Weekly Cash Comments

Cash Commentary-

Soy basis continued to plunge lower this week as old-crop premium levels eroded closer to new-crop delivery levels. For the week, US average soybean basis fell 17 cents a bushel, while corn managed a positive 2-cent gain.

In corn, basis levels firmed mostly thanks to strength out of the ethanol sector which posted a 3-cent gain on the week.  Western Cornbelt plants saw more improvement than the East this week as double digit gains were noted at plants from Iowa, Minnesota and North Dakota. At river terminals, basis levels were off sharply giving up 6 cents this week. Barge rates were up sharply this week helping push basis levels down along the river system.  For spot versus new-crop, there is little premium difference for spot delivery as old-crop supplies are abundant. This week, basis levels for spot delivery are fetching only a 3-cent premium over new crop delivery.

For soybeans, spot premium levels plunged this week reaching a 30-cent premium over new-crop delivery after being at 48-cents last week. Soy crushing plants had the biggest loss this week giving up 23 cents on average, while river terminals dropped basis by 11 cents a bushel.

Futures Commentary-

The grains could continue to move lower this week as optimal weather helps finish off the grain. Wheat led the fall declining 27 3/4 cents, while Soybeans dropped 6 1/2 cents and corn fell 16 cents this week. Planalytics, a business weather intelligence company that forecasts yield based on satellite imagery utilizing the NDVI index, lowered its corn yield forecast by .4 bushels per acre to 166.8 bushels per acre on Friday. This is below the USDA estimate of 168.8 bushels per acre, but a couple bushels per acre higher than the Pro Farmer forecast a couple weeks ago which settled at 164.3 BPA.

The USDA will release their latest Crop Production and Supply and Demand report next Friday which will add some volatility back into the grains. We believe that the USDA is more likely to move corn yield lower in the September report than higher, and the warm temperatures triggering rapid maturation of the crop will only rob yield potential in the eastern parts of the grain belt. Planalytics soybean yield was increased last week up to 46.2 bushels per acre, just shy of the 46.9 bushels per acre forecast by the USDA in the August report.

Crop conditions this week showed that corn good-to-excellent ratings declined 1 percent to 68 percent this week which was in line with analyst expectations. As of Monday 92 percent of corn was at Dough stage and 60 percent of the crop was Dented. Soybean conditions remained unchanged at 63 percent rated good-to-excellent this week which was better than expected.​​

Export inspections were strong this week with corn recording 1,000,175 metric tons beating the average guess which ranged between 775,000-900,000 metric tons. Soybeans was on the high side of expectations with 184,285 metric tons inspected for export, and Wheat beat expectations with 601,639 metric tons inspected at ports compared to the average guess of between 275,000-400,000 metric tons.

Export sales were positive for new crop with corn, soybeans and wheat all meeting expectations late in the marketing year. Old crop corn booked 112,700 metric tons which was within the range of analyst estimates and much better than last week’s cancelations. Soybeans reported cancelations 60,500 metric tons which was within analyst expectations. Wheat was on the low end of trade expectations which ranged from 250,000-500,000 metric tons by booking 277,500 metric tons, less than half of what was booked last week.

New crop sales were very strong for soybeans but disappointing for corn. New crop soybean sales totaled to 1,532,800 metric tons which was better than expectations which ranged from 700,000-900,000. There was also an additional 110,000 metric tons of U.S. soybeans to China and another 773,400 metric tons of U.S. soybeans to unknown destinations announced worth of reportable sales on Thursday morning. New crop corn sales only totaled to 328,300 metric tons below expectations which ranged from 500,000-700,000 metric tons.

Ethanol production fell 4,000 barrels per day last week to 948,000 barrels per day. Ethanol production has been in a seasonal decline since early June but continues to be well ahead of the four year moving average and last year’s production levels. This week’s production was 27,000 barrels per day over last year’s production and 87,000 barrels per day over the four year moving average. Ethanol stocks also increased last week by 374,000 barrels to 19 million barrels of ethanol this week.

Morning Comments – September 04

In the overnight session the grains traded a bit higher with corn up 1/2 a cent, soybeans up 3 cents and wheat up 2 1/2 cents this morning. The outside markets are weaker with the mini Dow down 1.14 percent and the e-mini S&P down 1 percent. The U.S. dollar is trading mostly unchanged at the moment. This morning it was announced that job growth increase was less than expected last month as non-farm payrolls increased 173,000 in August, down from 245,000 in July. Unemployment fell to 5.1 percent, a 7 1/2 year low.

Rains are expected to cover most of the Midwest next week with the heaviest precipitation expected between Sunday to Tuesday. The precipitation should be up to 5 inches in parts of Kansas, Nebraska, Missouri, Iowa and the northern parts of Illinois. Despite the expectation for heavy rains there seems to be little concern that the precipitation will result in damage to the crop. Currently the early freeze risk remains very low.

Keep in mind that Monday is a Holiday and the grain markets will be closed until 7 PM CST when the night session opens for Tuesday’s trade. On Friday the 11th, the USDA will release their latest Crop Production report and Supply and Demand report at 11 AM. The latest 3rd party yield estimates have revised their corn and soybean yields higher from last month but few have lifted them to the current USDA forecast. Planalytics see’s corn yield potential shrinking slightly in its latest forecast as the heat throughout Midwest speeds up the maturity process and limits the maximum yield potential.

Morning Comments – September 03

In the overnight session the grains are trading lower with corn down 3 1/4 cents, soybeans down 3/4 cents and wheat down 4 1/4 cents this morning. The U.S. dollar index is trading higher by .67 percent and crude oil is down 20 cents.

Ethanol production fell 4,000 barrels per day last week to 948,000 barrels per day. Ethanol production has been in a seasonal decline since early June but continues to be well ahead of the four year moving average and last year’s production levels. This week’s production was 27,000 barrels per day over last year’s production and 87,000 barrels per day over the four year moving average. Ethanol stocks also increased last week by 374,000 barrels to 19 million barrels of ethanol this week.

Export sales were positive for new crop with corn, soybeans and wheat all meeting expectations late in the marketing year. Old crop corn booked 112,700 metric tons which was within the range of analyst estimates and much better than last week’s cancelations. Soybeans also showed positive sales with 60,500 metric tons which actually beat the high side of analyst expectations. Wheat was on the low end of trade expectations which ranged from 250,000-500,000 metric tons by booking 277,500 metric tons, less than half of what was booked last week.

New crop sales were very strong for soybeans but disappointing for corn. New crop soybean sales totaled to 1,532,800 metric tons which was better than expectations which ranged from 700,000-900,000. This morning’s export sales report was accompanied a reportable sale announcement of an additional 110,000 metric tons of U.S. soybeans to China and another 773,400 metric tons of U.S. soybeans to unknown destinations. New crop corn sales only totaled to 328,300 metric tons below expectations which ranged from 500,000-700,000 metric tons.

Morning Comments – September 02

In the overnight session the grains traded slightly lower with corn down 1/2 a cent, soybeans up 3 cents and wheat down 3/4 of a cent. The outside markets are somewhat positive this morning with the Mini S&P up nearly a percent, the U.S. dollar index up .38 percent and crude oil down $.64 this morning. Corn is hovering right around a critical support level of $3.65 which it has tested two times in the last three weeks. If corn closes below $3.65 today, probability increases that prices move another leg lower.

Last night at 3:30 CST, FC Stone released its latest yield and production forecast. Their latest corn yield forecast was set at 165.9 bushels per acre up from 165 which it estimated last month. This is on the low end of expectations right now with Planalytics yield estimate at 166.8 bushels per acre, the USDA at 167.2 bpa and Pro Farmer at 164.3 bushels per acre. Corn production was estimated at 13.457 billion bushels from 13.381 billion last month.

FC Stone pegged the national average soybean yield at 45.4 bushels per acre up from 45 last month. This is still on the low end of estimates with Planalytics yield forecast at 46.2 BPA, USDA at 46.9 BPA and Pro Farmer yield at 46.5 BPA. FC Stone is looking for 3.791 billion bushels of U.S soybean production, up from 3.797 billion bushels this month.

Traders await the September WASDE report set for release at 11 AM CST on the 11th. NOPA crush numbers will then be released on the 15th of this month.

