Morning report: Corn and wheat relatively quiet ahead of Wednesday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Steady
Soybeans: Up 13 to 14 cents
Wheat: Narrowly mixed
***price snapshot as of 6:50 a.m. CST***
Grain market action was mostly muted overnight – mostly typical of the week between Christmas and New Year’s. However, soybeans still took the opportunity to test double digit gains heading into Wednesday’s session as traders keep watching dry conditions develop in Argentina, and as travel restrictions continue to ease in China. Corn and wheat prices weren’t able to move the needle much in either direction last night but generally were down slightly.
Overseas stock markets were mixed again on Wednesday. The Hang Seng market in Hong Kong jumped 1.5% higher while other Asian markets were down moderately today. European markets were generally narrowly mixed in midday trading. In the U.S., Dow futures tested gains of 104 points, moving to 33,521. Southwest Airlines stocks slumped nearly 6% lower yesterday after a flight cancellation fiasco was so bad, the U.S. Department of Transportation may investigate.
Energy futures were in the red. Crude oil eased 0.3% lower, with gasoline incurring similar losses. Diesel dropped 1%, while natural gas tumbled more than 5.5% lower. The U.S. Dollar also softened slightly.
The latest 72-hour precipitation map from NOAA shows some additional rain and snow for parts of the Midwest and Plains between Wednesday and Saturday. The Mid-South and Pacific Northwest are the regions most likely to gather the biggest amounts during this time. Official 6-to-10-day forecasts show seasonally wet weather likely for the entire central U.S. between January 2 and January 6, with much warmer-than-normal temperatures probable for the eastern half of the country next week.
On Tuesday, commodity funds were net buyers of corn (+6,000), soybeans (+1,500), soyoil (+6,500) and CBOT wheat (+500) contracts but were net sellers of soymeal (-1,000).
Corn prices tracked higher on Tuesday, thanks to a flash sale to Japan announced yesterday. Prices will probably need more bullish headlines to absorb on Wednesday to keep that momentum alive, especially as prices inch closer to $7 per bushel. On the brighter side, futures have been on a pretty consistent upward trajectory for much of December
Corn basis bids firmed 5 cents at an Iowa processor and tumbled 25 cents lower at a Nebraska processor while holding steady elsewhere across the central U.S. on Tuesday.
Yesterday, private exporters announced to USDA the sale of 7.0 million bushels of corn for delivery to Japan. Of that total, the bulk (more than 96%) is for delivery in 2023/24. The remainder is for delivery during the current marketing year, which began September 1.
Corn export inspections reached 33.7 million bushels for the week ending December 22. That was on the higher end of trade estimates, which ranged between 19.7 million and 35.4 million bushels. Mexico was the No. 1 destination, with 15.1 million bushels. Cumulative totals for the 2022/23 marketing year are still well below last year’s pace so far, with 348.1 million bushels.
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The preliminary report from the CBOT showed daily futures volume improve to 191,608, with open interest up 3,723. Options volume firmed to 62,332 and still favors calls (33,692) over puts (28,640). Implied volatility for near-the-money March contracts increased slightly to 18.4% and expire in 57 days.
Soybeans
Soybean prices trended around 0.75% higher overnight as traders tracked the latest Argentine forecasts and covid reopening measures in China, which signaled bullish action on both the supply and demand side. China is likely wanting to give a boost to its economy ahead of its much-celebrated Lunar New Year in late January. Watch export trends carefully for the next three to four weeks.
The rest of the soy complex was mixed. Soyoil prices mirrored soybean’s gains of 0.75% overnight, while soyoil futures eased 0.25% lower.
Soybean basis bids shifted a penny at an Ohio elevator on Tuesday while holding steady elsewhere across the central U.S. yesterday.
Soybean export inspections reached 64.4 million bushels last week. That was toward the higher end of trade estimates, which ranged between 44.1 million and 68.3 million bushels. China was the No. 1 destination, with 39.5 million bushels. Cumulative totals for the 2022/23 marketing year are still modestly behind last year’s pace so far, with 997.0 million bushels.
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The preliminary report from CBOT showed daily futures volume climb to 266,752, although open interest was down 5,535. Options volume eased to 38,956 and has shifted to favoring puts (22,727) over calls (16,229). Implied volatility for near-the-money March contracts increased to 17.0%, expiring in another 57 days.
Wheat
Wheat prices were narrowly mixed overnight. Chicago SRW futures tested modest gains, while Kansas City HRW and MGEX spring wheat futures eased slightly lower. Markets responded positively to a healthy dose of export inspection data from USDA on Tuesday. Otherwise, news of overseas sales has been relatively slim so far this week.
Wheat export inspections moved to 10.3 million bushels last week. That was near the middle of analyst expectations after trade guesses came in between 6.4 million and 16.5 million bushels. Mexico was the No. 1 destination, with 3.8 million bushels. Cumulative totals for the 2022/23 marketing year are slightly behind last year’s pace so far, with 430.7 million bushels.
Russian consultancy Sovecon expects the country’s December wheat exports will reach 150.6 million bushels. That would be slightly below November’s tally of 158.0 million bushels but 34% higher year-over-year, if realized. Russia is the world’s top wheat exporter.
Egypt is thought to have booked a sale of 2.9 million bushels of wheat sourced from Russia but has not yet made an official announcement of the purchase. Additional approvals may be needed from the World Bank, which is funding that tender. Once the deal closes, the grain will be for shipment during the first half of February.
Thailand purchased 2.3 million bushels of animal feed wheat, likely sourced from Australia, in a deal that closed on Friday. The grain is for shipment in June.
The preliminary report from CBOT showed daily SRW volume easing to 38,633, with open interest also down another 2,174. Options volume fell to 12,241 and heavily favors calls (8,896) over puts (3,345). Implied volatility for March near-the-money options increased to 31.1% and expires in 57 days.
Volume in HRW wheat inched up to 13,604, with open interest also trending 143 higher. Options volume fell to 772 and now favors calls (407) over puts (365).
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