Morning Comments – July 02

In the overnight session the grains traded lower with corn down 2 1/4 cents, soybeans down 8 3/4 cents and wheat down 9 1/2 cents this morning. Crude oil is trading up 25 cents and the U.S. dollar is down nearly a quarter of a percent.

On Wednesday, the EIA ethanol production report showed a weekly decline of 26,000 barrels per day to 968,000 barrels per day. Weekly production was 15,000 barrels per day above last year’s pace and well above the four year average of 898,000 barrels per day. This year’s production is 4.6 percent above last year’s levels. Ethanol stocks fell 308,000 barrels this week to 19.532 million barrels.

Old crop corn sales showed 594,300 metric tons was booked last week, up 20 percent from the previous week and on the high side of analyst expectations which ranged from 300,000 to 600,000 metric tons. New crop sales met expectations by booking 238,900 metric tons this week. Soybean sales disappointed analysts with net reductions by 10,300 metric tons, well below what analysts were expecting which ranged from 100,000 to 200,000 metric tons. New crop soybean sales were also light, booking 127,500 metric tons this week.  Wheat sales met expectations booking 363,900 metric tons.

Morning Comments – July 01

In the overnight session we have pulled back a bit with corn down 7 cents, soybeans down 5 1/2 cents and wheat down 17 cents this morning. The U.S. dollar is trading higher by a half a percent and crude oil is down 79 cents this morning.

Yesterday’s quarterly grain stocks and planted acreage reports pushed the market sharply higher within sight of some important chart resistance levels.  September corn resistance is at $4.30 where the market closed back on December 29th.  September wheat resistance is at $6.60 where the market closed back on December 18th and soybeans traded up to a high of $10.45 1/2 in the overnight which is an area that acted as resistance multiple times between November and January of last year.

The June 30th planted acreage report showed lower than expected planted acreage estimates for corn and soybeans. For the second year in a row the U.S. is planting record soybean acreage estimated at 85.139 million acres which was higher than the March 31st acreage numbers, but slightly lower than analyst expectations which averaged 85.171 million acres. The USDA followed their acreage report with an announcement that they will be resurveying Cotton, Soybeans and Sorghum acres in Texas, Kansas, Arkansas and Missouri after excessive rain caused planting delays.

Corn acreage slid 302,000 acres from the March 31st report to 88.897 million acres. This will be the lowest corn acreage since 2010, and is below analyst expectations which averaged 89.292 million acres. Wheat acres surprised the market with 56.1 million acres planted in 2015, which is 233,000 acres above the average trade guess and 733,000 acres above the March 31st forecast.

Corn stocks were reported at 4.45 billion bushels, 105 million bushels below the average trade expectations. Soybean stocks were also lower than expected with 625 million bushels, compared to expectations of 670 million bushels which helped bring buyers into the market. Wheat stocks were reported higher than trade estimates with 752 million bushels compared to analyst estimates of 718 million.

Morning Comments – June 30

In the overnight session the grains were mixed with corn up 1 cent, soybeans down 5 3/4 cents and wheat down 1 1/4 cents. The U.S. dollar is trading 1/2 a percent higher and crude oil is trading up 24 cents. Two major USDA reports will be released at 11 AM CST including the Planted Acreage report and the Quarterly Grain Stocks report. Below are the expectations for both reports.

In a poll of analysts conducted by Reuters the average forecast for corn acreage is 89.292 million acres. This is up from the 89.199 million acres of corn forecast on March 31st. For soybeans and wheat, analysts are expecting to see a half million acre increase from the March 31st report to 85.171 million acres and 55.867 million acres respectively. However, whatever the USDA releases this morning will likely come under scrutiny since the survey was conducted in early June. With slower than average soybean planting pace and saturating rains throughout the Midwest some fields may not get seeded.

