Soybeans continue to push higher. (Comments are updated by 7:30 a.m. Central Time.)
Grain prices test modest gains – with mixed success – heading into Thursday’s session
Corn down 1 to 2 cents
Soybeans up 5 to 6 cents
Wheat mixed
*Prices as of 6:50am CST.
Soybean prices improved to seven-month highs on Wednesday and continued to test even higher levels in overnight trading as additional technical buying lifted prices another 0.5% higher. Corn prices wobbled and tracked slightly lower heading into Thursday’s session. Wheat prices were slightly mixed.
Overseas stock markets trended mostly lower overnight. Asian stock markets closed with significant losses, including a 3% slide in Japan and a nearly 2% drop in China. European markets were lightly mixed in midday trading. On Wall St., Dow futures slipped 53 points lower to 34,000 as investors increasingly anticipate a new interest rate hike as early as March from the Federal Reserve.
Energy futures continued to test modest overnight gains. Crude oil trended 0.4% higher to stay above $87 per barrel on bullish global demand. Gasoline was also up around 0.4%, with diesel tracking 0.75% higher. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows mostly drier weather in store for the Midwest and Plains between today and Sunday, although some areas could see a dusting of snow during that time. Official 6-to-10-day forecasts show cooler-than-normal conditions moving through the western half of the U.S. between February 1 and February 5, with seasonally wet weather returning to the Corn Belt next week.
On Wednesday, commodity funds were net buyers of corn (+7,500), soybeans (+15,000), soymeal (+5,500) and soyoil (+5,500) contracts but were net sellers of CBOT wheat (-12,000).
Corn
Corn prices attempted to shift slightly higher overnight, boosted in part by spillover strength from soybeans, but had some trouble keeping that forward momentum. Prices remain relatively solid overall, having stayed well above the $6 per bushel benchmark for more than a week now and keeping on an upward trajectory since September. Traders remain watchful for weather trends in South America, and USDA’s next batch of export sales data could further shape price trends today.
On Wednesday, corn basis bids were steady to mixed after sliding 2 to 3 cents lower at two Midwestern processors while firming 2 to 3 cents higher at two other central U.S. locations.
Ahead of the next export report from USDA, out later this morning, analysts expect the agency to show corn sales ranging between 23.6 million and 55.1 million bushels for the week ending January 20.
Yesterday, the U.S. Energy Information Administration reported moderately lower ethanol production for the week ending January 21, with a daily average of 1.035 million barrels. More optimistically, daily production has kept above the 1-million-barrel benchmark since last October and has consistently come in at or slightly above pre-pandemic levels.
Excessive rains in South Africa have the country’s Crop Estimates Committee estimating 5.3% lower acres this season, with a current projection of 6.449 million acres. South Africa is the continent’s No. 1 corn producer.
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The preliminary report from the CBOT showed daily futures volume moving to 329,840, with open interest dropping 4,232. Options volume moved to 86,245 and moderately favors calls (53,747) versus puts (32,498). Implied volatility for near-the-money March contracts trended to 23.7% and expire in another 22 days.
Soybeans
Soybean prices continue to trend higher ahead of Thursday’s session, with lingering doubts about South American production potential and rising oil prices sparking another round of technical buying. Overseas news was relatively quiet last night, allowing the current upward trajectory to stay on track. Prices easily eclipsed the $14 per bushel benchmark a week ago – will the stars align for a march to $15?
Ahead of this morning’s export report from USDA, analysts expect the agency to show soybean sales ranging between 27.6 million and 69.8 million bushels for the week ending January 20. Analyst also think USDA will show soymeal sales ranging between 100,000 and 600,000 metric tons last week, plus up to 45,000 MT in soyoil sales.
South Korea purchased 60,000 metric tons of soymeal, likely sourced from South America, in an international tender that closed earlier today. The grain is for arrival in early May.
The preliminary report from CBOT showed daily futures volume moving to 256,965 and open interest improving by 6,941. Options volume was at 111,986 and still moderately favors calls (65,411) over puts (46,575). Implied volatility in near-the-money March contracts moved to 20.7% and expire in 22 days.
Wheat
Wheat prices slumped Wednesday after a round of technical selling and profit-taking, and they are in danger of an “encore” today as overnight prices were mixed but mostly lower. Winter wheat contracts were down around 0.5% overnight, while spring wheat contracts tested fractional gains. Ongoing tensions between Ukraine and Russia are still front-of-mind, as are worrisome crop conditions in the U.S. Plains. Traders will also gather a new set of export sales data to digest later this morning.
Ahead of this morning’s export report from USDA, analysts think the agency will show wheat sales ranging between 7.3 million and 22.0 million bushels for the week ending January 20.
Adverse weather in Ukraine disrupted grain-loading operations at key ports earlier this week, but the country’s seaport authority said workloads have mostly returned to normal. Ukraine is among the world’s top corn and wheat exporters and could sell a record amount of grain in 2021/22 following its best-ever harvest last fall.
Meantime, if Russia makes more aggressive moves against Ukraine, it could disrupt an estimated 13% of the country’s corn and wheat exports moving forward via delays or outright cancellations, according to UkrAgroConsult. Ukraine is the world’s No. 4 wheat exporter, and any disruptions would benefit other leading sellers including the United States, Argentina and Australia.
Japan purchased around 935,000 bushels of food-quality wheat from Australia in a regular tender that closed earlier today. The grain is for shipment in May.
India plans to ship 1.8 million bushels of wheat to Afghanistan for humanitarian aid in February – a “gigantic exercise involving thousands of trucks,” according to AKIpress News Agency. Emergency food aid is the only source of nutrition for millions of Afghans in the war-torn nation, according to the Observer Research Foundation.
Yesterday, South Korea purchased around 2.0 million bushels of animal feed wheat from optional origins in an international tender that closed earlier this week. The grain is for arrival by April 25.
The preliminary report from CBOT showed daily SRW volume moving to 121,520, with open interest firming by 3,656. Options volume moved to 42,545 and still moderately favors calls (42,545) over puts (29,041). Implied volatility for March near-the-money options moved to 33.3%, expiring in 22 days.
Volume in HRW wheat moved to 46,450, with open interest trending 2,546 higher. Options volume is at 4,391 and heavily favors calls (3,657) versus puts (734).
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