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Morning Market Review for June 14, 2019

Corn ratchets higher. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trend:
Corn:  Up 3 to 5
Soybeans: Up 3 to 5
Wheat: Up 1 to 2

Rising tide lifts all boats in the grain market

Grain futures are posting modest gains across the board this morning, fueled by steady buying as markets began open in Europe. With the fate of U.S. corn and perhaps soybean crops in doubt, the path of least resistance still appears to be higher.

Storms are moving through the Plains and upper Midwest today, part of couple of systems that will linger in the heartland and bring heavy totals in the next week from the southeast Plains to the eastern Midwest. Official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning show warmer temperatures emerging in the Southwest with below average precipitation in the Southwest. But the rest of the growing region looks cool and wet.

A few growers are still trying to plant corn in the eastern Midwest, but most appear to be giving up as the season winds down according to reports filed on Feedback From The Field. While producers continue to worry about slow emergence and poor-looking crops, one farmer in Iowa said fields in excellent conditions.

How is your farm faring this year? Click this link to tell us what’s happening in your area and check the interactive map we update regularly.

Worries about weaker growth internationally sent stock markets lower around the world today, lending support to safe haves including the dollar and Treasuries. Gold also remains on a tear, topping $1,350 an ounce but crude oil eased to $52.

Corn prices made new contract highs on old and new crop charts overnight. Moving average crossovers countered by momentum indicators showing divergence by not making new highs.

Higher prices and questions about supplies are already triggering some rationing in the export market that showed up in last week’s sales numbers. Total old and new crop bookings came in at 10.3 million bushels, though USDA separately announced the sale of another 7 million bushels of 2019 corn to Mexico under the agency’s daily reporting system for large purchases.

Struggles on the river system continue, with the latest forecasts showing water levels in St. Louis not dropping below the 38-foot trigger for reopening the harbor until June 20. Nothing is moving on the system north to Davenport, sending buyers to areas that are still open. Basis firmed a penny at the Gulf yesterday, with bids on the Ohio River and Pacific Northwest also strengthening. Ethanol plants also boosted basis, encourage by stronger prices for the biofuel.

The preliminary report from the CBOT showed daily futures volume surging 18% to an impressive 990,089 contracts, with 172,503 of that done in the July-September on active bull spreading. The spread continues to tighten, strengthening three cents yesterday and another penny and a half overnight. Heavy new fund buying added 36,089 to open interest Thursday as well.

Options volume eased 18 to 224,399, 60% of it calls as traders liquidated near-the-money July calls that expire at the end of next week along with more September $4.50 and $5 calls. Implied volatility in at-the-money December options rose to 30.07%.

Overseas markets are mixed. September futures in China were down 3.5 cents to $7.173 but November Paris futures in morning trade are up 2.1 cents at $5.004 after adjustments for volumes and currencies.

Bottom line: Corn prices likely will go higher with acreage driving concerns. However, news about how much got planted will trickle into the market slowly. Prices are profitable – if you’re comfortable with good yield estimates. Most growers should tread lightly until they can lock in a profit on lower yields that increase the cost of production. Get ready to sell remaining old crop corn after USDA’s June 28 acreage report. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are higher as old and new crop contracts try to take out June highs. Fresh concerns about acreage are turning the market’s attention to soybeans, though large inventories remain an anchor.

Export sales last week of 19.5 million bushels included a cargo sold to China switched from unknown destinations. But China still has 233 million bushels of outstanding old crop sales on the books, part of a record list of outstanding sales that need to be moved this summer.

Vegetable oil markets in Asia ended mixed today. September soybean oil futures in China were up more than a quarter cent to 35.945 cents per pound while July palm oil futures in Malaysia eased to 218 cents

Oilseed markets internationally were also mixed. September soybean futures in China fell 1.2 cents to $13.694, August rapeseed futures in Paris are up 3.2 cents to $9.414 and July Winnipeg canola overnight gained 1.2 cents to $7.772 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed futures volume down 16% yesterday to 274,246 while open interest was up 21,484 despite modest fund short covering.

Options volume fell 18% to 70,116, 60% of it calls as traders liquidated November $8 puts and added September $10 calls. Implied volatility in at-the-money November options increased to 21.35%.

Bottom line: Soybeans will take a back seat to corn this year, with fundamentals remaining bearish without a production surprise. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices inched higher overnight, again paced by a SRW contract showing a large premium to HRW thanks to worries about Midwest rains.

Export demand to start the new crop marketing year was restrained at 12 million bushels. Taiwan also tendered for U.S. wheat overnight in an otherwise quiet market.

Overseas markets are mixed. July futures for Eastern Australian Wheat settled 15 cents lower at $6.665 following better rains on the continent this week. December futures in Paris midday trade were up 2.3 cents to $5.638, after adjustments for currencies and volumes, continuing to take their lead from Chicago.

Volume in soft red winter wheat was off 13% yesterday to 180,795 while open interest was down 4,158 on modest fund short covering. Options volume held steady at 48,038, 51% of it puts with new interest noted in the July and December $5 puts. Implied volatility in July options rose to 37.68%

Volume in HRW fell 8% to 74,412 on open interest that was up 1,755.

Bottom line: Too much rain is the biggest threat to the crop now, with problems starting to show up. 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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Pivots061419.jpg

 Explanation of pivot points. 

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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.
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