Morning Comments – September 01

In the overnight session the grains traded lower with December corn down 4 cents, November soybeans down 8 1/4 cents and December wheat up 2 cents. The outside markets are sharply lower this morning with the Dow down 2.5 percent and crude oil down $2.13 dollars after surging $4.00 higher yesterday. The global markets are lower this morning after China’s official manufacturing purchasing managers index for August fell to 49.7 from 50 in July. This marks the lowest level for the index since August 2012.

Crop conditions this week showed that corn good-to-excellent ratings declined 1 percent to 68 percent this week which was in line with analyst expectations. As of Monday 92 percent of corn was at Dough stage and 60 percent of the crop was Dented. Soybean conditions remained unchanged at 63 percent rated good-to-excellent this week which was better than expected.​​

Export inspections were strong this week with corn recording 1,000,175 metric tons beating the average guess which ranged between 775,000-900,000 metric tons. Soybeans was on the high side of expectations with 184,285 metric tons inspected for export, and Wheat beat expectations with 601,639 metric tons inspected at ports compared to the average guess of between 275,000-400,000 metric tons.

The Planalytics Agribusiness Weather brief showed that this week’s temperatures will remain above normal throughout the Midwest with chances of precipitation through eastern South Dakota, eastern Nebraska and Minnesota on Sunday. The 6-10 day forecast looks to bring wide coverage of precipitation throughout the corn and soybean belt with above average temperatures.

Morning Comments – August 31

In the overnight session the grains are trading lower with corn down 2 1/2 cents, soybeans down 9 1/4 cents and wheat down 4 1/2 cents by the morning pause in trading. The outside markets are also trading lower with crude oil down $1.20, the U.S. dollar down .22 cents and the mini Dow Jones average down 1 percent. Today is first notice day for September grain contracts.

The grains could continue to move lower this week as optimal weather helps finish off the grain, however we believe that corn could show relative strength in a weakening grain complex. Planalytics, lowered its corn yield forecast by .4 bushels per acre to 166.8 bushels per acre on Friday. This is below the USDA estimate of 168.8 bushels per acre, but a couple bushels per acre higher than the Pro Farmer forecast a couple weeks ago. We believe that the USDA is more likely to move corn yield lower in the September report than higher, and the warm temperatures triggering rapid maturation of the crop will only rob yield potential in the eastern parts of the grain belt.  Planalytics soybean yield was increased last week up to 46.2 bushels per acre, just shy of the 46.9 bushels per acre forecast by the USDA in the August report.

Over the weekend Iowa received precipitation as the moisture passed eastward from the South Dakota. Over the next 5 days little if any precipitation will assist the filling grain. Exceptional coverage is however expected in the 6-10 day outlook and more precipitation covers the Midwest in the 8-14 day forecast. Chances of an early frost are still low. Temperatures in the 6-10 day forecast remain above average for the majority of the central to eastern grain belt.

Weekly Cash Comments

Cash Commentary-

Grain basis was mixed again this week with corn basis gaining 1.5 cents a bushel, while soybean basis gave up 4 cents on average across the U.S.

In corn, basis levels were bolstered by strength at river terminals and the Gulf. Gulf corn bids were up 12 cents a bushel this week and surpassed their 5-year historical average for the first time since mid-June. At river terminals, basis levels were up 4 cents a bushel as gains were muted by a slight uptick in barge freight costs.

For soybeans, the premium of spot delivery over new-crop fall delivery continues to erode with harvest likely to start in the next month. Spot bean basis was off 4 cents for the week, but at the Gulf basis levels bucked that trend by posting a 9 cent advance. River terminals, however, failed to follow the Gulf market as losses upstream were about 7 cents a bushel. For soybean plants, double-digit losses were fairly typical this week, although as a group soy plants lost 5 cents a bushel.

Futures Commentary-

This week, the grains traded lower with corn down 7 1/4 cents, soybeans down 35 1/4 cents and wheat down 22 cents. This week’s selling was driven primarily by sharp selling out of China which spread into other markets across the Globe. On Monday the Chinese Shanghai index closed down 8.5 percent which plunged soybeans as much as 30 cents lower by mid-morning before paring losses by over half by the close. China then stepped in and lowered their interest rates and bank reserve requirement ratio on Tuesday which was the 5th move since last November. Soybeans were the most affected to the macro selling because China is the main buyer of U.S. soybeans. As a result of the lower prices, soybeans were able to book three reportable sales of new crop soybeans to unknown destinations this week.

