GRAIN MARKETS: Crops rebound ahead of USDA report

Corn at one-week high, SRW wheat ends losing streak.

Bob Burgdorfer 1, Senior Editor, Farm Futures

August 7, 2017

4 Min Read
GRAIN MARKETS: Crops rebound ahead of USDA report
Stock market background designCredit: FeelPic/iStock/Thinkstock

Crops moved higher on Monday after last week’s down week in light to moderate trading as traders look ahead to Thursday’s USDA report that is expected to lower production and ending stocks for corn and soybeans.

Some export business was announced early with Mexico buying new-crop corn and unknown destinations buying old-crop soybeans. The soybeans may have to be shipped in a hurry because the crop year ends August 31.

The three wheat markets finished higher, with SRW and HRW up for the first in a week. Spring wheat had the best gains of the three wheat markets as custom harvesters, as expected, are finding low yields in western North Dakota and eastern Montana.

Weather maps show scattered showers for much of the Midwest the next few days. The latest 6- to 10-day (August 12 to 16) outlook remains cool and wet for much of the country. However, the northern Plains should be dry then.

The dollar is a little lower, but remains near the top of Friday’s gains supported by Friday’s better-than-expected government job numbers for July. Equities also are higher, with the Dow Jones industrials up about 13 points when the crops closed.

Exports – USDA, Reuters:

-       USDA said Mexico bought 7.12 million bushels of 2017/2018 corn and unknown destinations bought 7.57 million bushels of 2016/2017 soybeans.

-       USDA export inspections, mln bu (est, prev week): corn 38.5 (27-41, 39.1), soybeans 25.2 (9-20, 18.1), wheat 21.5 (14-22, 21.5)

-       Iraq bought 50,000 metric tons of Australian wheat in its recent tender.

-       Jordan seeks to buy 100,000 metric tons of optional-origin wheat for Dec. 1-Jan. 31 shipment. The tender closes on Wednesday.

-       Bangladesh seeks to buy 50,000 metric tons of optional-origin wheat. The deadline for offers is Aug. 17, with shipment 40 days after deals are signed.

Corn closed at a one-week high, but new-crop December remained under key moving averages.

The corn sale to Mexico and decent export inspections were supportive. Corn shipments are on pace to meet USDA’s annual forecast.

Farm Futures expects mild improvement in the crop in this afternoon’s weekly progress report. Last week USDA rated the crop 61% good/excellent.

CBOT’s estimated volume for Monday was 345,589. Friday’s preliminary volume was 276,692. Open interest in Friday’s firm market decreased by 17,768.

September corn settled up 3-1/2 at $3.70 and new-crop December up 3-1/2 at $3.84-1/2.

What to Look For: Attention is on Thursday’s USDA report. Farm Futures expects a reduction in 2017 production (13.62 billion bu vs USDA July’s 14.255 billion) and in ending stocks (1.884 billion vs USDA July 2.325 billion).

Soybeans closed higher with new-crop November up from last week’s one-month low and now above the 50- and 100-day moving averages.

The export sale to unknown destinations and better-than-expected export inspections were supportive. Harvest is beginning in the south with Louisiana about 2% done as of a week ago. The cool weather in August should help Midwest soybeans develop.

Farm Futures expects soybeans at about 60% good/excellent in the weekly progress report. That would be up 1 point from last week.

CBOT’s estimated volume for Monday was 164,572. Friday’s preliminary volume was 166,551 and open interest in the weak market increased by 1,216.

August soybeans closed up 7-3/4 at $9.57, September rose 11-3/4 to $9.64 and new-crop November rose 10 to $9.66-1/2.

What to Look For – Farm Futures expects Thursday’s USDA report to cut 2017/2018 ending stocks to 415 million from USDA’s July 460 million due in part to expected lower production of 4.214 billion vs 4.26 billion.

Winter wheat closed with small to modest gains and led by spring wheat.

The winter wheat harvest is about finished and spring wheat should be about 18% harvested.

Weekly export shipments were about as expected and similar to the prior week. Year-to-date shipments are up about 17% from a year ago.

Spring wheat areas may have a few showers early this week but are expected to be dry next week.

The CBOT estimated Monday’s SRW volume at 138,755. Friday’s preliminary volume was 103,367. Open interest in Friday’s lower SRW market increased by 3,218. KC HRW preliminary volume for Friday was down about 19,000 from the prior day at 41,590 and open interest was up 985.

Chicago’s September SRW wheat closed up 3-3/4 at $4.58-1/2. Kansas City’s September HRW rose 1-1/4 to $4.60-3/4. Spring wheat for September rose 6-1/2 to $7.22-3/4.

What to Look For – In Thursday’s USDA report, Farm Futures expects 2017/2018 ending stocks lowered to 865 million from USDA’s July 938 million. Farm Futures has all wheat production at 1.719 billion bushels vs USDA’s July 1.76 billion.

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