Markets

GRAIN MARKETS: Corn, soybeans at three-week lows

Rain moves through Midwest, with cooler weather ahead.

Corn and soybeans dropped to three-week lows as weather maps show a wide swath of storms today and Thursday from Kansas to the Great Lakes.

The rain will help crops that have endured hot weather the past week. In addition, next week’s forecast shows cooler weather for the eastern half of the country.

Wheat futures also finished lower. Spring wheat set more contract highs overnight but lost support in the day session to close lower.

Tropical Storm Cindy is due to make landfall near Louisiana late on Wednesday and produce heavy rain in the Delta and Southeast. The 6- to 10-day outlook (June 26-30) is cool with seasonal rain for the Midwest and cool and dry for the northern Plains.

Equities were lower, with the Dow industrials down about 40 points, when the crops closed as lower oil prices again pulled down shares of oil companies. The dollar eased after yesterday’s one-month high, while the euro inched higher. Talks continue on Britain’s move to extricate itself from the European Union. Crude oil was down nearly $1 a barrel, and gold was lower.

Exports (from the U.S. Department of Agriculture and Reuters):

-       Japan’s issued its weekly tender for 135,747 metric tons of wheat from the U.S., Australia and Canada. From the U.S. it seeks 24,561 tons of western white, 9,690 of hard red winter and 35,710 of dark northern spring. Loading is between July 21 and August 20.

-       Bangladesh is in the market for 50,000 metric tons of wheat. The tender closes July 11, with shipment 40 days after deals are signed.

Corn closed at three-week lows with July and December under key moving averages as the cool, wet forecasts added pressure.

The seven-day and 6- to 10-day outlooks favor widespread beneficial rain for the Midwest with total amounts of an inch or more in northern Illinois and northeast Iowa.

The Chicago Board of Trade (CBOT) estimated Wednesday’s volume at 327,201. Tuesday’s actual volume was 450,185. Open interest in Tuesday’s lower market increased by 7,497 with July’s down 17,459 and December’s up 5,212.

July corn closed down 1-1/4 at $3.68-3/4 and new-crop December down 1-1/4 at $3.86-3/4.

What to Look For: Attention will be on the Midwest storms the next few days. While rain is needed, too much could be as bad as not enough. Tropical Storm Cindy could spin showers into the Delta this week. Total weekly export sales on Thursday are expected to be up from a week ago. Farm Futures expects next week’s planting report to keep corn acreage near USDA’s current 90 million estimate.

Soybeans closed under key moving averages amid pressure from the wet forecasts, with the July settling at its lowest since June 1.

The weather forecasts likely induced more short selling, which was noted on Tuesday as well. CFTC on Friday said funds reduced their net short position in soybeans by more than 18,000 contracts as of last Tuesday. 

CBOT estimated Wednesday’s volume at 216,022. Tuesday’s actual volume was 225,040. Tuesday’s open interest in the lower market increased by 8,449 with July’s down 6,286 and November’s increased by 7,604.

July soybeans closed down 9 at $9.18-3/4 and August dropped 9 to $9.22-1/2. New-crop November dropped 11 to $9.27-3/4.

What to Look For – Rain amounts and breadth of coverage the next few days will be at the forefront of traders’ minds. Total weekly export sales on Thursday are expected to be similar to a week ago. Farm Futures expects next week’s planting report to show a few more soybean acres than what USDA currently has.

Wheat markets closed lower to take a break from recent gains. Rain should aid spring wheat, while the winter wheat harvest could be slowed by this week’s storms.

For spring wheat, a daily National Weather Service forecast said recent rain likely helped wheat in the Dakota. Going forward the seven-day forecast has light showers there of less than an inch total. Weather maps show rain today and Thursday in Kansas wheat areas, where harvest is under way, with drier conditions on Friday.

Wire reports say hot, dry conditions in France and Spain have raised concerns for the wheat there.  Private forecasters have lowered harvest estimates for those crops. Germany’s crops, Europe’s second largest, is said to be doing well. Europe’s wheat markets were lower today after recent sharp gains.

CBOT estimated Wednesday’s SRW volume at 149,383. Tuesday’s actual volume was 210,150. Open interest in Tuesday’s higher SRW market increased by 2,920 with July’s down 9,089 and September’s up 5,438.

Chicago’s July SRW wheat closed down 8 at $4.64-1/2 and September down 8-1/4 at $4.79-1/2. Kansas City’s July hard red winter wheat dropped 6-1/2 to $4.67-3/4 and September dropped 6-3/4 to $4.85-1/2. Spring wheat for July was down 7-1/2 at $6.48-3/4 and September slipped 6-3/4 to $6.52-1/2.

What to Look For – The harvest has moved into Kansas and yield and protein data should soon provide insight to how the crop survived disease and the late spring storm. Weekly export sales on Thursday are expected to similar to or greater than last week’s.

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