Overnight Summary: The coffee is going down fast this morning, the drink that is not the futures market (down only a little bit). Though it’s the day after we sprang time forward, it still feels earlier than it is. Grain and oilseed contracts traded higher initially Sunday evening before oilseeds and wheat (naturally) slipped lower into early Monday. Market fundamentals haven’t changed, aren’t expected to change, with traders watching through tired eyes for the latest round of gibberish headlines regarding U.S. and China trade talks. The biggest mover overnight was DJIA futures, down more than 200 points during overnight trade before rallying ever so slightly.
Overnight markets: May corn was 1 cent higher with December corn also up 1 cent. July soybeans were 2 1/4 cents lower while November dipped 1 1/2 cents. May canola was $1.20 lower with new-crop November down $2.10. May Chicago wheat lost 1 1/2 cents, July Kansas City was off 2 cents, and May Minneapolis was 3 3/4 cents lower. May rice was off 0.5 cent and May oats were unchanged. May cotton was 0.03 lower with new-crop December off 0.05. Crude oil was up $0.45 while distillates (heating oil, diesel fuel, etc.) added 0.5 cent. April gold was $3.60 lower and May silver was down 4.4 cents. The U.S. dollar index was 0.03 higher. Japan’s Nikkei lost 330.92 points (1.5%), Hong Kong’s Hang Seng dropped 276.15 points (1.0%), and China’s Shanghai Composite fell 79.43 points (2.6%). London’s FTSE 100 was up 25 points (0.4%), Germany’s DAX was 28 points (0.3%) higher, and France’s CAC added 9 points (0.2%). DJIA futures were down another 195 points.
Corn: Let’s begin at the end of last week, specifically what we saw on the weekly close-only charts for the old-crop May-to-July futures spread and new-crop December 2019-to-July 2020 forward curve. The former saw its carry increase by 3/4 cent for the week, moving to 9 1/4 cents and covering roughly 73% of calculated full commercial carry. The latter saw its carry strengthen 1 1/4 cents to 20 3/4 cents, approximately 44% of calculated full commercial carry. The former is definitely not bullish, and the latter remains neutral. That’s the fundamental hand we have to play heading into this week, the same one we’ve held for the last number of weeks as the commercial view of old-crop fundamentals grew more bearish. Of all USDA’s numbers in last Friday’s report, the most interesting one (at least in corn) was the lower export demand projection of 2.375 bb. This combined with a 25 mb decrease in ethanol demand for corn increased USDA’s domestic stocks guess by 100 mb. The lower export projection would imply that we should continue to see corn’s shipment pace slow in subsequent weekly reports. As for Monday’s action, given little fresh news in the market it would not be surprising to see a two-sided session, with contracts favoring the downside. Another 937 contracts were reported delivered against the March issue, putting the total at 11,643 contracts.
Soybeans: The oilseed complex tried to rally early overnight, before Monday morning finds markets back in the red. Soybeans are just bearish, technically and fundamentally, with the old-crop May-to-July futures spread sitting at a carry of 14 cents and covering roughly 82% of calculated full commercial carry. That having been said, it would not be surprising, when Thursday’s weekly export shipment numbers roll around, to see the pace of U.S. soybean exports to continue to improve. We’ve seen national average basis firming as merchandisers try to find enough supplies in this late-lasting winter to meet demand. All that having been said, I still expect soybeans to move lower Monday. Down seems to be the path of least resistance with initial technical support for the old-crop May contract at last week’s low of $8.92 1/4. The contract touched $8.93 1/2 overnight. Another 578 contracts were reported delivered against the March issues, putting the total at 4,832 contracts.
Wheat: The wheat complex was lower overnight in what seems to be a strengthening cycle of bearishness. I’ll keep an eye on new-crop July Kansas City (HRW) and Chicago (SRW) contracts, fully expecting to see new contract lows posted over the course of Monday’s session. Last week saw July KC hit $4.35, then $4.37 3/4 overnight. July Chicago has a working low of $4.45 3/4 from the overnight session compared to last week’s low of $4.41 3/4. Minneapolis spring wheat contracts were also showing losses of 1 to 2 cents. Look for wheat markets to stay under pressure as the day progresses, with some of the pressure likely tied to the continued strength of the U.S. dollar. However, if wheat closes lower, then we should hear plenty of Turnaround Tuesday talk come Monday evening. Another 22 contracts were reported delivered against the Chicago March issue, putting the total at 2,463 contracts. Another 8 contracts were reported delivered against the Kansas City issue, putting its total at 184 contracts.
