Markets

GRAIN MARKETS: Soybeans sustain a seven-day streak

Prices recover from early losses, while corn and wheat edge lower.

By Ben Potter

Soybean futures entered Tuesday’s session with a six-day streak that looked as if it may fall apart as prices crumbled early, but they later rebounded to close out another day with small gains. Corn prices were steady to slightly down on the day after some technical selling, and wheat futures dropped about 1% on a round of technical maneuvering.

Those hoping for above-normal temperatures in the Plains and Midwest will get that wish fulfilled starting Wednesday and extending through this weekend in most areas. Following the big winter storm that dropped heavy snowfall across parts of Nebraska, Iowa, Minnesota and Wisconsin yesterday, not a lot of additional precipitation is expected in the central U.S. over the next three days.

Further out, NOAA anticipates a February that will deliver seasonally average temperatures in the Midwest and Plains, with the probability of wetter-than-normal weather in the Great Lakes region.

On Wall Street, positive earnings reports had the Dow trading 40 points higher to 26,235 Tuesday morning. NAFTA nervousness continues as another round of talks gear up. With expectations of continued world growth, plus OPEC tightening supplies, crude oil prices are back above $64 per barrel after 1.5% gains in Tuesday morning trading. Other energy prices are also trending higher, with natural gas prices surging 5% or more. The U.S. Dollar continues to soften.

Note: The U.S. federal government shutdown, although short, has nonetheless created a few minor ripples across some departments, including USDA. To that point, the agency plans to release its weekly export data on Friday, January 26, one day later than usual.

Corn prices were tripped up on a round of technical selling but landed with fractional losses on Tuesday. March and May futures each lost 0.75 cents on the day to close at $3.5125 and $3.5975, respectively.

Spot basis bids for corn were largely unchanged Tuesday, although three Midwestern locations reported changes of -3, +1 and +2 cents.

Private exporters reported to USDA the sale of 10.1 million bushels of corn to unknown destinations for the 2017/18 marketing year, which began September 1. 

Informa Economics has lowered its 2018 corn acre forecast from 89.675 million acres in December to a January estimate of 89.179 million acres. Farm Futures and Informa Economics are both owned by Informa PLC.

China’s 2017 corn imports totaled 111.4 million bushels, 10.8% lower year-over-year and the lowest amount since 2014. China’s monthly imports of 17.7 million bushels in December, meantime, were 221% higher year-over-year. 

A farmer’s union from Zambia says that country’s corn production for 2017/18 could drop by as much as 50% if current dry conditions extend in to February. Some production estimates are as low as 70.9 million to 78.7 million bushels. Zambia’s corn harvest typically occurs in March and April. 

Preliminary volume estimates were for 208,911 contracts, which was about 17% lower than Monday’s final count of 253,582.

Soybean prices traded in a narrow range overnight before embarking on a bumpy ride on Tuesday’s session after traders continued to factor in dry conditions in Argentina. Prices finally settled 2 cents higher for March and May contracts, which closed at $9.8625 and $9.9775, respectively. 

Spot basis bids for soybeans were mostly unchanged Tuesday, although one Ohio elevator reported prices 2 cents lower, with a river terminal in Illinois moving 1 cent higher.

Informa Economics cut its 2018 soybean acre forecast from 91.387 million acres in December to a January estimate of 91.197 million acres. The most U.S. soybean acres ever planted was 90.142 million acres in 2017. 

Preliminary volume estimates were for 163,198 contracts, which was nearly 31% lower than Monday’s final tally of 236,327.

Wheat prices got chopped on chart-based selling amid the backdrop of large global supplies, with March Chicago SRW futures falling 4.25 cents to $4.2150, while March Kansas City HRW prices dipped 5 cents to $4.2350. March MGEX Spring Wheat contracts slipped 2.5 cents to $6.0575 – the lowest price levels since last June.

Informa Economics estimates 2018 U.S. spring wheat acres will total 11.255 million acres, plus another 2.254 million acres of durum wheat. The company’s winter wheat acre estimates match USDA’s current projections of 32.608 million acres.

China sold approximately 21.9 million bushels of imported wheat at a state reserves auction Tuesday. That amount represented nearly 29% of the total available for auction.

Japan seeks to purchase around 3.1 million bushels of food quality wheat sourced from the U.S. and Australia in a regular tender that closes Thursday. Purchases sought for U.S. western white, dark northern spring and hard red winter wheat account for about 72% of the total amount.

The Philippines issued an international tender for the purchase of 6.1 million bushels of feed wheat that closes Tuesday. The purchase is for three separate shipments between May 20 and July 20, depending on where the grain originates.

In an international tender that closed Tuesday, Jordan made no purchases in its bid to buy 3.7 million bushels of milling wheat.

Preliminary volume estimates were for 75,462 CBOT contracts, nearly identical to Monday’s final tally of 75,321.

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