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GRAIN MARKETS: Market report again rattles crop markets

Soybeans lowest since October after big acreage number.

Aftershocks from the U.S. Department of Agriculture's Friday planting report rippled through Monday’s markets, with soybeans lower again and settling at a 5.5-month low, while corn finished higher and again helped USDA’s forecast that farmers will plant fewer acres of corn this year.

Wheat futures were mixed with soft red winter (SRW) a little higher and hard red winter (HRW) and spring wheat lower. The HRW faced pressure from widespread rain in the Plains the past few days, and forecasts call for more this week.

Wall Street was lower when the crops closed, while the dollar was higher. Crude oil was down about 30 cents a barrel, and gold was up $3.40/oz.

Export highlights (from USDA and Reuters):

  • Weekly export inspections million bushel (est): corn 58.1 (47-55), soybeans 22.8 (16-23), wheat 20.6 (14-22). Last week, corn 61.8, soybeans, 20.4 and wheat 20.1.
  • Jordan seeks to buy 100,000 metric tons each of optional-origin hard milling wheat and feed barley. The deadline is April 6, with the wheat shipment for Oct. 1-Nov. 30 and the barley for May 1-June 30.
  • Wire reports say Iraq likely cancelled its tender to buy 50,000 mt of wheat. The wheat could have been sourced from the U.S., Australia or Canada.
  • 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 higher but were well off the day’s highs. May finished above the 20-, 100- and 200-day moving averages and just under the 50-day average.

Higher futures in the past two days encouraged farmer sales of old-crop corn, but no new-crop sales, Midwest grain dealers said.

The USDA corn acreage estimate on Friday of just under 90 million was down 4% from a year ago, and the quarterly stocks number of 8.616 billion bu. was up 10% from a year earlier.

Talk in Midwest cash markets is that wet fields and forecasts for more rain may delay spring planting by a few days. Crop insurance guidelines allow planting to begin from late this week to the middle of next week, depending on area of the Midwest. The latest 6- to 10-day outlook is wet for the Midwest, with above-normal temperatures.

The Chicago Board of Trade (CBOT) estimated Monday’s volume at 394,825. Friday’s actual volume was 575,354. Open interest in Friday’s higher market increased by 23,833, with May up 6,999 and July up 12,387.

May and July corn both closed 3-1/2 cents higher at $3.6775 and $3.7575/bu., respectively. New-crop December rose 3-3/4 cents to $3.92.

What to look for: Spring weather can skew markets when planting gets under way. Spring rallies have occurred ever year since 2011; some have been brief, and others longer lasting.

Soybeans settled lower for fourth straight session and were the lowest since October. May moved deeper into oversold territory with an RSI of 17.

The bearish acreage and stocks will be in focus for a while, particularly as analysts keep raising estimates for South America’s crop. Wire reports last week had one private firm bumping its estimate for Brazil’s soybeans to 111 million metric tons (up 3 million) and Argentina’s soybeans to 57.5 million (up 2.5 milion).

After Monday’s close, USDA said the February soybean crush was 151 million bu., down from 155 million a year ago. In Brazil, a trade group there said that country exported a March record of 9.7 mmt of soybeans.

Foreign oilseed markets showed some resilience, with European rapeseed and Canadian canola higher.

Weather remains favorable for U.S. and South American crops, with rain here boosting soil moisture for spring planting. South American crop areas may have rain this week but should be drier next week.

CBOT estimated Monday’s volume at 168,709.  Friday’s actual volume was 343,386. Friday’s open interest increased by 17,852 in that lower market, with May up 7,532 and July up 6,120. November’s open interest was up 2,220.

May soybeans closed down 7-3/4 cents at $9.3825/bu., and July dropped 7-3/4 cents to $9.4925. New-crop November was off 3-3/4 cents at $9.5025.

What to look for: Be alert for spring and summer rallies, which have occurred in the previous two years.

SRW wheat futures closed a little higher, while HRW and spring wheat finished lower. Widespread rain in the Plains weighed on the HRW wheat as farmers there said the moisture should nourish the crop into late spring.

Forecasts put more rain in the central Plains this week, and the 6- to 10-day forecast also looks wet for that area.

SRW wheat still finished under most key moving averages, but May came to rest just under the 20-day average. HRW wheat is well under moving averages, and May’s RSI of 31 is just above oversold on technical charts.

CBOT estimated Monday’s volume at 127,995, compared with Friday’s actual volume of 168,855. Friday’s open interest increased by 6,219 in the higher market, with May down 1,841 and July up 5,918.

Chicago, Ill., May soft red winter wheat closed up 1-1/4 cents at $4.2775/bu. and July rose 1-1/4 cents to $4.4025/bu. Kansas City, Mo., May hard red winter dropped 1-1/2 cents to $4.19, and July dropped 1-1/2 cents to $4.3225. Spring wheat for May dropped 3-1/4 cents to $5.31, and July was off 3-3/4 cents at $5.385.

What to look for: Big global stocks may limit price increases, even though the U.S. will be producing less.

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