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Morning Market Review for Aug. 16, 2019

Bruising week ending better. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls:
Corn: Up 2 to 3
Soybeans:  Up 3 to 4
Wheat: Up 1 to 3

Markets try to stem the bearish tide
 

Grain futures are a little stronger this morning, benefiting from a bright mood in financial markets that were just as volatile as the grain trade this week. Fears about trade wars and risk of a global recession appear to be easing.

A series of storms moving through the western Corn Belt today bring chances for rain in some dry areas as they move east over the next week. The official 6 to 10 and 8 to 14-day forecasts out yesterday call for mostly warm and wet conditions though the latest updates from the ensemble models are cooler, with the European model also drier.

Growers posting Feedback From The Field Thursday reported too much or too little rain. While some growers remain dry, others again saw flooding this week.

“Wet and cool summer has crops behind,” wrote a farmer in northwest Nebraska. “Cannot get winter wheat harvest done because of constant rain every day or so. Latest wheat harvest ever.”

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

After a back and forth session yesterday that ended with gains, stocks could open sharply higher on Wall Street following mixed trade in Asia that gave way to gains in Europe. The Dow tries to move back above its 200-day moving average today on the heels of a bullish reversal higher Thursday.

While investors are selling gold and Treasuries, the dollar is stronger despite ideas the Federal Reserve will cut interest rates in September. Crude oil is higher, though it pulled back from a move above $55 a barrel overnight.

Corn prices are a little higher this morning ad December tries to move through resistance at the old support line broken this week from its July downturn. While long-term forecasts out yesterday for fall are mostly benign, questions about yields are helping the market try to stabilize.

Total old and new crop export sales improved last week but remain weak at just 14.3 million bushels. Corn seems increasingly unlikely to meet USDA’s target for the 2018 marketing year, though USDA made no revisions to its forecast Monday. New crop sales are off to the slowest start in 13 years.

Basis weakened at the Gulf Thursday with that tone noted up river as well though ethanol plants kept bids steady

The preliminary report from the CBOT showed daily futures volume down 40% yesterday to 376,112 while open interest fell 2,640 on light fund short covering.

Options volume was 34% lower at 143,629, 58% of it calls with heavy new buying of out-of-the-money December calls seen. Implied volatility in at-the-money December options rose slightly to 21.07%.

Overseas markets are a little lower today. September futures in China fell nearly a penny to $6.752 and November Paris futures in afternoon trade are down a quarter cent to $4.732 after adjustments for volumes and currencies following steady ratings in France this week.

Bottom line: Stability is the best hope now once selling from the USDA report subsides. Without clear damage to yields the size of the 2019 crop won’t be known for months, leaving the market to fester. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are posting modest gains this morning, benefiting from short covering as traders head to the sidelines for the weekend. That’s keeping November futures to an inside day so far.

Higher trade came despite news that China is aggressively buying soybeans from Brazil, where supplies are already running thin.

U.S. soybeans still have a shot at reaching USDA’s forecast exports for the 2018 marketing year, with shipments last week on track. Much depends on whether buyers rush delivery or defer or cancel sales outright. Half of the 207 million bushels of outstanding sales were bought by China, which last week cancelled a net 15.5 million bushels of previous deals made as a goodwill gesture during the brief truce in the trade war this summer. That news dented an overnight rally yesterday, with weather forecasts adding further pressure.

Other data was more upbeat. Members of the National Oilseed Processors Association crushed 168.1 million bushels of soybeans in July, better than expected and a record for the month. The good showing keeps year-to-date crush on track to beat USDA’s forecast for the 2018 marketing year.

The preliminary report from the CBOT showed daily futures volume down 14% at 123,499 with open interest up 4,383 on light new fund selling.

Options volume eased 2% to 42,411, 61% of it calls as traders liquidated out-of-the-money November calls and September puts. Implied volatility in November at-the-money options increased to 15.67%.

Vegetable oil markets in Asia were firm today. September soybean oil futures in China settled higher at 39.052 cents per pound and September palm oil futures in Malaysia ended steady at 23.29 cents.

Oilseed markets internationally are mixed. September soybean futures in China lost 3.4 cents to $13.10, November rapeseed futures in Paris gained 1.3 cents to $9.532 and November Winnipeg canola overnight is up a quarter of a cent to $7.692 after adjustments for volumes and currencies.

Bottom line: Soybeans got friendly news from USDA but not enough to change the landscape unless yields suffer. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices are higher in all three markets, which remain locked in downtrends nonetheless. Ample supplies are offset by better news about exports as futures try to turn a corner seasonally.

Black Sea wheat from Russia and Ukraine again captured all of the latest tender by Egypt for 10.8 million bushels. But U.S. 2019 crop export sales of 17 million bushels were ahead of the rate needed weekly to reach USDA’s forecast for the marketing year as other buyers around the world take advantage of plentiful supplies and cheap prices.

The preliminary report from the CBOT showed daily volume Thursday down 9% to 122,852 on open interest that was up 3,351 on light new fund selling.

Options volume jumped 82% but is still thin at 27,164, 72% of it calls as traders liquidated in-the-money September puts that expire at the end of next week. Implied volatility in December at-the-money options dropped to 21.20%.

Volume in HRW dropped 31% to 62,787 on open interest that fell 661.

Overseas markets are higher today. January futures for Eastern Australian Wheat ended 3.1 cents higher at $6.751 after a dry week for most of the continent. December futures in Paris wheat in afternoon trade are up nearly a penny to $5.214 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. 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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Pivots081619.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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