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Morning Market Review for July 19, 2019

Futures look for lifeline. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls:
Corn: Up 1
Soybeans:  Up 5 to 7
Wheat: Up 1 to 3

Soybeans firm after trade talks resume

Grain futures are trying to rebound at the end of a punishing week, finding a little support from searing temperatures and resumption of trade talks between the U.S. and China.

While 100-degree heat will bake parts of the Corn Belt today, rains should cool off the region quickly, though some areas will again receive only light amounts over the next week. U.S. models, including official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning call for below average temperatures to last through the end of the month, with normal to below normal precipitation. The European Model also has shifted cooler, though not at chilly as the American model runs. Forecasts out yesterday for August show no threats of hot, dry weather either that could damage crops.

Growers posting Feedback From The Field yesterday took note of the roller coaster ride this year. “So far we have had two seasons, winter and the Fourth of July,” said a grower in northwest Nebraska who rated corn and soybeans in average condition.

Click this link to tell us what’s happening in your area and check the interactive map we update regularly.

Stock prices are also trying to rally today, after eking out small gains yesterday. The dollar is stronger, even though betting on Federal Funds futures suggests a 50-50 chance the Federal Reserve will cut interest rates by one-half of 1% at the end of its next two-day meeting July 31. Crude oil is trying to move back above $56 a barrel as tensions with Iran heat up.

Corn prices are trying to hold onto small gains, though December remains below its 50-day moving average. Futures firmed into the start of trading in Europe before starting to fade.

Cooler forecasts dented the market this week, which received more negative news from Thursday’s weekly export sales report. The total, just 13.1 million bushels of old and new crop business, continues to justify USDA’s decision July 11 to reduce its forecast for 2018 marketing year sales.

Corn basis was slightly weaker yesterday despite the downturn in futures. The preliminary report from the CBOT showed daily futures volume up 29% to 426,510 while heavy fund liquidation took only 5,067 off open interest.

Options volume more than doubled to 191,929, 53% of it puts as traders rolled down August calls and puts. Implied volatility in at-the-money December options rose to 27.78%.

Overseas markets are stronger today. September futures in China edged higher to $7.128 rose 1.2 cents to $7.126 and November Paris futures in morning trade gained 3.6 cents to $5.065 after adjustments for volumes and currencies on the heels of lower crop ratings from the ag ministry as forecasts call for another blast of heat.

Bottom line: Markets must wait until Aug. 12 to learn more about acreage, which should create uncertain markets trading weekly Crop Progress reports and weather forecasts. While the story of 2019 will take time to play out, add to new crop sales cautiously due to potential for lower yields to raise the cost of production per bushel. In the meantime, sell remaining old crop. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are higher, getting a lift from chart traders when November held a test of its 50-day moving average Thursday.

News was scant after negotiators from the U.S. and China spoke by phone for only the second time since the trade war truce at the end of June. Lack of Chinese buying of U.S. farm goods has been a key source of friction in trying to get the talks going again.

China bought no soybeans last week, cancelling some small old crop purchases and booking nothing for delivery in the 2019 crop marketing year. Chinese buyers still have 193 million bushels of old crop deals on the books that may be rolled over past the Sept. 1 start to the new crop marketing year.

Vegetable oil markets in Asia were lower today. September soybean oil futures in China dropped to 35.654 cents per pound and September palm oil futures in Malaysia settled at 21.40 cents.

Oilseed markets internationally are mixed. September soybean futures in China gained 1.4 cents to $13.383, August rapeseed futures in Paris east a penny to $9.468 and November Winnipeg canola is up 1.6 cents at $7.758 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed futures volume up 16% yesterday to 170,670 while light new fund selling added 2,770 to open interest.

Options volume was up 30% to 49,028, 66% of it calls as traders rolled up out-of-the-money November puts and calls. Implied volatility in November at-the-money options increased dropped to 17.23%.

Bottom line: Soybeans face lost acres and lower yields that could make for an interesting market. Hold off on new crop sales for now. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices are holding on to modest gains with all three markets facing technical challenges.

Soft red winter wheat held a test of the 50% retracement of its May-June rally, HRW tried to reverse off a two-month low while Minneapolis fought to stay above its July bottom.

Wheat export sales were tepid last week at 12.8 million bushels, falling short of what’s needed to reach USDA’s forecast for the 2019 marketing year.

Volume in soft red winter wheat rose 48% yesterday to 91,521 while modest new fund selling added 3,522 to open interest. Options volume more than doubled to 38,065, 57% of it calls as traders added near-the-money August and September calls. Implied volatility in December at-the-money options rose to 23.89%.

Volume in HRW was off 12% yesterday to 36,525 on open interest that fell 126.

Overseas markets were quiet today. January futures for Eastern Australian Wheat held steady at $6.22 and December futures in Paris midday trade are up a penny at $5.485 after adjustments for currencies and volumes.

Bottom line: Wheat is trying to prove harvest lows but still faces harvest on the northern Plains. 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.

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Pivots071919.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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