Morning Comments – July 28

Grains were mixed overnight with corn and wheat posting modest gains while soybeans sank into negative territory by the end of the night session.  Crude oil continued to come under pressure, falling below $42 for the first time since April.

Spring wheat yield prospects in central and northwest North Dakota are down from a year ago but still above average, scouts on an annual crop tour said on Wednesday.  The Wheat Quality Council tour calculated an average yield for 158 hard red spring wheat fields scouted in the region at 46.9 bushels per acre (bpa) on the second day of a three-day crop tour. The figure compares with the 2015 Day Two yield of 47.3 bpa and the five-year average of 45.7.

French consultancy ODA said it expects soft wheat production in the European Union to drop to 134 million tonnes this year, down 17 million from a record 2015 harvest, due to weather hit-yields in France and other parts of western Europe.

The estimate, posted late on Wednesday on ODA’s Twitter account, was well below the European Commission’s current forecast of 144.6 million tonnes made at the end of June and the 145.5 million tonnes estimated by fellow consultancy Strategie Grains in mid-July. As well as a widely expected plunge in French production, due to the impact of torrential rain, limited sunshine and crop disease, ODA said it expected similar problems in the Benelux countries, southern England and southern and western Germany.

Weekly Export Sales

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

438

300-500

476

450-650

Soybeans

-1

250-450

678

600-800

Wheat

506

400-600

Morning Comments – July 27

Grains were higher overnight with soybeans leading the complex by advancing above $10. Corn and wheat followed with more lackluster gains. In outside markets, crude oil dipped a bit while US equity futures were in positive territory to start the morning.

Spring wheat yield prospects are lower than last year in southern North Dakota and neighboring sections of South Dakota and Minnesota, scouts on an annual crop tour found on Tuesday.  The Wheat Quality Council tour calculated an average yield for hard red spring wheat fields scouted in the region at 43.1 bushels per acre (bpa) on the first day of a three-day crop tour. That figure compares with the 2015 Day One yield of 51.1 bpa and the tour’s five-year average of 45.0 bpa. Scouts on the tour sampled 177 fields overall on Tuesday, including 173 hard red spring wheat fields, four durum wheat fields and no hard red winter wheat fields.

Analyst UkrAgroConsult has raised its forecast for Ukraine’s 2016 wheat harvest to 24.8 million tonnes from 23.3 million, it said on Wednesday. UkrAgroConsult said that the new outlook was based on a fresh government data on the sowing area, showing the wheat area had increased to 6.2 million hectares from 6 million hectares.

In weather, cool air currently moving into the US Corn Belt continues through the weekend, but also pushes heaviest rains the next five days south of the region; temperatures bounce back to 5°F to 10°F above normal next week, but yet another weekend cool-down likely to follow.

Morning Comments – July 26

Grains were mixed overnight with wheat lower while corn and soybeans had modest advances in the overnight session. Crude oil continued to slump adding to yesterday’s sharp losses.

Yesterday after the close USDA’s crop progress report showed both corn and soybean condition ratings unchanged for the week at 76% and 71%, respectively. Also, both crops are developing ahead of normal. Corn is currently 79% silking versus a 5-year average of 70% while beans are 76% blooming versus 66% for normally for this time of year.

In world news, China has experienced heavy rains of late bring 6 to 9 inches in core corn producing areas of North China. While difficult to assess immediate damage to the corn crop, rain of this intensity has likely resulted in some widespread flooding across much of the region. The situation could be made even worse if the heavy rainfall were to continue over the next several weeks, but a dry and pattern would allow fields to dry down more rapidly.

The European Union’s crop-monitoring service (MARS) raised its forecast slightly for the average soft wheat yield in this year’s EU harvest as a sharp increase in the projection for Bulgaria offset a cut in rain-affected France. In its monthly report the MARS service pegged the average EU soft wheat yield at 6.10 tonnes per hectare (t/ha), up from 6.07 t/ha seen in June. The estimate was 2.9% below last year’s yield but 4.6% above the five-year average. MARS cut its soft wheat yield estimate for France, whose wheat crop has been hit by torrential rain in the spring and low sunshine, to 7.37 t/ha, from 7.45 t/ha estimated last month. It would be 6.9 percent below 2015, but 0.5 percent above the five-year average.

