Weekly Cash Comments

Cash Commentary-

The cash market saw loses yet again this week with soybeans getting hit especially hard.

Corn continues to hold up as unseasonably strong export movement is holding basis up for the time being. On average corn saw basis losses of 1 1/4 cents per bushel. Ethanol plants are holding strong as well only off 1 cent. River facilities were the biggest loser in the corn market this week losing 3 1/2 cents.

Soybeans were off an average of 9 1/4 cents being heavily weighed down by crush facilities and river terminals. Crush facilities saw losses of 12 cents moving even lower from last week’s 23 cent drop. River terminals were hit the hardest this week off 22 3/4 cents per bushel. Potentially adding more pressure was the closure of three Mississippi River locks in southern Iowa and northern Missouri earlier in the week.

Futures Commentary-

Grains saw negative movement this week giving up all of last week’s gains. Corn was off 7 1/2 cents, wheat down 6 1/2, and soybeans off 26 1/4 cents.

This week was marked by huge export announcements from the USDA. Export sales of 133,000 MT of soybeans for delivery to China and another 211,171 MT to Unknown for the 2016/2017 marketing year. For corn, there was a 1,577,340 MT deal to Mexico, with 1,036,320 MT for delivery during the 2016/2017 marketing year and 541,020 MT for delivery during the 2017/2018 marketing year.

On Monday, USDA reported that 15 percent of the US corn crop has been harvested, up from 9 percent last week but below the 5-year average of 19 percent. Likewise, soybean harvest progressed to 10 percent from 4 percent last week, but slightly below the 5-year average of 13 percent. Rains continue to slow harvest in the Eastern Corn Belt and should limit the pace thru the weekend.

The International Grains Council on Thursday cut its forecast for the 2016/17 world corn crop by 3 million tonnes to 1.027 billion, largely reflecting a downward revision for China. World wheat production in 2016/17 was upwardly revised by 4 million tonnes to 747 million driven by higher outlooks in Kazakhstan, Canada and China

China has given approval to at least two companies to export corn, trading sources said. In what could be the first bulk exports in a decade, the Chinese government has issued permits to two state-owned companies, top grains trader Cofco and major processor and trader Beidahuang, allowing them to sell grain abroad. The green-light was for around 2 million tonnes of corn to be exported by the state-owned companies. China last exported significant volumes of corn in 2006/07, when it sold almost 5 million tonnes.

In a surprise move, OPEC countries agreed to reduce oil production to 32.5 million barrels of oil per day from 33.4 million. Saudi Arabia, the largest oil producer, is expected to give up 350,000 barrels a day, according to a senior OPEC source quoting the final proposal. Other OPEC nations are expected to lower production too, though more details were not immediately clear. Three countries are exempted from the production cuts: Iran, Nigeria and Libya.

Morning Comments – September 30

Grains moved to the downside to start the day as traders await fresh news from USDA’s quarterly grain stocks report this morning. In outside markets, crude oil slipped slightly taking a breather from the $3 a barrel rally in recent days while the US dollar surged.

China announced they will approve corn export permits for two state-owned companies. China’s corn exports would be a first in a decade as the government looks to reduce massive stockpiles.

Ukraine’s agriculture ministry and traders have agreed to export 16.5 million tonnes of wheat in the 2016-17 July-June season, news agency Unian quoted the agriculture minister as saying on Friday. The exports break down as 60 percent food wheat and 40 percent feed wheat, Unian said.
Ukraine and grain traders sign a memorandum each year in which the government promises to impose no restrictions on an agreed volume of grain and keep the export rules unchanged.

USDA’s quarterly stocks report is expected to show 1,754 MB of corn, 201 MB of soybeans and 2,397 MB of wheat on hand as of Sept 1. The report will be released at 11 am CDT. Also, USDA will have a wheat production estimate, which traders expect to show 2,323 MB of wheat produced in 2016.

This morning more economic data showed consumer spending and consumption in the US to be weaker than expected for the month of August. This helped deflate the US dollar off its overnight highs heading into the morning trade session.

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 – September 29

Grains gave up most of yesterday’s gains, pushing solidly into negative territory to start the day. In outside markets, equity indices were slightly lower while crude oil was trying to hold on to modest gains.

Basis levels for soybeans continue to come under pressure especially along river terminals. Yesterday losses of 5 to 10 cents on soybean basis were fairly widespread. Some processing plants continue to hold firm on spot basis though. Corn, on the other hand, continues to hold up as unseasonably strong export movement is holding basis up for the time being.

Overnight, two different South Korea feed manufacturers were tendering for corn and soymeal. From Jordan, they are back in the market for 100,000 MT of hard milling wheat.  Jordan has struggled to make purchases in a series of wheat and barley tenders in recent months, with traders saying uncertainty about new quality controls and payment terms has reduced participation by major grain exporting houses.

