Weekly Cash Comments

Cash Commentary-

Corn basis saw modest growth this week advancing 2 cents a bushel on average across the country, but bean basis was unchanged thanks to higher futures and better farmer selling.

In corn, basis levels were up largely driven by strength at ethanol plants in the Western Cornbelt. On average, ethanol plants posted a 3-cent gains but in the Western Cornbelt plants were up 5 to 10 cents a bushel in some cases. This week’s ethanol production was off 17,000 barrels per day from the previous week, but year-to-date production is still well ahead of last year’s pace. At the Gulf, export basis gained 2 cents a bushel but river terminals on average were up slightly less than that. Southern stretches of the Mississippi river and the Ohio River saw corn basis strength this week.

For beans, average basis levels were flat across the country, but soy crushing plants as a group were off 2 cents a bushel. Deliveries appeared to pick up this week with soybean futures shooting higher early in the week thanks to the threat of a Brazilian trucker strike. Also, bad weather in the US eastern Cornbelt kept plants in Indiana and Ohio bidding higher for beans as farm movement slowed, while river terminals along the Ohio River encouraged farmers to deliver beans over corn to their facilities. On average, river terminal basis levels were unchanged for the week in spite of a 4-cent advance at the Gulf.

Futures Commentary-

Corn and wheat prices fell this week down 9 ¾ cents and 24 ½ cents respectively, while soybean prices rallied 16 ¾ cents on news of Brazil trucking disruptions. Truckers in Brazil are protesting higher diesel prices by using road blocks and parking their rigs on the shoulders of Highway BR 163 to interrupt harvest grain flow throughout the country. The protest began on Wednesday in two small towns with a group of transportation companies and independent truckers but quickly spread to surrounding towns. Truckers are looking for the state government to reduce the diesel tax. The strike has slowed fuel delivery throughout the country cutting off the supply of fuel for many farmers during harvest. The strike has also disrupted the flow of grain to the ports making traders nervous that delays could push soybean sales onto the U.S. books.

The trucker strike continues in Brazil even after the Government offered truckers a year of free financing for vehicles from the state development bank, an offer to keep diesel prices unchanged for six months and to help truckers work out a framework for setting freight rates. This offer by the government resulted in some truckers quitting the strike and clearing off the roadside, but many roads throughout Brazil are still blocked. On Thursday, in an attempt to break the trucker strike, Brazil’s Justice Minister said that the government would impose fines of about $1,700-$3,400 per hour on trucks who have blocked roadways. Despite the threat of fines truckers continue to block traffic throughout Brazil.

Following a cancellation of the Egypt wheat tender last Wednesday due to “exaggerated U.S. wheat prices”, Egypt’s GASC bought 120,000 metric tons of U.S. HRW wheat announced on Wednesday. Egypt was looking to make use of a 100 million dollar line of credit provided by the U.S. Government to be used for the purchase of U.S. wheat. Although this should not be expected as the norm, the sale shows that prices are close to being competitive on the global market. Wheat prices seem to have found support during Thursdays trading session after holding a major support level of $4.92 ¼ which was the low back on February 2nd.

Exports sales for corn were weaker than expected, while wheat and soybeans reported sales on the low side of analyst expectations. For the week ending February 19th corn export sales totaled to 715,800 MT which was down 23 percent from last week. Analysts were expecting to see corn sales between 900,000 and 1,100,000 metric tons. Despite the weaker than expected export sales this week, cumulative corn sales running well ahead of the pace needed to meet USDA expectations with 34.8 million metric tons sold this year.

Soybean export sales were on the low side of expectations booking 459,200 MT. However, soybeans have booked 47.12 MMT already this year, well ahead of the pace needed to meet USDA expectations. Last year during this week only 43.4 MMT of soybeans were booked. Wheat sales were reported 328,300 metric tons of sales, within the analyst expectations and up 23 percent from the previous week.

Weather forecasts in Brazil continue to show moisture in the forecast which has been interrupting the safrinha corn planting pace. More rain is expected in the northern part of Brazil for the rest of the week and throughout the 6-15 day outlook. There are some slight concerns that the delays in planting could lead to additional acreage and yield loss throughout Moto Grosso.

Morning Comments – February 27

In the overnight the grains traded higher with corn up ¼ of a cent, soybeans up 3 ½ cents and wheat up 6 ¾ cents going into this morning’s pause. Wheat seems to be bouncing higher this morning after holding a major support level of $4.92 ¼ which was the low back on February 2nd. Today is first notice day for March grain contracts.

