Morning report: Corn prices up slightly overnight, with soybeans back in the red. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Steady to down 2 cents
Soybeans: Down 11 to 13 cents
Wheat: Up 22 to 28 cents
Positive forward momentum has only been captured after hard-fought battles so far this summer, and wheat prices look to have some fight in them again, if overnight action is any indicator. Some of the focus has turned back on Ukraine, where unsold grain keeps piling up amid the ongoing Russian invasion. That helped most contracts jump 2.75% to 3.25% ahead of Wednesday’s session. Corn prices were slightly mixed overnight, while soybeans suffered a moderate setback of around 0.75%.
Overseas stock markets were mixed. Asian markets jumped 1% to 2.5% by the close, while European markets were down 0.25% to 0.5% in midday trading. On Wall St., Dow futures eased 49 points lower to 31,742 as traders await more corporate earnings reports out later this week. But investors remain somewhat hopeful after streaming giant Netflix reported better-than-expected results late Tuesday.
Energy futures faded lower overnight. Crude oil dropped more than 1.25% but remains above $102 per barrel as traders ready themselves for the next set of domestic inventory data. Diesel dropped 2%, with gasoline down nearly 0.75%. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows scattered showers across an uneven portion of the Midwest and Plains between today and Saturday. Few areas should receive more than 0.25″ during this time. Official 6-to-10-day forecasts show swath of seasonally wet weather could emerge in a path stretching from Nebraska to Ohio between July 25 and July 29, with seasonally hot conditions likely for most of the country during this time.
On Tuesday, commodity funds were net sellers of all major grain contracts, including corn (-11,500), soybeans (-11,000), soymeal (-1,500), soyoil (-4,500) and CBOT wheat (-1,000).
NOTE: How do your farm’s crop conditions stack up against other operations around the country? Click this link to take the Feedback from the Field survey and share updates about your farm’s crop development. We review and upload results regularly to the FFTF Google MyMap, so farmers can see others’ responses from across the country.
Corn
Corn prices were narrowly mixed overnight as traders await more signals that could push them in either a positive or negative direction. Ethanol data out today and export sales data out tomorrow morning will offer some guidance, as will ongoing headlines from Ukraine.
Corn basis bids were mostly steady to weak on Tuesday after falling 2 to 23 cents lower across four Midwestern locations. An Indiana ethanol plant bucked the overall trend after firming 5 cents higher yesterday.
Later today, the U.S. Energy Information Administration will release its next round of ethanol production data. The last available week (through July 8) showed a daily average of 1.005 million barrels. That was down moderately from the prior week but managed to stay above the 1-million-barrel-per-day benchmark for the eighth consecutive week.
USDA reported earlier this month that Ukraine is sitting on a massive stockpile of grain, which includes 267.7 million bushels of corn (an eightfold increase from a year ago) and 213.1 million bushels of wheat (nearly fourfold from last year). “We have our own storage. But it’s full with the grain that we haven’t been able to sell,” farmer Mykola Tereshchenko recently told Reuters. Some crops are being transported via rail, but this is very inefficient compared to Ukraine’s preferred shipment via ports, which are largely closed due to Russian military presence in those areas.
Is the current market volatility managing you, or are you strategically managing market volatility – without letting emotions get the better of you? That’s easier said than done, but Brady Huck, risk advisor with Advance Trading, offers some relevant pointers in yesterday’s Ag Marketing IQ blog – click here to learn more.
The preliminary report from the CBOT showed daily futures volume improving to 293,960, with open interest also tracking 12,061 higher. Options volume firmed moderately to 124,574 and now favors calls (83,233) over puts (41,341) by a more than 2:1 margin. Implied volatility for near-the-money September contracts fell to fell to 39.0% but don’t expire for another 36 days.
Soybeans
Soybean prices tracked nearly 0.75% lower overnight. Without an influx of bullish news (i.e. flash sales, strong export data, etc.), prices appear to be on a gradual downward slide as U.S. production potential remains relatively high, and as Brazil looks to rebound from a disappointing crop for its upcoming 2022/23 season.
On Tuesday, soybean basis bids fell 3 to 5 cents lower at two interior river terminals but held steady elsewhere across the central U.S. yesterday.
With commodity prices still historically high, some farmers have been eyeing possible soybean/wheat double-crop setups. That’s certainly a possibility for some operations – particularly the farther south they are. But in other areas, it would be an uphill battle to make this rotation feasible. Farm Futures executive editor Mike Wilson dug into the details – click here to learn more.
China imported 266.0 million bushels of soybeans from Brazil in June, according to the latest custom’s data. That’s down 30.9% from year-ago totals. Soybean shipments from the United States were a distant second, with 28.4 million bushels, but that was still substantially higher than June 2021 tallies. China is by far the world’s No. 1 soybean importer.
The preliminary report from CBOT showed daily futures volume firm to 160,985 while open interest fell 3,255. Options volume dropped to 44,124 and still moderately favor calls (26,710) over puts (17,414). Implied volatility for near-the-money August contracts rose to 33.3% and expire tomorrow.
Wheat
Wheat prices were lifted significantly higher overnight. Prices have fallen enough earlier this month to finally trigger another round of bargain buying – especially considering an emerging heatwave in Europe and ample grain still stuck awaiting shipment in Ukraine. But throw harvest pressure into the mix, and the rest of July could have plenty more price volatility in store.
A German farm association (DBV) reported today that hot, dry weather may be hurting its wheat prospects, although the country’s winter barley crop (which is generally used for animal feed) looks to be in good shape so far, with a production potential of around 413.4 million bushels. Temperatures topped out at around 40 C (104 F) on Tuesday.
Jordan issued a new tender to purchase 4.4 million bushels of milling wheat from optional origins in an international tender that closes on July 26. The grain sis for shipment in November and December. Jordan made no purchases in its previous tender for a similar amount that closed yesterday.
Yesterday, Pakistan issued an international tender to purchase 7.3 million bushels of wheat from optional origins that closes July 25. The grain is for shipment during the first half of September.
The preliminary report from CBOT showed daily SRW volume firm to 83,282, with open interest firming 1,510. Options volume fell to 25,020 and still favors calls (13,984) over puts (11,036). Implied volatility for September near-the-money options fell to 49.4% and don’t expire for another 36 days.
Volume in HRW wheat eased to 30,879, with open interest trending 1,813 higher. Options volume is at 1,721 and moderately favors calls (1,128) over puts (593).
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