Weekly Cash Comments

Cash Commentary-

Grain basis moved higher this week and sliding grain futures continued to pressure farmer movement. On the week, corn basis was up 2 cents a bushel while spot soy basis managed a 3-cent advance.

Corn basis was buoyed mostly by ethanol plants which saw a 3-cent gain on the week. Much of the Western Cornbelt saw solid basis improvements on the week as farmers there face lower yield potential and hold back on any old-crop deals. Meanwhile at river terminals, basis was up about 2 cents, on par with the broader movement across the US. The Gulf was mostly steady on the week.

For soybeans, basis levels were much stronger at river terminals with a 5-cent advance on the week; driven partially by a 2-cent improvement at the Gulf. Soy crush plants were up 3 cents a bushel, although late-season maintenance routines for select plants will likely slow some of the appetite for soybeans in the near-term.

In terms of the competitive landscape, we saw Eastern IL/Western IN premium buyers bid up the market in their region.  Bunge and Cargill added a nickel to their basis to help expand their drawing region over the last week. Further to the south, Poet gained some ground in their drawing region with a modest 1-cent basis improvement.

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

Futures Commentary-

Grains continued to hemorrhage this week bleeding to fresh lows on the move. For the week corn was off 6, soybeans off 7 and Chicago wheat down 26.

Crop conditions were higher for corn this week as USDA reported 62% of the crop in good-to-excellent condition vs 60% last week. However, analysts and farmers continue to debate USDA’s shockingly high corn yield forecast of 169 from their August survey.  Excessive heat in late July and early August may have left some of the crop struggling to fully develop after pollination which could trim yields. But for now, the corn market continues to pencil in better yields at least until we get some in-field assessments from Pro Farmer’s crop tour. For soybeans, USDA crop conditions did slip 1% on the week to 59%.

On the demand front, the NOPA crush report showed better than expected crushings for July. NOPA reported that its members crushed 144.718 million bushels during July, well over the 143.004 million bushels guessed in the Reuters survey of analysts. This was the second largest July soybean crush on record and beats June by 6.644 million bushels.

On Wednesday, the EIA released their weekly ethanol production and stocks report. The latest report showed a sharp rise in ethanol production to the second highest weekly production number on record. Production jumped to 1.059 million BPD from 1.012 million BPD. Despite the sharp increase, this week’s production was still only 3 percent over the same week last year and with only three weeks left in the marketing year it is unlikely we will see the USDA’s ethanol estimates met. In order to meet the USDA’s corn used for ethanol forecast we would have to see 7 percent increases over last year during the next three weeks.

Weekly export sales showed that wheat had 633,600 metric tons for the 17/18 marketing year up 37 percent from the previous week. Old crop corn only recorded 62,400 metric tons which is slightly better than last week but well below the four week average. New crop Corn sales were strong with 671,000 metric tons recorded. Soybeans were exceptionally strong with 453,200 metric tons of old crop sold and 899,400 metric tons of new crop sales. Soybeans sales were well above last week and the four week average.

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 – August 18

In the overnight session the grains traded slightly higher with December corn up ¼ cent, November soybeans up ¾ of a cent and December Chicago wheat up 2 cents. December 2017 Corn is now trading at 3.64 ½ cents which is just six cents above the contract low of 3.58 ½. Any push lower should be met with technical support around that contract low that was set August 31st 2016.

This morning, China’s Agricultural Ministry  confirmed a bird flu outbreak at quail farms in Luodian. The outbreak infected 13,103 quails and culled 8,110 birds. This was the second major bird flu outbreak in China this year with the first occurring at the beginning of the month.  It was also reported this morning that the Philippines found a second outbreak of bird flu 50 miles away from the first reported case reported a week ago. Both cases of the bird flu were found in quails.

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On Thursday the USDA announced two positive trade developments. The first is that South Korea lifted a ban on U.S. poultry and eggs and the second was that the U.S and Argentina have agreed to a deal allowing the U.S to import pork into their country. This is the first time since 1992 that U.S. pork has been allowed to enter Argentina and should support the longer term fundamentals of the hog market.

France reported that 79 percent of their corn crop was rated good-to-excellent which was unchanged week over week. They also showed that their soft wheat harvest is wrapped up with 99 percent harvested up 2 percent from this week before.

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 – August 17

In the overnight session the grains were mixed with December corn up ½ a penny, December Chicago wheat down ¾ of a cent and November Soybeans rebounding 8 cents. There was some heavy rains last night in southwestern Minnesota bringing as much as 6 inches to some spots. The 1-5 day weather outlook is expecting variable precipitation throughout most crop areas. In the 6-10 day weather forecast temperatures are expected to be warmer than normal early next week with cooler temperatures returning by the end of next week. As the cold front moves into the Midwest it is expected to bring precipitation which should continue to support the corn and soybean crops.