The trucker strike continues in Brazil even after the Government offered truckers a year of free financing for vehicles from the state development bank, an offer to keep diesel prices unchanged for six months and to help truckers work out a framework for setting freight rates. This offer by the government resulted in some truckers ending their strike and clearing off the roadside, but many roads throughout Brazil are still blocked. Yesterday, in an attempt to break the trucker strike, the state Justice Minister said that the government would impose fines of about $1,700-$3,400 per hour on trucks who have blocked roadways. Despite the threat of fines truckers continue to block traffic throughout Brazil.

Weather forecasts in Brazil continue to show moisture in the forecast which has been interrupting the Safrinha corn planting pace. More rain is expected in the northern part of Brazil for the rest of the week and throughout the 6-15 day outlook. There are some slight concerns that the delays in planting could lead to additional acreage and yield loss throughout Moto Grosso.

Yesterday Brazil’s Agro consultant released their latest forecast of 14/15 Brazilian soybean production pegging the crop at 94.7 million metric tons compared the USDA’s forecast in February of 94.5 MMT.

Morning Comments – February 26

In the overnight session the grains traded mixed with corn and soybeans up 2 ¼ each and wheat trading 1 ¼ cent higher going into the morning pause in trade. Today is the last day to get out of any March grain contracts with first notice day Friday the 27th.

Yesterday at 11 AM CST trucker strike representatives met with the Brazil government to seek a resolution to the multi week long strike that has clogged roadways in Brazil. Following the meeting, Brazil minister says that the Government is not open to altering fuel tax to appease the striking truckers. However, the government followed that announcement by stating that the truckers are showing flexibility and that they expect a resolution will be reached soon.

Exports sales for corn were weaker than expected, while wheat and soybeans reported sales on the low side of analyst expectations. For the week ending February 19th corn export sales totaled to 715,800 MT which was down 23 percent from last week. Analysts were expecting to see corn sales between 900,000 and 1,100,000 metric tons. Soybean export sales were on the low side of expectations booking 459,200 MT compared to expectations between 450,000-650,000 metric tons. Soybean sales are still well ahead of the pace needed to meet USDA expectations. Wheat sales were reported 328,300 metric tons of sales, within the analyst expectations and up 23 percent from the previous week.

  Expected Actual
Corn 900,000-1,100,000 715,800
Soybeans 450,000-650,000 459,000
Wheat 200,000-400,000 328,300

This morning the International Grains Council forecast the world wheat crop to increase 2 million metric tons to 719 MMT for the 14/15 marketing year. The IGC forecast a decline for the 15/16 marketing year to 705 MMT.

Morning Comments – February 25

The grains are moving lower this morning with corn down a penny, soybeans down 4 cents and wheat in Chicago down 3 ½ cents. Yesterday’s rally in Soybeans sparked some farmer selling after prices rose sharply to an intraday high of $10.29. Keep a close watch on corn today as it trades next to a support level of 3.76 cents which was a previous low on in November, December and the middle of January. This morning a reportable sale of 120,000 metric tons of HRW wheat to Egypt was announced.

The Brazil trucker strike and blockade continues this morning although a main road to the Port of Santos was cleared early Wednesday. Even though the striking trucks were dispersed along that stretch, congestion remains an issue with a large amount of trucks looking to use the road soon. The Attorney General stated that they will begin levying significant fines if the strike continues to grow. Despite the threat of large fines, the strike continues throughout many of the countryside roads as truckers protest the increase in diesel prices. Traders are still concerned that the flow of grain to ports and the flow of diesel to small towns which fuel combines will cause slowdowns and delays in weeks to come.

Also in Brazil, scattered showers will continue Thursday through Sunday and continue to disrupt corn planting. Corn planting is about a week behind normal and the 6-15 day forecast showing very few windows of opportunity for corn planting between precipitation events.

Morning Comments – February 24

This morning the grains are trading higher with corn up 1 ½ cents, soybeans up 9 cents and wheat up 1 cent. Soybeans are trading higher on concerns about supply disruptions out of Brazil due to the truckers who are protesting higher fuel prices by blocking main roads across Brazil. Traders are concerned that the lack of transportation will leave small towns without fuel to power combines during the harvest, and generally delay the movement of grain to ports.

Yesterday export inspections were better than expected for both corn and wheat. Corn recorded 900,965 metric tons of grain leaving the country which was higher than market expectations which ranged from 700,000-850,000 MT. Wheat export inspections were recorded at 501,458 metric tons which were around 100,000 above the high side of expectations. Soybean showed 961,749 metric tons were inspected for export which was down from 1.3 million metric tons inspected last week and on the low side of analyst expectations.

Egypt’s GASC announced yesterday that they are seeking 55,000-60,000 metric tons of U.S origin wheat after prices declined late last week. Egypt canceled a tender for U.S. wheat last Wednesday citing that prices were exaggerated. Since the close of Wednesday’s session, wheat prices have fallen 22 cents.

