Morning report: Wheat prices ease moderately lower ahead of Friday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Up 6 to 7 cents
Soybeans: Up 7 to 8 cents
Wheat: Down 6 to 9 cents
*Prices as of 6:50am CST.
Grain prices were mixed but mostly higher overnight as traders continue to closely monitor weather forecasts. Scorching-hot weather will be widespread and extends very far north (consider Fargo, which could reach 104 degrees on Sunday!). The ongoing Russian invasion of Ukraine is also top-of-mind, but production and export stoppages there have already largely been taken into consideration. Heading into Friday’s session, corn and soybean prices were each trending around 0.75% to 1% higher, with wheat prices moving in the opposite direction with losses of around 0.5% to 0.75%.
Overseas stock markets were mixed but mostly higher, especially in Asia. Japan’s Nikkei index closed 1.75% lower, while other Asian markets firmed 1%. European markets were up 1% to 1.25% in midday trading. And on Wall St., Dow futures rose 180 points higher to 30,099 ahead of the opening bell but are still on track for big weekly losses after the Federal Reserve raised interest rates by 75 basis points amid persistent worries over inflation trends.
Energy futures were mixed but mostly higher. Crude oil edged 0.25% higher overnight to move closer to $118 per barrel. Diesel firmed by a similar amount, while gasoline spilled 1.25% lower. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows little to no moisture likely for the central U.S. between today and Monday. Very few areas could see up to 0.25″ during this time. Official 6-to-10-day forecasts show plenty of seasonally hot, dry weather will be in store for most of the central U.S. between June 22 and June 26.
On Thursday, commodity funds were net buyers of corn (+10,500), soybeans (+8,500), soymeal (+5,000) and CBOT wheat (+10,500) contracts but were net sellers of soyoil (-4,500).
NOTE: Grain markets will be closed on Monday, June 20, in observance of the Juneteenth federal holiday (which commemorates the abolishment of slavery via the 13th Amendment). Be sure to come back to FarmFutures.com first thing Tuesday morning for our next round of grain market new and analysis.
Corn
Corn prices tested gains of around 1% overnight, suggesting traders are ready to return to a pattern of technical buying as long as unfavorable weather forecasts remain in the mix. Crop quality, which has started off in a relatively strong position at 72% rated in good-to-excellent condition, is already in danger of eroding lower. Of course, there’s a lot of time left for recovery, but be sure to keep a close watch moving forward.
Are your crops showing signs of stress yet, or are they still holding strong? Curious as to how other farmers across the Corn Belt are faring? We can offer you an incomplete but interesting snapshot of how the season is progressing so far via our regularly updated Feedback from the Field feature. Click here to read the latest round of farmer anecdotes and find out how you can also participate.
Corn basis bids saw some variability on Thursday after rising as much as 13 cents higher at an Iowa processor while dropping as much as 10 cents lower at an Indiana ethanol plant.
Old crop corn sales reached 5.5 million bushels through June 9 in USDA’s latest weekly report. New crop sales chipped in another 5.5 million bushels, bringing the total to 11.0 million bushels. Analysts were generally expecting to see stronger totals, offering a range of guesses between 5.9 million and 35.4 million bushels prior to the report’s release. Cumulative sales for the 2021/22 marketing year are more than 200 million bushels below last year’s pace, with 1.932 billion bushels.
Corn export shipments slid 10% below the prior four-week average, with 54.6 million bushels. Mexico was the No. 1 destination, with 18.1 million bushels.
Through the first half of June, Ukraine’s grain exports tumbled nearly 44% lower from year-ago level. That includes 24.5 million bushels of corn and just 1.8 million bushels of wheat during that time. Ukraine has struggled to export an increasingly large backlog of grain amid the ongoing Russian invasion but has been able to reroute some exports from sea ports to rail or river ports.