Yesterday afternoon Egypt’s GASC announced that they had purchased 355,000 metric tons of wheat sourced from Russia and Ukraine. The Saudi grain buying organization announced it had issued an international tender to buy 480,000 metric tons of hard milling wheat. Also in the news was an announcement from the U.S. Soybean Export Council that the Chinese trade delegation signed a deal to buy 3.8 million metric tons of U.S. Soybeans in a ceremony in Nebraska.

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On Wednesday, the EIA released their weekly ethanol production and stocks report. The latest report showed a sharp rise in ethanol production to the second highest weekly production number on record. Production jumped to 1.059 million BPD from 1.012 million BPD. Despite the sharp increase, this week’s production was still only 3 percent over the same week last year and with only three weeks left in the marketing year it is unlikely we will see the USDA’s ethanol estimates met. In order to meet the UDSA’s corn used for ethanol forecast we would have to see 7 percent increases over last year during the next three weeks. Ending stocks also increased last week to 21.828 million barrels from 21.347 last week.

Exports sales this morning showed that wheat had 633,600 metric tons for the 17/18 marketing year up 37 percent from the previous week. Old crop corn only recorded 62,400 metric tons which is slightly better than last week but well below the four week average. New crop Corn sales were strong with 671,000 metric tons recorded. Soybeans were exceptionally strong this morning with 453,200 metric tons of old crop sold and 899,400 metric tons of new crop sales. Soybeans sales were well above last week and the four week average.

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 – August 15

In the overnight session the grains traded lower with December corn down 4 ¼ cents, November Soybeans down 5 ¼ cents and December Chicago wheat down 5 ½ cents after crop conditions came in better than expected in Monday afternoon’s report. Traders will be digesting yesterday afternoon’s crop conditions report and anticipating the NOPA crush report which will be released out at 11 AM CST today.

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Expectations were for the good to excellent ratings to be steady this week for the Corn and Soybean crop. Corn ratings increased by two percentage points in the good to excellent category to 62 percent. States that saw improvement included South Dakota which was up 5 percent, North Dakota which was up 8 percent, Nebraska marked a 4 percent increase, Indiana was up 3 percent and Illinois was up 4 percent compared to last week. There was a 3 percent drop in Iowa and a 10 percent drop in Michigan good to excellent ratings in corn.

The soybean crop ratings declined by 1 percent in the good to excellent category to 59. Among the states that saw a deterioration in their soybean conditions was Iowa which was down 3 percent, Michigan which was down 7 percent and Illinois which was down 1 percent.

Spring Wheat rated good to excellent improved by 1 percent to 33 in this week’s report. This improvement was in line with expectations as crop condition improvements were observed across Idaho, Minnesota, Montana and North Dakota. Despite the slight uptick in crop conditions the spring wheat crop is still well below the good to excellent rating of 66 during the same period last year.

Spring wheat harvest has advanced to 40 percent complete up from 24 percent the week before. The four year average is 35 percent harvested during the same week last year.

The NOPA crush report which will contain the data of 13 companies that account for approximately 95 percent of US soybean crush will be released out 11 AM CST this morning. In a Reuters poll of analysts the average guess is for the report to show 143.004 million bushels crushed.

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 – August 14

In the Sunday overnight session the grains traded lower with December corn down 4 ¼ cents, November soybeans down 9 3/4 cents and December wheat down 7 cents. Weekend rains in the southern half of North Dakota, parts of western Minnesota and eastern Nebraska are pressuring the market along with a positive weather forecast that shows a couple more good chances for precipitation over the next two weeks.

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This morning Saudi Arabia’s state grain buyer announced it had purchased 660,000 metric tons of animal feed barley it had recently tendered. The barley purchase was filled at an average price of $203.37.

On Friday, Russia’s agriculture consultancy IKAR increased its forecast for Russian wheat production to 77-80 million metric tons from 74-77 million metric tons in its previous forecast. The large crop anticipated in Russia has put pressure their wheat prices making this the second consecutive week that wheat export prices have fallen. Russia FOB export prices now sit at around $192 a metric ton. Russia continues their wheat harvest and is now only two percent behind last year’s harvest pace.

On Friday, the latest commitment of traders report showed that managed money net long position in corn fell from 84,644 to 67,073. Wheat also lost ground with the biggest change coming from Chicago wheat which went from net long 12,190 to a net short position of -14,101. Kansas City wheat net long position shrunk from 54,187 to 48,935 and Spring wheat held mostly steady at 10,708 from 10,808 the previous week. The managed money net long position in Soybeans also dropped sharply this week from 39,795 to 12,913.

