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3 Big Things Today, April 2

Soybeans, Grains Higher Overnight; Money Managers Curb Bullish Bets on Trade Fears

1. Soybeans, Corn Rise on Continued Bullishness After Plantings Report

Soybeans and grains were higher as buying continued after last week’s prospective plantings report showed expectations for fewer-than-expected acres of both crops.

Growers will plant 89 million acres with soybeans this year, the U.S. Department of Agriculture said in a report on Thursday, down from 90.1 million last year and a February projection of 90 million acres.

Corn area will total 88 million acres this year, down from 90.2 million in 2017 and last month’s forecast for 90 million acres, according to the USDA.

Analysts had expected soybean acres at 91 million and corn area at 89.4 million acres. Soybean and grain markets were closed Friday.

The reduced acreage estimates took traders and brokers by surprise, with many indicating skepticism that growers would plant so few acres with the crops. Still, the lower-than-expected forecasts have given prices a boost.

Soybean futures for May delivery jumped 12¾¢ to $10.57½ a bushel overnight on the Chicago Board of Trade. Soy meal added $3.40 to $387.40 a short ton and soy oil gained 0.32¢ to 32.19¢ a pound.

Corn futures rose 3¾¢ to $3.91½ a bushel overnight.

Wheat gained 4¼¢ to $4.55¼ a bushel in Chicago while Kansas City futures added 7¢ to $4.74¼ a bushel overnight.

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2. Money Managers Reduce Bullish Bets on Beans, Grains on Trade Fears

Money managers reduced their bullish bets on soybeans and corn last week on fears that exports will decline amid an ongoing trade dispute with China.

Speculative investors held a net-long position, or a bet on higher prices, of 108,839 corn contracts in the week that ended on March 27, the Commodity Futures Trading Commission said in a report. That’s down from 207,376 contracts a week earlier.

Investors were net-long by 173,011 soybean contracts last week, down 6.1% from the prior week, according to the CFTC.

The U.S. and China are in the midst of a tit-for-tat trade dispute. The U.S. last month put tariffs on steel and aluminum imports and said it would impose levies on $50 billion worth of Chinese goods. China responded by yesterday saying it would impose tariffs on more than 100 items from the U.S., including pork, wine, and fruits.

While soybeans aren’t on the initial list, many fear that it will be added as it’s a large bargaining chip for both countries.

China was conspicuously absent from last week’s export sales report that showed it didn’t buy any U.S. soybeans for delivery in the current marketing year that ends on August 31. The Asian country is usually the biggest buyer of beans.

Investors held 25,512 net-long contracts in hard-red winter wheat, down from 72,969 contracts a week earlier, but also had a net-short position, or a bet on lower prices, of 78,107 soft-red winter wheat contracts, according to the CFTC.

The weekly commitments of traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Winter Storms Hitting Northern U.S. While Extremely Dry Weather Plagues Southern Plains

Weather maps are extremely active this morning with winter weather in the northern U.S. and extremely dry weather in the southern Plains.

A widespread winter storm is pounding much of Montana and will hit eastern North and South Dakota starting today, according to the National Weather Service.

South Dakota will see 4 to 7 inches of snow with localized amounts of up to 9 inches, the NWS said in a report early Monday. Travel is expected to be difficult with winds of up to 35 mph causing snow to drift.

A red flag warning is in effect for much of the southern Plains including western Kansas, the Oklahoma and Texas panhandles, and much of eastern New Mexico.

Winds are forecast from 20 to 30 mph sustained with stronger gusts expected while relative humidity will drop as low as 8% today, the NWS said. The combination of strong winds and low relative humidity makes for tinderbox-like conditions.

Along with the dry weather, a freeze warning is also in effect for much of Oklahoma – outside the panhandle – as temperatures dropped into the mid- to upper-20s overnight, according to the agency. Whether temperatures were cold enough for long enough to damage winter wheat remains to be seen.

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