Morning Comments – April 23

Headlines

  • Wheat trades higher on less than expected rains in KCBT region.

  • Parts of S. Brazil corn are dry.

  • U.S. Secretary Treasury considers trip to China.

  • Weather expected to turn favorable to planting in Midwest.

Weather

  • Rain is expected in the southern and eastern part of Midwest today and tomorrow, but outlook is mostly dry and warmer the remainder of the week.

  • The 6-10 day weather outlook shows dry and warmer weather which will allow for rapid fieldwork.

  • KCBT wheat is trading higher this morning after precipitation this weekend was not as widespread and heavy as forecasted.

  • Precipitation fell across KS, OK and Northern and Eastern TX over the last 48 hours with the heaviest precipitation (1”-2”) falling in S. Central KS and N. Central OK.

  • The driest areas of the KCBT wheat received only light rain over the weekend and will need follow up precipitation.

South American Weather

  • Some parts of southern Brazil haven’t received rain for two weeks.

  • Driest areas in Parana and parts of Mato Grosso do Sul and Sao Paulo.

  • No damage has been reported yet, but crop is in a vulnerable period with 40% in the reproductive phase.

  • No rains are in the forecast until the end of April.

Commitment of Traders- Week ending April 17th

  • Long corn positions held by speculators declined by 45,013 to 161,932 contracts.

  • Long soybean positions held by speculators increased 14,213 to 156,510 contracts.

  • Short wheat positions held by speculators increased by 5,063 to 63,277 contracts.

U.S. Treasury Secretary Considers Trip to China

  • On Saturday, U.S. Treasury Secretary Steve Mnuchin said he is having discussions with China to resolve the differences of opinion in trade policy and that he is considering a trip there to continue discussions.

  • Mnuchin declined to comment on the trips timing, but it would be seen as an effort to calm tensions that have been building recently.

  • On Sunday, China’s commerce ministry said they welcome U.S officials to discuss trade and economic issues.

Cattle on Feed Within Trade Expectations

  • All Cattle on Feed was within trade expectations at 107 percent of LY.

  • March placements were 91 percent of LY compared to a trade est. of 90.3%.

  • Marketed cattle was 96 percent of LY compared to a trade est. of 95.9%.

  • Reaction to the report should be minimal on Monday. Traders will focus on growing fat cattle supplies as we move into seasonally strong spring demand as weather warms.

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-

Cash markets saw modest advances of 1-cent a bushel on the week for both corn and beans. River terminals were the big winner thanks to declining barge freight. On the week corn buyers along rivers were up 6 cents while soy markets were up 4 cents. However, barge rates fell much more sharply than the cash market improved with barge rates falling about 20 cents a bushel, but lower Gulf bids kept upstream river terminals less aggressive at bidding up basis.

As for end users, soy crush plants were up 1.6 cents on the week, but ethanol facilities were up 1.8 cents on the week. Soy crush facilities should continue to bid aggressively in coming months with spot crush margins trading at all time highs for this time of year. Basis levels should also be supported as weather begins to turn more favorable in early May which should limit farmer selling.

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 were lower on the week with soybeans leading the complex lower giving up 23 cents while corn and wheat followed with 6 and 4-cent losses respectively.

Cold weather has been hampering planting so far in April. USDA’s corn planting number was at 3% last week vs 5% normal for this time of year. However, weather is expected to shift to more warmth in the next few weeks which could aid planting. In the near term, the overall pattern will remain near or slightly colder than normal during the 6-10 day time frame. Despite some chances for rainfall, the broader pattern does appear slightly drier than normal, leaning favorable for additional corn plantings in the Deep South and southern Midwest in between periods of wet weather. Recent model guidance indicates a pattern change could be underway as the calendar flips to May. Current projections are for widespread high pressure enabling warmer than normal temperatures during the 11-15 day time frame. This will most notably warm ground temperatures, eliminate any remaining snow cover at the time across the Upper Midwest and Great Lakes, and potentially promote spring plantings. Iowa temps are expected to reach into the 70s and 80s. Furthermore, much of the broader corn and soybean belt should see warming into the first week of May which should aid planting if the forecasts hold up.

