Morning report: Corn, soybean and wheat prices sag lower ahead of Tuesday’s session. (Comments are updated by 7:30 a.m. Central Time.)
NOTE: Market analyst Jacqueline Holland is on-site at the Farm Progress Show in Boone! Find her at the ADM Stage in the Wallaces Farmer Hospitality Tent at 10:00 a.m. CST daily for the LIVE Farm Futures Market Update.
Overnight trends:
Corn: Down 10 to 11 cents
Soybeans: Down 18 to 20 cents
Wheat: Down 7 to 15 cents
Grain prices remain in relatively good shape over the past several weeks, but that doesn’t mean they aren’t prone to the occasional session of technical selling and profit-taking. That appears to be the case today, with corn, soybeans and wheat each trending lower overnight. Corn and soybean losses were around 1.5%, with most wheat contracts down between 0.75% and 1.5%.
Overseas stock markets were mixed. In Asia, Japan’s Nikkei markets closed with gains of more than 1%, while China’s Shanghai market slid 0.4% lower. European markets were up as much as 1.75% in midday trading. On Wall St., Dow futures were up 219 points to 32,294 ahead of the opening bell as markets hope to stabilize after spending the prior two sessions in the red.
Energy futures faced moderate cuts overnight, with crude oil down more than 2% to fall back below $95 per barrel. Diesel dropped 0.75%, while gasoline tumbled 3.25% lower. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows very little rainfall expected west of the Mississippi River between today and Friday, although expect to get drenched if you live in Texas. Official 6-to-10-day forecasts show relatively hot, dry conditions likely for the Corn Belt between September 4 and September 8.
On Monday, commodity funds were net buyers of corn (+12,500) and CBOT wheat (+13,000) contracts but were net sellers of soybeans (-8,500) and soyoil (-1,500). Funds were roughly even when trading soymeal contracts yesterday.
Corn
Corn prices rallied to a two-month high yesterday but seesawed back into the red overnight as traders continue to monitor mid-range weather forecasts and look for fresh demand signals. (This may be hard to come by in the near future, as USDA announced yesterday it will not release weekly export sales data until further notice following a botched attempt to move to a new reporting system.) Prices eroded around 1.5% lower overnight, so a round of profit-taking is likely in store absent any bullish news that might emerge later today.
Corn basis bids were steady to mixed across the central U.S. on Monday after trending 15 cents higher at an Iowa processor while spilling 7 to 8 cents lower at two other Midwestern locations.
Corn export inspections came in at 27.1 million bushels last week, which was on the upper end of trade estimates that ranged between 19.7 million and 33.5 million bushels. China topped all destinations, with 13.6 million bushels. Cumulative totals for the 2021/22 marketing year are well below last year’s pace, with 2.149 billion bushels.
Corn quality ratings dropped one point lower last week, with 54% of the crop now in good-to-excellent condition through August 28, per USDA’s latest crop progress report, out Monday afternoon. Another 27% was rated fair (unchanged from last week), with the remaining 19% rated poor or very poor (up a point from last week). Physiologically, 86% has reached the dough stage, 46% is now dented, and 8% is fully mature. All three categories are running behind the prior five-year average.
How do your farm’s crop conditions stack up against other operations in the U.S.? 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 peer anecdotes from around the country.
South Korea purchased 5.4 million bushels of animal feed corn in an international tender that closed earlier today. The grain can be sourced from optional origins but is expected to be sourced from South America or South Africa and is for arrival in December.
The preliminary report from the CBOT showed daily futures volume move to 384,918, with open interest dropping 5,135. Options volume moved to 187,334 and significantly favors calls (117,485) over puts (69,849). Implied volatility for near-the-money December contracts is 31.4%, which don’t expire for another 87 days.
Soybeans
Soybean prices were slashed by double digits overnight after USDA held crop ratings steady yesterday afternoon, and with mostly favorable weather forecasts in store for early September. Traders are also wary of Brazil’s production potential, which is expected to reach all-time highs for the 2022/23 season.