The International Grains Council on Thursday cut its forecast for the 2016/17 world corn crop by 3 million tonnes to 1.027 billion, largely reflecting a downward revision for China. World wheat production in 2016/17 was upwardly revised by 4 million tonnes to 747 million driven by higher outlooks in Kazakhstan, Canada and China.. In the US, rains continue to slow harvest in the Eastern Corn Belt and should limit the pace thru the weekend. The Western Corn Belt remains dry until Tuesday.

In a surprise move, OPEC countries agreed to reduce oil production to 32.5 million barrels of oil per day from 33.4 million. Saudi Arabia, the largest oil producer, is expected to give up 350,000 barrels a day, according to a senior OPEC source quoting the final proposal. Other OPEC nations are expected to lower production too, though more details were not immediately clear. Three countries are exempted from the production cuts: Iran, Nigeria and Libya.

WEEKLY EXPORT SALES

Actual

Expected

Corn

575

750-950

Soybeans

1,692

1,100-1,300

Wheat

595

400-600

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 – September 28

Grains gave up most of yesterday’s gains, pushing solidly into negative territory to start the day. In outside markets, equity indices were slightly lower while crude oil was trying to hold on to modest gains.

China will impose anti-subsidy duties of around 10% on imports of U.S. DDGs, the Commerce Ministry said in a preliminary ruling on Wednesday. The move was widely expected after the government announced a similar move on anti-dumping duties last week.

South Korea’s Korea Corn Processing Industry Association (KOCPIA) has issued an international tender to purchase about 55,000 tonnes of optional-origin corn, European traders said on Wednesday.

This morning, USDA announced some big export deals. Export sales of 133,000 MT of soybeans for delivery to China and another 211,171 MT to Unknown for the 2016/2017 marketing year. For corn, there was a 1,577,340 MT deal to Mexico, with 1,036,320 MT for delivery during the 2016/2017 marketing year and 541,020 MT for delivery during the 2017/2018 marketing year.

 

Morning Comments – September 27

Grains had modest positive gains in the overnight session while crude oil was sharply lower and the US dollar pushed higher off of its recent lows.

On Monday, USDA reported that 15% of the US corn crop has been harvested, up from 9% last week but below the 5-year average of 19%. Likewise, soybean harvest progressed to 10% from 4% last week, but slightly below the 5-year average of 13%.

Rains this week are expected to be confined to the East with the Ohio River Valley, Mid Atlantic and Carolinas with rain of 3 to 6 inches expected in some East Coast areas. Next week brings a chance of showers next Tue/Wed in the Western Cornbelt which could limit harvest advances.

Soybean basis fell sharply on Monday as any premium between and old- and new-crop bean deliveries has all but evaporated at most markets. Potentially adding more pressure to interior basis is the closure of three MS river locks in S IA and N MO due to flooding. The locks are expected to close later this week due to flooding.

Crude oil prices edged down on Tuesday as a jittery market reacted to statements by Iran that dimmed hopes for an agreement by major oil producers to cap or freeze output. As energy ministers arrived in Algiers for a summit on energy, Iran Oil Minister Bijan Zanganeh called the meeting set for Wednesday “consultative,” adding to concerns that OPEC member nations won’t adopt production limits to prop up the sagging price of oil.

 

Morning Comments – September 26

Chicago soybean futures edged down on Monday to trade near a one-week low as weather forecasts suggested corp conditions would be dry enough this week to let farmers make headway in gathering what is expected to be a record US crop.

Heavy rains and flooding covered a broad area of the northern Midwest this past week. This halted the harvest of corn and soybeans and forced the closure of at least two Iowa crop processing plants. Parts of northern Iowa and southern Minnesota received several inches of rain at midweek; two-day rain totals topped 10 inches in some areas. The region is expected to see two days of drier weather before more rain moves in this week.

Cargill stopped taking deliveries of corn and soybeans at its processing plants in Cedar Rapids, IA due to flooding in the area. The soy plant is scheduled to be closed through Wednesday. Farmers are waiting for their fields to dry out before they can resume harvest.

The US Justice Department is looking into concerns that global consolidation among major seed and agricultural chemical companies may squeeze supplies of the building blocks for widely used genetically modified seeds, a farm group said. These federal inquiries started after Dow Chemical said in December that it would seek to merge with DuPont in a $130 billion deal.

Russian wheat export prices rose last week for the first time since mid-August, buoyed by demand from Egypt after it dropped its policy of not importing wheat containing the ergot fungus, agricultural consultancy IKAR said. Russia exported 7.8 million tonnes of wheat between July 1 and Sept 21, the agriculture ministry said. Grain exports were down 9 percent year on year.

