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Afternoon Recap by Bob Burgdorfer

Exports, drop in the dollar support corn, soybeans.

Sept. 6, 2016

Wheat continues to struggle

The dollar fell more than 1% on Tuesday following bearish purchasing data and that tumble appeared to give corn and soybeans a lift after the long holiday weekend, with soybeans finishing higher for the third straight session.

Corn finished a fraction higher in most months, while volume leader December was unchanged. The wheat markets were mostly lower as the burden of big global supplies countered support from the lower dollar and robust export shipments.

Export shipments last week were better than expected and topped the previous week’s numbers.

In other markets, equities turned higher shrugging off the bearish economic. Gold and crude oil also were higher when the crops closed.

Storms moves through Iowa and eastern Nebraska later on Tuesday, with local forecasts in Iowa calling for 2 to 3 inches of rain overnight. The 6- to 10-day outlook (Sept 11-15) favors normal to above-normal rains for the Midwest with below-normal temperatures for Iowa and normal to above-normal heat for Illinois and east.

Export News – via USDA, Reuters:

-Japan will not tender for wheat this week. For administrative reasons the country skips a second week of the month tender twice a year, one in March and one in September.

-U.S. export inspections for the week ended Sept. 1: corn 57.8 million bushels, soybeans 45.3 million and wheat 23.5 million. The shipments topped forecasts and week ago numbers for all three crops.

-Russia’s Agriculture Minister said wheat exports may increase by 5 million metric tons to 30 million after the country lowered its export tax to zero for two years.

Corn unchanged

Corn futures closed unchanged to a fraction higher as investors await the start of this year’s big harvest.

While the export inspections and lower dollar were supportive, a predicted record 15 billion bushel harvest is about to get under way to cap rally attempts. Dealers in central Illinois said a few farmers started harvesting this past weekend and more cutting may start next week.

USDA is not scheduled to include a corn harvest report in its crop progress data due later today.

Last week Farm Futures released its 2017 planting survey earlier this week at the Farm Progress Show and it expects about 1 million fewer corn acres then versus 2016 as low prices will like shift acres to soybeans and other crops.

Estimated CBOT corn futures volume for Tuesday was 330,977, compared with Friday’s actual of 237,630. Open interest on Friday increased by 1,831 and that included a drop of 1,530 contracts in September and an increase of 1,761 in December.

September corn futures closed up ¼ cent at $3.16-3/4 per bushel and December was unchanged at 328-1/2.

What to Look For: Harvest will start soon and the 30- and 90-day forecasts indicate hot weather and mostly normal moisture for that effort.

Soybeans higher

Soybeans closed about 6 to 8 cents higher in nearby months, following the drop in the dollar and the robust export shipments.

Volume-leader November finished under key moving averages after it tested resistance at the 200-day moving average ($9.67). The gains moved November farther away from oversold territory with its latest relative strength reading at 39.7. Oversold is 30.

No daily export sales were reported the past few days after frequent sales in August.

The Farm Futures survey expects about 1 million more soybean acres in 2017 as farmer shift away from corn.

Estimated CBOT soybean volume for Tuesday 195,743 compared with Friday’s actual volume of 98,255. Open interest on Friday decreased by 1,926, which included a drop of 409 in September and an decrease of 2,389 in November.

September soybeans on Tuesday closed up 5-3/4 at $9.74-1/4 and November up 7-1/4 at $9.59-3/4.

What to Look For – Barring a change in the weather, the Sept 12 crop report and actual yields from this year’s harvest may be the next deciding points for traders.

Wheat lower

Wheat markets closed lower despite active export shipments and firm corn and soybeans.

Ample global wheat supplies kept pressure on prices. Russia’s move to lower its export tax should increase competition in world wheat markets.

In Australia, reports surfaced that excess rain has hurt wheat and other crops in New South Wales, the country’s second largest wheat producer. That wheat harvest will begin in October.

Forecasts keep rain in the central Plains later this week, which should help the winter wheat that will be planted this fall.

The CBOT estimated Monday’s soft red winter wheat volume at 105,419, compared with Friday’s actual of 58,525. Open interest on Friday increased by 52 with September’s down 390 and December’s up 426.

Chicago’s September soft red winter wheat closed down 2-1/4 at $3.71 per bushel and December slipped 3/4 to $3.98-1/2. Kansas City’s September hard red winter dropped 2-1/2 to $3.84 and December dropped 3 to $4.10-1/4. Spring wheat for September was down 7 at $4.89-1/4 and December dropped 5-1/2 to $4.86.

What to Look For – The big global wheat supply is not expected to change soon, which may limit market rallies. Northern Hemisphere harvests are largely done, while many Southern Hemisphere combines will start rolling this fall. Brazil’s harvest may be under way now.

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This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

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