Soybean basis bids remained steady across the central U.S. on Monday.
Soybean export inspections dropped to 16.1 million bushels last week, which was below the entire range of trade estimates that came in between 18.4 million and 30.3 million bushels. Mexico was the No. 1 destination, with 3.3 million bushels. Cumulative totals for the 2021/22 marketing year are still slightly below last year’s pace, with 2.074 billion bushels.
Soybean quality ratings were mostly steady last week, with 57% of the crop in good-to-excellent condition through Sunday (although the G/E split shifted from 47/10 to 46/11). Another 30% is rated fair (unchanged from last week), with the remaining 13% rated poor or very poor (also unchanged from last week). Ninety-one percent of the crop is now setting pods, versus the prior five-year average of 92%. And 4% is now dropping leaves, versus the prior five-year average of 7%.
Brazil’s Datagro consultancy expects to see the country’s soybean plantings to increase by another 3% to 6% this season – a pattern that has happened for 16 consecutive years now. Datagro expects 2022/23 production to improve by 20% versus last season’s drought-stressed crops, reaching a record 5.578 billion bushels. Exports could come in at 3.491 billion bushels.
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The preliminary report from CBOT showed daily futures volume move to 146,858 with open interest sliding 5,646 lower. Options volume was at 11,073 and heavily favor calls (8,275) over puts (2,798). Implied volatility for near-the-money November contracts moved to 25.0% and expire in another 51 days.
Wheat
Wheat prices followed a broad set of other commodities lower overnight. Winter wheat prices faded 0.75% to 1% lower, while spring wheat prices crumbled more than 1.5% after USDA unexpectedly boosted crop ratings four points higher in its latest crop progress report.
Wheat export inspections tracked moderately lower week-over-week, to 19.1 million bushels. It was still toward the higher end of trade guesses, which ranged between 9.2 million and 23.9 million bushels. Mexico was the No. 1 destination, with 3.8 million bushels. Cumulative totals for the 2022/23 marketing year are moderately below last year’s pace so far, with 184.3 million bushels.
Analysts were expecting to see stable spring wheat ratings, but USDA surprisingly moved them four points higher, with 68% of the crop now rated in good-to-excellent condition. Another 26% is rated fair (down two points from last week), with the remaining 6% rated poor or very poor (down two points from last week). Harvest has reached the halfway mark, up from 33% a week ago. It’s also much slower than 2021’s pace of 86% and the prior five-year average of 71%.
French consultancy Agritel slightly raised its estimates for 2022 soft wheat production, moving that number to 1.236 billion bushels. However, the upcoming French corn harvest could be “catastrophic” after rampant drought and heat throughout the summer. Agritel is forecasting the smallest production so far this century, with just 425.2 million bushels.
Japan issued a regular tender to purchase 3.5 million bushels of food-quality wheat from the United States and Canada, which closes on Thursday. Of the total, 71% is expected to be sourced from the U.S. The grain is for arrival by the end of December.
The Philippines issued an international tender to purchase 3.7 million bushels of animal feed wheat from optional origins that closes today. The grain is for shipment between October and December.
India has been actively supporting Afghanistan with humanitarian assistance. That includes shipping nearly 1.5 million bushels of wheat so far. “India has direct stakes in ensuring the return of the peace and stability, giving our position as a contiguous neighbor and long-standing partner of Afghanistan,” according to India’s permanent representative to the UN, Ruchira Kamboj.
The preliminary report from CBOT showed daily SRW volume move to 116,993, with open interest trending 8,835 lower. Options volume moved to 34,025 and favors calls (21,558) over puts (12,467). Implied volatility for December near-the-money options moved to 40.8% and expires in 87 days.
Volume in HRW wheat moved to 36,964, with open interest trending 3,656 lower. Options volume is at 1,902 and heavily favors puts (1,415) versus calls (487).
