 despite modest new selling from funds. Options volume was 10% lower at 22,466, 52% of it puts with mostly short-term protection in play. Implied volatility in December at-the-money options eased to 21.44%.

Volume in HRW was little changed at 50,430 on open interest that was up 2,612.

Overseas markets are lower today. January futures for Eastern Australian Wheat dropped 12 cents to $6.056 with forecasts looking wetter over the next two weeks. Rains also moved through Argentina’s key growing region this week. December futures in Paris wheat afternoon trade are down another penny to $5.12 after adjustments for currencies and volumes.

Bottom line: Wheat must prove export demand will offset a larger crop, which won’t be easy in a bearish grain market. For more details on the outlook, see the Wheat Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Pivots082119.jpg

Investopedia says a pivot point is a technical analysis indicator, or calculations, used to determine the overall trend of the market over different time frames. The pivot point itself is simply the average of the high, low and closing prices rom the previous trading day. On the subsequent day, trading above the pivot point is thought to indicate ongoing bullish sentiment, while trading below the pivot point indicates bearish sentiment.
Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Advisor. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on basis, energy, fertilizer and financial markets and feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association. And you can follow Farm Futures throughout the day on Twitter at www.twitter.com/farmfutures, and be sure to like or follow the new Farm Futures Facebook page.
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