The weekly Texas crop conditions report showed that the percentage of wheat crop rated good-to-excellent was 44 percent, unchanged since last week. Poor-to-very poor was also unchanged at 14 percent.

Morning Comments – February 23

The grains are trading mixed this morning with corn down ¾ of a penny, soybeans up 4 ¼ cents and wheat down 1 ½ a cent. This Friday the 27th is the First Notice day for March corn, soybeans, wheat, KC wheat and MN wheat. Hedgers that are not looking to take delivery should exit their March positions or roll into May contracts.

Truckers in Brazil are protesting higher diesel prices by using road blocks and parking rigs on the shoulders of Highway BR 163 to interrupt harvest grain flow throughout the country. The protest began on Wednesday in two small towns with a group of transportation companies and independent truckers but quickly spread to surrounding towns. Truckers are looking for the state government to reduce the diesel tax.

A few tenders have been offered this morning including an optional origin tender by Jordan’s state grain buyer to purchase 100,000 metric tons of hard milling wheat and another Israeli private tender to purchase up to 90,000 metric tons of corn and 25,000 metric tons of feed wheat.

The CFTC commitment of traders report showed that large speculators which includes hedge funds, cut their long corn positions for the week ending February 17th and lessened their short wheat and short soybean position.

Weekly Cash Comments

Cash Commentary-

Grain futures posted positive gains this week with beans up 23 and corn up 6, but in the cash market overall trends in the basis were mostly flat. Corn managed a 1-cent improvement on the week, while soybeans were unchanged on average across the country.

For corn, export demand and ethanol use continue to be strong demand stimuli. Friday’s export sales report showed over 900,000 MT of old-crop sales, surpassing analyst expectations of 650-900,000 MT. Physical exports of only 696,000 MT meant that outstanding sales, or the amount of grain left to be shipped, continuing to grow to 17.4 MMT. River terminals appear to be bidding more aggressively for March delivery versus spot, with March premiums fetching 7 to 9 cents over most spot deliveries. This likely will help improve basis in the coming weeks. For ethanol, weekly production grew by 3,000 barrels per day and continues to eclipse last year’s pace. Year-to-date production is up 5.7 percent from the same period last year, while USDA is only looking for a 2.3 percent increase in corn use for ethanol.

In soybeans, monthly crush numbers for January came in at 162.675 million bushels, up from last year’s January figure of 156.943 million bushels and just over expectations of 162.673 million bushels. For the week, soybean plants were lower by a penny per bushel on basis with losses most apparent in SD, MN & IA. On the export front, river terminals were up half a penny per bushel on average although there was a mix of buyers that were up and others that were down on the week. Export business continues to be stronger than expected as weekly sales of 505,600 MT were at the high end of analyst expectations on the week.

Futures Commentary-

This week the USDA Ag Outlook Forum provided a boost for soybean prices on Thursday after the USDA announced that soybean acres are projected to be 83.5 million acres in 2015, down from 83.7 million acres planted in 2014. This was a surprise to the market which expected acreage to increase year over year for soybeans. Currently Informa’s latest soybean acreage forecast for 2015 is 88.03 million acres. Although this is not a survey based outlook the market still viewed this as positive news for soybean prices.  The USDA forecast corn at 89 million acres planted in 2015, down from 90.6 million acres planted last year and saw wheat seeding’s losing 1.3 million acres year over year.

Soybeans have been propped up by strong demand in over the last two weeks. On Tuesday the 17th the National Oilseed Processing Association announced a record amount of soybeans were crushed in the month of January. NOPA stated that 162.675 million bushels of soybeans were crushed in January; up from last year’s January figure of 156.943 million bushels and just over expectations of 162.673 million bushels. Soyoil stocks were larger than expected at 1.228 billion pounds compared to expectations of 1.170 billion pounds.

The wheat market struggled to hold onto gains from earlier on in the week after Egypt canceled a tender to buy an unspecified amount of U.S. origin wheat for April delivery. The Egyptian state grain buyer GASC, had been expected to purchase U.S. wheat over recent weeks in order to take advantage of a 100 million dollar credit line provided by the United States. However, despite the credit line GASC canceled the U.S. tender explaining that prices were exaggerated and that it will now seek wheat from other origins with better prices. GASC then issued a tender for 55,000-60,000 metric tons and opened the tender global suppliers.

Another cold front entered the Midwest this week with lows around 0 to-5 degrees Fahrenheit. Although most of the winter wheat belt has sufficient snow cover, around 10-15% of the region is exposed to the harsh wintery temperatures. From central Illinois, Indiana, Ohio and down into Northern Missouri low temperatures could lead to some levels of crop damage.

Northern Brazil weather has once again been very divergent from Southern Brazil. The dryness in northern Brazil has allowed harvest activities to progress normally while Southern Brazil has run into delays due to continued precipitation. The precipitation has been a double edged sword as it provides good moisture for late developing crops, but slowing harvest pace for mature fields. Significant precipitation is expected to continue into next weekend.

