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Morning markets: Have corn and wheat bottomed out on turnround Friday?

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After losing value all week, grains appeared to have bottomed out early Friday, with strengthening corn, wheat and soy values.


This follows sharp falls in the US corn and wheat futures contracts in Thursday trading, with wheat dropping below $5 per bushel for the first time since May.

 

European contracts also fell after Wednesday’s rise.


More rainfall in the forecast than previously expected is lifting US corn and soy yield prospects, which is weighing on prices.


The Chicago September corn contract continued its downward trend, ending Thursday at $424½ per bushel from the previous day’s $433¾ per bushel, but was up to $4.26 per bushel on Friday morning.

 

The December position closed Thursday down 2¾c at $4.38¾ per bushel.


The Paris maize September futures contract, which had gained E0.75 Wednesday, ended Thursday E0.25 down at E178.00 per tonne.


Yesterday’s USDA corn export figures, with a 40% weekly reduction to 682,400 tonnes and a 1% fall over the month, on top of better weather, contributed to the sharp fall in values.


Analyst CRM Commodities said: “The combination of improving weather in the midwest, poor US export sales and harvest pressure weighed heavily.

 

Corn was posting double digit losses with the Dec-19 expiry dropping more than 2% today or 7% since the beginning of the week.”


Rain forecast helpful for corn yields


“The sharp drop in corn futures is linked to better weather, with forecasts of rain for the midwest corn helpful for the growing corn crop,” added Tobin Gorey of Commonwealth Bank of Australia.


But he noted that corn prices have dropped to near their recent lows, “which might mean the market could find some support”.


However, CRM said the dry and hot forecast will continue to negatively impact the French maize crop which was little changed on Euronext Thursday.

 

“The spread between spot Euronext wheat and spot Euronext maize is still in negative territory (i.e. wheat at a discount to maize) at its lowest level since mid-March 2018.”


September Chicago wheat, which closed at $5.03¼ per bushel Wednesday, broke the $5 per bushel barrier to finish Thursday at $4.93½ bu with the December position 2.3% down at $5.05 per bushel.

 

But early Friday business was running at $4.98 per bushel for the nearby position. The Euronext September wheat contract, which had gained E1.25 to end E176.75 per tonne Wednesday, closed at E174.75 per tonne.


US wheat prices are following the corn trend, although US wheat export figures were in line with trade expectations. There is also new crop pressure with the US soft wheat harvest in progress.

 

“Prices in Chicago are now trading on the lowest levels for 2 months, under $5.10 per bushel for December 2019,” noted Agritel.


Surprising French wheat quality


CRM attributes the Euronext wheat loss of value to “good yield and somewhat surprising good quality in the northern part of France, despite the recent heatwave.

 

Dec-19 CBOT wheat closed at its lowest level since the end of May after a 4-session fall of nearly 6%.”

 

Chicago August soybeans gained 74c Thursday to close at $8.81¼ per bushel with the contract trading at $8.85 per bushel as markets opened on Friday.

 

Canada’s ICE canola November contract gained 0.3% to finish at CAN$445 per tonne, but the August Paris rapeseed position lost E2.50 to E372 per tonne on Thursday, with the December position just E0.25 per tonne higher at E372.25 per tonne.


Mr Gorey observed that oilseed prices were little changed in quiet trading, with the publication of US soy export volumes at anticipated levels having little effect on markets.

 

“Despite improving weather conditions in the US, CBOT soybeans treaded water with resuming US-China trade talks although fresh news was lacking,” added CRM.


EU rapeseed close to highest levels


In Europe, Agritel said the nearby Euronext rapeseed prices “came to test the resistance levels before retreating.

 

"The European market, however, is still close to its highest levels facing the prospect of small production”.


In Europe, CRM noted that European rapeseed prices were in ’consolidation mode’ with the November contract settling at a near nine-month high yesterday. The weakening veg oil/ energy markets were also adding pressure today.


Canadian canola values were up slightly, despite reports of ’wild weather” over the last week in Saskatchewan, with hail, severe winds and some crop damage, at a time when 46% of the oilseed crop is said to be behind its normal stage of development.

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