Corn, soybeans, wheat end lower after weak manufacturing data

Corn, soybean and wheat futures closed lower on the first trading day of the year as bearish manufacturing data here and in China quelled buying.

Corn, soybean and wheat futures closed lower on the first trading day of the year as bearish manufacturing data here and in China quelled buying incentive in a number of markets, even crude oil was lower despite new tensions in the Mideast between Iran and Saudi Arabia.

Corn and wheat set contract lows and soybeans ended at a two-week low.

The global selloff began in China, with a slowdown in manufacturing there, bearish U.S. data arrived a few hours later with construction spending posting its first drop in 1-1/2 years and the December manufacturing index the lowest since June 2009.

Flooding on key Midwest rivers appears to be easing, although it may continue on the lower Mississippi for a while. Weather forecasts show more rain and snow in the Midwest beginning on Wednesday and the 6- to 10-day outlook has above-normal chances for precipitation through mid-January.

In equities, the Dow Jones industrial average was down about 400 points Monday, crude oil was down about 29 cents at $36.75 a barrel and gold was up $14.2 an ounce. The dollar was up and at a two-week high.

Corn futures finished about 7 cents lower with actively traded March in oversold territory with an RSI under 30.

In addition to outside pressures, weekly export inspections of 12.8 million bushels missed trade forecasts, were under the 39.4 million weekly rate needed to meet USDA’s annual forecast and were down 40% from the year-ago holiday week.

In Chicago, the estimated corn futures volume for Monday was 593,176 compared with Thursday’s actual of 121,200.  Open interest on Thursday increased by 9,862 in that weak market with March gaining 5,495 and May adding 2,004.

On Monday, March corn closed down 7-¼ cents at $3.51-1/2 and May dropped 7 to $3.57-1/2. March stayed under key averages.

What to Look For: News has been scarce in corn. Some attention remains on Argentina, where an easing of tax rules should help that grain compete in world markets.

Corn Strategy: We assume 50% commercial and 50% on-farm storage. We recommended pricing 2015 production as follows: Price 30% of 2015 production at an average futures price of $4.97 using futures or hedge-to-arrive contracts, including options and spread trade proceeds; protect 10% of production with July 2017 futures or hedge or arrive contracts at $4.1075.ALERT: PROTECT ANOTHER 10% OF 2015 PRODUCTION ON A TRADE BY JULY 2017 FUTURES TO $4.20. THESE POSITIONS CAN BE HELD AS LONG-TERM HEDGES OR ROLLED BACK TO 2015 CROP IF THE MARKET RALLIES.

Soybean futures lower and at a two-week low amid the bearish economic news here and in China.

Soybean export inspections of 55.5 million bushels were a small bright spot as the amount topped trade forecasts and were better than 20 million needed to meet USDA’s annual forecasts. However, with stock markets sharply lower here and overseas it was hard to rally the commodities.

No soybeans have yet been delivered again the January soybean and soymeal contracts, while 373 soybean oil contracts were posted.

Brazil continues to receive rain, with its Mato Grosso due to receive moderate showers in the next week.

Estimated futures volume in Chicago for Monday was 246,106 compared with Thursday’s actual of 107,469. Open interest after Thursday’s lower market increased by 990 with January losing 5,243 positions and March gaining 5,680.  

January soybeans closed down 6-3/4 at $8.64-1/2 per bushel and March finished down 8-1/4 at $8.56. Volume leader March stayed under key moving averages with an RSI of about 39 versus the previous ofs 43.

What to Look For – – After the close, USDA reported the November soybean crush at 4.97 million bushels, down from October’s of 5.1 million.

Soybean Strategy: We previously recommended pricing 30% of expected 2015 production at an average futures price of $9.775. ALERT: PRICE 10% OF 2015 PRODUCTION ON A MOVE TO $9.15 BY JANUARY FUTURES.

Winter wheat futures finished lower with contract lows in all three markets.

The lower outside markets and the stronger dollar added to ample global supplies to weigh on the market.

Weekly export inspections 12.8 million bushels were slightly better than trade forecasts in a Reuters poll, but down from the 16.1 million needed to meet USDA’s annual forecast.

Export tenders:

  • A South Korea feedmaker seeks 60,000 metric tons of feed wheat and 13,000 of barley, with the deadline on Tuesday. The wheat is for April to June shipment depending on origin.
  • Taiwan seeks 88,750 tons of U.S. wheat for February and March shipment. The tender closes Jan.12.
  • Ethiopia seeks 70,000 tons of optional-origin wheat to be financed by the World Bank.
  • Results are expected on Tuesday in Morocco’s tender to buy 360,000 metric tons of U.S. wheat and 315,000 of durum, with arrival in Morocco May 31.
  • Results are expected Jan. 10 on Bangladesh tender for 50,000 metric tons of wheat.

Estimated volume for Monday’s soft red winter wheat futures was 206,298 compared with Thursday’s actual of 36,603. Open interest on Thursday increased by 2,664 after the firm market with March adding 1,115 and May adding 206.

Chicago’s March SRW wheat closed down 11-3/4 at $4.58-1/4 and May was down 12 at $4.64-1/2.

Kansas City’s March HRW wheat closed down 14-1/4 at $4.54-1/4 and May was off 14-1/4 at $4.64-1/2.

Spring wheat for March closed down 8-1/2 at $4.84-3/4 and May dropped 7-3/4 to $4.94-1/4.

What to Look For – The trade will await reports of flood damage, if any, to soft red winter wheat fields in southern Illinois, Missouri and the Delta region.

  Wheat Strategy: Growers following our recommendations also priced 60% of 2015 production at $5.79 Chicago or $5.92 HRW using futures or hedge to arrive contracts. Spring wheat growers priced 70% of expected production at $5.96 basis Minneapolis futures or hedge to arrive contracts. ALERT: WINTER WHEAT GROWERS SHOULD PRICE ANOTHER 10% OF PRODUCTION ON A MOVE BY CHICAGO MARCH TO $5.30 OR $5.25 HARD RED WINTER WHEAT.

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