GRAIN MARKETS: Dry forecast lifts winter wheat

Bird flu find weighs on corn; soybeans flat.

Bob Burgdorfer 1, Senior Editor, Farm Futures

March 7, 2017

5 Min Read
GRAIN MARKETS: Dry forecast lifts winter wheat

Winter wheat closed higher as forecasts favor warm, dry weather for the central and southern Plains through next week, which could impede growth as the crop exits winter dormancy.

Corn finished about 2 cents lower following reports of bird flu in a commercial chicken flock. The chicken industry is huge consumer of corn and the discovery could slow feed use.

Soybeans were largely unchanged as pressure from the big Brazil crop was countered by shipping problems there and by better-than-expected weekly U.S. export inspections.

Exports – USDA, Reuters:

  • Weekly U.S. export inspections (est): corn 56.9 mln bu (39-51), soybeans 33.9 (20-27) and wheat 19.7 (13-21).

  • Turkey seeks to buy 130,000 metric tons of EU wheat. Turkey seeks high-quality milling wheat, which is in short supply in Turkey and from Russia. The tender closes on Wednesday.

  • Jordan seeks to buy from optional origins 100,000 metric tons of wheat and 150,000 of feed barley. The deadline is Tuesday for the wheat tender and Wednesday for the barley. The wheat if for July 16-Sept.15 shipment and the barley for July 1-31.

  • 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 of durum and 75,000 of corn for April-May shipment.

Corn closed lower after losing gains near mid-morning as news of bird flu in the Tennessee commercial flock made the rounds.

Bird flu cases occur during the fall and early spring as wild birds migrate. So far only South Korea has banned the imports of U.S. chicken. Shares of Tyson Foods, which owns the birds, were down sharply on Monday.

Weekly export inspections of 56.9 million bushels were better than expected and easily exceeded the 44.1 million weekly pace needed to meet USDA’s annual sales forecast.

Funds were said to be net sellers on Monday. The CFTC report on Friday showed funds reduced bullish bets during the week ended Feb. 28, but remained net long.

Open interest is dropping in March ahead of its expiration next week. Traders are focused on the May, which has had a steady rise in open interest.

The CBOT estimated Monday’s corn volume at 236,857 compared with Friday’s actual volume of 214,662. Open interest in Friday’s higher market increased by 7,961 with March’s down 1,762 at 9,972 and May’s up 2,817 at 661,328.

March corn closed down 2 at $3.72-3/4 per bushel and May dropped 2-1/4 to $3.78-1/2. New-crop December slipped 1-1/4 to $3.98.

What to Look For: In Thursday’s monthly report, USDA may increase export and ethanol use and trim ending stocks.

Soybeans finished a fraction lower after holding gains earlier. The May contract finished under the 20- and 50-day moving averages for third straight day.

Weekly export inspections were better than expected at 33.9 million bushels and were well ahead of the approximate weekly pace of 16.2 million bushels needed to meet USDA’s annual forecast. China was again the top destination. 

USDA on Thursday is not expected to make big changes to U.S. soybean numbers, but could raise its estimate for the Brazil crop. Wire reports last week carried a private firm’s estimate of 108 million metric tons and on Monday another firm had 107 million. USDA in February had 104 million. 

The bearishness of the big numbers was countered by the reports of rain damage to a key road that has slowed deliveries to a key Brazil port. That raised concerns in Brazil the delays could have buyers turning to other suppliers.

Funds sold soybeans on Monday. Friday’s CFTC report showed funds reduced bullish bets during the week ended Feb. 28 but remained net long.

The CBOT estimated Monday’s volume at 158,245 compared with Friday’s actual volume of 143,460. Friday’s open interest decreased by 1,032 in the firm market with March’s down 949 at 6,254 and May’s down 2,700 at 343,171.

March soybeans closed down ¼ cent at $10.26-3/4 per bushel and May down ¼ at $10.37-1/4. New-crop November slipped ¼ to $10.21-3/4.

What to Look For – The Brazil soy harvest is moving along, but attention now is on the shipment delays to ports. The region may have some relief as only scattered showers are forecast there this week.

Winter wheat futures closed higher while spring wheat was about 5 cents lower. Fund buying was noted in the winter wheat following the forecasts for warm, dry weather in the Plains.

Kansas City HRW for May closed above key moving averages, while spring wheat for May set a new one-month low and under the 20-, 50- and 100-day moving averages. USDA weather forecaster said winter wheat in the Plains will have little or no precipitation the next few days. The 6- to 10-day outlook (March 12-16) also is rain-free for much of the Plains winter wheat, with above-normal temperatures expected.

The weekly CFTC report on Friday showed funds added to their net short position in soft red winter wheat as of Feb. 28, but added bullish bets to their net long position in hard red winter.

The CBOT estimated Monday’s soft red winter wheat’s volume at 81,760 compared with Friday’s actual volume of 83,482. Friday’s open interest increased by 4,419 in the firm market with March’s down 349 to 474 and May’s up 289 at 218,550.

Chicago’s March soft red winter wheat closed up 4-1/2 at $4.38-1/4 per bushel and May up 5 at $4.58-1/2. Kansas City’s March hard red winter rose 2-1/4 to $4.64-1/4 and May rose 2-1/4 to $4.74. Spring wheat for March dropped 5-3/4 to $5.31-1/4 and May dropped 5-1/2 to $5.42-1/4.

What to Look For – Winter wheat will exit winter dormancy soon to put attention on condition reports from the Southern Plains.

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