Weekly Cash Comments

Cash Commentary-

Corn grain basis was unchanged for the week, while soybeans posted a 2-cent advance.

In corn, basis levels were up one-cent a bushel at the Gulf export market, but river terminals were on average unchanged for the week. Barge rates dipped slightly on the week but did little to stimulate the river basis levels. For ethanol plants, basis levels were off 1-cent a bushel on average as strength in the corn futures market in the past week has helped keep pipeline supplies adequate.

For soybeans, basis levels improved for the first time in nearly 6 weeks. River terminals were up 6 cents a bushel with the Gulf export market posting a 7-cent advance. For soybean crushing plants, basis levels were up 4 cents a bushel in the past week.

Futures Commentary-

The grains were mixed this week with soybeans and corn both gaining, while wheat fell 12 3/4 cents for the week ending Thursday 27th. Corn showed relative strength improving 17 3/4 cents, while soybeans increased 12 3/4 cents. Traders are eyeing two major reports including the Planting Intentions report scheduled for release at 11 AM CST on Tuesday the 31st.

Lanworth released their latest planted acreage forecasts this morning raising its U.S. soybean seeding’s estimates to 85.5 million acres and its U.S. corn planting estimate to 88.2 million acres. This compares to Informa Economics estimates of 88.5 million acres of corn planted and 87.5 million acres of soybeans planted in the 2015 growing season.

Wheat was unable to continue its move higher after an improvement in crop conditions in the plains states. Kansas wheat good to excellent winter wheat ratings were unchanged from the previous week at 41 percent, Oklahoma increased 4 percent to 44 percent good to excellent and Texas improved 4 percent to 55 percent good to excellent. Patchy showers are expected over the plains in the 6-15 day outlook which should provide very limited relief to the parched soil. Russia’s weather stressed crop looks to receive more moisture over the next week as rains expand across Europe, Ukraine and into Russia.

Weekly export sales were strong for soybeans which booked 505,808 metric tons, up 48 percent week over week. This beat analyst expectations which ranged from 100,000-300,000 metric tons. The market has been looking for soybean export sales to taper as Brazil harvest is over halfway complete. Major buyers this week included Indonesia, China, Germany and the Netherlands. Soybeans have cumulative export sales of 48.5 million metric tons which is well ahead of last year’s pace of 44.4 million metric tons.

Corn sales were on the low side of expectations this week booking 435,000 metric tons compared to expectations of 400,000-600,000 metric tons. This week’s sales were down 13 percent from the previous week and did little to help along the overall pace of exports this year. So far cumulative corn sales have totaled to 37 million metric tons which is still ahead of the 34.7 million metric tons needed at this time to meet the USDA expectations.  China purchased 60,800 metric tons this week which is the largest weekly purchase in nearly a year.  China has turned to Ukraine to source corn importing 574,000 metric tons in February, up nearly 200 percent from last year. In January only 13,663 metric tons of U.S. corn was imported into China which was down 93 percent from last year.

Wheat sales were reported at 102,000 metric tons this week down 74 percent from last week and a marketing year low for the grain. Expectations were for sales between 200,000-400,000 metric tons. The strength in the U.S. dollar continues to weigh on wheat export sales.

This week’s EIA ethanol production report showed an increase in output by 6,000 barrels per day bringing weekly production to 953,000 barrels per day. This is the 3rd straight week of ethanol production increases despite the lagging energy sector. Seasonally, it is normal to see an increase in ethanol production from March through June. Ethanol ending stocks were also increased this week by 497,000 barrels per day to 21.32 million barrels.

Brazil’s Agroconsult increased their soybean crop estimate to 95.8 million metric tons from 94.7 million in their previous forecast. Brazil soybean harvest is 61 percent complete which is about 4 percent behind last year. Dry conditions recently has helped move along harvest, but light precipitation over the next few days may slow the pace temporarily. Precipitation should clear by early next week to provide more opportunity for harvest.