 

Morning Comments – February 20

Grains saw some trend reversal overnight with corn and beans giving up some of their gains from the previous session while wheat recovered from its losses on Thursday.  Corn was down 1 cent a bushel, soybeans off 2 cents a bushel and wheat was up 2 cents.

The USDA Ag Outlook Forum provided a boost for soybean prices on Thursday after the​y announced that soybean acres are projected to be 83.5 million acres in 2015, down from 83.7 million acres planted in 2014. This was a surprise to the market which expected acreage to increase year over year for soybeans. Currently Informa’s latest soybean acreage forecast for 2015 is 88.03 million acres. Although this is not a survey based outlook the market still viewed this as positive news for soybean prices.  The USDA forecast​ed​ corn at 89 million acres planted in 2015, down from 90.6 million acres planted last year and saw wheat seeding’s losing 1.3 million acres year over year.

On Thursday after the close, Egypt’s GASC bought 240,000 MT of wheat with 180,000 MT of that going to French suppliers and the remainder going to Romania. On Friday, Egypt’s Supplies Minister Khaled Hanafi said Egypt’s strategic wheat reserves will last until the end of May.

At the USDA forum on Friday, analysts’ pegged new-crop 2015 supplies based on normal yields and reduced acres. For corn, USDA sees the 2015/16 crop at 13.6 BLN BU as compared to 14.2 BLN last year. The soybean crop is projected to be 3.80 BLN BU versus 3.96 in 2014/15. Finally for wheat, USDA looks for the 2015/16 crop to be 2.125 BLN BU as compared to 2.026 BLN in 2014/15.

WEEKLY EXPORT SALES

Expected Actual
Corn 650-900,000 1,075,400
Soybeans 375-550,000 621,500
Wheat 300-500,000 305,400

 

Morning Comments – February 19

In the overnight session corn traded down a penny, soybeans increased 5 cents and wheat fell 1 ¼ cents by the pause in trading. Corn is currently trading at $3.82 which is right on its 100 day moving average. Soybeans 100 day moving average hangs over prices at $10.07.

The USDA Ag Outlook Forum begins today and continues through Friday the 20th. Traders were watching the release of acreage estimates this morning which showed corn at 89 million acres planted from 90.6 million acres planted last year. The USDA projected soybean acres at 83.5 million acres from 83.7 million acres planted in 2015. Soybean acres were a bit of a surprise to traders who were expecting acreage to increase year over year. Informa’s latest soybean acreage forecast for 2015 was 88.03. Planted acreage for U.S. wheat estimated to decline 1.3 million acres.

Egypt canceled a tender for U.S. wheat on Wednesday citing that prices were exaggerated after Cargill, Bunge, Ameropa and Invivo made offers for 60,000 metric tons of soft red winter wheat. Egypt stated that it had hoped to buy American wheat but will now seek other origins with better prices. GASC then issued a tender for 55,000-60,000 metric tons and opened the tender global suppliers.

Morning Comments – February 18

In the overnight session corn traded down 2 ¼ cents, soybeans slipped 2 cents and wheat increased 1 ¾ of a cent. Be careful of soybeans hitting resistance during today’s trading session. We are currently trading near resistance from the lows of the soybeans channel that lasted from October through January. Though we could get continuation buying early on in the session, be careful of some selling pressure at these levels.

NOPA crush numbers were within analyst expectations for the month of January. In the report released at 11 AM CST, the National Oilseed Processors Association announced that 162.675 million bushels of soybeans were crushed in January compared to expectations of 162.673 million bushels. This month’s soybean crush was the largest ever in January topping last year’s January total of 156.943. Soyoil stocks were larger than expected at 1.228 billion pounds compared to expectations of 1.170 billion pounds.

Egypt has set a tender on Tuesday to buy an unspecified amount of U.S. origin wheat for April delivery. A tender from GASC has been expected to purchase U.S. wheat over recent weeks to take advantage of a 100 million dollar credit line provided by the United States.

Government farm office, FranceAgrimer, lifted its French wheat export estimates by 1 MMT for 14/15 for outside the EU to 9.8 and cut ending stock to 3.63 MMT from 4.34 MMT last month. EU wheat exports have picked up significant pace in response to the Russian export curbs. In the latest USDA supply and demand report EU exports were also revised 1 MMT higher from the previous month.

Cold weather is expected to enter the Midwest and continue into Friday. Although there is snow cover throughout much of the Midwest, around 10-15 percent of dormant wheat remains at risk of winterkill. The most vulnerable areas are through Illinois, Indiana, and Ohio. Some snow is expected this weekend to help avert future cold snaps.

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