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

 

Weekly Cash Comments

Cash Commentary-

Grain basis was mixed this week with corn showing little upward strength this week while soybeans posted a 2-cent advance.

Cash markets were mostly stable with some corn markets continue to push higher basis levels over the last few weeks of futures selling pressure. Corn ethanol plants as a group were fractionally higher on the week but there was a number of plants raising bids 5 to 10 cents a bushel to draw out more grain from farmer hands. At river terminals, the basis increased on average at 1.4 cents a bushel.

The competitive landscape in the corn market saw markets in IL/IN push to new highs helping to increase their drawing area around neighboring competition. Along the MS River, Roquette Grain and Green Plains showed double-digit gains in spot corn basis while Poet in Indiana upped their bids by 4 cents on the week to significantly expand their drawing region.

For soybeans, basis levels showed more buoyancy in the face of steeper losses on the Board. Crush facilities were up 2 cents a bushel while the river terminals were up 3 cents on the week.

Futures Commentary-

Grains spent the first part of the week trying to nudge higher but by the end of the week fresh data from USDA had the market in a tailspin. On the week, corn was off 6, soybeans were off 20 and Chicago wheat gave up 17.

Crop conditions for corn continued to slip this week hitting 60% good-to-excellent, off from 61% last week. Meanwhile, soybean crop scores reversed the downward trend from 59% last week to 60% this week.

On Thursday, USDA’s crop report showed a shockingly higher yield forecast for corn and soybeans which spooked the trade. For corn yield, USDA pegged it at 169.5 BPA and soybean yield at 49.4 BPA compared to an average analyst expectation of 166.2 and 47.5 BPA respectively. Ending stock forecasts for 17/18 corn were 270 million bushels higher than the average guess among analysts in the Reuters poll. The smaller than expected revision in corn yield and 25 million bushel decline in both exports and feed and residual caused ending stocks to soar to 2.273 billion bushels, well over analyst forecasts. New crop soybean ending stocks were also higher than analysts were expecting despite lowering old crop carry-out and increasing exports by 75 million bushels. Ending stocks were still higher than the July WASDE by 15 million bushels, primarily due to the larger than expected yield revision from 48 BPA to 49.4 BPA.

Export sales this week were robust for wheat with 464 TMT sold vs trade expectations of 250-450. Meanwhile, both corn and soybean new-crop deals bested expectations, while the tail end of the old-crop season came in below expectations. YTD new-crop deals are still trailing last year’s pace by a wide margin. For corn, new-crop deals so far are off 45% from last year while USDA expects the year to post a 17% slump from 2016. But for soybeans it is much worse with current new-crop bookings half of what they were this time last year but USDA expects exports to grow in the new-crop season by 3%.

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 – August 11

In the overnight session the grains seemed to pause their sharp move lower that was triggered after the USDA’s 17/18 corn, soybeans and wheat production estimates topped analyst forecasts in the latest WASDE report. We should also note, better than expected precipitation last night in western Illinois and the latest weather models show the 6-15 day forecast bringing precipitation and much needed relief in the western corn belt.

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Today, the market will continue to digest the surprise in yesterday’s reports. The most bearish part of this report was the new crop production forecasts which showed corn yield forecast at 169.5 BPA and soybean yield at 49.4 BPA compared to an average analyst expectation of 166.2 and 47.5 BPA respectively. These numbers surprised the markets and caused sharp selling pressure immediately following the report’s release.

Ending stock forecasts for 17/18 corn were 270 million bushels higher than the average guess among analysts in the Reuters poll. The smaller than expected revision in corn yield and 25 million bushel decline in both exports and feed and residual caused ending stocks to soar to 2.273 billion bushels, well over analyst forecasts.

New crop soybean ending stocks were also higher than analysts were expecting despite lowering old crop carry-out and increasing exports by 75 million bushels. Ending stocks were still higher than the July WASDE by 15 million bushels, primarily due to the larger than expected yield revision from 48 BPA to 49.4 BPA.

The WASDE report held the old crop corn balance sheet steady keeping ending stocks at 2.37 billion bushels surprising many analysts that expected to see a revision lower in corn used for ethanol. Old crop soybean ending stocks were revised lower than the average analyst expectations.The revision was a result of reducing crushings by 10 million bushels and increasing exports by 40 million bushels.

US wheat ending stocks also surprised traders after yield was revised lower by only .6 BPA leaving new crop stocks at 933 million bushels compared to the 907 million bushels expected.

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 – August 10

In the overnight session December corn up ¼ cent,  November soybeans is up 4 ¾ cents and December wheat is up 1 ¼ cent. Traders have been positioning before the August WASDE report which is scheduled for release at 11 CST.