 

March 27 – Morning Comments

In the overnight session the grains were mixed with corn down 3/4 of a cent, soybeans down 2 3/4 of a cent and wheat up 4 cents going into this morning’s pause. Traders are eyeing two market moving reports that will be released next Tuesday the 31st which include the planting intentions report and the quarterly grain stocks report. Be prepared to monitor grain prices during the release of this report. Click here for a 14 day free trial of the Grain Hedge trading platform which delivers live quotes to your mobile phone, iPad or tablet.

Ukraine had planted 744,000 hectares of spring grain by the 24th this year which was behind last year’s pace of 1.4 million hectares. Analysts have already warned that production could fall from last year’s record due to decreased yields as a result of unfavorable weather during last fall’s planting season. UkrAgroConsult stated that 85 percent of the winter wheat is rated good to satisfactory compared to 93.4 percent last year. They also estimated that total grain production could decrease to 53 million metric tons from 59.2 million metric tons harvested in 2014.

A poll of analysts conducted by Reuters expects quarterly grain stocks to show 7.609 billion bushels of corn with a range of estimates from 7.459 to 7.8 billion bushels. Wheat stocks are expected to be showing 1.140 billion bushels with a range of analyst guesses from 1.083 to 1.2 billion bushels. Soybean stocks are expected to be around 1.346 billion bushels with a range of guesses from 1.273 to 1.404 billion bushels.

Morning Comments – March 26

In the overnight session corn fell 3/4 of a cent, soybeans dropped 2 3/4 cents and wheat increased 1 1/2 cents. The dollar pulled back one third of a percent and crude oil is trading up a dollar this morning. This morning there was a reportable sale of 280,000 metric tons of soybeans to unknown destinations for the 15/16 marketing year.

Weekly export sales were strong for soybeans which booked 505,808 metric tons, up 48 percent week over week. This beat analyst expectations which ranged from 100,000-300,000 metric tons. The market has been looking for soybean export sales to taper as Brazil harvest is over halfway complete. Major buyers this week included Indonesia, China, Germany and the Netherlands. Corn sales were on the low side of expectations this week booking 435,000 metric tons compared to expectations of 400,000-600,000 metric tons. This week’s sales were down 13 percent from the previous week and did little to help along the overall pace of exports this year. China was one of the corn buyers this week purchasing 60,800 metric tons, the most in quite some time. Wheat sales were reported at 102,000 metric tons this week down 74 percent from last week and a marketing year low for the grain. Expectations were for sales between 200,000-400,000 metric tons.

Yesterday, the EIA’s weekly ethanol production report showed an increase in output by 6,000 barrels per day bringing weekly production to 953,000 barrels per day. This is the 3rd straight week of ethanol production increases despite the lagging energy sector. Seasonally, it is normal to see an increase in ethanol production from March through June. Ethanol ending stocks were also increased this week by 497,000 barrels per day to 21.32 million barrels.

Brazil’s Agroconsult increased their soybean crop estimate to 95.8 million metric tons from 94.7 million in their previous forecast. Brazil soybean harvest is 61 percent complete which is about 4 percent behind last year. Dry conditions recently has helped move along harvest, but light precipitation over the next few days may slow the pace temporarily. Precipitation should clear by early next week to provide more opportunity for harvest.

Morning Comments – March 25

The overnight was a quiet trade with corn unchanged, soybeans up 1/4 cent and wheat down 3 1/4 cents. The dollar is trading lower by nearly 3/4 of a percent and crude oil is up 34 cents. This morning there were a couple reportable sales that were announced by FAS for 108,863 metric tons of soymeal to Canada for 2015/16 delivery and 114,000 metric tons of old crop corn to Mexico. The markets will be focusing on the 2015 prospective plantings report and the quarterly grain stocks report which will both be released at 11 AM CST.

