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Morning Market Review for Sept. 20, 2019

Futures mixed as fall looms. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trends:
Corn:
 Steady
Soybeans: Down 1 to 2
Wheat: Up 1 to 4

Good weather offsets good exports for now

Grain futures are mixed this morning with markets mostly holding gains this week in the wake of the Sept. 12 USDA reports. While export news is improving, lack of a frost threat to immature crops is keeping buying in check.

Remnants of Tropical Storm Imelda will bring heavy rains into much of the Midwest over the next week though parts of the eastern Corn Belt could remain dry. Official 6 to 10 and 8 to 14-day forecasts out yesterday remain warm and the latest updates from the ensemble models remain warm with a drying trend for the eastern U.S.

Growers posting Feedback From The Field this week reported yields that remain widely variable, with corn ranging from 70 to 190 bushels per acre and beans making 18 to 50 bpa.

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Financial markets are trying to stabilize after turbulent trade this week. U.S. stock index futures point to a higher open on Wall Street this morning following gains in Europe and Asia.

Crude continue continues to eye a return to $59 though tensions could be easing a little in the Middle East one week after attacks on Saudi oil fields. The dollar is firm though Treasuries lost ground overnight with gold posting modest gains to stay above $1,500 an ounce.

Corn prices are trying to hold steady as a very low volume overnight session winds down. December corn broke out of its July-September downtrend this week but needs a move over $3.81 to trigger more buying from chart traders.

Export sales last week of 63.5 million bushels were even stronger than expected due to previously announced heavy buying from Mexico. Japan also stepped forward with purchases ahead of the Sept. 12 USDA report.

The market’s relative lack of reaction to this news yesterday reflects the slow start to the selling season. Corn commitments are at the lowest level in 15 years for mid-September. Still, corn basis firmed a half-cent on average due to stronger bids in the export pipeline.

The preliminary report from the CBOT showed daily futures volume down 9% Thursday to 197,482 while light fund short covering took 5,696 off open interest.

Options volume rose 4% to 60,216, 55% of it calls as traders dumped October puts and calls that expire today. Implied volatility in at-the-money December options edged lower to 18.04%.

Overseas markets are mixed today. January futures in China dropped 4.9 cents to $6.652 while November Paris futures in afternoon trade were steady at $4.58 after adjustments for volumes and currencies, holding firm despite the start to harvest on lower crop ratings.

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 are a little lower this morning keeping November futures to an inside day. A break out of the chart’s bull flag could trigger more gains with traders waiting for news about production and trade.

Soybean export sales of 60.2 million bushels last week appear to indicate China was buying even before the series of announcement made under USDA’s daily reporting system for large purchases. Still, commitments are at a 10-year low, so the market will be watching trade talks in Washington that restarted Thursday with meetings by lower level negotiators. A Chinese trade delegation will also be in the U.S. next week, which could generate more goodwill purchases ahead of higher-level discussions after Chinese holidays in the first week of October.

The preliminary report from the CBOT showed daily futures volume jumping 70% yesterday to 167,980 while open interest rose 11,935 despite light fund short covering.

Options volume was 19% higher at 34,162, 70% of it calls as traders added out-of-the-money November calls and puts. Implied volatility in at-the-money November options dropped to 15.37%

Vegetable oil markets in Asia were lower again today. January soybean oil futures in China lost a quarter-cent to 38.745 cents per pound and November palm oil futures in Malaysia settled at 23.85 cents.

Oilseed markets internationally are mixed. January soybean futures in China dropped a dime to $13.213, November rapeseed futures in Paris is up 1.3 cents to $9.691 and November Winnipeg canola overnight was off a penny to $7.70 after adjustments for volumes and currencies. While rains in Brazil focused on the south this week, forecasts continue to hint at wetter weather in the center-west in early October.

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 leading the market today, posting modest gains with charts continuing to look stronger. Minneapolis is again leading the pack as wet conditions slow harvest on the northern Plains and raise quality concerns.

Wheat sales were disappointing last week at just 10.5 million bushels in a very fracture market that still has plenty of wheat. Black Sea exporters continue to dominate tenders by Egypt, with France maintaining business with its traditional North African trading partners as well. That leaves only crumbs for higher priced U.S. wheat to pick up.

Still, weather issues around the world offered hope U.S. trade could pick up as USDA forecasts.

Overseas markets are mixed today. January futures for Eastern Australian Wheat slipped 4.6 cents to $6.743. Good rains moved through the southern part of the continent though production losses from the drought continue to mount. December wheat futures in Paris afternoon trade are up a penny at $5.17 after adjustments for currencies and volumes. Much of Europe was dry this week for winter wheat seeding but rains are in the forecast for the next week.

The preliminary report from the CBOT showed daily volume down 4% yesterday to 71,559 while open interest rose 3,790 on light new fund selling.

Options volume was down 19% to just15,066, 52% of it puts as traders liquidated October calls that expire today. Implied volatility in December at-the-money options fell nearly 1% to 19.12%.

Volume in HRW was 6% higher at 42,249 on open interest that was up 2,634.

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.


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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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