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Brazil’s agricultural statistics agency released its 16/17 corn and soybean forecast which showed a revision higher for both. Brazil’s 16/17 corn crop forecast increased 1.2 MMT to 97.2 while their soybean crop was revised only slightly, up .08 MMT to 114 in the same marketing year.

Ethanol production increased by 10 thousand BPD to 1.012 million BPD according to the EIA report on Wednesday. Despite the increase, weekly ethanol production was down nearly 1 percent compared to the same week last year. With July ethanol production numbers in the books, we will need to see roughly a 6 percent increase in ethanol production throughout the remainder of the marketing season to meet the USDA’s corn used for ethanol projection. Although this is possible, it is unlikely and may be reason enough to see the USDA revise their ethanol forecasts lower on the old crop balance sheet in today’s report.

Ethanol stocks increased to 21.347 million barrels from 20.852 million barrels last week. Although ethanol stocks have seen a drawdown since March when they peaked for the year, they remain at record highs when comparing on a same week basis.

Old crop export sales for both corn and soybeans missed expectations with soybeans actually recording a marketing year low, down 83 percent from the prior four week average. All new crop sales were strong however, with corn and soybeans both beating analyst expectations.

Weekly Export Sales-

Actual

Estimated

Wheat

464

250-450

Corn – OC

52

100-300

Corn – NC

628

400-600

Soybeans – OC

45

100-300

Soybeans – NC

639

250-450

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

Morning Commentary – August 9

In the overnight session the grains traded slightly higher with December corn up ½ a cent, November soybeans up 1 ¾ cents and Chicago wheat up 2 ¼ cents. The cool and dry weather forecast across key growing regions continues to fan the uncertainty surrounding this year’s crop and anticipation for the USDA WASDE report to be released on Thursday seems to support the market.

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Thursday’s WASDE report will be released at 11 AM CST and will include the USDA’s first survey based production forecasts for 2017. In the latest poll by Reuters, the average trade guess is for corn yield to be reduced to 166.2 BPA from 170.7 in the July report. Analysts are expecting corn production to be revised to 13.855 billion bushels, down from 14.255 billion bushels last month.

For soybeans, the average analyst guess is looking for yield to be revised lower by .5 BPA to 47.5 BPA and for production to slip from 4.26 billion bushels in July to 4.212 billion bushels.

Analysts polls show wheat production is likely to be revised lower as well with all wheat production expected to fall from 1.76 billion bushels in July to 1.711 billion bushels in August. The largest revisions are expected to be made to the spring wheat crop which has suffered from drought and heat in the western Dakotas into Montana for the majority of the growing season.

The Japanese Ministry of Agriculture sought 120,000 metric tons of feed wheat and 200,000 metric tons of feed barley in a tender this morning. It was also reported that Taiwan’s MFIG rejected all offers in a tender to buy 130,000 metric tons of corn.

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 – August 08

The market continued higher in the overnight session with December corn up ¾ cent, November soybeans up 8 cents and wheat up 2 cents. The market will digest the latest updates in the crop conditions report, but most attention will be directed toward the August USDA WASDE report scheduled for release on Thursday.

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The weekly crop progress report showed a continued deterioration in the national corn crop. In the 18 states that make up over 90 percent of our acres, corn rated good-to-excellent slid to 60 percent from 61 percent the previous week. Good-to-excellent ratings declined by 5 percent in Illinois to 58, down 1 percent in Iowa to 64, down 1 percent in Minnesota to 80 and down 1 percent in Nebraska to 59. The decline in good-to-excellent ratings was partially offset by a 3 percent increase in Indiana to 52, a 2 percent increase in Missouri to 63 and a 1 percent increase in North Dakota to 40.

The national soybean crop condition was revised higher this week to 60 from 59 percent last week with some of the largest increases coming from North Carolina, Ohio, North Dakota, South Dakota and Indiana this week. Spring wheat conditions improved by 1 percent this week to 32.

Precipitation is expected in the Southern Plains and Lower Mississippi Valley in both the 1-5 and 6-10 day weather forecast. The Midwest is expected to stay cool, but the mild and dry pattern is expected to cause some moisture stress to the corn and soybean crop.

Figures from from the General Administration of Customs of China showed that soybean volumes imported during July increased by 31.1 percent to 10.08 million metric tons. According to one analyst, the strong increase can be explained by delayed arrivals from the previous month coupled with a change in taxes. Either way, the large supply in the cash market is likely to continue putting pressure on Chinese crush margins which have been in the red since February. Just yesterday it was reported that a Chinese soybean buyer resold more than 500,000 metric tons of soybeans.

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

 

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