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Morning Market Review for Aug. 17, 2018

Wheat news puts grain market in play. (Comments are updated by 7:30 a.m. Central Time.)

Opening Calls
Soybeans: Down 4 to 5
Wheat: Up 5 to 10

Russia mulls export curbs after prices surge to record highs

Grain futures are mixed in a volatile overnight session sparked by a big move in wheat. Futures jumped on news Russia might consider limiting exports to control prices that surged to all-time highs there this week.

The story pushed concerns about China off the front page, at least in agriculture. U.S. stock prices rallied sharply yesterday when China said a trade delegation would come to Washington for talks next week. Though most of Asia also surged on the news, stocks in China remain under pressure, falling to the lowest level in more than two years as economic pressures mount.

The dollar gave back some of its recent move overnight as investors shed the safety of the greenback. Some commodities gained, including gold and crude oil, which edged back towards $66 a barrel. Urea swaps were also higher Thursday, continuing their advance on strong world markets.


Corn prices are trying to hang on to gains spurred by the spike in wheat. December futures took a run at the trendline off May and August highs before pulling back.

Export sales totaled 54.5 million bushels last week, thanks to strong demand for new crop as the 2017 marketing year winds down. Shipments remain behind the rate needed to reach USDA’s forecast for old crop, which could increase supplies leftover on Sept. 1.

Storms again are moving across the heart of the Corn Belt this morning, though coverage was hit or miss in some areas this week. Storms moving in this weekend should give most of the growing region chances for more rain over the next week. The official 6 to 10 and 8 to 14-day forecasts out yesterday and the morning updates from the ensemble model show a drier pattern for the Mid- and Upper Mississippi River Valleys while temperatures could turn warmer. 

Farmers reporting Feedback From The Field this week lowered yield expectations for corn and soybeans noting very dry conditions in some areas.

What’s happening in your fields? Let us know by clicking this linkto enter your data and comments and check out the latest reports by scrolling down to our updated interactive map.

Overseas markets were mixed today. September futures in China lost 6.1 cents to $6.669 as the government continues to supply the market with reserves from its large stocks. November futures in Paris in midday trade were 4.3 cents higher at $5.497 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed daily futures volume down 14% Thursday to 236,698 while open interest rose only 1,802 after active fund short covering. Options volume was up 20% at 85,761, 60% of it calls as traders liquidated more out-of-the-money December calls and near-the-money September puts that expire at the end of next week.

Implied volatility in the at-the-money December options rose to 17.87. 

Bottom line:Signs of lower yields may be needed to firm the market now. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.


Soybeans got a brief respite from profit taking overnight on the rally in wheat. Losses so far are modest as the trade mulls chances for China and the U.S. to resolve their trade disputes. 

China cancelled another cargo of U.S. soybeans last week according to yesterday’s export sales tally, but other customers bought 25.9 million bushels net. USDA also announced the sale of 5.7 million bushels of new crop beans to Mexico under its daily reporting system for large purchases. 

Vegetable oil markets in Asiawere higher today. September futures in China gained nearly a quarter cent to 37.944 cents per pound with September palm oil futures in Malaysia settling at 24.35 cents. 

Oilseed markets internationally were mixed. September futures in China dropped a nickel to $14.287, November rapeseed futures in Paris in midday trade was up 1.9 cents at $9.913 and November futures Winnipeg canola overnight were a penny higher at $8.816 after adjustments for volumes and currencies.

The preliminaryreport from the CBOT showed daily futures volume up 68% yesterday to 238,810 while open interest was down 5,569 after heavy fund short covering.

Options volume more than doubled to 133,846, 51% of it calls as traders liquidated November $9 calls and $8 puts. Implied volatility in November at-the-money options was higher at 20.75. 

Bottom line: The outlook for soybeans is bearish until China starts buying again. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.


Wheat prices are trying to hang on to double digit gains after a spike higher following news Russia might consider curbing exports to control record prices.

That fed into ideas U.S. exports could gain due to lower world production and tightening stocks among major exporters. Last week’s total sales supported that notion, coming in at a marketing year high of 29.5 million bushels. USDA separately also confirmed earlier reports Iraq bought 7.35 million bushels from the U.S. 

Overseas markets were also higher today. January futures for Eastern Australian Wheat gained nearly 6 cents to $8.805 with little rain in sight for the continent’s fields. December futures in Paris midday trade area up 6.9 cents at $6.624 after adjustments for volumes and currencies. 

Volume in soft red winter wheat fell 24% Thursday to 143,190 on open interest that gained 609 with light fund buying. Options volume was 5% lower at 28,995, 59% of it calls as traders liquidated September puts that expire at the end of next week. Implied volatility in at-the-money September options fell to 27.62. 

Volume in HRW futures was 29% lower at 57,785 on open interest that rose 1,902.

Bottom line:Wheat could stabilize and perhaps mount a rebound. 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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