Corn: Down 1
Soybeans: Down 1 to 2
USDA confirmation of soybean purchases would ease market’s concerns
Grain futures are narrowly mixed this morning following two-sided trade overnight. Attempts to rally ran into a bearish mood in financial markets, where the on-going Brexit drama continues to add to anxiety about slowing global growth due to the trade war.
Farmers in the upper Midwest and northern Plains face more delays from new storms moving through the region today but could dry out some over the next week as tropical moisture moves up the lower Mississippi River into the eastern Corn Belt. Official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble models disagree on whether storms return but both call for below normal temperatures in the second week of the outlook.
Growers posting Feedback From The Field Tuesday reported more variety in yields, with corn ranging from 124 to 210 bushels per acre and soybeans beans running 30 to 65 bpa.
“Wet spring, cool summer, and early frost nailed them!” wrote a producer from southwest Illinois with disappointing production.
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Stocks traded mostly lower in Asia and Europe today with losses in U.S. index futures beginning to accelerate on concerns about corporate earnings reports. Stocks retreated from gains on good earnings Tuesday when Parliament failed to approve a Brexit plan, which could trigger another delay and new elections. However, British Prime Minister Boris Johnson appears to have the votes to get a deal through Parliament eventually.
The dollar, Treasuries and gold are all benefiting from safe haven buying today while crude oil fights to hold above $54 a barrel. Today’s report on petroleum inventories is expected to show another increase in crude oil stocks thanks to strong production, though diesel supplies likely continued to fall on harvest demand.
Corn prices are a little lower as December futures fight to avoid confirming a break below their uptrend for September and October. Lack of fresh news on production and concerns about demand are making the path of least resistance lower for now.
Today’s data on ethanol production will show how plants responded to weaker margins after corn prices stayed near two-month highs. Production has improved recently but usage of corn to make the biofuel still appears lower than last year.
Basis was mostly unchanged yesterday at major terminals as farmers wait for fields to dry out from this week’s storm. The preliminary report from the CBOT showed daily futures volume down 7% to 225,528 while open interest rose 9,697 despite light fund short covering.
Options volume dropped 2% to 60,180, 51% of it calls with new interest noted in November $3.90 and $3.95 puts that expire Friday as traders liquidated out-of-the-money November calls. Implied volatility in at-the-money December options slipped to 17.96%.
Bottom line: Corn will rise or fall based on the extent of damage from weather in this unusual growing season because demand remains sluggish. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Soybeans are drifting lower, but November futures remain in the trading range under June highs that’s held since USDA’s Oct. 10 report.
Traders continue to wait for confirmation of new buying from China, with no new deals posted this week at 8 a.m. CST on the agency’s daily wire for large purchases. Though the Chinese government reported approved waivers on tariffs for another 367.5 million bushels of U.S. soybeans, Gulf prices for winter delivery are around 20 cents more expensive than out of Brazil. China has total commitments so far of 661 million bushels, but 478 million of those are yet to be shipped, which firmed basis on the river system 5 to 10 cents yesterday, with processors also forced to raise bids to obtain supplies.
The preliminary report from the CBOT showed daily futures volume up 37% yesterday to 347,364 with open interest up 12,209 on light new fund buying as traders continue to liquidate November ahead of first notice day next week.
Options volume edged 1% higher to 38,996, 54% of it calls as traders liquidated November calls that expire Friday but added puts. Implied volatility in at-the-money November rose to 17.82%.
Vegetable oil markets in Asia were today. January soybean oil futures in China gained a third of a cent to 39.805 cents per pound and November palm oil futures in Malaysia made a new two-month high before running out of steam and settling at 24.26 cents.
Oilseed markets internationally are mixed. January soybean futures in China dropped 8.6 cents to $13.06, November rapeseed futures in Paris afternoon trade are up 1.9 cents to $9.497 and November Winnipeg canola overnight is a penny lower at $7.845 after adjustments for currencies and volumes.
Bottom line: Smaller production and stronger demand could take carryout below 400 million bushels in the year ahead, fueling gains into November. But confirming of Chinese buying is needed to keep new bulls from heading to the sidelines. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.
Wheat prices are narrowly mixed today. Winter wheat contracts are trying to avoid more follow-through weakness after Monday’s bearish reversals while Minneapolis continues to battle around its 100-day moving average.
Taiwan tendered for U.S. wheat overnight but other export news is lacking as deals mostly go to regular customers.
The preliminary report from the CBOT showed daily SRW volume up 6% to 95,854 while open interest rose 1,508 on light new fund selling.
SRW options volume dropped 23% to 16,851, 60% of it puts with new interest noted in November and December puts. Implied volatility in December at-the-money options fell to 20.77%.
Volume in HRW wheat dropped 25% to 53,535 on open interest that decreased by 2,393.
Overseas markets are lower today. January futures for Eastern Australian Wheat dropped another 7.4 cents to $6.459 despite dry forecasts. December wheat futures in Paris afternoon trade are down a penny at $5.46 adjustments for currencies and volumes
Bottom line: Protein could be at a premium this year as snow flattens part of the crop in North Dakota and the Canadian Prairies. But wheat must prove export demand, which won’t be easy. 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.