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GRAIN MARKETS: Crops waver ahead of USDA report

Winter wheat markets little changed after big rain.

Crops were mixed on Wednesday as attention remained on Friday's U.S. Department of Agriculture planting and grain stocks reports. There was little else in the news to pull traders from the sidelines.

The widespread rain in Plains winter wheat areas overnight was expected and prompted few reactions for traders in those markets. More rain is in the forecast there late this week and next week.

Wall Street was lower, taking back some of yesterday's gains as bank shares slipped. Higher crude oil prices helped energy companies, but not enough to turn the broader market higher. Britain's latest moves to advance its exit from the European Union remain on traders' radar.

Export highlights (USDA and Reuters data):

  • Algeria bought about 200,000 metric tons of durum wheat for May shipment. Reports said the durum would likely be from the U.S. or Canada.
  • Iraq seeks to buy 50,000 mt of wheat and can be sourced from the U.S., Australia or Canada. The tender closes April 2. Shipment was not disclosed.
  • Libya extended the deadline for offers in its wheat, durum and corn tender to the end of March. It seeks 100,000 mt of wheat, 50,000 mt of durum and 75,000 mt of corn for April-May shipment.

Corn futures settled a fraction higher but remained under key moving averages and not far from being oversold, with an RSI of 38.

Crop news was scarce with traders awaiting Friday's report. Funds entered the week net short the corn as Friday's Commodity Futures Trading Commission (CFTC) report showed that they added shorts through Tuesday of last week.

Ethanol production increased by 10,000 barrels a day in the latest week amid improved margins. Production of 1.054 million per day was the most in more than six weeks, the government's Energy Information Administration said. Stocks increased to nearly 23.26 million barrels, also the most in more than six weeks.

Global supplies are ample, and Argentina and Brazil are harvesting corn now. There are no apparent threats in South American weather as forecasts show mostly dry conditions in Argentina and Brazil this week.

In the U.S., rain is in the forecast for the Midwest, which build soil moisture for spring planting next month. The latest 6- to 10-day and seven-day outlooks remain wet for the Midwest.

The Chicago Board of Trade (CBOT) estimated Wednesday's volume at 223,227. Tuesday's actual volume was 212,773. Open interest in Tuesday's firm market increased by 9,743, with May down 1,657 and July up 5,921

May corn closed up ¾ cent at $3.585/bu., and July rose ½ to $3.66. New-crop December was up ¼ at $3.82.

What to look for: Weekly export sales on Thursday are expected to be down from last week's old-crop sales of 53 million bu. The grain stocks report on Friday should confirm ample supplies, with Farm Futures expecting 8.54 billion bu. versus 7.82 billion a year ago.

Soybeans settled a few cents lower amid moderate fund selling to keep May solidly in oversold territory on charts. Soybean meal finished a little higher, and soybean oil was lower.

Weather remains favorable for U.S. and South American crops, with rain here boosting soil moisture for spring planting, while South America is drier for that harvest.

In the U.S. market, trading was fairly light ahead of Friday's reports. Funds entered the week net long but have been exiting those positions. Friday's CFTC report showed that funds trimmed their net long by more than 34,500 contracts as of Tuesday.

CBOT estimated Wednesday's volume at 154,764. Tuesday's actual volume was 156,147. Tuesday's open interest increased by 2,339 in that flat market, with May down 633 and July up 2,352. November's open interest decreased 42.

May soybeans closed 3 cents lower at $9.69/bu., and July was down 2.75 cents to $9.795. New-crop November dropped 4.25 cents to $9.68.

What to look for: Trader forecasts expect Thursday's weekly old-crop export sales to be down from last week's 27.1 million bu., while new-crop sales could top last week's 2.9 million bu. Farm Futures has soybean stocks in Friday's report at 1.695 billion bu., while a Bloomberg survey averaged 1.676 billion.

Winter wheat futures finished narrowly mixed in light trading, while spring wheat rose about 8 cents. Rain overnight was plentiful in Plains winter wheat areas but also was widely expected.

Chicago, Ill., and Kansas City, Mo., winter wheat remain below key moving averages, although Chicago soft red winter wheat closed higher for the second day to finish with an RSI of about 40.

Rain amounts should ease in the Plains in the next week, but forecasts still have showers there late this week and in the 6- to 10-day period. Hard red winter wheat is jointing, and its condition was largely stable in the latest weekly readings.

CBOT estimated Wednesday's volume at 86,613, compared with Tuesday's actual volume of 98,782. Tuesday's open interest decreased by 4,418 in the higher market, with May down 6,051 and July up 699.

Chicago's soft red winter wheat closed 1 cent higher at $4.255 for May and $4.385/bu. for July. Kansas City hard red winter wheat slipped a half-cent to $4.235 for May and $4.365/bu. for July. Spring wheat for May rose 8.25 cents to $5.4325, and July rose 7.5 cents to $5.495/bu.

What to look for: Weekly wheat export sales on Thursday are expected to similar to or down from last week's 15.4 million bu. in old-crop sales. For Friday's March 1 wheat stocks, Farm Futures has 1.614 billion bu., and the survey has 1.627 billion. A year ago, stocks were 1.372 billion bu.

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