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GRAIN MARKETS: Wheat at five-week high; corn three-week high

Soybeans retreat in small correction.

Winter wheat added to yesterday’s gains and is now the highest since late November after Kansas and Oklahoma early this week lowered crop ratings after a cold and dry December.

 

Corn inched higher, which was enough for a three-week high. Soybeans dropped a few cents in a mild correction from yesterday’s robust gains.

 

The dollar took another tumble and is at about a two-week low following more gains in China’s surging yuan, which gained about 1% against the dollar the past two days.

 

Exports – USDA, Reuters:

- Algeria bought milling wheat at $198 to $202 per metric ton, c&f, for March shipment. No details were available on origin of the wheat or quantity. Traders said Algeria had sought to buy at least 50,000 tons.

- Taiwan’s MFIG group bought about 65,000 metric tons of U.S. corn at 119.43 cents over CBOT July futures, c&f. Shipment is for March 17-April 5.

- Morocco seeks to buy 363,636 metric tons of U.S soft wheat and a similar amount of EU soft wheat. It also seeks to buy 327,273 tons of U.S. durum. The deadline for the U.S. wheat is Jan. 17, with the soft wheat for arrival by April 30 and the durum by Dec. 31.

- Ethiopia seeks to buy 720,000 metric tons of optional-origin milling wheat, with offers due by Feb. 3. Shipment will be within three months of when letters of credit are opened, which could be March to May.

 

In other markets, the Dow Jones industrials were down about 70 points when the crops closed. Crude oil was up about 53 cents a barrel after a weekly report showed a larger-than-expected drop in weekly stocks, but a bearish increase in gasoline supplies.

 

Corn closed about 1-1/2 cents higher to keep it above a few key moving averages and at a three-week high. The gain puts the March contract near the upper end of a 15-cent trading range that goes back to October.

 

USDA’s Jan. 12 report will have estimates for 2016 crops. The Farm Futures survey released on Thursday expects a corn number of 15.05 billion bushels, down about 176 million from USDA’s current estimate.

 

The dollar-value of corn at China’s Dalian market  for January surged about a dime due to gains in the yuan and was at the equivalent of $5.58 a bushel. European corn for March was firm at about $4.52. The prices reflect conversions from local currencies and metric tons.

 

The CBOT estimated Thursday’s corn volume at 327,655 compared with Wednesday’s actual volume of 276,559. Open interest on Wednesday decreased by 2,845 in the higher market with March’s up 878 and May’s down 2,208.

 

March corn closed up 1-1/2 at $3.61-1/4 per bushel and May rose 1-3/4 to $3.67-1/2.

 

What to Look For:  Weekly export sales come out Friday morning after being delayed a day by Monday’s holiday. A Reuters’ poll expects sales to be similar to or lower than the previous week’s 37.7 million bushels

 

Soybeans dropped nearly 3 cents in light trading to take back a small portion of yesterday’s gains with funds light sellers.

 

Crop news has been light with attention still on South America as reports continue to circulate of excess rain causing some crop problems in Argentina’s Cordoba and Santa Fe provinces. Argentina will be harvesting it early beans in March and full season soybeans in April.

 

The Farm Futures survey expects U.S. soybean production in next week’s USDA report at 4.365 billion bushels, up about 4 million from USDA’s current estimate.

 

More deliveries were posted against the CBOT January contracts, with 500 soybeans posted, 96 soybean meal and 395 soyoil contracts.

 

U.S. soybean oil for January closed up 0.02 at 35 cents per lb. Malaysian palm oil futures were lower with January at the equivalent of 32.38 cents per lb.

 

The CBOT estimated Thursday’s volume at 91,062 compared with Wednesday’s actual of 155,748. On Wednesday, open interest in the higher market decreased by 3,375 contracts, with January’s down 1,457 and March’s up 1,546.

 

January soybeans closed down 2-3/4 at $10.03-1/2 per bushel and March dropped 2-3/4 to $10.12-1/2. New-crop November was off 2-1/2 at $9.96-1/4.

 

What to Look For – Weekly export sales are expected to be either side of the previous week’s 35.8 million bushels. Brazil’s soybean harvest got an early start in late December but will gain traction in January, with big production number expected.

 

Winter wheat posted strong gains for the second day following the lower condition ratings earlier this week.

 

Trade reports show funds were net buyers for the fifth straight day. Funds entered the week net short the winter wheat, but had reduced a sizable amount of short positions in hard red winter in the latest CFTC report.

 

The Farm Futures survey expects winter wheat seedings at 34.8 million acres, which would be the lowest since 1913.

 

The January drought monitor released on Thursday said 26% of the winter wheat acres were in drought areas and that included the major wheat areas of western Kansas and western Oklahoma. On Tuesday, USDA rated Kansas wheat 44% good to excellent, down from late November’s 53%. Oklahoma’s wheat was rater 25% good and 50% fair, which compared with November’s 7% excellent, 46% good and 35% fair.

 

This week snow spreads through Oklahoma and western Kansas today, which should provide some moisture and protection from the cold. However, this week’s coldest weather is expected in the northern Plains. The 6- to 10-day outlook shows a return to milder temperatures next week for the central and southern Plains but not a lot of moisture

The CBOT estimated Thursday’s soft red winter wheat’s volume at 124,740 compared with Wednesday’s actual of 90,646. Open interest in Wednesday’s higher market increased by 4,179, with March’s up 1,783 and May’s up 158.

 

Chicago’s March soft red winter wheat closed up 7-3/4 at $4.26-1/4 per bushel and May rose 7-1/4 at $4.36-1/2. Kansas City’s March hard red winter rose 8 to $4.34-1/2 and May gained 8 to $4.46. Spring wheat for March was up 5-3/4 at $5.50-1/4 and May rose 4-1/4 to $5.44-3/4.

 

What to Look For – Weekly export sales on Friday are expected to be down from last week’s 20.9 million bushels.

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