Markets-122316-scyther5-ThinkstockPhotos-2000 scyther5/Thinkstock

Morning Market Review for Oct. 22, 2018

Can grains find some optimism this week? (Comments are updated by 7:30 a.m. Central Time.)

Overnight Trends

Corn: Up 1
Soybeans: Up 1 to 2
Wheat: Down 2 to 3

Corn and soybean futures up slightly ahead of Monday’s open

Grain futures are again cautiously mixed ahead of Monday’s open, as markets are happy to put last week’s seesaw – but mostly slumping – performance in the past. Traders will watch weather forecasts, harvest progress and the usual spate of governmental releases early this week to help guide their next moves.

Overseas markets saw European stocks move higher amid a stabilizing Italian budget. Stabilization was also a key word in Asian markets today, with China promising domestic tax cuts to counteract the effect of U.S. tariffs. That gave an ample boost to the Shanghai Composite, which soared more than 4% today. Most other world markets were up modestly Monday.

More drama from the U.S. and Russia – this time over accusations Russia is violating a Cold War-era nuclear arms treaty – may still rattle domestic stock indexes Monday, although the Dow was still trending 65 points higher in overnight trading. 

Energy futures were narrowly mixed overnight. Crude oil tests small gains as per-barrel prices hover just below $70. Diesel prices were up moderately, meantime, with gasoline and natural gas down slightly. The U.S. Dollar firmed slightly.

 

Corn prices could try to scrape together some optimism Monday after inching ahead overnight. Markets will look to the latest export and crop progress data from USDA later today for further direction. 

Export news will need a shot in the arm after last Thursday’s report slumped considerably, with just 15.1 million bushels in new bookings – falling well short of activity in prior weeks. USDA’s weekly export inspections report comes out later this morning. 

Harvest progress, out Monday afternoon, will likely show a strong push forward after plenty of relatively dry weather across the central U.S. last week. 

Looking ahead, theofficial 6 to 10 and 8 to 14-day forecasts and the latest updates this morning from the ensemble model call for above normal precipitation over the eastern Corn Belt, with plenty of seasonally cooler temperatures prevalent during this time.

NOAA also released its 2018/19 winter outlook late last week, calling mostly for a wetter-than-normal south and seasonally warm weather for much of the U.S. Click hereto see what else the agency has predicted.

Farmers reporting Feedback From The Field last week noted some rain – and snow delays. “Seven inches of snow on beans and corn, unknown loss, plus 3 inches of rain prior to snow,” said one Nebraska farmer. “Fields are a soggy mess.” 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.

Overseas markets were mixed today. November futures in China were up another 5 cents to $6.737, but November Paris futures in midday trade dipped 2 cents to $4.897 after adjustments for volumes and currencies.

The preliminary report from the CBOT showed daily futures volume up again to 295,799 while open interest trended another 11,823 higher.

Options volume eased to 40,504, still favoring calls (23,376) over puts (17,128) for now. Implied volatility slipped 1% to 16.22. 

Bottom line: Ability to hold the break through the head-and-shoulders neckline on the December chart is key to hopes for a chance to hedge some 2018 inventory. For more, see Bryce Knorr’s latest Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Soybeans tested small gains overnight, which mostly evaporated ahead of Monday’s open. As with corn, markets may look to governmental export and harvest data, out later today, for further direction. Traders continue to fret over fractured U.S.-China trade relations, but prices have been on a mostly upward trajectory since bottoming out in mid-September.

China is only minimally buying U.S. soybeans so far in the 2018/19 marketing year, with the world’s No. 1 soybean importer accounting for 5% of total U.S. export commitments so far. China was also responsible for one of two large soybean sale cancellations last Friday. 

The preliminary report from the CBOT showed daily futures volumeeased to 231,711, with open interest down another 6,691.

Options volume dipped to 44,681 but still nearly favor puts (21,784) to calls (22,897), as traders continue to liquidate November calls that expire at the end of this week. Implied volatility in November at-the-money options dropped to 15.02%. 

Vegetable oil prices overseas were steady to firm today. December soybean oil futures in China held steady at 37.79 cents, with December palm oil futures in Malaysia up slightly to 23.83 cents. 

Oilseed markets were mixed. January soybean futures in China didn’t move the needle, hovering around $14.47. November rapeseed futures in Paris midday trade dropped 3 cents to $9.70 and November futureson Winnipeg canola overnight eased fractionally to $8.57 after adjustments for currencies and volumes.

Bottom line: Soybeans are struggling in their bid to extend the rally toward the end of the month. For more, see Bryce Knorr’s Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

 

Wheat prices start the week slightly lower Monday morning, continuing an overall bumpy ride in October that has featured several rounds of ups and downs throughout the month.

Markets saw a flurry of overseas wheat sales overnight, including China selling off more of its 2013 imported wheat stocks and Syria purchasing 7.3 million bushels of Russian inventory. Algeria and Jordan also issued international tenders to purchase substantial amounts of wheat.

Overseas markets are mixed today. January futures for Eastern Australian Wheat picked up nearly 6 cents to $8.309. December futures in Paris midday trade slipped fractionally to $6.283 after adjustments for currencies and volumes.

Volume in soft red winter wheat ticked higher to 80,211, with light net fund selling adding another 4,453 to open interest. Options volume of 32,765 massively favor calls (27,842) to puts (4,923). With another month to expire, implied volatility in at-the-money December options ticked higher again, reaching 21.22.

HRW volume eased to 23,986 on open interest that moved 377 higher. Options volume of 478 favored calls versus puts by a more than two-to-one margin. 

Bottom line:The logic for a wheat rally depends on global supply and demand. Without problems seeding the 2019 crop, rallies could depend on whether Russia aggressively exports or not. 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. 

Want to receive market commentary by e-mail twice each day? This service includes added information, charts and graphs to explain market trends, and more. Sign up for the FREE service today - Farm Futures Daily - and follow along on Twitter with @FarmFutures.

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.
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish