Markets

GRAIN MARKETS: Wet forecast rains on crop prices

Corn and soybeans higher for the week.

End-of-the-week selling took crop markets lower as forecasts have put a little more rain in the Midwest over the next few days, and the forecast for next week also favors rain.

The corn and soybeans still finished higher for the week following gains on the previous days related to fund buying and the latest U.S. Drought Monitor that expanded the area of moderate drought into the western Midwest and central Plains.

In addition, the National Weather Service’s 30-day outlook favors above-normal temperatures in August for most of the country.

The latest 6- to 10-day outlook (July 26-30) shows hot but wet conditions for much the Midwest and hot and normal rainfall chances for the northern Plains. The 8- to 14-day outlook (July 28-Aug. 3) has hot and dry conditions for the Plains and western Midwest.

The dollar tumbled to its lowest in more than a year following more gains in the euro as the European Central Bank hinted this week that it may tighten the money supply beginning this fall.

Equities were a little lower with the Dow Jones industrials down about 41 points when the crops closed. Gold was up $6.30/oz., and crude oil was down $1.21 a barrel.

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

-       Jordan re-tendered for 100,000 metric tons of wheat after not making a purchase in its previous tender. The current tender closes on July 26.

-       Iraq tendered to buy 50,000 metric tons of wheat from the U.S., Canada or Australia. The tender closes on July 31, with offers remaining valid until Aug. 6.

-       Bangladesh issued a new tender to buy 50,000 metric tons of wheat. The tender closes July 26.

Corn closed about 11 cents lower to wipe out the previous day’s gains but still finished higher for the week. New-crop December came to rest just above chart support at the 20-day moving average with an RSI of 49.6.

The 2.7% drop in December corn was the largest daily drop in a week.

Much of the late-week drop was linked to the forecasts that have more rain for the Midwest and the northern Plains. Those same forecasts keep hot weather in the growing regions at a time when much of the corn is pollinating.

The Chicago Board of Trade (CBOT) estimated Friday’s volume at 387,198. Thursday’s actual volume was 407,029. Open interest in Thursday’s higher market decreased by 2,147, with September’s down 10,419 and December’s down 2,125.

September corn closed down 11-1/4 cents at $3.79-3/4, and new-crop December dropped 11-1/4 cents to $3.93-1/2.

What to Look For: Weather remains supportive with hot conditions expected this week and next week. Crop conditions will be updated on Monday. As of last Sunday, corn was rated 64% good/excellent.

Soybeans closed a few cents lower but remained higher for the week, with new-crop contracts staying well above $10/bu.

Other oilseed markets were mixed, with Winnipeg, Man., canola sharply lower on profit taking and with Europe’s rapeseed at a two-week low.

August soybean futures remained above key moving averages with an RSI of 62 on charts. November also stayed above key moving averages with an RSI near 63.

CBOT estimated Friday’s volume at 213,193. Thursday’s actual volume was 214,565. Thursday’s open interest in the higher market increased by 4,955, with August’s down 5,734 and November’s up 2,808.

August closed down 4-1/4 cents at $10.09, and new-crop November was down 4-3/4 cents at 10.22-1/4.

What to Look For: Soybeans are developing about on schedule, with 52% at the blooming stage versus the 51% average. Crop conditions will be updated on Monday. Earlier this week, the crop was rated 61% good/excellent.

The three wheat markets were followers and closed lower for the day. Spring wheat was higher for the week as there are concerns about that crop.

Spring wheat contracts remain above key moving averages with September’s RSI at 61. Harvest in the Dakotas is about two weeks away. September soft red and hard red winter wheat contracts stayed under the 20-day averages but above other averages.

The winter wheat harvest is about finished, leaving it largely immune to further weather problems. Europe’s harvest is under way, and rain has slowed progress in Germany and raised concerns for that crop. Early reports indicate better-than-expected results from the harvest in France.

CBOT estimated Friday’s soft red winter wheat volume at 119,352. Thursday’s actual volume was 115,787. Open interest in Thursday’s firm soft red winter wheat market decreased by 2,426, with September’s down 368 and December’s down 342. Kansas City, Mo., hard red winter wheat actual volume on Thursday decreased to 39,418, with open interest up 1,086.

Chicago, Ill., September soft red winter wheat closed down 6-1/2 cents at $4.99-1/4. Kansas City September hard red winter wheat dropped 7-3/4 cents to $4.96. Spring wheat for September dropped 12-1/4 cents to $7.65-3/4.

What to Look For: Weather will be key as spring wheat heads into next month’s harvest.

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