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Morning Market Review for July 17, 2019

Shifting forecasts give bears pause. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls:
Corn: Steady
Soybeans:  Up 3
Wheat: Down 1 to 2

Turn to cooler weather next week may not be set in stone

Grain futures are mixed as a choppy overnight session heads down the home stretch thanks to conflicting forecasts that keep traders from getting too set in their ways.

Models agree on heat baking the region this week, with temperatures topping 100 degrees in some areas. U.S. models, including official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning called for below average temperatures to return next week along with mostly drier conditions. But the European Model appears to be hinting at a little more heat, keeping the cooldown brief.

Growers posting Feedback From The Field say crop ratings aren’t telling the true story of 2019 corn and soybeans due to late planting and slow development.

“Probably 1/2 of the full-season soybeans here were planted around the same time we would normally plant double-crop beans (first 2 weeks of July),” said a producer in northeast Missouri. “I have seen no soybeans more than 8" tall within a 1-hour drive from here.”

Click this link to tell us what’s happening in your area and check the interactive map we update regularly.

Financial markets are also trying to regain their mojo after Wall Street stumbled yesterday following a series of record highs. Stocks traded mostly lower overseas today but U.S. index futures point to a firm opening in New York today.

The dollar is a little weaker today but remains stubbornly strong despite widespread expectations for the Federal Reserve to cut interest rates at the end of the month.

Crude oil is trying to retake $58 a barrel after easing yesterday. Crude oil stocks likely fell last week, though may not as much as expected, when the government updates its petroleum inventory report at 9:30 CDT today.

Corn prices are trying to turn higher after a rally bid at the start of European trading fell flat. December so far rejected a move towards downside support and could be headed into a trading range into USDA’s Aug. 12 report.

Today’s report on ethanol production will show how plants responded to weaker stocks last week. USDA made no changes to its forecast for corn usage to make the biofuel last week, but year-to-date totals suggest the agency is 50 to 100 million bushels too high without a push from E-15. But plants must maintain a certain level of production and with farmers holding tight yesterday they were forced to raise bids again to attract feedstocks. Basis fell in the export market, however, as higher prices ration foreign demand.

The preliminary report from the CBOT showed daily futures volume down 17% Tuesday to 382,777 while open interest rose 2,098 despite active fund liquidation.

Options volume was 19% higher at 169,260, 61% of it calls as traders rolled down August calls that expire at the end of next week. Implied volatility in at-the-money December options dropped more than 1% to 28.22%.

Overseas markets are firm today. September futures in China gained a quarter-cent today to $7.111 and November Paris futures in morning trade are steady at $4.866 after adjustments for volumes and currencies as France looks mostly dry for another week.

Bottom line: Markets must wait until Aug. 12 to learn more about acreage, which should create uncertain markets trading weekly Crop Progress reports and weather forecasts. While the story of 2019 will take time to play out, add to new crop sales cautiously due to potential for lower yields to raise the cost of production per bushel. In the meantime, sell remaining old crop. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are trying to reverse higher, fighting off a break by November below its 100-day moving average overnight. Mixed news on trade talks with China and conflicting forecasts appear to be sending money to the sidelines.

Vegetable oil markets in Asia ended mixed today. September soybean oil futures in China edged lower to 35.765 cents per pound but September palm oil futures in Malaysia reversed higher to settle at 21.59 cents.

Oilseed markets internationally are also mixed. September soybean futures in China lost 10.5 cents to $13.346, but August rapeseed futures in Paris are up 1.9 cents to $9.506 and November Winnipeg canola gained fractionally overnight to $7.736 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed futures volume up 76% yesterday to 250,071 while open interest fell 8,184 despite new selling by funds.

Options volume was 52% higher at 84,352, 63% of it calls as traders liquidated calls and added a few puts. Implied volatility in November at-the-money options increased dropped to 17.88%.

Bottom line: Soybeans face lost acres and lower yields that could make for an interesting market. Hold off on new crop sales for now. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Wheat prices are trying to hold after breaking support at all three markets overnight. Harvest pressure on winter wheat plus more rain on the northern Plains coupled with limited export news are keeping futures underwater.

The U.S. likely will be priced out of today’s tender by Egypt by as much as $1.40 a bushel or more compared to Black Sea competitors. And Japan left the U.S. off the list of origins for its regular weekly tender, splitting the deal between Canada and Australia.

Volume in soft red winter wheat fell 23% yesterday to 80,507 while open interest was up 4,631 on only a little new fund selling. Options volume was 20% lower at 22,555, 71% of it calls as traders added September calls and August puts. Implied volatility in December at-the-money options dropped to 23.72%.

Volume in HRW was 25% lower at 35,306 with open interest up 1,404.

Overseas markets are firm today. January futures for Eastern Australian Wheat settled 1.9 cents higher at $6.139 as forecasts remain mostly dry for the continent. December futures in Paris midday trade are up a penny at $5.517 after adjustments for currencies and volumes.

Bottom line: Wheat is trying to prove harvest lows but still faces harvest on the northern Plains. 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.

Pivots071719.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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