Markets

GRAIN MARKETS: Soybeans lower as Brazil speeds through harvest

Wheat markets lower after six-day upward trend.

Soybeans closed lower for the second day as Brazil’s big harvest is going well and will compete with U.S. soybeans in export markets. The market’s slump occurred despite the sale of more than 5 million bu. of 2016 soybeans to Mexico.

Corn and wheat finished a little lower. Active farmer selling following last week’s higher markets may have put hedge pressure on the corn as well as the soybeans. 

In outside markets, equities and the dollar were higher when the crops closed, crude oil rose, while gold inched lower. Positive comments on the economy and job market by Federal Reserve Chairman Janet Yellen supported the equities and the dollar.

Exports highlights (U.S. Department of Agriculture and Reuters) include:

- Japan bought more than 9 million bu. of 2017-18 corn, and Mexico bought 5.24 million of 2016-17 soybeans.

- Japan’s weekly wheat tender seeks to buy 113,248 metric tons from the Canada and the U.S. From the U.S., it seeks 9,080 mt of western white, 43,940 mt of hard red winter and 35,268 mt of dark northern spring wheat. Loading is from March 21 to April 20. Results are due late on Thursday.

- Algeria seeks to buy a nominal 50,000 mt of durum wheat and 50,000 mt of feed barley. The tenders close on Thursday. The wheat is for March 16 to April 30 shipment and the barley for March 1-15.

- Jordan seeks to buy 100,000 mt of hard wheat and 50,000 mt of barley from optional origins. Wheat offers are due Feb. 21 and barley offers a day later.

Corn closed about a penny lower in active trading but remained within Monday’s higher range and above key moving averages.

The export sale of 9 million bu. of 2017 corn to Japan was the second daily export corn sale this week. Support from that sale was countered by the active farmer selling.

The corn harvest is under way in Argentina and Brazil. USDA last week left its crop estimates unchanged for the two countries, with Argentina’s at 36.5 million mt and Brazil’s at 86.5 million. USDA raised its corn production forecast in Mexico but lowered it a little in Europe.

The Chicago Board of Trade (CBOT) estimated Tuesday’s corn volume at 399,721, compared with Monday’s actual volume of 558,540. Open interest in Monday’s firm market increased by 31,886, with March down 24,807 and May up 42,574.

March corn closed down 1.25 cents to $3.7425/bu., and May was down 1 cent to $3.8175.

What to look for: Brazil is planting its second corn crop (Safrinha), which, in recent years, has been similar to or larger than the first crop.

Soybeans closed lower for the second day, with March dropping under the 20-day average for the first-time in a week.

Brazil is harvesting beans now, and local reports the harvest is moving quickly.

Soybeans have had a good run since last week, and some profit taking may be in play. Farmers also took advantage of recent gains and sold some old- and new-crop supplies. In some areas, cash new-crop prices reached $10/bu.

USDA left Brazil’s soybean estimate unchanged, but since then, traders have read reports of larger estimates from here and South America, some up to 105 million mt. USDA's last figure was at 104 million mt. USDA did trim Argentina’s crop to 55.5 million from 57 million mt.

CBOT estimated Tuesday’s volume at 228,802, compared with Monday’s actual volume of 330,275. Monday’s open interest increased by 16,490 contracts in the lower market, with March down 15,343 and May up 28,324.

March soybeans closed down 9.25 cents to $10.45/bu., and May was down 9.75 cents to $10.56. New-crop November fell 4.25 cents to $10.23.

What to look for: CBOT March soybeans are above a few key moving averages, but their RSI of 51.5 indicates that they still have room to climb before being overbought.

Winter wheat futures closed lower following five days of gains. The forecast for next week favors mild and wet weather for winter wheat, which will be exiting winter dormancy in a few weeks.

CBOT estimated Tuesday’s soft red winter wheat’s volume at 143,062, compared with Monday’s actual volume of 249,577. Monday’s open interest decreased in the higher market by 1,324, with March down 16,353 and May up 12,029.

Chicago, Ill., March soft red winter wheat closed down 2.75 cents at $4.495/bu., and May was down 3.5 cents to $4.635. Kansas City, Mo., hard red winter wheat slipped 1.5 cents to $4.6525 for March and dropped 1.5 cents to $4.78 for May. Spring wheat for March dropped 2.5 cents to $5.6825, while May fell 2.5 cents to $5.68.

What to look for: USDA lowered world wheat production last week to 748.24 million mt, which is higher than the previous year’s 735.6 million mt.

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