Morning report: Plus – Corn and wheat test modest overnight gains, while soybeans sink lower. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Up 1 to 2 cents
Soybeans: Down 4 to 5 cents
Wheat: Mixed
*Prices as of 6:50am CST.
On Thursday, corn prices eased slightly lower while soybeans and wheat made solid inroads. But which commodities will see favorable results today amid the constant shifts of technical maneuvering in a very volatile season? Overnight moves suggest corn could rebound a bit from losses incurred earlier this week, with wheat also trending slightly in the green. Soybeans, in contrast, are setting the stage for moderate losses if traders continue to lock in profits and engage in some technical selling.
Overseas stock markets were mixed but mostly higher. Markets in Hong Kong slumped 1% lower, while other Asian markets moved moderately higher. European markets were varied in midday trading. On Wall St., the Dow dropped 103 points to 33,117 ahead of the opening bell as investors await fresh employment data out later today.
Energy futures showed some variability overnight. Crude oil prices sank 0.5% to $116 per barrel on OPEC’s announcement that it will boost production in July. In contrast, diesel climbed another 1% higher, with gasoline trending 0.2% higher. The U.S. Dollar firmed slightly.
The latest 72-hour precipitation map from NOAA shows large portions of Kansas, Missouri, Nebraska, Iowa and southern Wisconsin could receive around 0.75″ additional rainfall between Friday and Monday. Other areas in the Midwest could see measurable moisture during that time but may not match those amounts. Official 6-to-10-day forecasts show a more seasonally wet weather in store for most of the Corn Belt between June 8 and June 12, with cooler-than-normal conditions likely across most of the Midwest and Plains.
On Thursday, commodity funds were net buyers of soybeans (+14,500), soymeal (+2,000), soyoil (+9,500) and CBOT wheat (+7,000) contracts. Funds were roughly even trading corn contracts yesterday.
Corn
Corn prices have struggled to find positive momentum since peaking in mid-April and have had a rough time in this holiday-shortened week, fading more than 40 cents lower since Tuesday’s open. Could some bargain buying lift prices today? Modest gains in overnight trading suggest that it could be hard to find much traction today.
Corn basis bids trended as much as 10 cents higher at an Illinois ethanol plant and as much as 5 cents lower at a Nebraska processor on Thursday. Bids at most Midwestern locations held steady yesterday.
Ethanol production saw moderate improvements in the week ending May 27, climbing to a daily average of 1.071 million barrels, per the latest data from the U.S. Energy Information Administration out yesterday. That’s the best weekly effort since last November. Ethanol stocks moved 3% lower from a week ago.
Analysts expect USDA to show another big round of corn sales when it releases its new export report later this morning, with trade guesses ranging between 8.9 million and 27.6 million bushels for the week ending May 26.
In France, the country’s FranceAgriMer farm office is rating 91% of this season’s corn crop in good-to-excellent condition through May 30, holding steady from a week ago. Another 8% of the crop is rated fair, with just 1% rated poor or very poor.
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The preliminary report from the CBOT showed daily futures volume move to 278,718 and open interest firm by 1,721. Options volume was at 154,524 and still favors calls (91,562) over puts (62,962). Implied volatility for near-the-money July contracts is at 30.1%, which expire in 20 days.
Soybeans
Soybean prices have been bouncing above and below $17 per bushel since February, and despite some technical selling overnight, prices should hold above that benchmark on Friday unless some more bearish news enters the fray today. Overnight losses hovered around 0.5%.
On Thursday, soybean basis bids were steady to mixed, firming 10 cents at two Midwestern processors while falling as much as 7 cents lower at an Illinois river terminal.
Ahead of USDA’s export report later this morning, analysts expect the agency to show soybean sales ranging between 7.3 million and 39.4 million bushels for the week ending May 26. Analysts also think USDA will show soymeal sales ranging between 100,000 and 320,000 metric tons, plus up to 40,000 MT of soyoil sales.
Could another flash sale soon be announced? Yesterday offered a pleasant surprise after private exporters reported to USDA the sale of 12.9 million bushels of soybeans to Pakistan. Of the total, 16% is for delivery during the current marketing year, which began September 1. The remainder is for delivery in 2022/23. China, Mexico and Egypt have also made notable purchases earlier this year.
In Argentina, the Buenos Aires Grains Exchange is now forecasting the country’s 2021/22 soybean production at 1.591 billion bushels, which is 3.1% higher than its prior estimate, citing “better than expected yields in the center and north.” The Exchange estimates that 94% of this season’s crop has now been harvested.
The preliminary report from CBOT showed daily futures volume moving to 208,009 with open interest trending 2,748 higher. Options volume was at 82,783 and modestly favors puts (43,198) versus calls (39,585). Implied volatility for near-the-money July contracts stands at 21.0% and expire in another 20 days.
Wheat
Wheat prices were mixed in overnight trading, moving as much as 0.6% in either direction. Spring wheat prices showed the most upside, as this year’s crop looks to face ample uphill battles. All wheat prices have slid below multiyear highs captured earlier this spring but remain at historically high levels, meantime.
Prior to today’s weekly export report from USDA, analysts expect the agency to show wheat sales ranging between 5.5 million and 16.5 million bushels for the week ending May 26.
Australia is hoping to see a third consecutive year of near-record production in 2022 amid promising weather trends and forecasts. Analysts such as agribusiness economist Phin Ziebell says the country has a “good shot” at exceeding 1.100 billion bushels again this season. Harvest this season won’t commence until November, but importers are already trying to line up deals.
Russian consultancy Sovecon raised its estimates for the country’s 2022/23 wheat exports by 3.2% to 1.554 billion bushels. The new marketing year begins in July for the world’s No. 1 wheat exporter.
French soft wheat quality ratings have declined for the fifth consecutive week, with 67% of the crop now rated in good-to-excellent condition through May 30. That’s also significantly below year-ago ratings of 80% for Europe’s top wheat producer.
Argentina’s Buenos Aires Grains Exchange estimates that the country’s 2022/23 wheat plantings will come in around 16.062 million acres. That’s slightly lower than the group’s prior estimate, based on low soil moisture and scant rains in the near-term forecasts.
The preliminary report from CBOT showed daily SRW volume at 128,933, with open interest down 1,699. Options volume moved to 33,828 and is moderately favoring puts (20,406) over calls (13,422). Implied volatility for July near-the-money options are still relatively high, at 38.6%, expiring in 20 days.
Volume in HRW wheat moved to 45,046, with open interest trending 112 higher. Options volume is at 3,827 and heavily favors calls (3,339) versus puts (488).
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