Markets

GRAIN MARKETS: Crops end week in quiet fashion

Dry forecast may speed planting.

Corn futures closed a little higher for the day and a fraction higher for the week in light trading as support from bullish world numbers in the U.S. Department of Agriculture’s crop report earlier this week was countered by pressure from expected planting progress through the weekend.

Soybeans closed a few cents lower for the day and the week -- also pressured by good planting weather, plus new and larger forecasts this week for South America’s soybean crops.

Farmers in the Midwest will have a few dry days for planting before more rain arrives. The 6- to 10-day outlook (May 17-21) is warm and wet for the Midwest.

Wheat futures finished a little lower for the day and week as the markets continued their retreat from the storm rally nearly two weeks ago.

The May crop contracts expired at noon on Friday.

Wall Street was a little lower when the crops closed. The Dow Jones Industrials were down about 30 points, hurt by lower retail companies as recent store earnings have disappointed. The dollar dropped 0.35% following April retail sales that were short of forecasts. Crude oil was about unchanged, and gold was higher.

Export highlights (from USDA and Reuters):

- Wire reports say Algeria bought 470,000 metric tons of optional-origin wheat and 75,000 of feed barley. Trade sources said it between $197.75 to $199 per metric ton for the wheat. The wheat was sought for July shipment.

- Jordan seeks 100,000 metric tons of hard milling wheat and 100,000 mt of feed barley all from optional origins. The wheat deadline is May 16 and barley May 17. Both are for October-November shipment.

- Results are awaited on Iraq tender to buy 50,000 metric tons of wheat from the U.S., Canada or Australia. The tender closed May 7, but offers were to remain valid until May 11.

- Turkey seeks to buy 180,000 metric tons of feed corn. The tender deadline is May 18. It seeks the corn from a number of countries, including the U.S. Shipment details were not provided.

Corn futures eked out small gains for the day and week, with July closing above resistance at the 20-, 50- and 200-day moving averages.

USDA’s domestic and world crop numbers in Wednesday’s monthly report remained supportive. U.S. ending stocks were cut to 2.295 billion bu. and next year’s to 2.11 billion. World ending stocks for 2017-18 came in at 195.27 million metric tons, down from this year’s 223.90 million.

That support was tested by pressure from expected active planting this weekend in the Midwest and the sharp drop in weekly export sales on Thursday

Also this week, South American analysts raised corn forecasts for Argentina and Brazil. Argentina’s private Buenos Aires Exchange put that crop at 39 million metric tons, up from its previous 37 million. That is still under USDA’s 40 million. Brazil put that corn crop at 92.8 million metric tons versus its previous 91.5 million. USDA is at 96 million.

Chicago Board of Trade (CBOT) corn deliveries of 192 contracts were posted on Friday to bring the total to 7,173.

CBOT estimated Friday’s corn volume at 140,934. Thursday’s actual volume was 207,820. Open interest in Thursday’s lower market increased by 7,689 with May’s down 399 and July’s up 2,263.

May corn expired up 1-1/4 for the day at $3.61-3/4, July closed up 1-3/4 at 3.71 and new-crop December rose 1-1/2 to $3.88-3/4.

What to Look For: It has been a wet week in the Midwest but a dry weekend for most areas should have farmers back in the fields. USDA’s updates corn planting progress on Monday. A year ago, the five-year average for that date was 70% completed.

Soybeans closed a few cents lower in light trading for the day and week, with July coming to rest just under the 20-day moving average. The dry forecasts may have lessened concerns about planting delays.

South American analysts raised estimates for those crops this week. Argentina’s Buenos Aires Exchange put that crop at 57.5 million metric tons versus the previous 56.5 million, while Brazil’s government raised that crop to 113 million from 110.2 million. USDA had 57 million for Argentina and 111.6 million for Brazil.

Ninety-three deliveries were posted on Friday against the May contract to put the total at 3,225.

CBOT estimated Friday’s volume at 94,555. Thursday’s actual volume was 153,692. Thursday’s open interest decreased by 4,849 in the lower market with May’s down 202 and July’s down 3,212. November’s open interest decreased by 2,498.

May soybeans dropped 2 cents to $9.64-1/4 per bushel and July dropped 3-1/4 to $9.63. New-crop November dropped 4-1/4 to $9.59-3/4.

What to Look For – Attention is on weather and if all of the acres can get planted. The year ago five-year average for soybean planting in Monday’s report was 32%. A week ago 14% was planted. NOPA issues its monthly crush report on Monday, with six participants in a Reuters poll on average expecting 145.74 million bushels versus last year’s 147.614 million.

Winter wheat markets closed about a penny lower in light trading and spring wheat about 2 cents lower to put all three markets lower for the week.

Wheat markets had support near mid-week after USDA trimmed U.S. and world production in its monthly supply and demand report, but gains were brief as other data showed the world still has plenty of wheat.

World production for 2017-18 was trimmed to 737.83 million metric tons, but USDA raised world ending stocks to 258.29 million from the current year. U.S. 2017 production as pegged at 1.82 billion, down 9% from 2016, which includes a 25% drop in the winter wheat. Wheat ending stocks were cut to 914 million for the coming crop year, from the current year’s 1.159 billion.

Sixty-four hard red winter wheat contracts were delivered on Friday to put the total at 2,258, while 10 soft red winter wheat contracts were posted for a total 1,380. 

CBOT estimated Friday’s soft red winter wheat volume at 85,293. Thursday’s actual volume was 99,912. Open interest in Thursday’s higher market increased by 3,334 with May’s down 13 and July’s up 855.

Chicago, Ill., May soft red winter wheat expired down 1 for the day at $4.25 and July slipped 1 to $4.32-3/4. Kansas City, Mo., May hard red winter wheat expired down ¾ cent at $4.29 and July closed down 1-1/2 at $4.39-1/4. Spring wheat for May dropped 2 to $5.37 and July dropped 1-3/4 to $5.46-1/2.

What to Look For – Damage is still being assessed in the Plains from the storm two weeks ago. USDA will update wheat condition ratings on Monday. In France, spring rain has helped that crop recover from the dry winter. Harvest is in August. 

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