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GRAIN MARKETS: Soybeans recover, approach two-week high

Corn posts highest close in a month.

Soybeans shook off the bearish influence of yesterday’s U.S. Department of Agriculture report to close higher and near a two-week high as traders may have used the recent drop to do some short covering.

Corn finished with modest gains, but that was enough for the lead May contract to post its highest settlement in nearly a month. More rain in the Midwest may be raising concerns about planting delays.

Selling in the May crop contracts continued by followers of index-guided trading plans who are near the end of their five-day stint of rolling longs to deferred months. That action should end on Thursday. The markets will be closed on Good Friday.

Outside markets were mixed, with Wall Street’s Dow industrials down about 65 points when the crops closed, gold higher and the dollar flat. Crude oil was lower despite the weekly Energy Information Administration's report showing an unexpected and big drop in crude oil stocks. Crude production, however, increased by 268,000 barrels per day.

Export highlights (USDA and Reuters):

  • Taiwan’s MFIG group bought 65,000 metric tons of corn that likely will be sourced from the U.S. The corn is for June 10 to July 14 shipment. The price was 120 cents over Chicago Board of Trade (CBOT) September futures, c&f.
  • Japan seeks to buy 126,405 metric tons of wheat from Australia, Canada and the U.S. From the U.S., it seeks 13,910 mt of western white, 19,190 mt of hard red winter and 34,995 mt of dark northern spring wheat, all loading between May 21 and June 20. Results are due on Thursday.

Corn futures closed about 2 cents higher as traders likely cast some attention to weather forecasts that put more rain in the Midwest the next few days.

There is still plenty of time to plant, but the recent parade of showers plus forecasts for more have prompted short covering. The 6- to 10-day outlook also is wet for the Midwest. USDA’s "Crop Progress" report late on Monday said 3% of the corn was planted, matching the five-year average, with most of that in Texas and the South, plus a few acres in Illinois.

CBOT estimated Wednesday’s volume at 465,245. Tuesday’s actual volume was 565,440. Open interest in Tuesday’s flat market increased by 7,807, with May’s down 35,026 and July’s up 34,517.

May corn closed up 2-1/2 cents at $3.69 and July up 2-1/4 at $3.76. New-crop December rose 2 cents to $3.92.

What to Look For: Weekly export sales on Thursday are expected to be down from a week ago for old-crop corn but could be a little higher for new-crop. Brazil’s corn and soybeans are nearly harvested, while Argentina’s harvests are under way. Dry forecasts this week for Argentina should help that process.

Soybeans settled near a two-week high as they rebounded from Tuesday’s midday drop to a one-year low.

The buying may have been short covering ahead of the three-day weekend. Particularly with more rain the forecast for the Midwest, that could delay planting.

In overseas markets, Canada’s canola was narrowly mixed, Europe’s rapeseed was higher and China’s soybeans were a little lower. Malaysian palm oil dropped to a five-month low as it was unable to hold onto yesterday’s gains amid pressure from bigger production there and lower soybean oil values yesterday.

CBOT estimated Wednesday’s soybean volume at 204,432. Tuesday’s actual volume was 275,417. Tuesday’s open interest increased by 10,494 in the lower market, with May’s down 9,365 and July’s up 17,135. November’s open interest increased by 1,201.

May soybeans closed up 8-1/2 cents at $9.47-3/4 per bushel and July rose 8 cents to $9.58-3/4. New-crop November rose 7 cents to $9.55-1/2.

What to Look For: Weekly export sales on Thursday are expected to be modest, with old-crop business forecasted to be higher than a week ago, while-new-crop sales could be down. Old-crop sales do not need to be big to top the pace needed to meet USDA’s annual sales forecast.

The wheat markets were narrowly mixed with gains capped by more beneficial rain this week in the Plains winter wheat areas.

Forecasts have rain today through Friday in the central Plains, and the 6- to 10-day outlook that runs through next week also is wet for that area.

USDA confirmed that the world has plenty of wheat, with the U.S. and world wheat carryout numbers in yesterday’s report on the high side of trade forecasts. USDA left production unchanged for most major world producers but listed an 11 million bu. increase in Pakistan and a 1.1 million increase for Russia.

CBOT estimated Wednesday’s soft red winter wheat volume at 218,097, compared with Tuesday’s actual volume of 289,239. Tuesday’s open interest decreased by 7,800 in the higher market, with May’s down 27,659 and July’s up 19,602.

Chicago, Ill., May soft red winter wheat closed unchanged at $4.33-1/4 and July slipped 1-1/4 cent to $4.46-1/4. Kansas City, Mo., May hard red winter was up ¼ cent at $4.30 and July rose a half-cent to $4.42-1/2 Spring wheat for May was up 1 cent at $5.28-3/4 and July rose 1-3/4 cent to $5.37-1/4.

What to Look For: Old-crop weekly export sales on Thursday are expected to be down from the prior week, while estimates have new-crop business similar to or higher than last week’s.

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