Oil on Tuesday hit its lowest mark since May, falling towards $44 a barrel, pressured by concerns that a long-awaited rebalancing of the market would be delayed due to excess supply. Record crude output from the Organization of the Petroleum Exporting Countries, a glut of refined products and signs of more drilling activity in the United States in the face of low oil prices have added to concern about excess supply. U.S. drillers added oil rigs for a fourth consecutive week and traders fear continued increases would threaten a market weighed by excess supply for two years.

 

Morning Comments-July 25

Soybeans was a leader to the downside this losing 51.25 cents. Compared to soybeans, corn and wheat were down modestly, off 23.5 and 16.25 respectively.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

US Exports were mixed this week. Old and new crop corn came in slightly lower than analysts expectations. Old crop soybeans were in line with expectations, but new crop came in almost 300,000 MT above expectations.

Wheat exports have the potential to increase in the next few months. News out of Europe points to disappointing yields with French wheat yield estimates at the lowest seen in 13 years.

Crude oil continues to move lower. Rebalancing may take longer than expected as huge amounts of crude remain in vessels at sea and storage tanks on land. Data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

Weekly Cash Comments

Cash Commentary

Basis levels kept relatively steady during a week of volatile futures prices. Corn was up an average of 1.5 cents per bushel with soybeans slightly behind up 1.25.

Ethanol plants saw a slight rise higher this week up 1.5 cents per bushel. Ethanol production continues to stay strong, particularly in the midwest where we saw the highest production numbers this month. Corn along the river saw an average increase of 3.5 cents per bushel even with old crop and new crop exports coming in below expectations.

Plummeting futures prices kept soybean basis levels mostly stable to slightly stronger across some sectors this week. River terminals as a group were steady as old-crop business starts to trickle off. However, crush plants moved higher by 3.2 cents a bushel on the week.

Futures Commentary

Soybeans was a leader to the downside this losing 51.25 cents. Compared to soybeans, corn and wheat were down modestly, off 23.5 and 16.25 respectively.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

US Exports were mixed this week. Old and new crop corn came in slightly lower than analysts expectations. Old crop soybeans were in line with expectations, but new crop came in almost 300,000 MT above expectations.

Wheat exports have the potential to increase in the next few months. News out of Europe points to disappointing yields with French wheat yield estimates at the lowest seen in 13 years.

Crude oil continues to move lower. Rebalancing may take longer than expected as huge amounts of crude remain in vessels at sea and storage tanks on land. Data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

 

Morning Comments – July 22

Soybeans continued to plunge lower overnight giving up nearly 20 cents a bushel on new-crop November. Corn and wheat drifted lower as well.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

Yesterday after the close, Argentina’s government bumped up forecasts for the corn and bean crop for the 2015/16 marketing year. They pegged the soybean crop at 58.8 MMT vs 58.0 previously while the corn crop was projected to be 39.8 MMT versus a previous estimate of 37.9 MMT.

 

Wheat prospects deteriorated sharply in Europe in recent weeks due to worse than expected damage from heavy spring rain, prompting analysts to slash crop estimates with French output seen at its lowest in 13 years. Consultancy ODA Groupe expects the 2016 crop in the largest EU wheat producer and exporter to be less than 30 million tonnes, down from 32 million pegged last week and 35 million estimated on July 6. If realized, that would be the lowest French wheat harvest since 2003 and is far below the record 2015 crop of nearly 41 million tonnes.

Crude futures were on track for weekly losses on Friday as investors reassessed U.S. data on oil stocks and excesses in oil products in Europe and Asia. While many expect global oversupply of oil to ease in the near term, huge amounts of crude remain in vessels at sea and storage tanks on land as the rebalancing takes longer than some had anticipated. While U.S. production has been falling, crude inventories are at 519.5 million barrels, historically high for this time of year according to EIA.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

Morning Comments – July 21

Grains found modest support overnight trying to recover from the steep losses accumulated over the past three trade sessions. In outside markets, equities were lower as was crude oil and the US dollar.

Current weather models continue to point to a return to normal temperatures after today and Friday’s heat wave thru the Midwest.  The latest model shows heavier precip mid next week versus the model 24 hours ago.

