GRAIN MARKETS: Soybeans charge to two-week high

Corn and wheat post smaller gains.

Soybeans posted double-digit gains and closed at a two-week high a day ahead of a USDA report that is expected to trim the forecast for year-end supplies.

Corn and wheat had smaller gains but the two-cent rise in March corn was enough to push it past key moving averages. Soft red winter wheat also finished above a number of moving averages and is on track to be higher for the week.

Many traders of index-based funds this week are moving long March positions to May or other deferred months. That action should continue through Monday.

The USDA report remains in focus as industry experts, on average, expect the government to also trim ending stocks for corn and wheat and possibly trim Argentina’s soybean crop. Brazil’s crop size may be increased.

In the outside markets, the dollar is higher after early weakness and on track for its sixth straight daily increase. Gold was higher when the crops closed buoyed by angst surrounding the upcoming elections in Europe. Wall Street was lower with Dow Jones industrials down about 40 points when the crops closed. Crude oil was up about 30 cents as that market shook off bearish reactions to a big increase in weekly stocks.

Exports – USDA, Reuters:

-Tunisia bought 100,000 metric tons of optional-origin durum wheat. The lowest price was $267.99 per ton, c&f for 25,000 tons. Shipment is March to May 15.

- Bangladesh will import 200,000 metric tons of Russian wheat at about $245 a ton in a government-to-government deal. The first shipment is to arrive Feb. 18.

- Japan seeks to buy 111,522 metric tons of wheat with results due on Thursday. From the U.S. it seeks 12,210 metric tons of western white wheat, 18,850 of hard red winter and 34,000 of dark northern spring for loading March 21-April 20. It also seeks wheat from Australia and Canada.

- Jordan seeks to buy 100,000 metric tons of hard wheat and 50,000 of barley from optional origins. Wheat offers are due Feb. 21 and barley offers a day later.

Corn closed higher for the second day. Funds were net buyers for the second day.

In Thursday’s USDA report the trade expects U.S. corn ending stocks to be trimmed from January’s 2.36 billion bushels and world stocks to be down from January’s 221 million metric tons.

Corn harvest is under way in Argentina and Brazil although it may have been slowed by recent rain. Forecasts show Argentina is dry today with light showers next week, while Brazil may have rain this week and next week.

European corn for March was about 2 cents higher at $4.69. China’s corn market turned higher with the May contract up about 3 cent at the equivalent of $5.91 a bushel. The price reflects conversions from local currencies and metric tons.

The CBOT estimated Wednesday’s corn volume at 357,172 compared with Tuesday’s actual volume of 362,329. Open interest in Tuesday’s higher market increased by 14,298 with March’s down 29,446 and May’s up 37,894.

March corn closed up 2-1/4 cents at $3.70-3/4 per bushel and May up 2-1/2 at $3.78-1/2.

What to Look For: Weekly export sales early on Thursday are expected to down from a week ago for old-crop, while the new-crop sales could be higher.

Soybeans finished up 1.5% and higher for the third day and ahead of Thursday’s supply/demand and weekly export data.

Gains may be needed to pry soybeans loose from farmer hands. Export shipments have been active and soybeans are needed to fill boats, but farmers have been slow sellers as cash prices continue to hover at or below $10.

China’s soybean market was mixed with the May contract slightly lower at the equivalent of $17.18 a bushel.

In Thursday’s report the trade on average expects soybean ending stocks at 412 million bushels vs January’s 420 million. Farm Futures is at 400 million.

Also expected is a small increase in Brazil soybean crop to 104.1 million. However, there are some bigger numbers circulating both in South America and here. A Brazil analyst on Wednesday forecast 105.3 million. The average estimate for Argentina’s crop was at 54.4 million from USDA’s January number of 57 million. Farm Futures is at 104 million and 54 million, respectively.

The CBOT estimated Wednesday’s volume at 315,624 compared with Tuesday’s actual volume of 258,472. Tuesday’s open interest increased by 7,716 contracts in the higher market with March’s down 14,631 and May’s up 19,625.

March soybeans closed up 16 at $10.58-3/4 per bushel and May up 16 at $10.69-1/4. New-crop November rose 8-3/4 to $10.28-1/4.

What to Look For – Old-crop estimates for Thursday’s weekly export sales were on both sides of the previous week’s business while new-crop estimates are down from a week ago.

Wheat futures closed 1-2 cents higher in the three markets getting some support from the corn and soybeans and positioning ahead of Thursday.

Funds were light net sellers in wheat after buying it on Tuesday. Funds entered the week net short the soft red winter but long the hard red winter. Europe’s wheat market was higher with March contract at the equivalent of $5.02 a bushel.

In export, Japan is in the market for its weekly tender, seeking amounts of U.S., Australian and Canadian wheat, with those results are due on Thursday.

Winter wheat in the central Plains will be dry this week and in the 6- to 10-day outlook. The 6- to 10-day is wet for the southern Plains. Warm weather is expected later this week and next week for most of the U.S. wheat areas.

The CBOT estimated Wednesday’s soft red winter wheat’s volume at 168,429 compared with Tuesday’s actual volume of 194,686. Tuesday’s open interest decreased in the higher market by 1,341 with March’s down 17,064 and May’s up 14,156. 

Chicago’s March soft red winter wheat closed up 1-3/4 at $4.32-1/2 per bushel and May rose 1 to $4.43-1/2. Kansas City’s March hard red winter rose 2-1/2 to $4.42 and May increased 2-1/4 to $4.54-3/4. Spring wheat for March was up 2 at $5.57-1/2 and May rose 2 to $5.57-1/4.

What to Look For – The average trade estimate for Thursday’s wheat stocks report was 1.176 billion in one survey, down from last year’s 1.186 billion. Farm Futures expects 1.184 billion. Weekly export sales Thursday morning are expected to be similar to last week’s for old-crop supplies.

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