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Morning Market Review for Nov. 20, 2018

Futures fight to hang on. (Comments are updated by 7:30 a.m. Central Time.)

Overnight Trends
Corn: Steady
Soybeans: Steady to up 1
Wheat: Mixed

Gloomy trade outlook cast long shadow on markets

Grain futures are mostly steady to a little higher this morning, trying to turn around following a selloff into the start of trading in Europe. Delays with harvest and winter wheat seeding provide token support against a sour mood in the rest of the market caused by new tensions in the trade dispute between the U.S. and China. 

Those concerns hammered prices Monday and the selloff in the stock market spread around the world today as well, pointing U.S. indexes towards a lower open on Wall Street. The dollar, gold and Treasuries are all higher on safe haven buying, while crude oil held above $57 a barrel.

Fertilizer prices also appear to be firming, following a drop in urea last week caused by lower prices in India’s latest tender. The big importer was an active buyer, with the size of the deal keeping the selloff in check. Swaps at the Gulf for December urea were up another $3.50 Monday, settling at $292.50.

 

Corn prices are steady, keeping December to an inside day with a range of just a penny and a quarter so far. The nearby slipped below its 50-day moving average yesterday, which provides resistance today at $3.65. 

USDA Monday said 90% of the crop is harvested, up 6% from last week but 3% below the five-year average. The Dakotas continue to lag double-digits behind, though combines are finished in Illinois. 

Export news yesterday was mixed. Inspections last week of 31.4 million bushels were at the low end of trade guesses and fell well below the rate needed weekly to meet the government’s forecast for record sales. But year-to-date inspections are well ahead of that pace after a fast start to the selling season. USDA also separately confirmed the sale of 5.4 million bushels to a South Korean feedmaker reported earlier by the trade.

While a little light slow is moving through the Great Lakes today, most areas in the Plains and Midwest should be dry until the end of the week. The official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning start wetter but turn drier outside the central and southern Plains. 

Farmers reporting Feedback From The Field Monday continued to cite problems from one end of the Corn Belt to the other, with average October/November yield estimates lower than USDA’s recent forecast.

What’s happening in your fields? Let us know by clicking this link to enter your data and comments and check out the latest reports by scrolling down to our updated interactive map. We’ll be putting out our final report soon, so get your estimates in. 

Overseas markets are firm today. January futures in China edged a half-cent higher to $6.933 and March Paris futures in midday trade are i[ 1.4 cents to $5.103 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed daily futures volume down 10% Monday to 355,433 while open interest dropped 4,909 despite modest fund selling as traders move out of December.

Options volume was 17% lower at 64,253, 54% of it calls as traders rolled down December $3.60 puts that expire Friday. Implied volatility in at-the-money December options rose to 14.96. 

Bottom line: Be on the lookout for basis pushes that could provide opportunities to move a few bushels for cash flow. 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 hang on to a reversal higher following two-sided trade overnight. January futures held a test of the 50-day moving average at the session low of $8.705.

USDA Monday said 91% of the crop is harvested, down 5% from average and up only 3% from last week. States bordering the Ohio River and lower Mississippi are lagging in particular. 

Export inspections of 38.8 million bushels were solid, beating the weekly rate forecast by USDA by 4 million bushels. Still, year-to-date inspections are off to a slow start due to Chinese tariffs that should spread shipments out through the marketing year as non-Chinese buyers have nowhere else to turn for supplies. 

Vegetable oil prices overseas were mixed today. January soybean oil futures in China dropped to 35.255 cents per pound but January palm oil futures in Malaysia rose to 20.70 cents. 

Oilseed markets were lower. January soybean futures in China lost 14.7 cents to settle at $13.367 after hitting new contract lows. February rapeseed futures in Paris midday trade are down 5.2 cents to $9.53 and Winnipeg canola overnight lost a penny to $8.127 after adjustments for currencies and volumes. 

The preliminaryreport from the CBOT showed daily futures volume up 7% yesterday to 147,998 with fairly active new fund selling adding 3,763 to open interest. 

Options volume fell 30% to 47,582, 59% of it puts with new interest noted in the May $7.80 put. Implied volatility in January at-the-money options was fell to 17.89. 

Bottom line: Hopes for soybean rallies faded with USDA’s bearish report unless a weather threat emerges in South America or trade talks with China succeed. Neither looks likely right now. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Wheat prices are mixed today after a choppy overnight session. While hard red winter wheat futures try to recover from Monday’s contract lows, SRW and spring wheat are trying to hold reversals higher. 

Monday’s Crop Progress report provided mixed news for wheat. USDA noted improvement in the percentage of the crop rated good to excellent, which increased 2%. But overall conditions were up only slightly because the percentage in poor condition also rose. Still, the crop is in better shape than a year ago, with yield potential ranging from 47.7 to 50.6 bushels per acre according to our models. 

Slow planting and emergence of winter wheat remains a concern, though today’s 93% planted figure is about average for years when USDA is still reporting this progress. 

Export inspections last week improved to 18.7 million bushels, though that’s still behind the rate needed weekly to reach USDA’s forecast for the 2018 crop. Year-to-date shipments are 18% lower though USDA forecast a 14% increase in sales, hoping for business to pick up in the second half of the marketing year. Japan today said it would fill its regular weekly tender from the U.S. and Canada, bidding for no Australian wheat. 

Overseas markets are mixed today. January futures for Eastern Australian Wheat edged a penny lower to $8.106 and December futures in Paris midday trade are up a penning at $6.128 after adjustments for currencies and volumes.

Volume in soft red winter wheat futures were up 45% yesterday at 143,432 while modest new fund selling helped add 3,941 to open interest. HRW volume rose 68% to 67,157 on open interest that was down 9,007.

SRW options volume was up 68% to 23,438, 56% of it calls as traders liquidated near-the-money December puts that expire at the end of the week. Implied volatility in at-the-money SRW December 2018 options rose to 19.51.

Bottom line: Wheat is struggling to break free for a rally that could be a selling opportunity. 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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