Crop progress was released yesterday at 3 PM CST after the market closed and showed another drop in corn and soybean conditions. The U.S corn rated good-to-excellent slipped 3 percentage points to 68 percent from 71 percent last week.  Ohio’s crop conditions declined notably from 61 percent rated good-to-excellent last week to 42 percent this week. Soybean conditions also slipped falling to 63 percent rated good to excellent from 65 percent last week. Soybean planting increased 4 percent this week but planting pace still lags significantly in Missouri which is only 62 percent complete compared to the four year average of 94 percent complete. Wheat plantings increased this week to 38 percent but still lag the four year average of 46 percent complete by the last week in June.

In a Reuter’s poll of analysts the average analyst guess for the quarterly grain stocks is 718 million bushels for wheat, 4.555 billion bushels of corn and 670 million bushels of soybeans. This would be a draw down in grain stocks from 1.124 billion bushels of wheat, 7.745 billion bushels of corn and 1.334 billion bushels of soybeans reported on March 1st. Traders will be watching corn stocks closely to gauge feed demand which could be negatively influenced by the bird flu this year.

Morning Comments – June 29

In the overnight session, the grains traded higher with corn up 5 1/2 cents, soybeans up 3 3/4 cents and wheat up 9 cents by the pause of trade this morning. The U.S. dollar is up only a fraction of a percent and crude oil is down 71 cents. All traders in long July grain contracts will need to liquidate or roll their positions by the close of trade today with Tuesday the 30th being First Notice. Tuesday the 30th also marks the release of two major USDA reports including the Planted Acreage report and the Quarterly Grain Stocks report.

In a Reuter’s poll of analysts the average analyst guess for the quarterly grain stocks is 718 million bushels for wheat, 4.555 billion bushels of corn and 670 million bushels of soybeans. This would be a draw down in grain stocks from 1.124 billion bushels of wheat, 7.745 billion bushels of corn and 1.334 billion bushels of soybeans reported on March 1st. The Quarterly Grain Stocks report will be released at 11 AM CST tomorrow.

Weather this week is expected to bring cooler than normal conditions to the Midwest and leave the northwest significantly hotter than normal. Rains are expected to pass through the Midwest leaving Illinois, Indiana Michigan and Ohio with more precipitation than normal this week while North Dakota, South Dakota, Nebraska and Kansas expect drier weather.

Morning Comments – June 26

In the overnight session the grains traded sharply higher with corn up 10 1/2 cents, soybeans up 19 1/2 cents and wheat up 26 3/4 cents this morning. Wheat has broken through resistance which hovered around $5.36 3/4 and is building momentum to the upside, soybeans has been above its 100 day moving average since Monday and is now trading above 10 dollars. Next resistance level for July soybeans is around $10.42 3/4 which was a previous high back on February 26th. Corn is trading around 3.86 1/2 this morning which is just above its downtrend resistance of $3.81 and the 100 day moving average of $3.79. Keep a close watch on today’s trade action as we could see prices chop around throughout the trade day.

This morning’s rally is triggered by the strong amount of rain that went through the Midwest on Wednesday and the rain forecast throughout Thursday and Friday. On Wednesday evening a storm blew through Iowa and Missouri dropping as much as 7 inches of rain in some areas. Traders are concerned that the excessive rains will damage yield prospects for this growing season. Thursday will usher in a another storm into the Midwest bringing 1 to 3 inches of rain to South Dakota and then Missouri, Illinois, Indiana and Ohio on into Saturday.

In other parts of the world dry weather is beginning to be a concern. The conditions of French wheat declined this week according to the FranceAgriMer who cited dry weather as the main reason. As of June 22nd the good to excellent ratings fell to 81 percent compared to 85 percent a week earlier and 87 percent on June 8th. Weather in France is expected to remain hot and dry with temperatures forecast to hit record highs next week in many parts of the country.​

Morning Comments – June 25

In the overnight session the grains traded higher with corn up 2 1/2 cents, soybeans up 8 1/4 cents and wheat up 2 1/4 cents. The U.S dollar is mostly unchanged this morning and crude oil has slipped 29 cents lower.

The EIA ethanol production numbers showed that last week’s production was the largest this marketing year. Weekly production increased 14,000 barrels per day to 994,000 BPD. Ethanol stocks dropped 878,000 barrels to 19.840 million barrels helping to paint a more bullish picture. This marketing year ethanol production is up 4.7 percent compared to 2013/14.