French corn crop conditions eased a point lower last week, with 87% of the crop still rated in good-to-excellent condition through June 13, per the country’s FraceAgriMer farm office. Some traders are still concerned that overly hot conditions will further damage ratings, especially in the southwestern part of the country.
The preliminary report from the CBOT showed daily futures volume move to 301,950, with open interest firming by 8,594. Options volume moved to 117,264 and moderately favors calls (70,927) over puts (46,337). Implied volatility for near-the-money July contracts is now at 31.3% with another six days until expiration.
Soybeans
Soybean prices tested modest gains overnight after rising 1% higher on Thursday. Nearby contracts are comfortably above the $17-per-bushel benchmark and could stay that way as long as traders remain focused on tightening domestic stocks and unfavorable weather forecasts.
On Thursday, soybean basis bids were steady to weak after sliding 2 to 10 cents lower across four Midwestern locations.
Soybean exports found 11.7 million bushels in old crop sales plus another 15.0 million bushels in new crop sales for a total of 26.7 million bushels last week. That was toward the higher end of trade guesses, which ranged between 7.3 million and 40.4 million bushels. Cumulative totals for the 2021/22 marketing year are still moderately below last year’s pace, with 1.866 billion bushels.
Soybean export shipments climbed 23% above the prior four-week average to 26.0 million bushels. Mexico was the No. 1 destination, with 6.8 million bushels.
China plans to auction off another 18.4 million bushels of its state reserves of imported soybeans on June 24, according to a statement from the country’s National Grain Trade Center. China has offered a series of similarly sized sales throughout 2022 to cool high prices and assist with domestic demand.
“Sometimes it seems like the theme of this crop marketing year for soybeans has been, and continues to be, ‘Hurry up and wait,'” according to Naomi Blohm, senior market adviser with Stewart Peterson. But two upcoming factors are looming that could move the market one way or the other – the June 30 USDA acreage report and weather forecasts. Blohm offered additional explanation and analysis in yesterday’s Ag Marketing IQ blog – click here to learn more.
The preliminary report from CBOT showed daily futures volume at 151,508 with open interest tipping 530 higher. Options volume m and now oved to 43,830 and favors calls (29,586) over puts (14,244) by a 2:1 margin. Implied volatility for near-the-money July contracts moved to 19.4% and expire in six days.
Wheat
Wheat prices have generally struggled to gain traction over the past several sessions, although they did manage to rake in double-digit gains yesterday. But prices were back in the red overnight, accumulating losses of around 0.5% to 0.75%. Prices remain very solid overall, as traders still have to wrestle with poor U.S. crop quality and Ukraine’s production and export challenges, despite the occasional round of profit-taking in recent weeks.
Wheat exports reached 8.7 million bushels last week, falling to the very low end of analyst estimates, which came in between 7.3 million and 22.0 million bushels. Cumulative sales for the young 2022/23 marketing year are off to a slightly stronger start versus year-ago totals, with 21.4 million bushels.
Wheat export shipments 13.6 million bushels last week. Mexico was the No. 1 destination, with 3.0 million bushels.
FranceAgriMer trimmed French soft wheat quality ratings for the seventh consecutive week, with 65% of the crop now rated in good-to-excellent condition. Southern France saw temperatures as high as 104 degrees yesterday, although cooler weather may lie ahead.
Overly dry conditions in Argentina has the Buenos Aires Grains Exchange trimming its acreage estimates to 15.815 million acres. The exchange threatened to further reduce its estimate later “if the drought scenario is not reversed in the short term.” Around 47% of this season’s crop has been planted, which is 10 points behind last year’s pace so far.
The preliminary report from CBOT showed daily SRW volume at 93,112, with open interest also falling by 3,249. Options volume moved to 28,110 and favors calls (18,313) over puts (9,797) by a nearly 2:1 margin. Implied volatility for July near-the-money options moved to 37.0%, and expires in six days.
Volume in HRW wheat moved to 34,606, with open interest trending 626 lower. Options volume is at 1,891 and heavily favors calls (1,485) versus puts (406).
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