It was a respectable week for both corn and soybean exports as weekly deals for old-crop both topped 1 MMT. In the case of beans, there was also another 1 MMT sold for new-crop 2018 with Argentina again being a featured buyer. Year-to-date deals are topping the pace to reach USDA’s annual export projections with corn coveting a 6% lead while soybeans pushed up to a 3% margin to cover the USDA annual forecast.

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 – April 20

Headlines

Grains trade lower in the overnight. Wheat lower on precip expectations this weekend. Sorghum ships redirect after China’s tariff announcement

Weather

Temperatures are expected to stay below average throughout the midwest through next week. Rains are expected today and Saturday through the Plains and is expected to bring moisture to KCBT wheat regions that have suffered from extreme and exceptional drought.

China 2018 Corn & Soybean Production

The Ministry of Agriculture and Rural Affairs announced this morning that China’s 2018 Chinese soybean production is expected to increase to 1.9 percent over LY to 15.18 MMT. The increase is a result of farmers responding to government policy to increase soybean production. Soybean acreage is expected to increase 1.1 percent. The Ministry also announced that China corn production is expected to increase 1 percent over LY to 218 MMT.

 

Argentina Production

Buenos Aires Grains Exchange released their Weekly Agricultural Report on Thurs. The organization estimates corn harvest at 32 MMT (USDA 33 MMT) and soybean harvest at 38MMT (USDA 40 MMT).  Temperatures are expected to be above normal with precipitation affecting most of the grain growing region into mid next week. The western and northeast are both expected to stay mostly dry.  Soybean harvest is now 39.6% complete. First crop soybeans are 50% harvested while second crop soybeans are now 10% harvested. Corn is 29.5% harvested as of Thursday.

Sorghum Ships Change Course

Five ships loaded with sorghum and destined for China changed course within hours of China’s announcement of tariffs on U.S. sorghum imports. China’s announced on Tuesday that grain handlers would have to put up a deposit of 178% of the value of the shipments.

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-April 19

Headlines

  • Wheat sales disappoint.

  • Corn and soybean sales within trade expectations.

  • Barge rates continue to spike due to high water.

  • Ethanol production declines week over week.

Weekly Ethanol Production Drops

  • Weekly ethanol production declined 25,000 barrels per day to 1.01 million bpd.

  • TW ethanol production was 1.6% above LY production during the same week.

  • Weekly ethanol stocks were also lower by 502,000 barrels to 21.34 million bbls.

  • Ethanol stocks are 7.3% below LY during the same week and have dropped 123 million gallons in the last five weeks which is the largest 5-week decline on record.

  • Ethanol margins are still positive and driving season is nearing which bodes well for steady production in the coming weeks.

  • Assistant Administrator to the EPA said that the EPA is working on a rule waiver for gasoline blended with 15% ethanol. However, the agency has not decided on next steps.

Weekly Export Sales

  • Wheat recorded a net reduction of 66,900 metric tons which was a marketing year low for the grain.

  • Corn and soybean sales were within trade expectations.

  • Corn sales were just 4% below the 4-week avg while soybean sales was 12% over the 4-week avg.

Actual

Estimated

Wheat

-66,900

100-350

Corn

1,091

700-1,200

Soybeans

1,040

900-1,400

Logistical Slowdowns Continue Along The Rivers

  • Barge rates along the Illinois, Mississippi and Ohio river continue to climb to unseasonably high levels. Barge rates have spiked due to high water safety protocols causing a lack of turnaround time.

  • The Ohio River and Lower Miss. River have been at flood stage since March.

  • Transit times between St. Louis to New Orleans have increased 5 to 7 days.

  • With weather forecasts calling for above average precip in the Ohio river valley, the river may stay at flood levels until mid May.

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 – April 18

Headlines

  • May corn finds support on the 50 day moving average.

  • Japan allows U.S. corn-based ETBE imports.

Grains Find Overnight Support on Moving Averages

  • May corn found support at the 50 day moving average.

  • May soybeans turns higher in the overnight. Both 20 day and 50 day moving average are crossing at $10.37 and provide support below current prices.

  • May Chicago wheat find support on 20 and 50 day moving average at $5.495.

Corn Acres Capped?