This week’s export sales report showed that wheat booked 434,300 metric tons which was on the high side of analyst expectations which ranged from 200,000-450,000. Soybean sales fell 11 percent compared to last week to 118,000 metric tons but was still within the range of analyst expectations. Corn sales declined 21 percent to 496,800 metric tons. This was below the analyst estimates that ranged from 500,000-700,000 metric tons.

New crop sales were strong for corn however, booking 297,500 metric tons which was above the 100,000-200,000 metric tons expected this week. Soybeans booked 202,500 metric tons to be delivered in the 2015/2016 marketing year.

Morning Comments – June 24

In the overnight session the grains traded lower with corn down 3 1/4 cents, wheat down 2 3/4 cents and soybeans down 6 1/2 cents. Crude oil is trading 10 cents lower and the U.S. dollar is down a fraction of a percent. The market will be focusing on the June 30th planted acreage numbers that is expected to have the biggest impact on Soybeans.

Soybeans were only 90 percent planted as of Monday which is 5 percent behind normal pace. Rains forecast across the Midwest this week helped lift soybean prices as traders became nervous about the remaining unplanted acreage. Allendale estimates corn planted acreage at 91.742 million acres which is up from the 89.199 million acres forecast by the USDA in March. Allendale expects soybean acreage to increase to 85.105 million acres which is up from 84.635 million acres estimated by the USDA in the March 31st report. The July soybean contract is currently above the 100 day moving average but is giving back some of its gains this morning. Look at 974 1/4 as a support level for today and tomorrows trade session.

Winter wheat harvest is behind the average pace during this time of the year. On Monday, the crop progress announced that only 19 percent of the crop had been harvested which is behind the 31 percent harvested we typically see. Harvest prospects look to be mostly uninterrupted in the near term with some scattered storms expected on Thursday and Friday. However, the forecast turns wet again for the beginning of July which is likely to continue to disrupt harvest pace. Traders are also concerned about the wheat quality after the plains received significant moisture late in the growing season. Head scab has spread rapidly in the winter wheat fields of central Kansas.

Morning Comments – June 23

In the overnight session, the grains were mixed with corn up 1 cent, soybeans down 1 3/4 cents and wheat up 2 1/2 cents. Crude oil has slipped 57 cents lower this morning with the U.S. dollar index up by over 1 percent. The dollar gained some strength following U.S. housing data and the euro was unable to hold onto recent gains as deal surrounding Greece’s debt remains in debate.

This morning there was some demand activity with Ethiopia buying 240,000 metric tons of wheat from optional origins. Traders expect this wheat to be sourced from the Black Sea region. Japan’s ministry of agriculture is also buying 114,510 metric tons of food quality wheat from the United States or Canada.

Export inspections showed that 1,105,000 metric tons of corn was inspected for export which was above the 800,000-1,000,000 metric tons expected. Soybeans showed 178,000 metric tons inspected for export which was within analyst expectations and wheat inspections missed expectations. Wheat inspections totaled to 290,000 metric tons compared to 300,000-400,000 metric tons anticipated by analysts.

Corn rated good-to-excellent fell 2 percent in this week’s crop progress report which was a bit more than traders were looking for. At this point in the marketing year 71 percent of the corn crop is rated good-to-excellent compared to 74 percent last year. Corn conditions in the eastern grain belt states like Indiana and Ohio dropped the most.

Soybean rated good-to-excellent also fell 2 percent this week which was in line with trade expectations. However, only 90 percent of the crop was planted which is now behind the 4 year average of 95 percent planted during this time of year.


Morning Comments – June 22

In the overnight the grains are higher with soybeans leading the charge up 7 1/2 cents, wheat up 4 1/4 cents higher and corn down 1/2 a penny. July soybeans now trades above $9.74 which is the 100 day moving average after closing Friday below that level. Crude oil is up 22 cents this morning and the U.S. dollar is only a fraction of a percent higher. The USDA crop progress is expected out at 3 PM CST today.

