Morning report: Corn, soybeans and wheat all slump lower in overnight trading. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Down 2 to 3 cents
Soybeans: Down 11 to 12 cents
Wheat: Down 8 to 10 cents
Grain prices have made solid inroads for the most part earlier this week, but overnight action suggests a round of technical selling and profit-taking may be in store for Thursday’s session. Corn prices faded 0.5% lower overnight, with soybeans down more than 0.75% and some wheat contract losing more than 1%.
Overseas stock markets were mostly lower. Japan’s Nikkei index closed 0.7% higher, while other Asian markets were down around 0.5%. European markets also trended 0.5% lower in midday trading. On Wall St., Dow futures tracked 185 points lower to 30,127 as investors await the next round of inflation data.
Energy futures were also in the red overnight, with crude oil dipping 0.25% lower to $87 per barrel. Diesel dropped 1.75%, with gasoline down around 1%. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows very little rainfall likely for the Midwest and Plains between today and Sunday, although the Central Plains could see some scattered showers during this time. Official 6-to-10-day forecasts show seasonally wet weather returning to the central U.S. between October 11 and October 15, with some warmer-than-normal temperatures also likely during this time.
On Wednesday, commodity funds were net buyers of corn (+2,000) and soyoil (+1,000) contracts but were net sellers of soybeans (-5,000), soymeal (-2,500) and CBOT wheat (-500).
Corn
Corn prices faded moderately lower ahead of Thursday’s session, suggesting a round of technical selling may be in store today after prices made solid inroads earlier this week. Seasonal harvest pressure and a strengthening U.S. Dollar are providing short-term headwinds.
Corn basis bids were steady to mixed on Wednesday, especially at several Midwestern ethanol plants, where bids fell 10 cents at one location while rising 15 cents higher at another location.
Ethanol production trended moderately higher for the week ending September 30, with a daily average of 889,000 barrels, per the latest data from the U.S. Energy Information Administration. The last time production reached the 1-million-barrel-per-day benchmark was in early August. Ethanol stocks fell by 4%.
Prior to the next USDA grain export report, out later this morning and covering the week through September 29, analysts think the agency will show corn sales ranging between 13.8 million and 31.5 million bushels.
Grain traveling the nation’s railways saw another 22,745 carloads last week. That brings cumulative 2022 totals up to 851,497 carloads, which is 4.6% behind last year’s pace so far.
French farmer group AGPM is only expecting this country’s drought-plagued crop to reach a total production of 393.7 million bushels. That makes this year’s crop the smallest one in more than 30 years. Yields are expected to fall nearly 19% below the prior five-year average, to 117.5 bushels per acre. Only around one-third of France’s corn acres are irrigated.
The preliminary report from the CBOT showed daily futures volume move to 202,500, with open interest firming by 3,949. Options volume moved to 45,718 and moderately favors calls (25,959) over puts (19,759). Implied volatility for near-the-money December contracts is 26.2%, which don’t expire for another 50 days.
Soybeans
Soybean prices followed a broad set of other commodities lower ahead of Thursday’s session, incurring double-digit losses in overnight trading. Investors are focused on U.S. yield potential, export demand trends and the potential for record-breaking Brazilian production this upcoming season.
Soybean basis bids were steady to mixed across the central U.S. on Wednesday after trending as much as 10 cents lower at an Indiana elevator while firming as much as 7 cents at an Indiana processor.
Prior to tomorrow morning’s USDA export report, analysts expect the agency to show soybean sales ranging between 18.4 million and 44.1 million bushels for the week ending September 29. Analysts are also anticipating soymeal sales ranging between 50,000 and 400,000 metric tons, plus up to 30,000 MT of soyoil sales.
Grain trade association Anec raised its estimates for the country’s 2022 soybean exports by 2.0% to 2.774 billion bushels, citing updates to shipping schedules. Much of that grain will eventually end up in China.
Meantime, a Reuters poll of 12 analysts expects record-large Brazilian soybean plantings this season, with 105.8 million acres. That could lead to a probable record-breaking production of 5.534 billion bushels. It would also be a significant increase from last season’s disappointing drought-stressed effort. “The beginning of planting is very good, it is moving fast, there is no lack of moisture, the rains are coming to the Midwest and Southeast,” according to Luiz Roque, an analyst with Safras & Mercado.
How are your crops looking this week? Is harvest progressing as planned? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can keep current with peer anecdotes from around the country.
The preliminary report from CBOT showed daily futures volume move to 206,186 with open interest firming by 2,352. Options volume was at 25,845 and moderately favor calls (25,845) over puts (16,408). Implied volatility for near-the-money November contracts moved to 23.6% and expires in another 14 days.
Wheat
Wheat prices suffered a moderate technical setback as trader reevaluated the latest supply and demand trends ahead of USDA’s next export sales report. A relatively strong U.S. Dollar has also been applying headwinds lately. Losses mostly hovered around 1% overnight.
Ahead of Thursday morning’s grain export report from USDA, analysts expect to see wheat sales ranging between 7.3 million and 16.5 million bushels for the week ending September 29.
Ukraine’s winter wheat planting progress has only reached 27% of its expected footprint for the 2022/23 season, with agribusiness CEO Alex Lissitsa estimating that 2023 production could drop by as much as 70% – “we will cover our own needs, but not everything will be so rosy with exports,” he says. Ukraine’s typical domestic wheat consumption comes in at around 257 million bushels.
As expected, Japan purchased 3.6 million bushels of food-quality wheat from the United States and Canada in a regular tender that closed earlier today. Roughly two-thirds of the total was sourced from the U.S. The grain is for arrival by the end of January.
The preliminary report from CBOT showed daily SRW volume moving to 66,536, with open interest trending 198 higher. Options volume moved to 14,953 and favors calls (10,050) over puts (4,903) by a more than 2:1 ratio. Implied volatility for December near-the-money options moved to 41.7% and expires in 50 days.
Volume in HRW wheat moved to 31,677, with open interest trending 314 lower. Options volume is at 2,638 and heavily favors calls (1,716) versus calls (922).