Last Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production was estimated at 3.887 billion bushels.

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons. Despite the strong new crop sales this week both corn and soybeans are still running only 73 percent of the 4 year average sales pace. We will need consecutive weeks of strong sales to catch up to the pace needed to meet existing USDA expectations.

Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week. Both old crop corn and soybeans are now behind the pace to meet USDA expectations with corn 1 million metric tons behind pace and soybeans 400,000 metric tons behind pace according to our export sales models.

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production, cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 mission barrels this week.

Weather this week was cooler than normal throughout the Midwest with precipitation Thursday in the northwestern part of the grain belt. The precipitation is expected to move east across the mid-west over the next couple days. The weather outlook then turns drier until late next week when above average precipitation is expected over the northern half of the Midwest. Monday’s latest crop conditions report showed 87 percent of the soybean crop is pod setting which is on par with the 4 year average. Corn conditions remained unchanged this week at 69 percent rated good-to-excellent; soybean conditions also remained unchanged. ​

Morning Comments – August 28

In the overnight session, the grains inched higher with corn up 1 1/4 cents soybeans up 5 cents and wheat up 1 cent. The U.S. dollar is trading mostly unchanged and crude oil is down 46 cents. The EU cut its corn production forecast this month to 58.7 million metric tons from 65.5 million metric tons last month. Europe was plagued by hot dry weather during a critical development period which reduced yield prospects significantly. The EU however raised their soft wheat harvest estimate to 140.7 million metric tons from 139.4 million metric tons last month.

Yesterday, the International Grains Council raised its global wheat production by 10 million metric tons to 720 million metric tons citing improved Russian production. The council also increased their global corn crop by 2 million metric tons to 968 million metric tons this month, mentioning a decline in EU production being more than offset by more favorable U.S. crop prospects.

The GASC tender set mid-week was won by Russia on Thursday with the low bid of $180.47 dollars per ton FOB. Egyptians grain buyer GASC issued another tender for 60,000 metric tons on Thursday which was also filled by Russian wheat at $190.07 per ton including freight.

The western grain belt saw rain last night with the heaviest rains in South Dakota. The storm should move eastward into the Midwest over the next couple days. Following this rain event the forecast looks mostly dry until late next week when the northern half of the grain belt looks to be wetter than normal. Showers will aid the crop in the 11-15 day forecast.

Morning Comments – August 27

In the overnight session the grains are trading higher with soybeans leading the charge up 14 1/2 cents, corn up 1 1/2 cents and wheat up 3/4 of a penny. The U.S. dollar index is trading 1/2 a percent higher and crude oil is up $1.33. This morning exporters sold 130,000 metric tons of new crop soybeans to unknown destinations making this the third reportable soybean sale this week.

Last night the China market rallied over 5 percent in the last hour of trading after the government took steps to stabilize their stock market before a September 3rd military parade which celebrates the 70th anniversary of the WWII victory over Japan. With China showing strength late in the session soybeans have been able to rebound. Positive news about the U.S. economy was also announced this morning with GDP expanding at a 3.7 percent annual pace up from the 2.3 percent reported last month.  Unemployment claims also fell more than expected last week by declining 6,000 to 271,000 for the week.

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons.  Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week.

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 million barrels this week.​

Morning Comments – August 26

In the overnight session the grains traded lower with corn up 1 cent, soybeans unchanged and wheat up 1 1/4 cents this morning. The U.S. dollar is trading up .38 percent and crude oil is 34 cents higher this morning. This morning the U.S. stock market is expected to open higher after a rally in European markets. China however, which has been the driving force in the recent sell-off, has been unable to see a market gains since the PBOC lowered interest rates yesterday. The Shanghai composite index fell another 1.27 percent last night.

The volatility over the last two days has triggered two reportable new crop soybean sales to be delivered to unknown destinations totaling to 330,000 metric tons. Despite this week’s sales, new crop soybeans has still only booked around 68 percent of sales volume compared to what we typically see around this time period.

Weather looks to remain cool and dry this week except for the western grain belt which should receive above average precipitation in the middle of this week. The 8-14 day weather outlook shows moisture forecast for the northern parts of the grain belt which should aid crops in main growing regions. Currently, there is no significant threat of an early freeze.

 

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