August 26th- Morning Comments

The grains are slightly lower to unchanged this morning with corn down ½ of a cent, soybeans down 4 ¼ and wheat down ¼ a cent this morning. On Monday Egypt’s GASC announced a tender to buy an unspecified amount of soft wheat or milling wheat for delivery Sept 21 to 30. Traders are looking for Russia, Ukraine and Romanian wheat are likely to win the tender since Black Sea wheat is nearly $4 a metric ton more competitive than Chicago Wheat. GASC tender results are expected later today.

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Crop progress was released on Monday at 2 PM CST and showed that corn rated good-to-excellent has improved by 1% while soybeans have fallen 1% over the last week. Spring wheat conditions have also declined, falling to 66% good-to-excellent from 68% a week ago. Soybean harvest is now starting in the south with Missouri 2% complete and 8% complete in Texas. Early harvested soybeans have a strong cash market to sell into, with the spread between Sep/Nov at 79 ¾ cents this morning. The spread has been wildly volatile in the last week trading as high as 151 yesterday morning before seeing the gains evaporate by the end of the day. The start of southern soybean harvest will be putting pressure the old crop, new crop spread and has already started to affect Gulf bids which moved 10-17 cents lower yesterday.

This week’s weather is showing a wet pattern over the next 10 days with the majority of the grain belt receiving meaningful precipitation. The precipitation should cover the remaining dry spots which had developed over most of July and had been cause for concern for late planted soybean development. Currently, there are no early frost threats over the next 30 days.

On Friday, Pro Farmer announced the aggregate U.S corn yield estimate at 169.3 bushels per acre which is 1.9 bushels per acre higher than the August USDA forecast and .9 bushels higher than the latest Planalytics yield forecast.

August 25th – Morning Comments

This morning the grains are trading slightly lower with corn down 3 ½ cents, soybeans down 7 cents and wheat down 1 cent as we go into the morning pause in trading. The spread between the September soybean contract and the November contract has taken another giant leap higher, up 15 cents just in the overnight. The spread is now trading at 139 3/4, up from 15 cents on August 6th.

There should be more moisture this week throughout the Midwest as a storm tracks from Nebraska to the Great Lakes region from Tuesday to Friday. The storm should help the later planted corn and soybeans giving eastern Nebraska, Iowa, Southern Minnesota, and Wisconsin between ½ -1 inch of precipitation.

Heavy rains fell this weekend in Montana and the Western Dakotas which halted harvest and gave cause for concern about crop quality. In Montana, the higher elevations received snow which is still sticking on the peaks this morning. The wet growing season has caused concern about the emergence of Vomitoxin as harvest progresses. Vomitoxin has already been present in some of the early harvested crop.

France was able to wrap up wheat harvest over the weekend. Germany however, who has been struggling with wet weather during harvest, is still looking for a break in the forecast to cut the remaining acres.

Trading opened at 8:30 PM Sunday night, which was 1.5 hours later than expected after the CME ran into unspecified technical problems. Those problems have since been resolved.

August 22 – Morning Comments

The grains moved slightly higher in the overnight session with corn increasing ½ a cent, soybeans up 3 ¼ cents and wheat up 4 1/4.

Yesterday, the Pro Farmer crop tour released their yield estimates for Iowa at 178 ¾ bushels per acre which is below the USDA’s August forecast of 185 bushels per acre and well below the latest Planalytics yield forecast of 187.4 bushels per acre. In Minnesota the crop tour projected 170.76 bushels per acre which was down from last year but still higher than the 168 bushels per acre forecast by the USDA.

Yesterday, we continued to see end users increase their basis for spot soybeans. The tight old crop stocks have the September/November soybean spread rocketing higher. The spread is now trading at 106 ½ cents, up from 11 cents on August 4th. End users have supported the bullish spreading with the Gulf CIF basis now trading +325 off the November contract and a processor out of Claypool, IN bidding $4.00 over the November contract for soybeans delivered by September 3rd.

Wheat quality problems continue to be a concern in Europe with more rain in the forecast for Germany as it looks to harvest the remaining 25% of its crop. Quality specifications for the delivery locations of the European wheat contract have been changed weeks ago to ensure that foreign buyers are not delivered feed wheat. Recently across the newswires there is talk that Lithuanian wheat and English wheat are being imported to mix with French wheat to get quality up to spec.

Aug 21 – Morning Comments

Weekly export sales were released this morning, with very strong new crop corn and soybean sales reported. Corn sales beat out expectations coming into this morning’s report, with FAS reporting 719,300 MT of 2014/15 corn sold. Major buyers were Colombia, Mexico, and unknown destinations. Soybean export sales were a mixed bag, with net cancellations of 89,600 MT reported for 2013/14 and large sales of 1,420,000 MT reported for the new crop. Soybeans should have favorable Wheat saw relatively poor sales, with just 209,200 MT reported sold. This was below expectations and down 62% from the 4 week average.

