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GRAIN MARKETS: Wheat markets tumble as prices pierce chart support

Corn follows wheat lower, while soybeans hold nearly unchanged.

Winter wheat futures closed lower and had the largest losses of the three main crops as prices moved below chart support levels. The selling helped pull corn lower, while soybeans held nearly unchanged.

The selling in wheat came despite much of the hard red winter wheat area being missed by the weekend storm that dumped several inches of snow in Iowa and Illinois and is now threatening the East Coast with blizzard conditions. Also, forecasts show a return of hot, dry conditions in the Plains next week.

As a reminder, March crop contracts expire at midday on Tuesday.

No major crop reports are scheduled this week, but traders in commodities and other markets await the Federal Reserve Bank’s statement early Wednesday afternoon that is widely expected to include an interest rate increase.

In other markets, Wall Street was a little lower when the crops closed as attention is on Wednesday’s Fed statement. Crude oil in New York trading was lower again as big supplies continue to weigh on that market. Gold and the dollar were both a little higher.

Exports (according to U.S. Department of Agriculture and Reuters data):

  • USDA said unknown destinations bought 4.41 million bu. of 2017-18 soybeans.
  • Weekly export inspections (estimates) were corn at 60.9 million bu. (49-61), soybeans at 24.1 million bu. (18-29) and wheat at 19.1 million bu. (14-22).
  • Saudi Arabia bought 735,000 metric tons of optional-origin hard milling wheat for May to July arrival. Prices ranged from $216.80 to $221/mt, c&f, for arrival at Jeddah, and $221.57 to $224.98 for Dammam port.
  • Israel seeks to buy 85,000 mt of corn, 50,000 mt of feed wheat and 30,000 mt of feed barley from optional origins. The tender closes on Wednesday, with April to May shipment.
  • Algeria seeks to buy about 50,000 mt of optional-origin milling wheat for May shipment. The tender deadline is Wednesday.
  • Libya extended the deadline for offers in its wheat, durum and corn tender to the end of March. It  seeks 100,000 mt of wheat, 50,000 mt of durum and 75,000 mt of corn for April-May shipment.

Corn futures closed about 3 cents lower in mostly light trading and at a two-month low. May moved further under key moving averages and posted an RSI of about 36.

Despite weekly export inspections being on the high end of trade forecasts, futures showed little reaction to the numbers.

The snowstorm moving through the Midwest Monday and Tuesday should boost soil moisture for spring planting. Snow-covered roads in Iowa and Illinois discouraged truck traffic, but grain dealers said farmers had not been moving grain anyway. Lower prices since last week’s crop report had shut off farmer selling, they said.

That crop report increased world ending stocks by about 118 million bu. due, in part, to USDA’s increases in crop estimates for Argentina and Brazil.

The Chicago Board of Trade (CBOT) estimated Monday’s corn volume at 224,563, compared with Friday’s actual volume of 304,890. Open interest in Friday’s lower market increased by 4,397, with March down 1,278 to 1,607 and May up 943 to 616,979.

May corn closed down 3.25 cents lower at $3.61/bu., and July was down 3.5 cents to $3.685. New-crop December corn dropped 3 cents to $3.835/bu.

What to look for: Next up for USDA is its annual planting intentions data on March 31.  Until then, attention will be on the South American harvest and development of Brazil’s second corn crop, which is in its early growth stage.

Soybeans finished a fraction lower to remain at two-month lows and below key moving averages, with an RSI just shy of 36.

Farmer selling of soybeans has been quiet following the week-long drop in the market. The drop was helped by Thursday’s bearish USDA report, which lowered U.S. exports and raised Brazil’s soybean crop to 108 million mt from 104 million.

Weather forecasts remain favorable for harvests in Argentina and Brazil, although areas of Brazil could see rain in the next week.

CBOT estimated Monday’s volume at 119,380, compared with Friday’s actual volume of 182,658.  Friday’s open interest increased by 2,514 in the lower market, with March down 644 at 1,107 and May down 4,551 at 319,058.

Soybeans closed a half-cent lower, with May at $10.06/bu. and July at 10.1575. New-crop November rose 2.5 cents to $10.0225/bu.

What to look for: Brazil still needs to get its big soybean crop out of the field and to market. If delays continue, buyers could look elsewhere.

Winter wheat futures finished with double-digit losses, with May SRW and HRW wheat settling at a one-month lows and below key moving averages.

Last week’s USDA report showed that the world has plenty of wheat, despite less output expected from the U.S. this year.

The weekend snowstorms largely missed wheat in the central Plains, with sources reporting about an inch total. That was not enough to aid plant growth or quell the wildfires that have hit the area, one source said.

Winter wheat in the Plains should stay dry this week and during the 6- to 10-day period, which runs through late next week. The latter forecast favors warmer and dry conditions for the Plains.

CBOT estimated Monday’s soft red winter wheat’s volume at 113,382 compared with Friday’s actual volume of 89,137. Friday’s open interest increased by 5,438 in the lower market with March’s down 19 at 18 and May’s up 550 at 219,224.

Chicago, Ill., soft red winter wheat closed 10 cents lower at $4.305/bu. for May and was down 9.75 cents at $4.465 for July. Kansas City, Mo., hard red winter dropped 12.75 cents — to $4.4275/bu. for May and $4.5475 for July. Spring wheat for May was 7.25 cents lower at $5.3125/bu., and July slipped 6.75 cents to $5.39.

What to look for: Winter wheat is exiting winter dormancy soon, which will put attention on condition reports from the southern Plains.

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