The expectations for the quarterly grain stocks as of March 1st are as follows. For corn the average analyst guess pegs quarterly grain stocks at 7.609 billion bushels with the highest estimate at 7.8 billion and the lowest estimate at 7.459 billion bushels. Wheat stocks are expected to be around 1.140 billion bushels with a range of analyst guesses from 1.2 billion bushels to 1.083 billion bushels. Soybean stocks are expected to be around 1.346 billion bushels with a range of guesses from 1.404 – 1.273 billion bushels.

Lanworth released their latest planted acreage forecasts this morning raising its U.S. soybean seedings estimates to 85.5 million acres and its U.S. corn planting estimate to 88.2 million acres. This compares to Informa Economics estimates of 88.5 million acres of corn planted and 87.5 million acres of soybeans planted in the 2015 growing season.

 

Morning Comments – March 24

In the overnight session the grains found some selling pressure near resistance levels. Corn is down 1/2 cents, soybeans are down 3 cents and wheat is down 8 1/4 cents on the day. The Dollar index is trading slightly higher this morning and crude oil is lower by a percent.

Corn is currently trading at its 50 day moving average and is now at a price level scared by consolidation throughout most of February and March. Be aware that selling pressure at these levels is likely following the strong two day rally that lifted us off the short term lows of $3.67. Soybeans are also near a resistance level where the 20 day simple moving average and 50 day simple moving average converge.

State level crop conditions reported yesterday that Kansas winter wheat good to excellent ratings were unchanged from the previous week at 41 percent, Oklahoma increased 4 percent to 44 percent good to excellent and Texas improved 4 percent to 55 percent good to excellent. Despite this week’s improvement in crop conditions, traders see a drier pattern developing over the next 10 days with only a chance of patchy showers in the 11-15 day forecast. Russia’s weather stressed crop looks to receive more moisture over the next week as rains expand across Europe, Ukraine and into Russia.

Export inspections were mostly positive this week with corn beating analyst expectations with 994,666 metric tons of corn booked this week compared to 750,000-950,000 metric tons expected. Soybeans and wheat both met analyst expectations with 519,464 metric tons and 511,069 metric tons respectively.

Morning Comments – March 23

In the overnight session the grains moved higher with corn up 4 1/2 cents, soybeans up 6 3/4 cents and wheat up 6 1/2 cents going into this morning’s pause in trade. The U.S. dollar is pulling back this morning continuing the sell-off on Friday. Corn is currently trading at $3.89 near its 50 day moving average. Crop conditions reports will be released for some the plains states later today.

Over the weekend some precipitation helped out central to eastern Texas, but that was not enough to provide meaningful relief for the drought that is focused on the panhandle of Texas and Western Oklahoma. Dryness looks to continue over the next two weeks with only expectations for light scattered showers. The Delta was able to dry a bit over the weekend providing some opportunity for seeding after excess moisture has slowed fieldwork recently. The weather should remain favorable in the far south for the remainder of the month with showers expected to return in April.

China has turned to Ukraine and away from the U.S. to source corn. In January only 13,663 metric tons of U.S. corn was imported into China which was down 93 percent from last year. However, Ukrainian corn imports have surged in February to 574,000 metric tons, up nearly 200 percent from last year.​

Weekly Cash Comments

Cash Commentary-

Grain futures came under pressure this week as US dollar strength and slow export business took its toll on the market. In the cash market, there was little movement in basis by grain buyers as a whole with U.S. average soybean basis unchanged for the week while corn basis gained only 1-cent on average across the country.

Barge rates were on the rise this week especially along the IL & MS River where gains of 10 cents or more per bushel were fairly common for barge costs. As a result, basis levels in these areas were off fairly sharply. For corn, Gulf export bids were up 4 cents a bushel which helped to blunt some of the basis declines upstream along the river system. For ethanol plants, basis gains were better than the overall U.S. average gaining 2.25 cents a bushel this week. Especially strong were some plants in the Western Cornbelt were gains of 5 to 10 cents were fairly typical at some key plants.

