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CME: Corn Futures Closed Lower Wednesday

29 August 2013

US - December Corn finished down 5 1/2 at 480 3/4, 11 1/4 off the high and 1 3/4 up from the low. March Corn closed down 5 1/4 at 493 1/2. This was 2 up from the low and 11 off the high.

Corn futures had a tough time shaking off the sharply lower action from yesterday and traded lower throughout the session.

The technical chart is beginning to turn lower which has eroded bullish momentum but the forecast for the remainder of the week certainly suggests yields will be trimmed in many key growing states.

The high heat seen this week is occurring post-pollination which is the most important influence on yield potential but August has been very dry which has helped ratchet back thoughts of record yields for some states.

A noted commodity weather analyst cut their yield forecast 1% from July to 158.1 bushels per acre which is still near trend. Yield forecasts remain highly variable across the market. Basis bids in the west remain extremely firm with reports of $2 over the September trading.

Ethanol demand is strong while supply is thin. Ethanol production for the week ending August 23th averaged 820,000 barrels per day.

This is down 2.8% vs. last week and up 0.12% vs. last year. Corn used in last week's production is estimated at 86.1 million bushels and cumulative usage for this crop year is 4.44 billion bushels.

Corn use needs to average 186.02 million bushels per week to meet this crop year's USDA estimate of 4.65 billion bushels. Stocks as of August 23rd were 16.25 million barrels, down 1.4% vs. last week and down 12.1% vs. last year.

November Rice finished down 0.025 at 15.71, 0.035 off the high and equal to the low.

Soy Futures Closed Higher

November Soybeans finished up 2 1/4 at 1372 3/4, 15 off the high and 10 1/2 up from the low. January Soybeans closed up 3 at 1368 1/2. This was 11 up from the low and 14 1/4 off the high.

December Soymeal closed down 1.1 at 429.3. This was 2.5 up from the low and 8.3 off the high.

December Soybean Oil finished up 0.26 at 44.78, 0.13 off the high and 0.42 up from the low.

Fresh new crop demand helped to spark a rally for the soybean market today but traders were still cautious ahead of the weekend given the forecast that calls for a better chance for rainfall into next week.

Old vs. new crop spreads were at it again to the upside with cash basis levels holding above delivery values as the market approaches first notice day for the September option. New crop spreads edged lower throughout the day.

The 5 day weather forecast is mostly unchanged from yesterday. Next week offers up cooler temps compared to this week and the high pressure ridge may begin to break down which could bring light showers across the Corn Belt.

The heaviest rainfall looks to be in the northern Midwest and far Eastern Corn Belt. Most of the totals look to be a quarter to a half inch. More rainfall is needed and the scorching heat this week has already begun to take its toll on the crop in some areas.

The trade is having a difficult time projecting potential yields at this point but data shows that there is correlation between dry conditions in August and final yields vs. trend-line yields.

Demand remains strong for the new crop year and China bought another 120,000 tonnes of soybeans overnight.

The sales trend continues to suggest relentless demand from China and perhaps buyers were covering needs as insurance against lower US yields going forward.

Wheat Futures Closed Higher

December Wheat finished down 4 1/4 at 659 1/2, 10 off the high and 1 1/4 up from the low. March Wheat closed down 4 at 671 1/2. This was 1 up from the low and 9 1/2 off the high.

Wheat futures were mixed today with losses seen in Chicago wheat while KC probed into positive territory for most of the session.

Spreads were firm in the KC market but the Sept/Dec is still trading at a carry. European markets slipped lower but traders noted the market was steady as traders await the results from the Egypt wheat tender that was issued yesterday afternoon.

French and Black Sea wheat were expected to be in prime position to take the business while US Chicago wheat remains $15 to $20 overpriced. Egypt ended up taking 5 cargos of Romanian, Ukrainian, and Russian wheat in the end.

Despite early weather fears, the EU crop looks to be much larger than expected and quality is average.

A large international trading house estimated EU production at 134.6 million tonnes in 2013/14, up from 125.7 million a year ago and against the USDA forecast of 141.37 million tonnes. Production hit a record high of over 150 million tonnes in 2008.

The strong supply outlook should ratchet back wheat imports and will likely mean that the EU will be a tough competitor for the Black Sea all crop year.

US exporters did see a bit of good news this morning after the USDA announced that US private exporters sold 119,000 tonnes of wheat to an unknown destination, of which 40,000 tonnes were for 2013/14 and 79,000 were for 2014/15.

December Oats closed down 1 1/4 at 348 1/2. This was 2 up from the low and 4 1/4 off the high.


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