Morning Market Review

(Farm Futures) –   Grain futures are mostly higher this morning, finding support from better export news and forecasts for wetter weather into early next week.

Farmers reporting Feed from The Field this week noted better yields, 173.4 bushels per acre for corn and 50 bpa soybeans, a little above USDA forecasts. Variability remains a concern with corn yields ranging from 90 to 288 bushels per acre for corn and 21 to 74 for soybeans.

Stocks look poised for more gains today as prospects for a tax bill advanced. Wall Street recovered from losses yesterday to edge higher, and major indexes jumped to new records overnight after mostly higher trade in Asia and Europe. The dollar is stronger with investors shedding safe havens like gold and Treasuries. Crude oil eased below $51 on easing tensions in Iraq.

Corn prices are trying to edge higher after choppy range-bound trade overnight. December futures remain below the 25-day moving average, which comes in around $3.5075 today.

Better export news helped support the market, with basis firming in the export pipeline last week. Export sales hit the 50-million-bushel market last week, down from the prior period but still well above trade guesses and almost twice the rate needed every week to reach USDA’s forecast for the marketing year.

Basis was fairly firm despite an open week of harvest, but rains return this weekend though the Plains should be mostly dry according to maps for the next week. Official 6- to 10 and 8- to14-day forecasts out yesterday show dry weather returning, confirmed by the latest updates this morning

The preliminary report from the CBOT had futures bolume down 9% to 203,029 on open interest that was up 18,597 despite light fund short covering, suggesting more harvest hedge pressuring hitting the market. Options volume dropped 12% to 51,854, 56% of it puts as traders added November $3.50 calls and puts, spending a couple pennies for a bet on a price move over the next week. Implied volatility eased 1% to 14.02.

Overseas markets were mixed. January futures on the Dalian Exchange in Chinca edged a half cent higher to $6.40 as the government continues to find some demand at auctions of reserves this week. November futures in Paris fell 5.3 cents to $4.336 after adjustments for volumes and currencies, following a strong week of harvest.

Bottom line: Corn supplies are still big and will have to draft a bean rally to hold the Oct. 12 low. Tight farmer holding should firm basis, and maybe futures, into December.

Soybeans are a little higher, sticking to their trading range after losses earlier in the week.

Export sales last week came in 46.9 million bushels, down from the big numbers of the prior week and also below trade guesses. Still, the total was nearly 20 million above the weekly rate needed to reach USDA’s forecast for the 2017 crop. The government separately reported the sale of another 14.1 million bushels to China under its daily reporting system for large purchases.

Strength in the export pipeline last week despite higher barge freight costs helped strength basis overall despite an active week of harvest.

The preliminary report from the CBOT showed daily futures volume up 27% to 257,584 with open interest up 4,709 on light fund buying. Options volume dropped 44% to just 26,684, 56% of it puts as traders added 1,866 November puts that expire at the end of next week. Implied volatility rose 1% 12.46 after falling to the lowest close in more than 20 months.

Vegetable oil prices in Asia ended mixed today. Nov futures for palm oil in Malaysia were higher at 29.257 cents per pound while January soybean oil futures in China eased to 41.219 cents.

Oilseed prices overseas were firm. January soybean futures in China gained 1.6 cents to $15.318, November rapeseed in Paris was steady at $9.822 and Nov canola in Winnipeg was up almost a penny at $9.114. Note: International prices are converted to bushel or pound equivalents after conversions for currencies.

Bottom line:  Soybeans have broken out but don’t let opportunities to lock in profits slip away.

Wheat prices are enjoying modest gains this morning, attracting a little follow-through buying after better trade Thursday. Winter wheat contracts are testing the top of their downtending channels while Minneapolis December goes after its 200-day moving average.

Export sales of 22.6 million bushels were much better than the previous week and came in well above trade expectations, giving the market a little lift.  Long-term forecast out yesterday also called for a warm, dry winter for the southern Plains.

Overseas prices were mixed today. January futures for Eastern Australian Wheat slipped another 4.2 cents to $5.619 following better rains this week. December futures in Paris morning trade were steady at $5.192 after adjustments for volumes and currencies as farmers advanced seeding.

Volume in soft red winter wheat rose 28% to 89,327 while open interest rose 13,747 despite light fund short covering. Options volume dropped 50% to just 9,558, 70% of it calls as traders added near-the-money December strikes. Implied volatility fell more than 1% to 17.39.

Volume in hard red winter wheat nearly doubled to 43,724 on open interest that was up 6,025.

Bottom line: Large global supplies frustrated wheat’s attempt for a rebound.