For soybeans, it was another week of lackluster movement in basis with U.S. average basis sitting at -43K, virtually unchanged since the start of the month.  At the Gulf, export basis was up 8 cents a bushel, but higher barge costs offset this gain putting river terminal bids under pressure by 2 cents a bushel. For soybean plants, basis levels were mostly unchanged but some modest strength was apparent in the Western Cornbelt plants.

Futures Commentary-

This week the U.S. dollar volatility pushed and pulled grains caused by anticipation and the reaction to the FOMC statement issued on Wednesday. The FOMC indicated in their latest statement, that a rate increase will be unlikely in the April meeting and announced that they will make a rate hike after they are “Reasonably Confident” inflation will move back to the 2 percent target and after further improvement in the labor market has been observed. The dollar traded sharply lower following the statement as traders viewed this position as a continuation of extremely low interest rates and the delay of any interest rate hike that was expected in the near future.

NOPA crush numbers were released on Monday and showed 146.970 million bushels of soybeans crushed in the month of February, the largest recorded since 2010. This figure was lower than the average analyst guess of 148.537 million bushels, but up from last year’s figure of 141.612 million bushels. The trade reaction to the report was relatively mute with little volatility in soybean prices following the release of the NOPA numbers.

Export sales this week were within analyst expectations for soybeans and wheat, but on the low side of expectations for corn. Wheat booked 391,900 metric tons for the week ending March 12th, up 12 percent from the previous week. Corn sales were reported at 502,300 metric tons up 20 percent from last week but on the low side of expectations which ranged from 500,000-700,000 metric tons. Soybean sales fell within analyst expectations with 342,000 metric tons booked for 14/15 delivery. Expectations for soybean sales ranged from 250,000-450,000 metric tons. Corn, Soybeans and wheat are all running ahead of pace to meet current USDA export forecasts.

On Wednesday, the EIA announced that ethanol production increased again 3,000 bpd to 947,000 barrels per day. This year’s ethanol production is now up 5.7 percent compared to last year. In the March WASDE report the USDA lowered its corn used for ethanol to only a 1.3 percent increase year over year. Recently, there has been talk of Brazilian ethanol being imported into the U.S. due to the strong shift in currency rates. This news is a negative sign for both ethanol and the corn markets.

Wheat continued its short covering rally this week as the national weather service issued a “red flag” warning across the plains on Monday.  The warning was for very warm temperatures, low humidities and southwest winds which created an environment at risk of rapid wildfire growth. The dry conditions throughout the plains have caused Kansas to drop its weekly wheat crop rating to 41 percent good-to-excellent from 46 percent last week. Texas weekly crop report improved a percent, but the Oklahoma wheat conditions declined two percent this week. The latest drought monitor shows parts of the Texas panhandle and western Oklahoma in “Extreme Drought” with only minor relief expected over the next 30 days.  Some light showers of 1/4 inch or less was seen across the plains on Thursday but the forecast turns drier over the next 10 days. Russian growing conditions have also been unfavorable, receiving unseasonably warm dry weather fueling crop concerns as farmers begin seeding.

The recent warm-up has triggered flooding on the Ohio River which has halted grain loading at many river terminals. The National Weather Service has issued a flood warning in the Cincinnati area early in the week and expected the river to stay at flooded at least through Thursday.

 

Morning Comments – March 20

In the overnight session the dollar pulled back slightly helping grains push higher. Going into the morning pause corn was up 2 1/4 cents, soybeans were up 3 1/4 cents and wheat was up 5 3/4 cents. Keep in mind that at 10:30 CST this morning Informa will release their latest crop planting forecasts. A recent survey from Farm Futures Magazine forecast soybean acreage at 87.25 million acres, up 4.2 percent from the last year. The farm futures poll also saw corn plantings at 88.34 million acres versus 90.6 million acres planted last year.

