Morning report: Corn, soybeans and wheat all track significantly higher heading into Monday’s session?. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Up 10 to 11 cents
Soybeans: Up 25 to 27 cents
Wheat: Up 26 to 38 cents
Grain prices were red-hot in overnight trading. Wheat led the way, with most contracts surging between 2.75% and 4.25% higher as various escalations in the Ukraine/Russia war over the weekend put future Black Sea exports back in doubt. Soybeans also notched healthy gains of nearly 2% on a technical bounce, while corn prices firmed around 1.25% higher.
Overseas stock markets were mixed but mostly lower. Asian markets closed with losses of 0.75% to 3% as the threat of a potential global recession still looms. European markets ranged between losses of 0.4% and gains of 0.4% in midday trading. On Wall St., the Dow eased 44 points lower to 29,306 as investors await the next round of inflation and corporate earnings data out later this week.
Energy futures were in the red overnight. Crude oil faded 0.4% lower to $92 per barrel, while gasoline and diesel each dropped 1%. The U.S. Dollar firmed moderately, while safe-haven gold spilled nearly 1% lower.
The latest 72-hour precipitation map from NOAA shows the eastern half of the country will see variable rains that range from trace amounts to more than 1″ between today and Thursday. Much of the Northern and Central Plains will fail to gather any additional moisture during this time, meantime. Official 6-to-10-day forecasts show a return to seasonally dry weather for the Midwest and Plains between October 15 and October 19, with cooler-than-normal conditions likely for the eastern half of the country.
On Friday, commodity funds were net buyers of corn (+5,000), soybeans (+4,500), soymeal (+2,000) and CBOT wheat (+750) contracts and were roughly net even when trading soyoil contracts.
Corn
Corn prices followed other grain prices higher on a round of overnight technical buying as traders prepare for plenty of additional data from USDA later this week, including the agency’s next World Agricultural Supply and Demand Estimates (WASDE) report, out Wednesday morning. Prices fought off seasonal harvest pressure as focus shifted to the latest developments in Russia’s ongoing invasion of Ukraine.
Later Monday morning, traders will get to see the next round of grain export inspection data from USDA. A week ago, corn export inspections made it to the upper end of trade estimates that ranged between 15.7 million and 27.6 million bushels, with a tally of 26.0 million bushels. Cumulative totals for the 2022/23 marketing year are also trending slightly ahead of last year’s pace so far.
Also out later today is USDA’s new crop progress report, which will cover the week through October 9. As of October 2, harvest progress was at 20% (identical to the prior five-year average), and 52% of the crop was rated in good-to-excellent condition.
Have harvest lows already been notched this season? Grain market analyst Bryce Knorr digs into historical price trends in November and December, adding that “in the here-and-now, surviving hedge pressure from harvest could be the key test.” Knorr offers additional analysis in today’s Ag Marketing IQ blog – click here to learn more.
The preliminary report from the CBOT showed daily futures volume track moderately lower to 209,094 with open interest firming by 10,464. Options volume fell to 36,778 and still favors calls (21,948) over puts (14,830). Implied volatility for near-the-money December contracts eased to 25.6%, which don’t expire for another 46 days.
Soybeans
Soybean prices rose 2% higher in overnight trading on a round of technical buying partly spurred by spillover strength from other grains. Traders are also tracking hog prices in China, which surged 6% higher today on post-holiday demand and rapidly shrinking supplies. Expect the current pattern of technical buying to continue throughout the day.
Traders will be closely monitoring the results of two USDA reports out later today. First comes the agency’s grain export inspection report. Can soybean volume improve on the prior week’s tally of 21.1 million bushels? And can cumulative totals for the 2022/23 marketing year overtake last year’s pace (totals are running slightly lower year-over-year so far, with 65.5 million bushels since the beginning of September)?
Also out this afternoon is USDA’s next crop progress report. Through October 2, 22% of the 2022 soybean harvest is complete, while crop quality has held steady the past two weeks, with 55% rated in good-to-excellent condition.
Grain market analyst Roger Wright recently fielded several reader questions, including this one: “Roger, I have about one-third of my soybeans unpriced. Am I better off to sell at this lower price and buy them back using call options, or pay the 5 cents a month storage at the elevator? Grain bin storage is not an option.” Wright offers his opinion on what to do and how to approach these type of “opportunity cost” situations – click here to learn more.
How are your crops looking this week? Is harvest progressing as planned? Click this link to take the survey and share updates about your farm’s crop development. Farm Futures grain market analyst Jacqueline Holland regularly reviews and uploads results to the FFTF Google MyMap, so farmers can keep current with peer anecdotes from around the country.
The preliminary report from CBOT showed daily futures volume firm moderately to 281,678 with open interest firming by 231. Options volume fell to 27,258 and still favors puts (14,404) over calls (12,854). Implied volatility for near-the-money November contracts eased to 22.8% and expires in another 10 days.
Wheat
Wheat prices jumped substantially higher amid an escalation of hostilities in Ukraine. Over the weekend, Ukrainian forces blew up a key transportation bridge in Crimea, and Russia responded with a barrage of new missile strikes targeting various military, communications and energy infrastructure. Most wheat contracts trended between 2.75% and 4.25% higher heading into Monday’s session.
Will the next set of USDA grain export inspections show more robust results for wheat? Week-ago results of 24.5 million bushels bested the entire range of trade estimates, which came in between 9.2 million and 23.9 million bushels. Cumulative totals for the 2022/23 marketing year are still running slightly behind last year’s pace, with 312.9 million bushels as of September 29.
Analysts will also get to see USDA’s next winter wheat crop progress updates this afternoon. As of October 2, 40% of the 2022/23 crop had been planted, which is below 2021’s pace of 45% and the prior five-year average of 44%. At the same time, 15% of the crop had emerged, which is also behind the prior five-year average of 17%.
Algeria issued an international tender to purchase 1.8 million bushels of soft milling wheat from optional origins that closes on Tuesday. Algeria typically buys more than the nominal amount listed on its tenders. The grain is for shipment in November.
The preliminary report from CBOT showed daily SRW volume eased slightly lower to 68,112, with open interest trending 3,414 higher. Options volume fell to 17,473, heavily favoring calls (14,114) over puts (3,359). Implied volatility for December near-the-money options increased to 43.6% and expires in 46 days.
Volume in HRW wheat eased to 29,364, with open interest trending 343 higher. Options volume is at 2,146 and heavily favors calls (1,945) versus puts (201).