The Pro Farmer Crop Tour enters day 4, with scouts moving from Coralville and Spencer Iowa to Rochester, MN. This will be the final day of the crop tour, and as shown by the map below has the potential to see some very good stands of corn. Follow #PFtour14 on twitter for live photos and comments from the crop tour.

NOAA will be releasing their September and 90 day weather outlooks this morning. A major focus of this report will be the potential for an early frost/freeze event. Monday’s crop progress report showed just 22% of U.S. corn dented compared to a 5 year average of 27% for this week in the growing season. In Iowa just 16% of corn is dented compared to a 5 year average of 25%. Soybeans remain less of a concern in terms of progress as 83% of the crop is setting pods compared to a 5 year average of 79%. Numerous reports have been made from the Pro Farmer Crop Tour that the soybean crop will need more growing degree days to maintain yield potential.

August 20 – Morning Comments

Grains are mixed this morning with corn off 3 cents, soybeans down 4 cents, and Chicago wheat up 2. Exporters sold 110,000 metric tons of soybeans to Vietnam for 2014/15 delivery.

Day 3 of the Pro Farmer crop tour is now underway with the eastern leg moving from Bloomington IL to Coralville, IA. Western crop scouts will be moving from Nebraska City, NE to Spencer, IA. This should show crop scouts some of the best corn of the entire trip, with our models projecting yields 10-30 bushels per acre better than last year along much of today’s route. In western Iowa we are projecting yield at 188 bushels per acre. Follow #PFTour14 and @GrainTV on twitter for live updates from the trip and to see crop photos as they are released.

With today’s crop tour is taking scouts through prime growing regions, strong yield potential is likely to cause some social media buzz. Expectations are for the market to trade lower as it is pressured from images of high yielding counties.  However, the corn market has been able to find its footing after a steep sell off starting early May. Price action will be critical to monitor over the next few days. If we can’t trade lower as scout’s survey some of the top fields in America, corn may have some more upside before resuming the bearish trend.

 

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August 19 – Morning Comments

Grains are trading lower this morning in Chicago with corn down 3 cents, soybeans of 6 cents, and Chicago wheat down 3 cents.

The Pro Farmer crop tour is entering day 2 this morning with the western leg moving from Grand Island to Nebraska City, Nebraska. The eastern leg will go from Fishers, Indiana to Bloomington, Illinois. The map below shows Crop Reporting District yield forecasts for corn with the Pro Farmer Crop Tour route highlighted in blue. Tour stops are shown as blue dots. As you can see from the map, day 1 and day 2 should produce the “worst” yield forecasts, relative to 2013, of the entire trip. Day 3 and Day 4 of the tour will be in Iowa and Illinois where we are projecting yields up sharply from 2013. Expect the corn market to be pressured by reports of exceptional crops on Wednesday and Thursday of this week.

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Crop Progress was released after the market close Monday, showing soybeans rated 71% good-to-excellent. This was up 1% week over week. 83% of the soybean crop is now setting pods – well above the 5 year average of 79%. Corn conditions slipped a percent, now rated 72% good to excellent. 22% of corn is now in dent stage.

This week we should receive wetter than normal precipitation across much of the northern grain belt, with South Dakota, North Dakota, Minnesota, Iowa, Indiana and Ohio all getting a drink this week. The cooler trend across the upper Midwest and the hotter trend in the southern Midwest should collide to provide a number of precipitation opportunities to finish off much of the corn and soybean crop.

This morning an 8,000 gallon diesel occurred along the Ohio River. The incident has shut down the river as officials have responded to the situation. The Ohio River is closed to vessel traffic near Cincinnati, OH to Dayton, Kentucky.

August 18 – Morning Comments

Corn is trading 3 cents higher this morning, soybeans are up 5 on September and unchanged on November, Chicago wheat is down 6 cents. S&P 500 futures are trading 11 points higher while crude oil is off 80 cents to 96.54 at 8:00 AM central time.

U.S. grains received spotty precipitation over the weekend, with parts of Iowa, Missouri and Illinois receiving 1-3 inches. The majority of the western grain belt received 0.20 – 0.60 inches of precipitation, which has helped to weaken November soybean futures this morning. China received 0.50 – 1.50 inches of much needed rain over night as most of the country continues to battle a severe drought. Weather over the weekend was generally supportive for growing conditions, and the USDA will receive their updated crop condition report today at 3:00 PM central time.

Corn has made a strong technical move over the last three trade sessions, moving above the 20 day moving average on the December contract. This has been the first close above the 20 day MA since May 9th and will be viewed as a strong technical indicator for fund and spec traders. This market is ripe for a short covering rally, and we still feel any bounce is a good opportunity to make catch up sales.

