Crop markets higher ahead of USDA report

Wheat rebounds from recent contract lows.

U.S. crop markets closed higher Friday in moderate trading and put soybeans and wheat higher for the wheat, while corn was lower for the five-day stretch.

Winter wheat futures gained about 10 cents on Friday to lead the crop markets, but those gains followed contract lows earlier in the week.

The gains in the crops came despite worries about China’s economy. The U.S. stock market was lower early in the afternoon despite the better-than-expected job numbers for December

USDA will release Tuesday its crop supply and demand reports that will include final 2015 production numbers. Farm Futures last week released its farmer survey that forecast 2015 U.S. corn production at 13.57 million bushels with a 169.1 average yield and soybeans at 3.986 billion on 48.2 bpa. In December, USDA put corn at 13.65 billion and soybeans at 3.981 billion.

In equities, the Dow Jones industrial average was down about 26 points Friday afternoon, the dollar was a little higher and supported by the jobs data, gold was down about $7 an ounce and crude oil was slightly lower at $33.09 a barrel.

Corn futures closed about four cents higher Friday, but were lower for the week, as traders looked ahead to Tuesday’s report.

In a Bloomberg survey, analysts on average expect USDA’s report to show a corn crop at 13.649 billion and soybeans at 3.978 billion. In 2014, the crops were 14.216 billion and 3.927 billion.

In Chicago, the estimated corn futures volume for Friday was 301,730 compared with Thursday’s actual of 236,463. Open interest on Thursday increased by 6,401 with March losing 751 and May adding 2,786.

On Friday, March corn closed up 4 at $3.57 and May was up 4-1/2 at $3.62-3/4. March stayed under key averages but its RSI improved to about 39.2 from 32.

Soybean futures closed slightly higher, but that was enough for a higher week, following decent weekly export sales and some daily business to China.

Weather news was not supportive, with more rain forecast for Brazil’s soybean-rich Mato Grasso. However, an attache report on Thursday said put Brazil’s soybean crop at about 98 million metric tons, versus USDA’s current forecast of 100 million.

Futures trading was moderate with traders may be looking ahead to next week’s report. The Bloomberg survey has an average crop estimate at 3.978 billion bushels and yield of 47.3. USDA in December had 3.981 billion and 48.3. The 2014 numbers were 3.927 billion and 47.5.

No deliveries have yet been posted against the January soybean contracts.

Estimated futures volume in Chicago for Friday was 205,746 compared with Thursday’s actual of 163,149. Open interest after Wednesday’s mixed market increased by 3,461 with January down 1,364 positions, March up 1,435 and May up 854.  

January soybeans closed up 2-1/2 at $8.79-1/2 per bushel and March up 3/4 at $8.65-1/4. Volume leader March stayed under key moving averages and the RSI stayed near 45.

Wheat futures finished a little higher in all three markets for the second day and to finish last week higher.

Trading activity increased from recent slow sessions, although there appeared to be little news to prompt activity. Weekly export sales on Thursday of 2.8 million bushels were a marketing-year low, but that can be attributed to a holiday-shortened week at the end of the calendar year.

Estimates in the Bloomberg poll for next week’s USDA grain stocks averaged 1.694 billion for wheat, compared with USDA’s year ago supply of 1.53 billion.

Export tenders:

  • A South Korean flour company bought 83,200 metric tons of U.S. and Canadian wheat for April-May 20 arrival. From the U.S. it bought 23,700 of western white/soft white, 10.5% protein, at $234.68 per ton; 3,100, 8.5% at $315.40;  6,500 of hard red winter, 11.5%, at $203.84 and 19,800 of dark/northern spring, 14%, at $21.76. All prices are FOB.
  • Taiwan seeks 88,750 tons of U.S. wheat for February and March shipment. The tender closes Jan.12.
  • Results are expected Jan. 10 on Bangladesh tender for 50,000 metric tons of wheat.

Estimated volume for Friday’s soft red winter wheat futures was 198,193 compared with Thursday’s actual of 93,162. Open interest in Thursday’s higher market increased by 2,707 with March adding 1,447 and May adding 827.

Chicago’s March SRW wheat closed up 10 at $4.78-1/2 and May gained 10-1/2 to $4.83-3/4.

Kansas City’s March HRW wheat closed up 10 at $4.72-3/4 and May rose 10 to $4.82-1/2.

Spring wheat for March closed up 6-1/4 at $5.01 and May rose 6-1/2 to $5.08. 

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