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GRAIN MARKETS: Wet forecast for Plains weighs on wheat

Corn, soybeans dip ahead of USDA report.

Winter wheat futures closed lower as forecasts put rain late this week in the dry Plains to help the crop that has begun spring growth.

Rain is needed to control the wild fires that have damaged property and killed livestock in Kansas, Oklahoma and Texas. The fires also have been blamed for the deaths of at least six people. The rain develops on Thursday, but may not reach the fire areas until Friday.

Corn and soybeans finished a few cents lower as traders await Thursday’s USDA report. The report is expected have only minor changes for U.S. crops, but should raise Brazil’s soybean production.

In other markets, Wall Street was down a little when the crops closed. The dollar is higher for the third day in anticipation the Federal Reserve will raise interest rates at its meeting next week.

Crude was down about $3 a barrel when the crops closed following a government report showing a larger-than-expected increase in weekly stocks.

Exports – USDA, Reuters:

  • The Philippines bought 12,000 metric tons of 2016/2017 soybean cake/meal.
  • Results are awaited on Turkey’s tender 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.
  • 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 dropped about 4 cents to its lowest in six days in light to moderate trading, with the actively traded May coming to rest at chart support at the 50- and 200-day moving averages.

In the upcoming USDA report, Farm Futures expects 2016/2017 corn ending stocks at 2.245 billion versus USDA’s 2.320 billion. The average in one trade survey put stocks at 2.317 billion.

Ethanol ticked lower and was at $1.465 a gallon when the crops closed. The weekly energy report showed a drop in weekly production and stocks, possibly a reflection of the recent erosion in margins due lower prices for ethanol and DDGs..

The CBOT estimated Wednesday’s corn volume at 203,116 compared with Tuesday’s actual volume of 271,396. Open interest in Tuesday’s lower market decreased by 7,817 with March’s down 1,725 at 6,341 and May’s down 17,957 at 636,299.

May corn closed down 3-3/4 at $3.72-1/4 and July down 3-1/2 at $3.79-3/4. New-crop December dropped 3-1/4 to $3.92-3/4.

What to Look For: Attention is on Thursday’s monthly report. In addition to expected lower U.S. ending stocks, the trade expects a larger Brazil corn crop but an unchanged to slightly smaller one in Argentina.

Soybeans finished 3-1/2 cents lower in several lead months in moderate trading and ahead of Thursday’s report, with actively traded May the lowest since late February.

The May soybeans finished under the 20-, 50- and 100-day moving averages and settled at the 200-day average

Attention is on Brazil, which is harvesting a big crop that at least one trading firm expects could be 109 million metric tons. USDA is currently at 104 million, but could raise that on Thursday.

Soymeal futures finished a little lower despite the soymeal sale to the Philippines. Soybean oil also was lower. European rapeseed was narrowly mixed, while Canadian canola recovered from early losses to close higher.

The CBOT estimated Wednesday’s volume at 152,274 compared with Tuesday’s actual volume of 171,670.  Tuesday’s open interest decreased by 9,578 in the lower market with March’s down 1,145 at 3,786 and May’s down 9,093 at 334,182.

March soybeans closed down 3-3/4 at $10.11 per bushel and May down 3-1/2 at $10.21-3/4. New-crop November slipped 3-1/4 to $10.10-1/4.

What to Look For – In Thursday’s report, Farm Futures expects U.S. ending stocks at 410 million bushels, while an average of trade guesses is about 418 million. USDA had 420 million in February.

Winter wheat futures had the largest losses of the day as beneficial rain may arrive in the Plains the next few days.

However, the 6- to 10-day outlook, which runs through late next week favors below-normal chances for rain in the Plains. Tuesday’s weekly weather outlook from USDA and Department of Commerce said February in Oklahoma was one of the driest on record and winter wheat there was 6% jointed, 3% behind the average. Texas wheat was rated fair to good but needs moisture.

Kansas City HRW for May closed lower and is now under the 20-day moving average for the first time in a week. It remains above other key averages. Spring wheat for May is lower for the fifth straight day, is under several key averages and is at a new two-month low.

The CBOT estimated Wednesday’s soft red winter wheat’s volume 93,262 compared with Tuesday’s actual volume of 98,056. Tuesday’s open interest increased by 2,070 in the lower market with March’s down 135 at 276 and May’s down 1,719 at 216,085.

Chicago’s May soft red winter wheat closed down 9-1/2 at $4.47 and July dropped 8-3/4 to $4.62-3/4. Kansas City’s May hard red winter dropped 6-1/2 to $4.66 and July dropped 6-3/4 to $4.77-3/4. Spring wheat for May dropped 5 to $5.34-1/2 and July was down 5-3/4 at $5.42-1/2.

What to Look For – Winter wheat is exiting winter dormancy soon to put attention on condition reports from the Southern Plains. Farm Futures expects wheat ending stocks on Thursday at 1.138 billion bushels while a trade average estimate came in at 1.135 billion. USDA in February had 1.139 billion.

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