Morning Market Review for April 22, 2019

(Farm Progress) – Grain futures are lower across the board this morning after an initial attempt to firm Sunday quickly turned into red ink. A hint at drier weather over the next month along with selling in other markets cooled enthusiasm, though some countries, including much of Europe, remain on holiday for Easter Monday.

While another storm is moving through the upper Midwest this morning, rains will be fairly light over some areas in the next week. Official 6 to 10 and 8 to 14-day forecasts out yesterday and the latest updates from the ensemble model this morning show a drier trend in the eastern Corn Belt. Longer term outlooks out last week were also show a warmer and more normal rainfall patter.

Farmers reporting Feedback From The Field last week were mostly still parked, but around 5% of their fields were in the ground. USDA should report planting remaining behind normal; usually around 13% of the crop is planted now.

Farm Futures wants to know what farmers are experiencing as the spring of 2019 unfolds with your Feedback From The Field. Click the link to tell us what’s happening in your area and we’ll publish regular updates featuring first-hand accounts from growers.

U.S. stock index futures tried to extend Thursday’s rally early in the overnight trade. That effort didn’t last when much of Asia turned lower on a drop on China’s main stock index.

Crude oil was one of the few markets showing gains, boosted above $65 a barrel by reports the U.S. will not extend waivers to some trading partners buying crude oil from Iran. That could drain supplies from a market already seeing production cuts from OPEC and its allies as output suffers in Libya and Venezuela.

Money managers poured more money into crude oil last week, adding nearly $1.8 in futures and options to their net long position, according to Friday’s Commitment of Traders. That took the bullish bet to its widest level since September.

While big speculators continued to build long positions in cotton, hogs, beef and pork last week they sold most of the grain market, adding a net 61,595 contracts to their overall bearish bet on agriculture.

Corn prices are lower this morning, sending the May contract below support off April 9 spike lows. Large old crop stocks remain a drag on the market, with shifting forecasts limiting buying.

Old crop export bookings last week of 37.3 million bushels were a pleasant surprise, beating the rate needed through August to reach USDA’s forecast for the 2018 crop. However, shipments need to pick up to hit that mark. They’ve tapered off lately after a fast start last fall.

A few barges moved up river over the weekend on northern stretches of the Mississippi River where flood waters are starting to ease. But the system remains closed from north of Muscatine, Iowa to north of St. Louis, which may not open to traffic until the first week of May. Other problems continue to hamper movement of barges all the way to the Gulf.

Big speculators extended their record bearish bet on corn again last week, adding 29,313 contracts to take the net short position to 323,665. That could provide plenty of ammunition for a short-covering rally if weather ever becomes an issue during the growing season.

The preliminary report from the CBOT showed daily futures volume down 20% Thursday to 292,470 while open interest was up 5,834 despite light fund short covering. Options volume was down 5% to 75,846, 60% of it calls as traders liquidated July puts and added calls that expire in the next two months. Implied volatility in at-the-money December options fell to 19.99%

Overseas markets saw limited trade today. May futures in China jumped 7.2 cents to $7.094 after adjustments for volumes and currencies while June Paris futures were closed for Eastern Monday.

Bottom line:  Corn is trying to hold on for a planting rally, but traders aren’t biting yet, believing the crop can be planted quickly thanks to modern technology. Large old crop supplies are also limiting gains. For more, see my Corn Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily.

Soybeans are down a little as the morning break nears, though that’s enough to create a bearish reversal for May if the market can’t bounce back.

Lack of news from trade talks with China continues to weigh on sentiment, as traders brace for farmers to plant more acres than USDA forecast March 29. Old crop soybean sales last week of 14 million bushels were above the rate needed through August to reach USDA’s forecast for the 2018 crop, but fell short of trade hopes. New buying of soybeans out of China remains negligible – just 5,880 bushels net in the latest week.

China still has 274 million bushels of unshipped sales on the books, though shipments have also slowed lately as trade talks dragged on. Traders will be watching today’s export inspections numbers to see if deliveries on those deals are starting to move.

USDA Friday also reported 105,000 million metric tons of soybean meal was sold to Columbia, split between old crop and new.

Big speculators sold across the board in the soy complex, increasing bearish bets in soybeans, meal and oil. The preliminary report from the CBOT showed daily futures volumeoff 26% on Thursday to 168,862 while open interests went up 2,935 despite light fund short covering.

Options volume dropped 46% to 33,812, 56% of it puts as traders added July $8.80 puts. Implied volatility in at-the-money November options rose to 15.94%.

Vegetable oil prices in Asia were lower today on fears of rising inventories. May soybean oil futures in China dropped to 36.109 cents per pound while May palm oil futures in Malaysia lost a fifth of a cent to 22.97 cents.

Oilseed markets internationally were weaker. Though May rapeseed futures in Paris were closed for Easter Monday, May soybean futures in China were down 8 cents to $13.436 and Winnipeg canolaovernight lost 3.9 cents to $7.587 after adjustments for currencies and volumes.

Bottom line: Old crop carryout is still burdensome. With more acres likely than USDA found March 29, rallies on a trade deal with China are the best hope for making old crop sales. For more, see my Soybean Outlook. For specific recommendations and daily charts, subscribe to our free E-newsletter, Farm Futures Daily

Wheat prices are lower with losses mounting at all three markets today. An outlook for drier weather on the northern Plains along with ample old crop inventories around the world are limiting interest in buying. Markets in Australia and much of Europe are closed, adding to the torpor today.

Export sales data out Thursday was mixed. While total new old crop bookings of 11.7 million bushels were above the rate needed through the end of May to reach USDA’s forecast for the marketing year, shipments continue to lag that pace.

Big speculators added to bearish bets in winter wheat last week and but large traders in Minneapolis covered a little of their net short position.

Volume in soft red winter wheat fell 6% Thursday to 138,882 while light new fund selling added 2,391 to open interest. Options volume was up 29% to 29,537, 52% of it calls as traders added March $4.90 and $5 calls and the March $4.70 put. Implied volatility in at-the-money July options increased to 21.61%.

HRW volume was off 27% Thursday at 64,686 on open interest that was up 4,537.

Bottom line: Acreage in 2019 is the lowest on record but winter wheat looks off to a very good start. And export demand remains limited in a highly competitive world market. 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.