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Morning Market Review for November 17, 2017

Futures edge higher trying to end week on uptick. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trade:

Corn: Up 1

Soybeans: Up 2 to 3

Wheat: Up 1 to 3

Markets firm overnight in consolidation trade

Grain futures are posting light gains this morning as markets across the board try to prove the worst is behind them this fall. 

Farmers reporting Feedback From The Field  this week continue to report highly variable yields, though averages for harvest periods are in line with recent USDA forecasts. Let us know what your yield estimates are by clicking the link.

Outside markets could provide a little lift with buying noted in commodities including crude oil, gold and copper. Stocks are trying to firm in Europe after early selling as Wall Street tries to hang on to yesterday’s big gains. The dollar is weaker.

 

Corn prices are a little higher, keeping December futures to an inside day following Thursday’s break to new contract lows. The market is hovering above support on the nearby chart that comes in around $3.355. 

Weekly sales of 37.6 million bushels fell far short of inflated trade expectations though the pace of new business was higher than needed every week for the rest of the marketing year to reach USDA’s forecast for the 2017 crop. Basis firmed in the export pipeline this week as shipping costs down river fell though feedlot bids eased as good yields have elevators full out west. For more, see my Basis Outlook.

Storms moving through the Dakotas this morning will linger around the Great Lakes, keeping moisture there above normal according to maps for the next week. Official 6- to 10 and 8- to 14-day forecasts out yesterday and the latest updates this morning show a drying trend for the east with the northern Plains seeing above normal precipitation.

The preliminary report from the CBOT had futures volume down 13% lower Thursday to 386,927 with modest new fund selling helping to add 16,114 to open interest. Options volume fell by almost a third to 67,330, 65% of it calls as traders opened 7,120 new March and 4,749 December 2018 calls while liquidating December 2017 puts that expire next week. Implied volatility fell nearly 3% on Thursday to 14.12. 

Overseas markets are weaker today. January futures on the Dalian Exchange in China lost 3.4 cents to $6.422 and March futures in Paris were off three-quarters to $4.808 after adjustments for volumes and currencies. 

Bottom line: Look for corn to complete its cycle low and begin to strengthen seasonally on tight farmer holding. But the upside looks limited due to large supplies. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Soybeans are trying to hold on to gains and a new support line for the week. January futures saw steady buying in Asia helping lift the market overnight.

Export sales totals from last week were little changed at 43.3 million bushels as new Chinese business from deals signed last week has yet to show up on the USDA daily wire. Still, basis was strong in the export pipeline with processors bidding more this week in the western Midwest. Rains returned to the center-west of Brazil over the past 24, though forecasts continue to trend dry for at least a week in Argentina after scattered storms there this week.

Soybean oil futures in Chicago are a little higher, overcoming a late downdraft in Asia. January futures for palm oil in Malaysia lost a quarter cent to 29.369 cents per pound and January soybean oil futures in China were a little lower at 40.905 cents.

Oilseed prices internationally got a little lift from a late attempt at recovery in Asia, where January soybean futures in China were off 1.6 cents to $14.84. February rapeseed in Paris was less than a penny higher at $10.143 and January canola in Winnipeg rose 1.8 cents to $9.223. Note: International prices are converted to bushel or pound equivalents after conversions for currencies.

The preliminary report from the CBOT showed daily futures volume down 3% Thursday to 156,768 with light fund selling helping to add 7,082 to open interest. Options volume was 42% lower to a thin 35,064, 52% of it puts as traders rolled down and liquidated January puts. Implied volatility fell nearly 4.5% to 11.81.

Bottom line: Soybeans face a test now to see if funds will flee or double down on bullish bets. South American weather and Chinese demand remain key to getting prices back to profitable levels, but sales likely will have to be made with futures or HTAs due to weak basis, with put options another alternative. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Wheat prices are a little higher with winter wheat contracts attracting a little more short covering trying to carve out a new uptrend.

Export sales of 19.1 million bushels were down from the marketing year high of the previous period but beat trade estimates and the weekly rate needed to reach USDA’s forecast for the 2017 crop. Egypt filled its latest tender for 8.8 million bushels from Russia, despite a lack of offers after courts backed controversial quality standards that roiled import business over the past year.

Updated forecasts for winter showed a pattern typical for La Nina years with above normal temperatures and below normal precipitation over the southern Plains.

Overseas prices were quiet today. January futures for Eastern Australian Wheat ended a penny lower at $5.361 while March futures in Paris morning trade were unchanged at $5.24 after adjustments for volumes and currencies

Volume in soft red winter wheat fell 7% Thursday to 149,822 while open interest fell 3,709 on light short covering. Options volume was 43% lower at 16,915, 58% of it puts though traders added twice as many new calls as puts. Implied volatility was almost 1.5% higher at 18.60. Volume in hard red winter wheat dropped 36% to 55,599 on open interest that fell 59.

Bottom line: Can wheat mount a rally finally? Maybe, but limit risk to new crop now. For more details on the outlook, see the Wheat Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

 

Explanation of pivot points. 

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This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.
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