Grains Futures Prices
- Why Corn Has Not Topped Out Yet
Todays sell off from the highs has some worried about a high being made. Here is a quick 4-minute video on the prospects that further advances are still...
- Livestock Report
Weakness prevails as cattle and hogs move lower
- Corn - Just My Opinion
Volatility Increase makes for Intra-Day Swings
Futures Market News and Commentary
Corn futures are trading 2 to 5 cents lower this morning. They ended the Tuesday session with most contracts 3 to 6 cents higher as rains continue to slow planting. The front month chart hit its highest price since May 2018 on Tuesday, with new crop Dec the highest since last August. The market is trying to talk producers out of taking the Prevent Plant insurance option by raising the ante, though some may not have a choice. New buying interest continued to flow into the market, with preliminary open interest up 18,371 contracts. A chunk of this is producer cash sales being hedged by the elevators. Due to weakness in the Real, prices have been carried by this rally to the highest level that Brazilian farmers have seen for corn since 2015. --provided by Brugler Marketing & Management
Soybean futures are fractionally to a penny per bushel lower this morning. They closed Turnaround Tuesday with 9 to 9 3/4 cent losses, after being higher for most of the morning. July soy meal was down $2/ton, with soybean oil 36 points lower. A rumor that $2/bu trade aid for soybeans is being considered was negative for futures prices yesterday. USDA released a comment that the new program will be acreage neutral. After Monday’s close, the Crop Progress report indicated IA was 27% planted, with MN at 10% complete, SD only 4%, IL 9% and NE 40% in the ground. --provided by Brugler Marketing & Management
As you recall from last week’s discussion on national average corn basis (cmdty National Corn Price Index minus nearby Chicago futures), the initial rally in the futures market opened what looked to be an initial crack in the price differential between cash and futures. That crack has widened early this week as the futures market continues to push higher, putting stress on a cash market that doesn’t need supplies that badly. For example, in last Thursday’s marketing year shipment update (through Thursday, May 9), the U.S. was on pace to see total export demand of 2.321 bb as compared to USDA’s May demand projection of 2.3 bb. However, the most recent pace was down 32 mb from the previous week and down about 75 mb over the last four weeks. Extending this same slowdown over the final 16 reporting weeks of the reporting year would drop U.S. export shipments another 300 mb, adding that to USDA’s latest ending stocks projection of 2.095 bb. Now we are talking about a lot of old-crop corn. Given these fundamentals, and what looks to be a budding secondary downtrend on the national average basis weekly close-only chart, those still holding short hedges in the July contract against 2018 production could be in a race to not be last to sell cash. Technically, keep an eye on the important 4-week low weekly close of 30 1/4-cent carry on the basis chart. If that gets taken out the new secondary downtrend could quickly gain momentum. National average basis was calculated at 27 1/2 cents under Tuesday afternoon, down 2 1/2 cents since May 13. Darin Newsom President Darin Newsom Analysis Inc.
Last week was one of the more interesting I’ve seen in the market for many, many years. Particularly soybeans. I could fill pages (and probably will at some point) about all the diverging signals in old-crop soybeans, with possibly the most interesting being the continued strengthening of national average basis despite a rally in the futures market that reached nearly 60 cents off the Monday low of $7.91 (July futures). And as I’ve talked about in this space before, there can be, and often is, and inverse relationship between futures and basis. But not last week, not in soybeans. Last week we saw the July futures contract eventually finish 12 1/2 cents higher at $8.21 3/4, while the cmdty National Soybean Price Index (NSPI, weighted national average cash price) settled $7.38 3/4, putting national average basis at 83 cents under. The previous Friday saw national average basis calculated at roughly 84 1/4 cents under. Recall from previous conversations that soybean national average basis has a seasonal tendency to strengthen into the late July timeframe. Weekly close-only resistance for the 2018-2019 market is at about 79 1/4 cents under, the weekly close the third week of April, just before cash bids were rolled to the July contract. Based on the history of national average soybean basis, I’d look for this year’s market to move above resistance in early June. This pattern could be put to the test if futures have indeed established secondary (intermediate-term) uptrends on weekly charts and look to be moving into major (long-term) trends on monthly charts. For now, though, the cash market continues to appreciate into short hedges that have been held and rolled since last harvest. Darin Newsom President Darin Newsom Analysis Inc.
While I sit here and wait, like nearly everyone else, for hard red winter wheat (HRW) harvest to begin in far southern Texas, I thought it would be interesting to look for oddities on the cmdty National Basis Map for HRW wheat. Sure enough, it didn’t take long to spot something interesting. Basis near the port of Houston, where much of the U.S. wheat is shipped out of for export, continues to run at about 95 cents over the July Kansas City wheat contract. This area is a bright green on the map, indicating basis in that area is some of the strongest in the country. The last month or so has seen basis at this location improve from 90 cents over to the 95 over, presumably because harvest still remains more a myth than a reality. Now, as I look north and to the west, I see basis in Jefferson County, Kansas running 70 cents under, the blotch on the map running a blood-like crimson red. Jefferson County sits just outside Kansas City, the onetime home of trade for the Kansas City HRW futures market and still a delivery point for the cash market. If I’m a merchandiser in the northeastern corner of Kansas, and business is slow because it just won’t stop raining – anywhere, anytime – I’m making a call to Bandit and the Snowman to see if they can deliver me a load or two of HRW down to the Houston area. After all, hauling wheat has to be more fun than hauling illegal beer. Darin Newsom President Darin Newsom Analysis Inc.