GRAIN MARKETS: Short week is a long one for prices

Soybeans finally turn higher, but corn and wheat markets stay under pressure.

Grain futures closed mixed on Friday after a holiday-shortened week proved bearish for prices. The U.S. Department of Agriculture's Outlook Forum wrapped up with a forecast for lower carryover supplies in the year ahead, although not enough to make prices rise significantly.

On Thursday, USDA also released county yield data for corn and soybeans, allowing preliminary projections to be made for potential 2016 ARC-County payments. Look for details of your county on these interactive maps.

Financial markets took a break from the run to multiple records on Wall Street during the week, pulling back on profit-taking. Crude oil slipped but held at $54 per barrel, while investors turned to safe havens for the weekend, including the dollar, treasuries and gold.

Corn prices closed with small losses on Friday after a choppy day of mostly lower trade. March futures broke support at the trend line from the past two months but held a test of the 50-day moving average, even advancing towards the $3.65/bu. strike price into options expiration on the close.

Old-crop export bookings last week of 29.3 million bu. were in line with the rate needed to meet USDA's forecast for the second half of the marketing year, and new-crop sales added 10.4 million. Still, the total was below trade guesses, which didn't add any momentum to early trading.

USDA's forecast for 90 million acres of corn this spring gave the market at least a measure of support on Thursday, but the agency took that away Friday with its updated supply and demand estimates for the coming year. Economists said the corn carryout could stay above 2.2 billion bu., although they could be short-changing demand by 150 million bu. or more.

With two more days of trading left in February, December futures were averaging $3.96/bu. for corn and $10.19/bu. for November soybeans. That makes for a 2.58-to-1.00 ratio that favors soybeans in crop insurance base prices, albeit not as much as early in the winter.

Temperatures will, at times, top 100°F over much of Argentina's growing region into early next week, but the heat doesn't look prolonged and should be accompanied by at least some rainfall as well.

Soybeans spent the past week beating a hasty retreat. That finally ended on Friday, when futures reversed higher after posting new six-week lows.

Expiration of March options may have played into the turnaround. March futures probed below the $10.10 strike price briefly in the first half-hour of trading Friday morning and then avoided a repeat with a firm close.

Signs of slowing exports and a seasonal shift in buying from South America weighed on the market for much of the session. Old-crop sales last week totaled just 15.2 million bu. Most of China's purchases came from previously announced deals to unknown destinations, and buyers also cancelled another cargo. Customs data showed that China bought most of its soybeans from the U.S. in January, but the U.S. share of imports slipped. That's a little earlier than normal.

Forecasts for larger crops out of Brazil and Argentina also weighed on sentiment and overshadowed USDA's forecast for 2017 crop ending stocks, which were unchanged from this year at 420 million bu.

Wheat prices came under steady pressure Friday, taking most contracts lower. Soft red winter wheat felt the heat the most, with March barely avoiding a move to its $4.30/bu. options strike price on the close.

Sluggish exports helped keep soft red winter wheat under water. Movement of hard red winter wheat was better, with all-wheat export sales hitting 26 million bu. That total includes 9.4 million bu. of the new crop, and the old-crop total for commitments remains below the rate usually seen headed into the last quarter of the marketing year.

The market paid scant attention to the USDA numbers. USDA said all-wheat plantings would fall to 46 million acres — the lowest since at least World War I — while carryout would fall to 905 million bu., a 20% reduction from 2016 crop levels. It was not enough to make end users blink.

Forecasts for drier weather over the next two weeks on the western Plains also garnered little attention. Some states will release February crop ratings in the week ahead, although yield potential is likely to remain average.

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