Morning report: Corn, soybeans and wheat trend lower again in overnight trading. (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 7 to 8 cents
Soybeans: Mixed
Wheat: Down 3 to 7 cents
Grain prices suffered a moderate setback after a round of technical selling and profit-taking on Tuesday. Overnight action ahead of Wednesday’s session suggests more of the same may be in store for today. Corn prices were down 1.25%, while most wheat contracts faded 0.5% to 1% lower. Soybean prices were mixed, meantime, as nearby contracts fought for modest gains.
Overseas stock markets all trended lower. Asian markets closed with losses ranging between 0.1% and 0.8%. European markets faced moderate losses in midday trading. On Wall St., the Dow tested fractional gains of 8 points, moving to 31,784 ahead of the opening bell and trying to move past the recent selloff after the Federal Reserve indicated late last week that it will continue its aggressive interest rate stance to staunch high inflation.
Energy futures continued to slump lower. Crude oil faced 3% cuts overnight, falling to $88 per barrel on recession fears. Gasoline was down 3.75%, while diesel dropped 2%. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows some rains are possible in Kansas, Nebraska, Iowa and Wisconsin between today and Saturday, but other areas are unlikely to see any measurable moisture during this time. Official 6-to-10-day forecasts call for generally warm, dry conditions for the northern half of the country between September 5 and September 9.
On Tuesday, commodity funds were net sellers of corn (-5,500), soybeans (-4,500), soymeal (-4,000) and CBOT wheat (-6,000) contracts and were roughly net even trading soyoil contracts yesterday.
Corn
Corn prices were down more than 1% in overnight trading, which suggests that traders are likely to engage in another round of technical selling and profit-taking today. The next round of ethanol production data will be released later today. Analysts may also make predictions for USDA’s next round of export sales data. This information would typically be released early Thursday morning, but the agency may still be scrambling to fix its failed attempt last week to migrate to a new reporting system.
Corn basis bids were mostly steady across the central U.S. on Tuesday but did trend 7 cents lower at an Illinois river terminal yesterday.
According to an exclusive grower survey from Farm Futures, corn acres are expected to increase 5% in 2023 to 94.3 million acres. If realized, that would be the largest corn footprint in a decade. Assuming trendline yields, that could mean a total production boost of 8% next season to 15.459 billion bushels. Click here to learn more.
Meantime, judging the size of this year’s crop won’t be easy, but grain market analyst Bryce Knorr dug into data from different sources, including crop progress ratings, WASDE, the U.S. Drought Monitor and the Cropland Vegetation Health Index to get a clearer picture of what’s happening. Click here to find out what he discovered.
Will U.S. ethanol production be able to reverse its currently disappointing trend? According to the U.S. Energy Information Administration, ethanol production had consistently stayed above a daily average of 1 million barrels per day since late May until falling below that benchmark for the past two weeks. EIA releases its next set of production data later today.
Brazil’s Anec reports that the country’s corn exports in August could jump to 281.2 million bushels, although that estimate is down 5.1% from its prior estimate from a week ago.
Taiwan issued an international tender to purchase 2.6 million bushels of animal feed corn to be sourced from the United States, South America or South Africa that closes on September 7. The grain is for shipment starting in early November, depending on the source.
The preliminary report from the CBOT showed daily futures volume declined moderately to 306,737, with open interest also down 14,408. Options volume was slashed to 83,231 and narrowly favors calls (42,432) over puts (40,799). Implied volatility for near-the-money December contracts fell to 30.5% and don’t expire for another 86 days.
Soybeans
Soybean prices are generally facing the same price sensitivity as corn, although prices were mixed overnight after some uneven technical maneuvering. Overall, traders are looking at no big surprises for the U.S. crop as it draws to a conclusion, as well as the likelihood of a record-breaking Brazilian crop this coming season.
Soybean basis bids dropped 10 cents at two Midwestern processors and rose 12 cents at an Illinois river terminal while holding steady elsewhere across the central U.S. yesterday.
Yesterday, private exporters announced to USDA the sale of 9.7 million bushels of soybeans for delivery to unknown destinations during the 2022/23 marketing year, which begins September 1.
Results from the newest Farm Futures grower survey show that farmers could plant 87.3 million acres of soybeans in 2023, a 0.8% year-over-year decline if realized. Assuming trendline yields, that would represent a total production of 4.529 billion bushels. “Soybeans are going to lose a few acres in the Corn Belt to corn rotations next spring, but most of the 2023 soybean acreage shift will come from outside the Heartland,” Notes Farm Futures grain market analyst Jacqueline Holland. “The Farm Futures survey forecasts lower soybean acreages in the Mississippi River Delta, which suggests that this year’s cotton production shortfalls could steal away acreage from soybeans next spring.”
It’s time once again for the Farm Progress Show! This year’s FPS returns to Boone, Iowa, for the first time since 2018. Ever wonder what it takes to put on the country’s largest farm show? Tune into an exclusive sneak peek behind the scenes with operations manager Rick Wild – click here to learn more in the latest Around Farm Progress podcast.
Ahead of the next USDA soybean crushing report, out tomorrow afternoon, analysts expect the agency to show a July soy crush of 180.5 million bushels. If realized, that would be a modest improvement from June’s tally of 174.1 million bushels – a nine-month low. It would also be well above year-ago totals of 166.3 million bushels. Soyoil stocks are expected to fall to a 10-month low of 2.221 billion pounds.
Brazil’s Anec estimates that the country’s soybean exports will reach 194.2 million bushels in August. That’s a modest decline from the group’s prior estimate from a week ago. Brazilian soymeal exports are currently estimated at 1.853 million metric tons.
The preliminary report from CBOT showed daily futures volume fell to 121,441 with open interest trending 2,042 higher. Options volume moved to 43,362 and now favors puts (26,186) over calls (17,175). Implied volatility for near-the-money November contracts increased to 25.5% and expire in another 50 days.
Wheat
Wheat prices continued to erode lower overnight, with most contracts down around 0.5%. Prices have seen a seasonal peak in mid-May, then plummeting for the next six to seven weeks. Prices have mostly stabilized since then but have been unable to find any significant forward momentum.
Our exclusive Farm Futures survey shows that 2022/23 all-wheat acres could reach 48.842 million acres – a 3.9% year-over-year increase, if realized. Of the total, winter wheat acres could total 33.553 million acres, with spring wheat acres coming in at 12.289 million acres. If realized, that would be the largest winter wheat crop since 2015/16.
Algeria purchased an unknown amount of milling wheat in an international tender that closed yesterday. The grain can come from optional origins but was thought to be sourced from Russia. Shipment will begin later this fall.
The preliminary report from CBOT showed daily SRW volume down to 94,514, with open interest trending 2,773 lower. Options volume dropped to 13,612 and favors calls (8,835) over puts (4,777). Implied volatility for December near-the-money options fell to 39.2% and expires in 86 days.
Volume in HRW wheat moved to 33,651, with open interest trending 4,263 lower. Options volume is at 3,186 and narrowly favors calls (1,620) over puts (1,566).
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