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Morning Market Review for Aug. 22, 2019

Quiet markets wait for news. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls:
Corn: Steady to up 1
Soybeans:  Up 1 to 2
Wheat: Steady to up 2

Futures firm ahead of export data

Grain futures are mostly slghtly higher this morning, trying to show a little technical strength after many contracts tested lows Wednesday. While prices remain in downtrends, sellers are reluctant to press the market further with so much uncertainty about production.

Storms moving south through the Plains and Midwest will bring mild temperatures over the next week, with another system developing over the weekend. 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 developing in the central Midwest. European models appear to agree with that outlook as well.

Growers posting Feedback From The Field Wednesday rated fields from very poor to excellent. But even in states with overall good conditions, there are trouble spots.

“Corn fields are full of drowned out and deathly yellow areas,” said a producer in eastern Kansas. “Beans are the same as second crop planting. Very tough year and now hail storm hit several farms.”

Click this link to tell us what’s happening in your area.

Minutes from the July meeting on monetary policy at the Federal Reserve show a wide range of opinions, from easing to holding the line. Chairman Jerome Powell could provide some direction when he speaks Friday at the Kansas City Fed’s Jackson Hole, WY conference.

In the meantime, financial markets are treading water. Stocks traded mixed in Asia before turning lower in Europe following Wednesday’s gains on Wall Street that came with generally good economic data and corporate earnings. Easing by other central banks around the world is keeping the dollar firm, with gold and Treasuries losing some of their safe haven status.

Crude oil held a move back above $56 a barrel after the government reported tighter inventories yesterday due to shrinking exports. Diesel stocks built as Midwest refineries pumped out more fuel and ag use wanes. Cash diesel prices moved higher none-the-less on the rally in crude.

Corn prices are trying to hold after a modest reversal higher Wednesday from new summer lows. Uncertainty about both supply and demand keeps prices from moving much.

Export sales from last week out this morning are expected to fall below the 17.4 million bushels done the prior week, a disappointing total. Exports of 2018 corn could still meet USDA’s forecast for the crop depending on what final Census data indicates.

USDA separately yesterday said Mexico bought 12.9 million bushels for new crop delivery.

Ethanol production fell last week, helping tighten stocks and improve plant margins modestly. Average corn basis slipped a half cent yesterday. A softer tone was noted at the Gulf yesterday, which weakened bids on parts of the lower Mississippi River, though cash was mixed elsewhere. Ethanol plants mostly faded a little.

This week's Vegetation Health Index analysis points to yields close to those from crop ratings, around 169.3 bushels per acre.  But late crop development is blurring assessments, keeping the trade uncertain.

The preliminary report from the CBOT showed daily futures volume up 4% yesterday to 410,433 while open interest fell 8,896 on modest short covering by funds.

Options volume dropped 20% to 87,817, 56% of it calls with new interest noted in near-the-money December calls as traders liquidated 11,821 September puts that expire Friday. Implied volatility in at-the-money December options was increased three-quarters of 1% to 21.26.

Overseas markets were also quiet today. September futures in China were unchanged at $6.612 as an auction of government reserves failed to attract much interest. November Paris futures in afternoon trade are down a penny to $4.642 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 are a little higher, keeping November stuck in its summer downtrend but well above support.

Export sales out this morning will show if China cancelled any more soybean purchases made during the short truce in the trade war as a goodwill gesture. Total old an new crop sales are expected to be lower, with new crop bookings over to a slow start.

This week's Vegetation Health Index analysis points to yields close to those from crop ratings, around 49.7 bushels per acre for soybeans.

The preliminary report from the CBOT showed daily futures volume down 3% at 118,285 while open interest was up 2,320 despite light fund short covering. Options volume dropped another 17% to just 22,667, 66% of it calls with new interest in near-the-money September and November calls. Implied volatility in November at-the-money options rose to 15.48%.

Vegetable oil markets in Asia were stronger today. September soybean oil futures in China edged higher to 38.801 cents per pound but September palm oil futures in Malaysia gapped higher to end up four-tenths of a cent at 23.82 cents.

Oilseed markets internationally are mixed. September soybean futures in China lost around a penny to 13.012, November rapeseed futures in Paris are up 2.5 cents to $9.597 and November Winnipeg canola overnight gained a penny to $7.749 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 mostly a little stronger as futures struggle to avoid more bearish trade.

While hard red winter wheat futures held lows this week so far, SRW tries to break out of its downtrend after a reversal higher yesterday. Minneapolis kept to an inside day after a new contract low Wednesday.

Export sales out this morning for last week are expected to be lower than last week’s 17.4 million bushels but close to the rate forecast by USDA for the 2019 crop.

The preliminary report from the CBOT showed daily volume down 11% yesterday to 100,094 with open interest up 2,998 despite light fund short covering. Options volume dropped 29% to 15,918, 53% of it calls with a little new interest noted in the July $6 call and $3.80 put. Implied volatility in December at-the-money options increased to 21.69%.

Volume in HRW gained 16% yesterday to 58,538 on open interest that was up 2,771.

Overseas markets are also little changed today. January futures for Eastern Australian Wheat were done a penny to $6.019 and December futures in Paris wheat afternoon trade held steady at $5.117 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.

Pivots082219.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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