Morning Comments – September 22

Grains were subdued overnight with little movement beyond yesterday’s close. In outside markets, crude oil was up for the 3rd day in a row while the US dollar was sharply lower.

Heavy rains in SE Minnesota/NE Iowa/C. Wisconsin are causing some localized flooding. But, rains are are expected to taper off today, although they are expected to return early next week. Rains in 11-15 day keep harvest very slow in NW Midwest but E. 1/2 harvest delays remain minor next 2 weeks.

In export news, Morocco continues to shop the global market for wheat, buying 310,000 MT of wheat from the EU. Yesterday a deal for 235,000 MT of wheat from the US had been purchased. Egypt reentered the tender market looking to source wheat. It relaxed its ergot tolerance from 0% to 0.05% after no suppliers were willing to deliver under those specs.

On Wednesday, the Fed left interest rates unchanged but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. The Fed said U.S. economic activity had picked up and job gains were “solid” in recent months.

WEEKLY EXPORT SALES

Actual

Expected

Corn

921.9

700-900

Soybeans

875.7

900-1,200

Wheat

561.0

300-500

Morning Comments – September 21st

Grains dipped lower overnight while crude oil and equities were in positive territory to start the day.

After finding a one-month high yesterday, soybeans turned lower as active farmer selling yesterday kept basis levels softening. Corn tried for the 4th time in two months to clear the $3.42 area in yesterday’s trade but settled below the $3.40 mark and is off further today.

Morocco’s grain agency, ONICL, said on Wednesday it had bought 235,000 MT of U.S. soft wheat under a preferential tariff agreement. Earlier this month, ONICL launched a tender to buy 300,000 tonnes of U.S. soft wheat, 300,000 tonnes of EU soft and 45,000 of EU durum, with shipments that should arrive at Moroccan ports by Dec. 31. The North African kingdom has agreements with the United States and the European Union to import certain types of grain at preferential tariffs, with volumes depending on the size of the local harvest.

Investors will watch the U.S. Federal Reserve policy decision later on Wednesday. Expectations of a rate increase have all but evaporated after some weak economic data. The Fed is expected to keep rates unchanged, but may signal year-end hike. The Fed’s rate-setting committee will release its policy statement at 1 p.m. CDT. Fed Chair Janet Yellen is scheduled to hold her quarterly press conference half an hour later.

 

Morning Comments – September 20

Grains were again in positive territory to start the day with soybeans leading the complex higher. In outside markets, the US dollar was slightly higher as were equities while crude oil was slipping lower going into the start of the day session.

USDA’s crop progress report showed on change in the condition of the US corn and soybean crops, as both held steady on the week at 74% and 73% good-to-excellent, respectively. Corn harvest came in a little below expectations with 9% of the crop harvested versus an average trade expectation of 11%. Soybean plantings were at 4%, which was inline with expectations but slightly below the 5-year average pace of 5% harvested at this time of year.

Russia is expected to harvest a grain crop of between 110 and 116 MMT this year, Agriculture Minister Alexander Tkachev told a conference in Moscow on Tuesday. The country’s grain exports may total 35-40 million tonnes in the 2016/17 marketing year which started on July 1, he added. The ministry had previously expected the crop in a range of 113 million to 116 million tonnes

This morning Stats Canada revised higher their wheat crop forecast.  They pegged all wheat output up 14.3% to 31.32 MMT vs 27.39 MMT in 2015. Canola output was seen as unchanged at 18.31 MMT as compared to the same output level in 2015.

The U.S. Federal Reserve’s two-day Federal Open Market Committee meeting on interest rates begins today. The meeting concludes on Wednesday with an interest rate decision due at 1 p.m. CDT.

Morning Comments – September 19

Soybeans posted double digit gains to hit a one-week high to start the day while corn and wheat gains were limited to a few cents. In outside markets, crude oil found strength and helped push equities higher to start the week.

Crop consultant Safras pegs Brazil’s 2016/17 corn crop at a record 92.3 MMT versus 70.75 MMT in 2015/16 . They expect summer crops planted area for corn to rise 7.8% from year ago to 4.21 million hectares. The increase in summer crop area is linked to the improved price of the grain in comparison to soybeans.

Dry soil could hit the sowing of winter grain in Ukraine, analyst UkrAgroConsult said on Monday.
Winter wheat accounts for 95% of Ukraine’s overall wheat output, and the winter crop is also a significant part of the barley harvest. The consultancy said in a statement the average daily temperature was up to 6 degrees Celsius higher than the norm, and that had created poor conditions for preparing the soil for winter sowing.

Egypt was again tendering for wheat. But their last tender met with silence as no global sellers offered up wheat because of strict Ergot restrictions.

Oil prices rallied on Monday, after Venezuela said a deal to stabilize the global oil supply is imminent between nations inside and outside the Organization of the Petroleum Exporting Countries.

 

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