On Friday, Informa Economics lowered its estimate of U.S. soybean plantings this year to 86.760 million acres down from 87.185 million acres in its previous forecast. Despite the downgrade, Informa is still above the current USDA estimates of 84.635 million acres which was released in March. The USDA will revise its Planted Acreage estimate on June 30th.

The European Union’s crop monitoring service MARS revised its yield estimates from 5.93 tons per hectare to 5.85 metric tons per hectare as a result of low soil moisture throughout the western and central parts of Europe. Higher than normal temperatures early this month accelerated development of crops in Spain Italy and Southern France, but the lack of soil moisture recently has begun to stress the crop. MARS has left corn yield estimates unchanged.

U.S. weather is expected to bring widespread showers later on this week which should continue to help the crops development. Following the showers on Thursday and Friday the outlook shifts to a drier milder outlook.

Weekly Cash Comments

Cash Commentary-

Grain basis was mostly stable this week with both corn and soybeans unchanged for the week across the U.S.

Weather was the big concern this week as Tropical Storm Bill hit Texas and Oklahoma and made its way into the Ohio Valley by late in the week. Wet conditions are leading to not only planting problems, but shipping delays along the IL & MS River as swollen rivers are shutting down some stretches for barge traffic. In FOB market, export premiums were firmer on Thursday because of high water levels on Illinois and Mississippi rivers. FOB soybean basis offers for July were offered at 105 cents over CBOT July on Thursday, up 10c from Wednesday.

End users were mostly quiet this week with little directional movement for either corn or soybean plants. The sharp rally in soybean futures helped increase some farmer selling of old-crop which caused basis levels at soy plants to be weaker as a result. In ethanol, production levels were off this week by 12,000 barrels per day to 980,000 barrels. Basis levels in the Western Cornbelt tended to be weaker for corn end users this week.

Futures Commentary-

Grains found some support this week thanks to heavy moisture that plagued the Southern Plains wheat harvest and kept farmers from planting the last of the soybean crop.

After trading as low as $8.97 at the start of the week, new-crop November futures shot higher reaching $9.45 later in the week before running out of steam. USDA estimated that 67 percent of the crop was in good to excellent condition, below the 69 percent level in the previous week. Also, the pace of plantings has stalled as wet weather continues to hamper the last of the crop, with 87 percent of the crop planted versus a 90 percent 5-year average for this time of year. Early in the week, the NOPA crush estimate for May was released which came in at 148.4 MB, well above analyst estimates of 147.3 MB. However, substantially higher soy oil stocks kept a lid on soybean prices with inventories of soy oil pegged at 1.58 billion pounds versus estimates of 1.40 billion pounds.

In corn, crop conditions also slipped a bit in USDA’s latest report going to 73 percent this week versus 74 percent last week and 76 percent this time last year. Overly wet conditions in the Southern Midwest is causing modest concerns but with ample stocks and sluggish demand it may prove difficult to see a big rally on overly wet conditions at this time of year.  Weather forecasting firm Planalytics released their latest US yield forecast which they now peg at 166.2 bushels per acre, up from their previous forecast two weeks ago which came in at 164.1.

For wheat, harvest pace continues to drag in the Southern Plains as rain-soaked fields hamper the progress. The latest crop progress report from USDA shows only 11 percent of the winter wheat crop harvested versus 4 percent last week and a 5-year average of 20 percent. Crop conditions for winter wheat were unchanged from last week at 43 percent good-to-excellent, while spring wheat increased one percent to 70 percent.

Export sales this week were mostly on par with expectations. Wheat sales for the new-crop marketing year came in at 315,700 MT versus trade estimates of 200,000 to 400,000 MT.  Old-crop corn totaled 627,000 MT as compared to the trade estimate range of 400,000 to 600,000 and new-crop sales were 200,400 MT versus trade estimates of 50,000 to 200,000 MT. New-crop soybeans were well above expectations with 532,000 MT while analysts expected only 150,000 to 350,000 MT but old-crop sales came in at the low end of expectations at 132,900 MT versus trade estimates of 100,000 to 250,000 MT.