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Morning Market Review for Sept. 13, 2019

Good luck or bad for Friday the 13th? (Comments are updated by 7:30 a.m. Central Time.)

Overnight trends:
Corn:
 Up 2 to 3
Soybeans:  Up 1 to 2
Wheat: Up 4 to 5
 

Overnight trends may signal another round of gains today

Can grain prices keep some much-needed positive momentum Friday after surging higher Thursday? Or is a technical reversal in store? Overnight trends hint that grains could move a bit higher today as long as any emerging factors don’t put the squeeze on technical buying today. U.S.-China trade negotiations, in particular, appear to be moving in the right direction but remain fragile for now. Keep black cats at bay and don’t walk under any ladders, just to play it safe.

Some rains moving through the upper Midwest through Michigan this morning are less likely to find their way into drier portions of the eastern Corn Belt over the next week, although some mild accumulation is possible there. The official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble models show much warmer but also wetter conditions probable across most of the central U.S. later in September.

Growers posting to Feedback From The Field earlier this week remain concerned about lack of growing degrees days in northern areas, though with normal-than-normal weather holding on across much of the Midwest at least for the next week or two, there are some hopes an early frost won’t be in the cards this year. Click this link and tell us what’s happening in your area.

Dow futures were up more than 60 points overnight, which signals stocks are ready to move higher again Friday. In fact, both the Dow and S&P have a shot at clearing new all-time highs later today. Markets continue to closely monitor any developments in U.S.-China trade negotiations, as well as some efforts in the European Union to stimulate its economy through a new bond-buying program.

Overseas stock markets also spent Friday moving higher. Most Asian markets finished the session up around 1% today, with European markets mixed but mostly higher in midday trading.

After a couple of rough days for energy futures, losses appear to be slowing overnight, with crude oil down fractionally, and gasoline and diesel down around 0.25%. Despite trade hopes, some demand worries still linger there.

Corn prices will likely see a battle among weather, production and trade play out in the coming weeks as the 2019 season draws to a close. Favorable weather forecasts have kept prices suppressed for the past few weeks, but some helpful governmental data out yesterday jumpstarted prices yesterday with hopes of extending those gains into Friday.

In yesterday’s World Agricultural Supply and Demand Estimates (WASDE) report, USDA left planted and harvested acres unchanged from a month ago, at 90 million and 82 million acres, respectively. The agency did pare down per-acre yield estimates from 169.5 bpa down to 168.1 bpa, however, with total production adjusted downward to 13.799 billion bushels.

Domestic corn ending stocks moved slightly higher, while USDA lowered world ending stocks 56 million bushels to 12.058 billion bushels.

USDA’s latest export report, out yesterday, was less supportive of better corn prices, meantime. Corn exports for the week ending September 5 reached 19.6 million bushels, which was well above the prior week’s tally of 9.9 million bushels but firmly below trade estimates of 27.6 million bushels.

Deliveries against September contracts eased again, with 123 more lots noted today.

The preliminary report from the CBOT showed daily futures volume boost back up to 514,295 yesterday, while open interest was up another 5,120.

Options volume boomed to 240,855, slightly favoring calls (125,836) versus puts (115,019). Implied volatility in near-the-money December options was for 19.50% with ample time (70 days) before expiration.

Overseas markets are also on the upward swing today. January futures in China are at $6.705 and November Paris futures in afternoon trade picked up 3.5 more cents to reach $4.609 after adjustments for volumes and currencies.

Bottom line: If this week’s crop ratings VHI and are a tip off, today’s USDA report could show a modest drop in production, offset partly by higher old crop inventories. For more, see Bryce Knorr’s Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans, like corn, will be locked in a battle of trade versus weather moving forward. Trade took center stage yesterday after China announced a massive purchase of U.S. soybeans. WASDE data, also out yesterday, was also extremely supportive. But favorable forecasts look likely for at least another week across much of the central U.S., which could put a lid on gains after the latest trade and production news cools off.

China got the bulls running Thursday after it announced U.S. soybean purchases totaling 22.0 million bushels – the largest single-day haul since June. Prices continued to climb yesterday on bullish WASDE data that lowered average yields to 47.9 bpa and total production down to 3.581 billion bushels. Domestic and global ending stocks also trended lower in the report.

Soybean sales last week were solid, too, after reaching 43.1 million bushels and moving moderately above the prior week’s tally of 31.5 million bushels and trade estimates of 31.2 million bushels. Export shipments were a more meager 17.5 million bushels.

Deliveries against September scaled back to 177 lots as the contract goes off the board today.

The preliminary report from the CBOT showed daily futures volume more than tripled to 345,170 with open interest that also rose another 7,217.

Options volume also came roaring back to 124,797 and is now more heavily favoring calls (73,031) versus puts (51,766). Implied volatility in November near-the-money options bumped up to 16.88%.

Vegetable oil markets in Asia moved higher. January soybean oil futures in China bumped up to 38.86 cents per pound and November palm oil futures in Malaysia tracked slightly higher to reach 23.86 cents.

Oilseed markets internationally are also firm. January soybean futures in China saw fractional gains to $13.16, November rapeseed futures in Paris were up around half a cent to $9.64 and November Winnipeg canola overnight gained a similar amount to $7.67 after adjustments for volumes and currencies.

Bottom line: Soybean production will be sharply lower for 2019 but even a bullish report Sept. 12 may have limited impact until demand improves or yields fall in South America. For more, see Bryce Knorr’s Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices hope to add to gains yesterday after trending moderately higher overnight. WASDE data was mostly a wash, but some production concerns overseas in areas such as drought-stressed Australia and Argentina have provided some temptation for technical buyers that may continue in the short-term.

USDA offered some mixed news on wheat domestic and global ending stocks yesterday. U.S. stocks held steady, at 1.014 billion bushels, while world ending stocks increased from 10.487 billion bushels in August up to 10.527 billion bushels.

The agency also reported wheat export sales totaling 22.5 million bushels in old crop sales, minus a reduction of 300,000 bushels in new crop sales, for a total of 22.1 million bushels last week. That was nearly double the prior week’s tally of 11.5 million bushels and moderately ahead of trade estimates that averaged 16.5 million bushels.

Wheat export shipments were only for 15.0 million bushels, meantime, falling below the weekly rate needed to match USDA forecasts, now at 19.0 million bushels.

Deliveries against September were a wash today, with 5 lots issued as another 5 were stopped.

The preliminary report from the CBOT showed daily volume moving up to 96,397 and open interest continued to fall another 1,728.

Options volume nearly tripled to 32,662, with a shift toward calls (19,712) versus puts (12,950). Implied volatility in December near-the-money options eased to 20.25%.

Volume in HRW moved up to 50,690 on open interest that was up another 1,383.

Overseas markets are quiet today. January futures for Eastern Australian Wheat moved to $6.717 and December wheat futures in Paris afternoon trade are up another 2 cents to $5.159 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. But wheat is a market that loves to trend and charts are trying to turn. 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.

09-13 pivot chart.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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