In overnight news, Japan bought 165,048 MT in a regular wheat tender. Most of that or 99,473 MT was with the US, while the remainder was to Canada and Australia. South Korea’s state-run Korea Agro-Fisheries & Food Trade Corp. has purchased 20,000 tonnes of soybeans to be sourced from the United States and Canada in an international tender which took place on Thursday, European traders said.

Oil prices rose as much as 1 percent on Wednesday, lifting U.S. crude from two-month lows, after the U.S. government reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a glut. U.S. gasoline prices, however, hit four-month lows after the data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

WEEKLY EXPORT SALES

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

345

400-600

506

500-700

Soybeans

325

300-500

1,001

500-700

Wheat

478

350-550

Morning Comments – July 20

Grains posted anemic gains overnight after yesterday’s sharp sell-off.  Equity futures were up overnight and crude oil was hovering around unchanged waiting for fresh EIA inventory data later this morning.

The latest weather models show hot weather on Thursday and Friday in the Midwest, but subsiding after that.  By early next week high temps are expected to be 7 degrees lower and by late next week be as much as 10 degrees lower. Rain also appears to be most likely this weekend into next week in the heart of the Corn Belt.

In overnight news, a South Korea feed buyer bought 70,000 MT of optional origin corn. Jordan passed on its tender aiming to buy 100,000 MT of wheat while Syria bought 200,000 MT of Russian wheat.

Crude oil is holding ground at a 10-week low, after the American Petroleum Institute reported that U.S. crude supplies fell by 2.3 million barrels for the week ended July 15, according to sources. The closely watched Energy Information Administration report will be released Wednesday. Analysts polled by S&P Global Platts forecast a decline of 1.25 million barrels for crude inventories.

Morning Comments – July 19

Grains were lower overnight while the US Dollar hit its highest mark in 4 months. Crude oil recovered some of yesterday’s losses while equity futures drifted towards negative territory to start the day.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

Precipitation totals were light in the last 24 hours with some rain events hitting W NE and S IN/OH. Intense heat sets up in the Midwest US and northern Plains from Wednesday through Saturday, with high temperatures between 95°F to 105°F and low temperatures near 80°F; temperatures normalize early next week, but warmth returns thereafter. The latest weather models show cooler temps and more precip for the Midwest in the next 3 to 5 day period.

Oil prices erased early losses on Tuesday after falling on concerns over a crude and refined fuel glut outweighed an expected cut in U.S. shale production and a probable further draw in U.S. crude inventories. Prices turned higher as an official said oil production at Libya’s Sarir field had been suspended due to protests at the Hariga terminal. Output at the Messla field was also at risk if ports shut, the official said.

 

Morning Comments – July 18

Grains traded both side of unchanged overnight but came into the morning break with losses, especially for soybeans.  In outside markets, crude oil started the week lower while equity and bond futures posted modest gains.

Weather for the 2nd half of the month looks to be hot and wet which gave the soybean market a reason to head lower. After a cooler than normal first half of July, Corn Belt temperatures will heat up later this week to average 6 to 9 degrees hotter than normal and much of the rest of the nation will also be hot. New GFS maps have the next 16 days with widespread storms east of the Mississippi, limited moisture and some heat across the WCB and N Plains and very limited storminess and excessively hot and dry over the S Plains.

NOPA June crush came in at 145.05 mb compared to trade est. of 155.4 and May’s crush of 152.82. The avg. daily rate of crush was 4.84 mb which is the lowest rate of the year, just below the Jan rate of 4.85 mb. Oil stocks were 1.985 bln lbs vs. 1.994 in May. Meal exports were 594 tst vs. 682 in May.

Crop conditions will be released later today after the market close. Crops should show a deterioration in SD, NE, MI, OH and IN while rains benefited crops in ND, MN, KS, much of MO, and good portions of IL, IN and WI.

Oil prices fell on Monday as traders shrugged off the impact of the attempted coup in Turkey and the market turned its attention to bearish fundamentals, while disruptions to crude exports in Libya lent prices some support. A report by Morgan Stanley raised concerns about the longer-term outlook for oil consumption as demand for petrochemicals rather than fuels such as diesel and gasoline is clouding the outlook for crude demand.

In export news, Egypt is in the market for wheat although the US is likely not to garner the business as last week’s deals to Egypt went to Ukraine and Russia.

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