The dollar was up 1.25% Thursday afternoon at a 14-year high, which weighed on a number of commodities including corn, wheat and crude oil. Soybeans finished higher but did retreat late from the day’s highs.
Crop exports were supportive with the weekly USDA numbers better-than-expected for corn, soybeans and wheat and were up from a week ago.
Traders view the strong dollar as an impediment to exports as U.S. goods become more expensive to buyers with foreign currencies. The Federal Reserve 0.25 point rate hike on Wednesday and forecast of three more rate hikes in 2017 lifted the dollar and helped the equity markets. Shares of financial companies lifted the Dow Jones industrial average about 76 points when the crops closed.
As the dollar rose, gold fell and the metal was down about $30 an ounce when the crops closed.
In the weather, cold blankets much of the Midwest this week, with snow moving across the northern Plains on Friday. By the weekend, freezing rain is forecast for the Midwest.
Exports – USDA, Reuters:
- China bought 4.85 million bushels of U.S. 2016/2017 soybeans.
- Japan bought 122,847 metric tons of U.S. and Canadian wheat. From the U.S. it bought 15,462 tons of western white, 19,200 of hard red winter and 34,390 of dark northern spring. Loading is for mid-January to mid-February.
- USDA weekly export sales (in mln bu): corn 60.6 (old and new-crop) vs 58.9 prior week; soybean 88.4 vs 53.9 and wheat 20.7 vs 19.3.
- Algeria bought at least 490,000 metric tons of optional-origin wheat at $199.50 to $200 per ton including c&f, for February shipment. The wheat can be sourced from the U.S., Argentina, Germany, France and the Baltic Sea region.
- A South Korean state group seeks to buy 90,000 metric tons of non-GMO soybeans from optional origins for 2018 arrival. The tender deadline is Dec. 26.
- Jordon seeks to buy 20,000 to 25,000 metric tons of optional origin milling wheat for second-half February shipment. The tender closes Dec. 19.
Corn closed about 5 cents lower with March coming to rest at support the 20- and 50- day moving averages.
Ethanol futures were down about 6 cents a gallon when the crops closed following a recent report showing as increased production and larger stocks. January ethanol futures were down about 6 cents at $1.62 a gallon in early afternoon.
The CBOT estimated Thursday’s futures volume at 187,473 compared with Wednesday’s actual of 131,123. Open interest in Wednesday’s firm market increased by 2,226 with March’s up 846 and May’s up 425.
March corn closed down 5-1/2 at $3.56-1/2 per bushel and May down 5-1/ at $3.63-1/4.
What to Look For: The weekly export sales topped forecasts and the weekly pace needed to meet USDA’s annual forecast. Argentina crop areas are getting some rain this week and next to help the growing corn crop there.
Soybeans finished about 5 cents higher helped by the daily export sale to China and the better-than-expected weekly export numbers.
The monthly NOPA crush (see chart) of 160.75 million bushels missed trade forecasts in a Reuters poll and was down from October’s 164.6 million. The crush however topped year ago’s 156.1 million.
The CBOT estimated soybean futures volume for Thursday at 260,683 compared with Wednesday’s actual volume of 248,402. Open interest in Wednesday’s lower market decreased by 3,458 and included a decrease of 10,845 in January and an increase of 3,984 in March.
January soybeans settled up 5-1/4 at $10.29 per bushel and March up 4-3/4 at $10.39-1/4.
What to Look For: While export sales have supported the soybean market, foreign buyers will soon shift to South America where early Brazilian soybeans will be available late in January.
Wheat markets lower as the strong dollar may make it even harder for U.S. wheat to compete with other origins.
U.S. wheat has been competitive due in part to poor crops in Canada and Europe. Australia big harvest is winding down and much of that will go to Asia.
Weekly export sales were better-than –expected with Nigeria, Morocco and China the leading buyers. Year-to-date sales are up 33% from a year ago.
CBOT estimated Thursday’s soft red winter wheat volume at 82,315 compared with Wednesday’s actual of 54,778. Open interest in Wednesday’s firm market decreased by 1,255, which included an increase of 175 in March and decrease of 501 in May.
Chicago’s March soft red winter wheat closed down 8-3/4 at $4.09-1/4 per bushel and May dropped 7-3/4 to $4.21-1/4. Kansas City’s March hard red winter dropped 7-1/4 to $4.12-3/4 and May fell 7 to $4.24-1/4. Spring wheat for March was off 3-1/4 at $5.38 and May fell 6-1/2 to $5.34-1/4.
What to Look For: Snow moves into the central Plains this week, which may provide some needed insulation for wheat from the pending cold.