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Morning Market Review for Sept. 18, 2019

Markets steady as growing season lingers. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trends:
Corn:
 Mixed
Soybeans:  Mixed
Wheat: Steady to up 2
 

Traders wait for news on Fed and oil

Grain futures are narrowly mixed this morning as a quiet overnight session winds down without the turbulence seen over much of the past week. That could change by the close when the Federal Reserve releases its latest statement on monetary policy.

Storms moving through the Upper Mississippi River Valley this morning should be joined by remnants of Tropical Storm Imelda over the next week bringing heavy rains to the nation’s midsection. Parts of the eastern Corn Belt could again be missed, though the official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble models show warm and wet conditions with no hint of frost yet as the normal window for an end to the growing season opens.

Growers posting Feedback From The Field this week expect mostly average yields depending on how the growing season winds down, with several voicing a little more optimism.

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

Investors are growing less sure about an interest rate cut from the Fed today at 1 p.m. CDT, with turmoil in money markets adding more uncertainty to the central bank’s outlook. Stock markets traded mixed in Asia before turning higher in Europe today, though U.S. index futures point to a pullback ahead of the Fed news.

Crude oil is a little lower after giving back some of its big rally Tuesday. Saudi Arabia said it would maintain export commitments from reserves while it repairs oil fields damaged by an attack Saturday. Traders have mixed ideas about the direction of U.S. inventories ahead of today’s report on petroleum supply and demand from last week before the attacks. Diesel supplies are expected to keep building ahead of the delayed harvest.

Corn prices are trying to stay steady with December futures still hemmed in by resistance from the line drawn off July and September highs. Lack of frost in the forecast into first days of October continues to ease fears crops may not make it to first frost before reaching maturity.

Corn basis firmed on Tuesday, with better bids seen at some ethanol plants as farmer selling dried up and Gulf buyers pushed a little too. Today’s report on ethanol production will show how plants responded to easing margins last week as corn prices began to firm.

The preliminary report from the CBOT showed daily futures volume up 2% to 227,235 while open interest was up 10,807 on active new fund selling.

Options volume fell 3% to 66,147, 63% of it puts as traders added December puts and liquidated October strikes that expire at the end of the week. Implied volatility in at-the-money December options slipped to 18.02%.

Overseas markets are firm today. January futures in China edged 1.7 cents higher to $6.695 and November Paris futures in afternoon trade are steady at $4.601 after adjustments for volumes and currencies.

Bottom line: Concerns about demand are offsetting some of the fear of smaller production, making it difficult for the market to produce more than short-covering rallies until more is known about yields. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans trying to stay above water this morning as the market waits for more news on the trade war while mulling yield potential.

USDA Tuesday announced the third sale of soybeans to China in as many days, this one for 9.6 million bushels. China has purchased 26.5 million bushels since trade tensions eased following President Trump’s announcement of delays to 5% tariff hikes set to take place Oct.1.

Still, the book of outstanding sales remains very thin ahead of new negotiations next month after Chinese holidays.

The preliminary report from the CBOT showed daily futures volume down 3% yesterday to 146,529 while open interest was down 6,137 despite light fund selling.

Options volume fell 11% to just 34,254, with 51% of it puts with new interest noted in November 2020 calls and the November 2020 $8 put. Implied volatility in November 2019 at-the-money options rose to 16.36%.

Vegetable oil markets in Asia pulled back after Tuesday’s surge higher. January soybean oil futures in China 39.462 cents per pound and November palm oil futures in Malaysia were off a quarter cent to $24.17 cents.

Oilseed markets internationally are mixed. January soybean futures in China gained 7.1 cents to $13.367, November rapeseed futures in Paris are off 2 cents to $9.651 and November Winnipeg canola overnight held steady at $7.742 after adjustments for volumes and currencies.

Bottom line: Soybean production will be sharply lower for 2019 but even the bullish report Sept. 12 may have limited impact until demand improves or yields fall in South America. 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 higher as futures try to hold short-term uptrends. Big tenders out of North Africa are encouraging, though it’s unclear how much of the business will fall to the U.S.

Originations out of the Gulf still look like they’re priced a buck or more a bushel above the market for Egypt’s latest tender due today, though French wheat is still fairly competitive to the Black Sea. Those areas are also expected to capture a large tender from Algeria.

Overseas markets are stronger today. January futures for Eastern Australian Wheat jumped another 10.2 cents to $6.83 on more forecasts for lower production despite increasing rains in the eastern part of the continent. December wheat futures in Paris afternoon trade are up a penny to $5.157 after adjustments for currencies and volumes as forecasts remain mostly dry in France for seeding the 2020 crop.

The preliminary report from the CBOT showed daily volume down 3% to 67,535 while open interest was down 1,041 despite light new fund selling.

Options volume rose 8% but remains thin at 16,532, with 57% of the trade in puts as traders liquidated October calls that expire Friday. Implied volatility in December at-the-money options dropped to 19.56%.

Volume in HRW was 16% higher at 38,249 on open interest that fell 3,369.

Bottom line: Wheat must prove export demand will offset a larger crop, which won’t be easy. 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.

Pivots091819.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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