  • Winter storms, cold weather and excessive precipitation across the Delta and eastern corn belt has made U.S. fieldwork challenging throughout April.

  • April is on track to be the coldest Midwestern April on record since 1895.

  • Possibility for delay in fieldwork across the Midwest leaves less room available for farmers to plant more corn than forecasted in the march Acreage report.

Ethanol Trade Win in Japan

  • Japan announced its decision to allow U.S. corn based Ethyl Tertiary Butyl Ether (ETBE) after reviewing its sustainability policies.

  • The decision allows US Ethanol to contribute up to 44 percent of Japan’s needs.

  • Japan’s annual ethanol demand is around 217 million gallons.

Weather

  • Midwest- A winter storm warning across northern Iowa today is expected to deliver more snow to the region. A winter weather advisory stretches from eastern SD and northeastern NE into southern WI. The 6-10 day weather outlook expects drier than normal conditions across much of the Midwest, with a wetter outlook across ND, SD, NE and Kansas. Temperatures are expected to stay cool.

  • Delta- The U.S. 1-5 day weather outlook expects the remainder of the week to remain dry weather in the Delta providing some opportunity for fieldwork and allowing for some planting progress. Weekend rain is expected to slow fieldwork in the area before it clears back up in the 6-10 day outlook providing fieldwork opportunities.

  • KCBT Wheat- Rains are expected to bring moisture to the Plains at the end of the week. Rains in the western Plains are expected to continue in the 6-10 day outlook but turn dry again in the southern and eastern Plains.

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 – April 17

Headlines

  • Grains firm in the overnight.

  • Planting pace is lagging but no alarms yet.

  • Record soybean crush in month of March.

  • Export Inspections within trade expectations.

Crop Progress

  • U.S. Corn planting is 3% complete vs five-year average of 5% complete.

  • Spring storm has dumped snow across the Dakotas and upper Midwest delaying prospects for fieldwork and increasing the possibility for significant planting delays in the region.

  • The cold temperatures throughout the Midwest, Plains and Delta will keep soil temperatures below 50 degrees through the weekend.

  • Missouri, Tennessee and Kansas lag behind normal planting pace.

    • Missouri corn planting is 4% complete vs.18% 5 YR Average.

    • Kansas corn planting is 6% complete vs 15% 5 YR Average.

    • Tennessee corn planting is 11% complete vs 16% 5 YR Average.

KCBT Winter Wheat

  • Winter wheat conditions showed 31% of the crop was rated good-to-excellent which was up 1% from last week. Winter wheat rated poor-to-very poor increased to 37% from 35% LW.

  • Winter wheat is now 9% headed vs a five year average of 10% at this time.

  • Rains are forecast to bring central and southern plains precipitation starting Friday and continuing through the weekend. However, the recent weather models have scaled back total precipitation amounts and reduced confidence in the placement.

  • Precipitation will be beneficial to KCBT wheat, but traders will be left guessing if event will improve or only stabilize crop conditions.

NOPA Crush Report

  • National Oilseed Processors Association reported a record soybean crush for the Month of March with 171.858 million bushels crushed vs. expectations of 168.247 million bushels.

  • Soyoil stocks were reported at 1.946 billion lbs which was below trade estimates of 1.962 billion lbs.

Export Inspections

  • Corn, soybeans and wheat inspections were within trade expectations this week.

Actual

Expectations

Wheat

483

200-500

Corn

1,504

1,100-1,600

Soybeans

444

300-600

*Thousand Metric Tons

China Announces Deposit Requirement on U.S. Sorghum

  • China Commerce Ministry reported a new deposit requirement by importers of U.S. Sorghum. Importers must make a deposit of 178.6% percent as a result of the probe on U.S. sorghum.

  • China reported that they will continue to investigate U.S. Sorghum to make a final ruling.

  • CHS, Planter’s Grain Co-Operative and J&C Farms were among some of the companies affected by the new deposit requirement.

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 – April 16

Headlines

  • Grains mixed in the overnight

  • Wheat lower on improved moisture prospects

  • Weekend storm brings snow to north central plains

Weekend Storm

  • A weekend storm brought 8-16 inches into the north central plains this weekend.

  • The storm also brought 1-3” of rains to the eastern Midwest and Delta.

