GRAIN MARKETS: Pending heat wave lifts corn, soybeans

Spring wheat prices dampened by rain.

Corn and soybeans closed higher for the second day, with both markets above key moving averages as traders await the weekend in which temperatures could top 100°F in Kansas and Missouri and the mid- to high 90s in the Midwest.

In the longer term, the latest 6- to 10-day (July 25-29) outlook shows hot, dry conditions for the central and northern Plains and for much of the Midwest. The 8- to 14-day (July 27-Aug. 2) outlook keeps hot and dry conditions for the Plains and western Midwest but increases rain chances for Ohio and eastern Indiana.

The dollar inched higher but remained near Tuesday’s low, which was lowest since September 2016. The Senate’s failure to pass a health care bill weighed on the dollar as the failure raised doubts among investors that the Trump Administration will be able to pass tax reform or infrastructure improvements.

Equities were a little higher, helped by strong quarterly results from banker Morgan Stanley. The Dow Jones industrials were up about 45 points when the crops closed. Gold was about unchanged, while crude oil was up about 69 cents following a government report that showed a larger-than-expected draw on weekly supplies.

Export highlights (U.S. Department of Agriculture and Reuters):

-       Taiwan bought 105,150 metric tons of U.S. wheat. The deal included spring wheat, hard red winter and soft white. Shipment is for September and early October.

-       Jordan did not buy any wheat in its tender for 100,000 metric tons of optional-origin grain. Shipment is for December.

-       Japan seeks to buy 89,443 metric tons of U.S. and Australian wheat. From the U.S., it seeks 17,457 of western white wheat, 10,110 of hard red winter wheat and 32,031 of dark northern spring wheat. Loading is for Aug. 21-Sept. 20. Results are due on Thursday.

-       Bangladesh issued a new tender to buy 50,000 metric tons of wheat. The tender closes July 26.

Corn closed about 5 cents higher, with new-crop December above key moving averages. That contract briefly topped $4/bu. but retreated under it by the close of business.

Hot weather this week and next week may stress pollinating corn. USDA late on Monday lowered corn’s condition rating one point to 64% good/excellent. In addition, a number of key production states had lower ratings, including Iowa, Indiana, Illinois, Nebraska and North Dakota.

Buyers appear to be favoring the long side of the market as open interest increased in Tuesday’s higher market.

Much of Midwestern corn is at or near the pollination stage, but many replanted fields will need about two weeks to reach that stage.

The Chicago Board of Trade (CBOT) estimated Wednesday’s volume at 375,942. Tuesday’s actual volume was 485,737. Open interest in Tuesday’s firm market increased by 21,779, with September's up 3,554 and December’s up 12,321.

September closed up 5-1/2 at $3.82-1/2, and new-crop December rose 5-1/2 to $3.96-1/4.

What to Look For: Weather remains supportive, with hot conditions expected this week and next week. Weekly export sales on Thursday are expected to be similar to last week’s business, according to estimates in a Reuters poll.

Soybeans posted double-digit gains, with new-crop November moving further above $10/bu. as the hot weather may pose problems for the developing Midwestern crop.

Other oilseed markets were lower, with Winnipeg, Man., canola easing in reaction to gains in the Canadian dollar. Europe’s rapeseed dipped and is near a two-week low.

Late on Monday, USDA lowered the soybean rating a point to 61% good/excellent, with small declines noted in Iowa and Indiana.

August futures finished above most key moving averages with an RSI of 60.5 on charts. November stayed above key moving averages with an RSI near 61.5.

CBOT estimated Wednesday’s volume at 187,279. Tuesday’s actual volume was 239,959. Tuesday’s open interest in the firm market decreased by 3,116, with August’s down 3,260 and November’s down 1,014.

August closed up 10-1/4 at $9.99-3/4, and new-crop November was up 10-3/4 at 10.12-1/2.

What to Look For: Soybeans are developing about on schedule, with 52% at the blooming stage versus the five-year average of 51%. New-crop export sales on Thursday should be up sharply from the prior week because of the big purchase by China announced late last week.

Spring wheat closed lower for the first time in four days as beneficial rain is in the forecast for much of the Dakotas over the next three days. The winter wheat markets were unchanged to a little lower in light trading.

Spring wheat contracts remain above key moving averages with September’s RSI at 65. That harvest in the Dakotas is about two weeks away.

September soft red winter wheat and hard red winter wheat contracts stayed under the 20-day averages but above other averages.

USDA late on Monday dropped spring wheat’s rating a point to 34%, with declines noted in Idaho, Minnesota and the Dakotas.

CBOT estimated Wednesday’s soft red winter wheat volume at 113,638. Tuesday’s actual volume was 134,282. Open interest in Tuesday’s lower SRW market decreased by 4,249, with September’s down 4,848 and December’s down 397. Kansas City, Mo., hard red winter wheat volume increased on Tuesday to 49,232 from Monday’s 42,865, and open interest increased by 118.

Chicago, Ill., September soft red winter wheat closed down ¾ cent at $5.03. Kansas City September HRW slipped 2-1/2 to $5.00-1/4. Spring wheat for September dropped 5 to $7.75-1/2.

What to Look For: Weather will be key as spring wheat heads into next month’s harvest. Estimates for Thursday's weekly export sales were on both sides of last week’s business, according to the Reuters poll.

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