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GRAIN MARKETS: Crops fall as dollar gains

U.S. dollar near 14-year high.

Corn, soybeans and wheat closed lower on Wednesday amid more gains in the dollar, which is near the 14-year high it set earlier this month.

Other selling likely was year-end positioning and the lessening of concerns about dry conditions in Argentina. Based on Wednesday’s closes, corn is about 10 cents/bu. lower for the year, soybeans $1.35/bu. higher and soft red winter wheat 68 cents/bu. lower.

Soybeans fell through some chart support levels to reclaim about half of the previous day’s gains. Old-crop soybeans remain above $10, but new-crop November settled just under that level. Corn was lower and finished under key moving averages.

Wheat lost about half of what it gained on Tuesday, with the dollar likely a contributing factor. The export lineup was thin during the day’s trading, with only Jordan working an announced tender this week. After the close, Egypt announced a tender for an undetermined amount of wheat for Feb. 1-10 shipment.

Exports, according to the the U.S. Department of Agriculture and Reuters:

- Jordan seeks to buy 30,000 and 25,000 metric tons of milling wheat in separate tenders, which both close on Thursday.

- Egypt seeks an unspecified amount of wheat for Feb. 1-10 shipment. The wheat can be from a number of supplies including the U.S. Results are expected on Thursday.

Outside markets were mixed. Equities turned lower after a higher start in year-end trading, with the Dow Jones Industrials down about 100 points when the crops closed. Crude oil was about 5 cents higher, and gold was up about 80 cents/oz.

 

Corn closed about 6 cents lower and under key moving averages. Funds started the week net short corn and have sold this week.

Rain this week and next week in Argentina and Brazil may aid those crops, which will be harvested in February.

The weekly export inspections of 38.2 million bu. on Tuesday were up 20% from a week ago, with Mexico and Japan the leading destinations.  

Corn closed weak at China’s Dalian market, with January at the equivalent of $5.58/bu. European corn for January was a few cents higher at $4.44. The prices reflect conversions from local currencies and metric tons.

The Chicago Board of Trade (CBOT) estimated Wednesday’s corn volume at 168,036, compared with Tuesday’s actual volume of 193,826. Open interest on Tuesday was up 1,520 in the higher market, with March up 2,145 and May down 61.

March corn closed down 6.75 cents to $3.4825/bu., and May was down 6.5 cents to $3.5475/bu.

What to look for:  Weather reports from South America continue to move the corn and soybean markets. Currently, Argentina should have beneficial rain this week and next week, but the breadth of coverage will be watched.

 

Soybeans dropped about a third of what they gained the previous day with the dollar and year-end bookkeeping motivating selling. Soybeans remain higher for the year, which will conclude in Friday’s trading. 

Soybean oil was lower, but still retained some of Tuesday’s gains, while January soybean meal was about 0.6% lower. Malaysian palm oil was narrowly mixed, with the lightly traded January contract down slightly, while the more active February was up a few cents.

Funds have been long on soybeans but pared those positions as they have been recent sellers. The Commodity Futures Trading Commission report on Friday showed that funds reduced their net long position in soybeans during the week ended Dec. 20.

CBOT estimated Wednesday’s volume at 171,755, compared with Tuesday’s actual volume of 268,809. On Tuesday, open interest in the higher market was down 4,272 contracts, with January down 13,083 and March up 9,349.

January soybeans closed down 8 cents to $10.0675/bu., and March was down 7.75 cents to $10.165. New-crop November was off 6.5 cents.

What to look for: Holiday trading has been fairly steady in soybeans, contrary to expectations for declines. Exports have been active late into 2016, which had helped keep Chicago, Ill., soybeans at or above $10/bu.

 

Wheat markets finished lower for the day and are on track to finish lower for the year. The strong dollar was a likely factor in Wednesday’s selling.

U.S. wheat has had trouble competing with other origins for Egypt's business because of price and freight costs. However, there have been recent sales to Algeria, Nigeria and Morocco, which have taken hard red winter, soft red winter, spring and durum wheat. Even Egypt bought about 45,000 metric tons of U.S. spring wheat a week ago.

CBOT estimated Wednesday’s soft red winter wheat volume at 62,623, compared with Tuesday’s actual volume of 90,543. Open interest in Tuesday’s higher market was down 11,767, with March down 10,904 and May down 372.

Chicago March soft red winter wheat closed down 8 cents to $4.015/bu., and May was down 7 cents to $4.145. Kansas City, Mo., March hard red winter dropped 9.25 cents to $4.095/bu., and May dropped 9 cents to $4.21. Spring wheat for March was down 8.25 cents to $5.3075/bu., and May was off 7 cents at $5.28.

What to look for: The dollar advanced and came close to its recent 14-year high. The strong currency will make it hard for U.S. wheat to compete in export markets where global buyers have plenty of supply to choose from.

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