  • Temperatures dropped into the teens following the storm as far south as Southern Kansas.

  • The potential for freeze damage in southwest Kansas to wheat in the jointing stage has been overshadowed this morning by the forecast for more moisture over the weekend.

Winter Wheat to Receive Rain

  • The forecast shows meaningful precipitation will move into the central and southwestern plains starting late this week and into the weekend.

  • The 6-10 day weather outlook improves moisture outlook.

  • The precipitation will benefit the winter wheat crop and bring moisture to the drought stricken regions of the winter wheat belt.

Argentina

  • Buenos Aires Grains Exchange reported Soybean harvest is 23% complete and corn harvest is 24% complete as of the 11th.

  • Showers over the weekend were mostly in Santa Fe and eastern Cordoba.

  • More showers are expected by later this week slowing dry-down and delaying harvest minimally.

Brazil Weather

  • Precipitation continues to benefit 2nd crop corn in the northern and eastern regions of Brazil.

  • Dryness is developing in Mato Grosso do Sul, Parana and Sao Paulo.

  • Temperatures are expected to increase next week which could add stress to the southern corn region.

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-

Basis levels firmed by 1.9 cents a bushel on beans across the US this week while corn was up marginally on a 0.3 cent improvement.

High water along the rivers continues to escalate barge rates. This week saw barge rates take another step higher, with rates trading at 40 cents a bushel more than normal at this time of year and near the harvest-time peaks we normally see in the fall. Both corn and soy basis was off about 5 cents a bushel at river terminals this week, in spite of strong Gulf gains of 10 and 20 cents a bushel for corn and beans, respectively.

For soybeans, they got some relief as crush facilities were higher on the week, bolstering their basis by 3.2 cents a bushel on average. 40% of the plants had a nickel to dime improvement on the week. Strong crush margins should be the norm for the next 6 months which should keep soy plants bidding aggressively for beans. As for corn plants, they improved by 0.8 cents a bushel. Gains by NE ethanol plants were 2 cents a bushel but ECB states of IN/OH saw more limited gains of only 1-cent a bushel.

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 finished mixed on the week as soybeans and wheat shot higher by 30 cents and 16 cents while corn was fractionally lower.

USDA in their monthly S&D update on Tuesday showed a smaller than expected Argentina soy crop at 40 MMT while the trade had expected a 42.6 MMT harvest. This is a far cry from last year’s nearly 58 MMT. Indeed, the world’s largest soymeal exporter is facing such a crippling crop shortfall that it purchased 4 cargos or 240,000 MT of new-crop US beans to help feed its pipelines. USDA also bumped up old-crop corn carry-out thanks to lower feed usage numbers. However, the US export tally was left unchanged even though current exports are about 6% ahead of the normal seasonal pace to reach the annual projection.

On Monday, USDA released their first national corn planting estimate, which was pegged at 2% vs normal of 3% for this time of the year. Looking ahead, farmers will likely face a lot of obstacles in the month of April with cold and wet weather to dominate. Over the next 5 days, snows are expected to hit Upper Midwest (Dakotas & Minnesota), while rounds of rain and thunderstorms are targeted for the Midwest/Delta. Planting progress is unlikely to proceed through next week as a result.

Weekly US export sales were strong for soybeans coming in at 1.5 MMT. While China was a noted buyer, other countries are also lining up to buy US soybeans thanks to the price hike at Brazil. With the threat of China’s tariff on US beans, Brazil’s prices have popped as farmers there will benefit from being the premier supplier to the world’s number one customer of soybeans. In the last two weeks Brazil’s prices have surged to a $0.60 per bushel premium over the US. Normally at this time of year when Brazil’s crop is harvested, Brazil’s prices generally trade at a $0.25 to $0.75 cent a bushel discount.

Corn sales on the week were light at 840,000 MT compared to recent weeks. But, business since the start of 2018 has helped fuel prices and push inventories down. With fewer planted acres in 2018 expected, new-crop 2018 US corn carry-out should be penciled in at less than 2 billion bushels in USDA’s first report in May.  If so, it would be the first time in 3 years that we will see carryout below the psychological 2-billion-bushel mark.

