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GRAINS MARKETS: Crops unable to hold early gains, end lower

Rain in the Plains weighs on winter wheat markets.

Crop futures started the first day of spring on the plus side but could not stay there as corn, soybeans and wheat all ended lower, with corn posting its first lower day in five consecutive sessions.

Winter wheat came under pressure, particularly hard red winter wheat, as rain is in the forecast this week for key production areas in the Plains.

Traders also may have been nervous about bidding crops higher after Friday’s Commodity Futures Trading Commission report showed that rich hedge funds were turning bearish on the crops. Funds turned net short on corn last week and wiped nearly 36,000 off their net long position in soybeans. They added about 32,000 to their net short position in soft red winter wheat and took about 13,000 off their net long in hard red winter wheat.

Outside markets offered little guidance to the crops. Wall Street’s Dow Jones Industrials were down about 14 points when the crops closed, the dollar was higher after being lower early and crude oil was lower.

Export highlights (USDA and Reuters data):

  • Weekly export inspections (estimates): corn 52.5 million bu. (43-59), soybeans 27.1 million bu. (14-22) and wheat 22.9 million bu. (12-20).
  • USDA: South Korea bought 5.2 million bu. of 2016-17 corn.
  • Taiwan seeks to buy 98,200 metric tons of U.S. wheat for May-June shipment. Results are due on Friday.
  • Jordan seeks to buy 100,000 metric tons of optional-origin milling wheat for September-October shipment. The tender deadline is Wednesday.
  • Jordan seeks to buy 100,000 metric tons of optional-origin feed barley for May shipment. The tender deadline is Thursday.
  • Libya extended the deadline for offers in its wheat, durum and corn tender to the end of March. It seeks 100,000 metric tons of wheat, 50,000 mt of durum and 75,000 mt of corn for April-May shipment.

Corn futures closed about 4 cents lower with the lead May lower for the first time in five session and below key moving averages.

Weekly export inspections were about expected but above the pace needed to meet USDA’s annual export forecast. In addition, USDA on Monday said South Korea bought 5.2 million bushels of the 2016 harvest.

Rain or snow moves through the Midwest the next few days. The 6- to 10-day outlook is warm and wet for the Midwest. South America is drier this week, which should aid harvests there.

The CBOT estimated Monday’s corn volume at 240,217 compared with Friday’s actual volume of 164,701. Open interest in Friday’s firm market increased by 10,938 with May’s up 2,188 and July’s up 3,757.

May corn closed down 4 at $3.63-1/2 and July down 3-3/4 at $3.71-1/4. New-crop December dropped 3-1/2 to $3.86-1/4.

What to Look For:  USDA’s annual planting intentions data lands on March 31 with fewer corn acres expected in 2017.

Soybeans settled a fraction lower , unable to hold early gains,  as traders monitor the big harvest under way in South America.

A wire service had a Brazilian analyst forecasting that harvest at 111 million metric tons. USDA is at 108 million.

Weekly export inspections of 27.1 million bushels were better than expected and well above the pace needed to meet USDA’s annual shipment forecast. However, there is more attention on the South American crop than on exports.

Weather forecasts are drier this week for Argentina and Brazil crop areas. In the U.S., the storms moving through the Midwest now should add to soil moisture for planting next month.

The CBOT estimated Monday’s volume at 127,505 compared with Friday’s actual volume of 108,073. Friday’s open interest increased by 2,780 in the lower market with May’s down 732 and July up 3,658.

May soybeans closed down ½ at 9.99-1/2 per bushel and July down ½ at $10.09-1/2. New-crop November was unchanged at $9.93-1/2.   

What to Look For – USDA’s planting intentions report, based on farmer surveys, lands March 31. USDA and others have released acreage estimates in recent months and the market has dialed in forecasts for more soybean and fewer corn acres in 2017.

Wheat futures finished lower with winter wheat posting the largest losses as beneficial rain moves through those crop areas this week.

The SRW and HRW May contracts closed below key moving averages and last week’s CFTC report showed funds are turning bearish on the two crops. Funds are net short SRW and took about 13,000 off their net long in HRW.

Weekly export inspections were better than expected at 22.9 million bushels but below the weekly pace needed to meet USDA’s annual forecast. Japan and China took the most wheat in the last week.

The CBOT estimated Monday’s soft red winter wheat volume at 92,881 compared with Friday’s actual volume of 55,824. Friday’s open interest increased by 6,949 in flat market with May’s up 4,282 and July’s up 935.

Chicago’s May soft red winter wheat closed down 6 at $4.30-1/4 and July down 6 at $4.45-1/2. Kansas City’s May hard red winter dropped 8-1/4 to $4.45-1/4 and July was down 8 at $4.57-1/4. Spring wheat for May eased ¾ cent to $5.48-1/4 and July dropped 1-1/4 to $5.52-3/4.

What to Look For – Winter wheat has started spring growth to put attention on condition reports from the Southern Plains.

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