Today the Pro Farmer crop tour kicks off with 130 scouts surveying fields throughout Minnesota, South Dakota, Nebraska, Iowa, Illinois, Indiana and Ohio. Half the scouts will head to survey fields toward Columbus, Ohio and the other half of scouts will survey fields west to Sioux Falls, South Dakota.

This morning Jordan’s state grain buyer issued a tender to purchase 100,000 metric tons of hard milling wheat. Wheat prices jumped on Friday after a Russian convoy was allegedly attacked in Eastern Ukraine. Details seem very unclear around this event, but the talk of such things marks an escalation of the situation.

August 15 – Morning Comments

The grain market is moving higher again in the overnight with December corn trading up 4 ½ cents, November soybeans trading up 8 1/2, and December wheat trading 4 cents higher. The dollar index moved lower in the overnight, providing some short covering support for the grains. A reportable sale of 110,000 metric tons of soybeans was reported by FAS to be delivered to China during the 14/15 marketing year.

NOPA crush numbers will be released today at 11:00 AM central time, with traders expecting July’s crush to be just 115 million bushels. This would be well below the 5 year average for July – but not overly surprising considering the very tight old crop soybean cash market. This is largely an “old crop” report and bull spreading has been a theme this week, with the September/November soybean spread increasing 12 cents since Monday. September is now trading at a 42 cent premium over November this morning.

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Overnight precipitation was limited across the grain belt, with some rain received in southwest MN and northwest IA. Precipitation over the next 10 days looks to be near average across much of the grain belt. Temperatures will remain cool across the grain belt with highs in the 70’s and 80’s for the next 10 days. China is expected to receive .25 to .75 inches of rain over 85% of their crop over the next 5 days, helping to mitigate drought conditions.

The Buenos Aires Grain Exchange has revised its 14/15 growing season wheat acreage estimates to 4.1 million hectares from 4.2 million hectares due to excessive moisture in some areas. Despite the reduction in planted acreage Argentina is still well above the 3.6 million hectares which it planted last year. Planting in Argentina is now 98 percent complete.

August 14 – Morning Comments

Grains are unchanged in the overnight session, with corn down a quarter cent, soybeans up a penny, and wheat up half a penny.

Export sales were slightly weaker than analyst expectations for wheat this morning with only 338,700 metric tons sold compared to the 450,000-650,000 MT expected. Wheat sales were down 43 percent from the previous week. Corn sales were also light on the old crop with only 117,100 metric tons sold but performed well for new crop, booking 787,800 metric tons for delivery in 14/15. Soybean sales continue to be positive, with 61,400 metric tons in the old crop and 1,050,000 metric tons in the new crop. Old crop soybean sales continue to show strength, posting positive sales without cancelations. Soymeal however did post net reductions of 31,700 metric tons of old crop, which was a marketing year low.

November soybean futures traded lower in the overnight session before rebounding into the morning trade break. Yesterday marked an important technical move for the contract as prices closed below $10.55 for the first time. This was a price level that acted as support on both July 22nd and August 4th, and this bearish signal opens the door to another move lower. Considering the 15 million bushel surprise on Tuesday, it is our opinion that undersold producers should put on some downside protection on any bounce we can find.

Looking at the weather forecast, the western corn belt remains the area of concern. Friday into Saturday there is a good chance to see between 0.5 and 2.0 inches of rain across South Dakota, Nebraska, and Iowa. The 6-10 day forecast projects above average precipitation for the grain belt and slightly above average temperatures for the central and eastern grain belt.

August 13 – Morning Comments

Grains are drifting higher following yesterday’s USDA report. Corn is up a penny, November soybeans is up 3 cents and Chicago wheat is up 4. Bull spreading continues to be a theme in the soybean market, with September soybean trading up 6 cents.

Two sales of U.S. corn were reported this morning, with Mexico purchasing 107,600 and unknown destinations purchasing 130,000 tonnes. Both sales were for the 2014/15 marketing year and we could be seeing some end users trying to price grain after the USDA came up short (relative to expectations) on their yield number yesterday.

Drought in the central Chinese province of Henan is one of the worst in forty years with the region only getting half its typical rain supply. Despite the losses in yield, it is unlikely that this drought will result a substantial need to increase corn imports into China because the yield declines are largely offset by the increases in planted acreage. China is also sitting on a massive supply of corn after a number of good producing years. Yesterday, the USDA left China’s corn production number unchanged at 222 MT.

NOPA crush numbers will be out Friday, detailing soybeans going to crush during the month of July. Spot crush margins remained favorable for much of the month, averaging 60 cents per bushel on the board. NOPA numbers will be out at 11:00 AM central time.