Yesterday, the Buenos Aires grain exchange held their soybean production forecast for Argentina steady at 57 million metric tons. The Ag Ministry did the same, keeping their forecast at 58 million metric tons compared to the March WASDE report which is looking for 56 million metric tons of soybean harvested in Argentina this year. Over the last two weeks temperatures across Argentina have been above normal putting some strain on the southern growing regions which missed out on the increased precipitation throughout February and early March. Overall there is still very little concern over the crop size in Argentina.

Dryness in the plains continues to provide a reason for traders to cover short positions. The latest drought monitor shows parts of the Texas panhandle and western Oklahoma in “Extreme Drought” with only minor relief expected over the next 30 days.  Scattered light showers of 1/4 inch or less was seen across the plains yesterday with some 1/4-1” inch totals observed along the Kansas and Oklahoma border. However, the forecast turns drier over the next 10 days with only chances of light and spotty relief in the 11-15 day forecast.

Morning Comments – March 19

The overnight session saw significant volatility with the U.S. dollar selling off sharply following the FOMC statement and then recovering in the overnight to an index level of 99.20. Corn, soybeans and wheat all gapped higher in the opening 5 minutes of the night session and spent the remainder of the night backing off of those gains. Corn went into the morning pause unchanged, soybeans are up 1 1/2 cents and wheat gained 2 1/4 cents in the overnight session.

Yesterday, the FOMC issued their latest statement which indicated that a rate increase will be unlikely in the April meeting. The statement issued announced that they will make a rate hike after they are “Reasonably Confident” inflation will move back to the 2 percent target and after further improvement in the labor market. The dollar traded sharply lower following the statement as traders viewed this as continuation of extremely low interest rates and the delay of any interest rate hike that was expected in the near future.

Export sales were within analyst expectations for soybeans and wheat, but on the low side of expectations for corn. Wheat booked 391,900 metric tons for the week ending March 12th, up 12 percent from the previous week. Corn sales were reported at 502,300 metric tons up 20 percent from last week but on the low side of expectations which ranged from 500,000-700,000 metric tons. Soybean sales fell within analyst expectations with 342,000 metric tons booked for 14/15 delivery. Expectations for soybean sales ranged from 250,000-450,000 metric tons.

Yesterday, the EIA announced that ethanol production increased 3,000 bpd to 947,000 barrels per day. This is the second consecutive week of ethanol production gains. This year’s ethanol production is now up 5.7 percent compared to last year’s production during the same time period. In the March WASDE report the USDA lowered its corn used for ethanol to only a 1.3 percent increase year over year. Recently, there has been talk of Brazilian ethanol being imported into the U.S. due to the strong shift in currency rates. This news is a negative sign for the ethanol and corn markets.

Morning Comments – March 18

In the overnight session the grains rebounded a bit after breaking through key support yesterday. The dollar index remains steady and crude oil has fallen a dollar overnight. Corn is up 2 1/4 cents, soybeans are up 6 cents and wheat is up 2 1/2 cents this morning. Today the FOMC statement will be released at 1 PM CST. Traders are watching the statement closely for indication that the first rate hike since 2006 may be near.

In the overnight, corn and soybean prices are testing the failed support levels that were broken during yesterday’s trade session. These support levels are likely to turn to resistance after failing to support prices in yesterday’s trade action. Keep a close watch on prices around 3.73 ¾ for corn and around 9.61 ¾ for soybeans.

China purchased over 600,000 metric tons of corn from Ukraine this year which is not a positive story for the U.S. corn market. China, a country which typically doesn’t import large amounts of corn, has turned to Ukraine to source its needs. In a statement made this month, China intends to double the nearly one million metric tons of corn it imported from Ukraine in 2014. In January Ukraine shipped 470,000 metric tons to China, which was well over the amount exported to China by the U.S.

 

 

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