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 – April 13

China Soy Imports Falter

  • China’s soybean imports fell 10% in March from a year ago.

  • March imports of 5.66 MMT were down from last year’s 6.33, but up slightly from last month’s 5.42, according to customs data.

  • Imports are expected to increase in coming months as China normally turns to Brazil beans at this point in the season.

Thursday’s Trump Policy Musings

  • President Trump said on Thursday his administration may allow the sale of gasoline containing 15% ethanol year-round, which could help farmers by firing up corn demand but faces opposition from Big Oil.

  • Trump administration continues to jockey between oil and corn constituencies as they clash over the nation’s bio-fuels policy.

  • President Trump has directed his top trade and economic advisers to take a fresh look at the Trans-Pacific Partnership (TPP) trade agreement he withdrew from in his first week in office.

  • He said he’s going to deputize (National Economic Council Chairman) Larry Kudlow and (US Trade Representative) Robert Lighthizer to look at re-entering the TPP negotiations and to take another look at whether or not a better deal could be negotiated.

US Weather

Days 1-5: Snows to hit Upper Midwest (Dakotas & Minnesota) through the weekend, while rounds of rain and thunderstorms in the Midwest/Delta. Planting progress is unlikely to proceed through next week as a result. Frost/freeze expected in S Plains. Temps in the 20s for KS, and sub-freezing temps will stretch into much of OK.

Days 6-10: Colder than normal temps dominate the north central U.S. with a moderate brand of cold across the Midwest. Limited precip over the next 10 days for southern Plains’ Hard Red Winter (HRW) wheat crop. Although, overnight model guidance (both GFS & EC) has begun to place a rainfall event somewhere in the vicinity of 20-22 April that could bring rain and thunderstorms to the southern Plains.

Days 11-15: Temps could moderate back to near normal with the very cold anomalies fading away. This should, on its own, be beneficial for plantings which typically begin to ramp up in parts of the southern Midwest by the end of the month. However, precip could be active during this time frame, which could be unfavorable from a planting standpoint. However, model guidance out through this time frame can be highly variable.

French Crops Lagging

  • Corn sowing is under way, with 1% of the expected area sown by April 9 vs 23% a year earlier.

  • FranceAgriMer estimates 78% of French soft wheat in good/excellent condition, unchanged vs week earlier but below the 89% rating last year.

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 – April 12

Headlines

  • Strong soybean exports sales.

  • Ethanol production held steady while stocks continue to decline.

  • Argentina purchases US soybeans for the 2nd time this week.

Ethanol Production

  • Ethanol production declined last week to 1.034 million barrels from 1.038 million barrels. Weekly production was 4.9% above LY.

  • Ethanol production dipped LY through May which means if weekly production holds steady over the next two months we will be back on track to meet the current corn used for ethanol estimate of 5.575 billion bushels.

  • Ethanol stocks declined again this week to 918 million gallons from 942 million gallons LW. Over the last four weeks we have seen a 10% decline in ethanol stocks which is the largest on record over a four week period.

Argentina Purchases U.S. Soybeans

  • Argentina purchased 120,000 MT of 18/19 soybeans from the U.S. on Wednesday.

  • Argentina made a similar purchase on Tuesday.

  • These sales will show up in next weeks export sales report.

  • The buyer was oilseed processor Vicentin SAIC and shows the impact of the drought in Argentina.

  • These purchases represent the largest imports to Argentina from the U.S. in 20 years and it is likely there will be more to come.

  • Weekly Export Sales

  • Soybean sales beat expectations and were up 74% from the four week average. China accounted for 254,700 MT while unknown destinations accounted for 665,800 MT. Egypt, Mexico and Taiwan were also present on the buyer list.

  • Soybean exports were only 419,700 MT which was a marketing year low.

  • Corn sales and wheat sales missed expectations. Both corn and wheat sales were 46% below the four week average.

Actual

Estimated

Wheat

120

150-350

Corn

839

900-1,400

Soybeans

1,510

900-1,400

Ukraine Planting Underway

  • Planting in Ukraine was reported to be 23% complete.

  • Weather is forecast to be favorable for both spring and winter crops.

  • This year 7.4 million hectares of spring grain is expected to be planted, up from 7.3 million hectares last year.

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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