October 24 – Morning Comments

In the overnight session the grains continued their move higher with corn up 3 3/4 cents, soybeans up 3 3/4 and wheat up 9 cents this morning. This morning private exporters reported 101,600 MT of corn to unknown destinations for 14/15 delivery.

Yesterday, U.S soybean export sales caught traders off guard by reporting more than twice the sales expected in that report which surprised the market and helped fuel the 30 cent soybean rally into yesterdays close. By law, sales over 100,000 metric tons must be reported in a daily sales announcement but this did not occur last week leaving traders with no indication that nearly 2.2 million tons of soybeans had been sold. Peter Burr, chief of the exporting branch of the USDA’s Foreign Agricultural Service said that “a sizable portion of these sales were optional origin sales that were changed to U.S origin” and that “some of these were late sales”.

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Wheat rallied sharply in the overnight with Chicago wheat up 8 cents while Kansas City and Minneapolis wheat posted 6-cent gains.  Weather problems in Australia are expected to curb production there, as farmers begin harvesting there this month. Analysts expect production to total 23.2 MMT in 2014-2015, versus a government forecast of 24.2 MMT and 27 MMT last year.  Also, Russia’s 2015 wheat crop is expected to drop with private analyst SovEcon expecting a 15 to 20% output slide based on lack of moisture and poor greenness that they say is the worst in 5 years.  Winter wheat is going into dormancy with a lack of moisture and runs the risk of some winterkill damage. In 2009-10, 12.6% of the crop was damaged by winterkill. SovEcon also warned that while farmers were able to get fall planted crops in based on pre-purchased inputs, spring crops could see substantial cuts in acreage as a result of the Russian ruble tumbling 17% in the past 3 months.

Harvest pace has been moving along quickly over the last week with clear weather expected over the next four days. Tuesday of next week should bring some more precipitation to the eastern corn-belt which might cause some interruption to harvest and the 6-10 day outlooks shows a higher chance of precipitation in the northern states of ND, MN, WI and MI. The 6-10 also shows a drier than normal trend in KS, OK, TX, MO and LA. In South America showers are expected from Saturday through Tuesday of next week, covering much of Brazil and alleviating some of the dryness concerns.

Today is the last trade for November options for Corn, Chicago Wheat, Kansas City Wheat, Minneapolis Wheat and Soybeans. Friday October 31st will be first notice for the November soybean contract.

October 23 – Morning Comments

Corn and wheat futures are unchanged while soybeans are trading 3 cents higher coming out of the overnight session.

This morning’s export sales report showed continued strong demand for U.S. soybeans. The USDA reported 2,166,800 tonnes sold for the current marketing year, with China accounting for 80% of export business this week. This sales total was over double the highest trade expectation coming into today’s report. We continue to see soybean basis out of the gulf edge higher, increasing roughly 10 cents in the last 5 days. Corn sales for the week were at the high end of expectations with with 1,031,200 tonnes reported sold. Wheat sales missed the mark with just 299,400 tonnes sold.

Brazil is expected to receive rain across their grain belt today and into the weekend, easing dryness concerns for the key growing state of Mato Grasso. Dry conditions have hampered planting across the country with Mato Grasso receiving 10 centimeters less rain that normal during the last month. Soybean bulls have pointed to this story as helping soybeans in the near term. A close above $9.67 on the November 2014 soybean contract would indicate that this run might still have gas in the tank from a technical perspective. First notice day for the November contract is Friday, October 31st.

Harvest weather continues to look favorable for the majority of the U.S. grain belt. Most areas will be receiving above average temperatures and below average precipitation through the weekend.

October 22 – Morning Comments

Soybeans surged another 12 cents higher in the overnight on very light news. A close above 972 ½ on the November 14 contract would be a strong technical signal that October’s price rally may have more gas in the tank. Bulls will point to strong export inspections and basis levels at the Gulf that have risen in the last 4 days for December delivered soybeans. The long term fundamentals of this market continue to point to lower prices when taking into account stocks/use for 2014/15 and the production outlook for South America. First notice day for November 14 futures is Friday, October 31st. If you need help rolling to January futures please contact our office.

This morning the Ukrainian Agricultural Ministry announced the country may export 11.76 million metric tons of wheat this marketing year compared to 9.2 exported last year. This year the countries wheat harvest increased 6.3% due to a higher number of planted acres and better yield. Currently the USDA has Ukrainian wheat exports pegged at 10 million metric tons in the October WASDE report which was unchanged from the previous report in September.

Over the last few days Chicago wheat and Kansas City wheat have been consolidating right around their 50 day moving averages which have acted as resistance. As more time passes around these levels the potency of the resistance will fade. If prices break out and move another leg higher, be cautious as we move right into the $6.20 resistance in Kansas City Wheat and the $5.42 resistance in Chicago wheat.

 

 

 

October 21 – Morning Comments

In the overnight session corn was unchanged, soybeans traded 5 1/4 cents higher and wheat improved 2 1/2 cents.

Brazil’s key growing state of Mato Grasso is seeing dryer than normal planting conditions as Brazilian producers ramp up planting. Over the last thirty days the majority of Mato Grasso is 3 ½ or more inches behind normal rain fall totals. Weather models are projecting a wet week for central Brazil, with an inch of precipitation possible across the majority of key growing areas. This should work to neutralize dryness concerns in the short run for central Brazil.  

Egypt’s state grain buyer GASC is expected to announce the result of their most recent tender today. Traders indicate that French, Russian, and Romanian wheat was offered with no offers from the United States. Staying on the wheat front, Syrian officials have announced they will import up to 1 million tonnes of wheat this marketing year as the country’s civil war has cut domestic production in half. Yesterday’s export inspections report showed that 481 thousand tonnes of U.S. wheat was inspected for export last week, right in line with trade expectations

 Crop progress was released last night which showed that harvest is now complete for 31% percent of corn area which was right around analyst expectations. This years pace lags the five year average of 53% percent by this time of the year. Last week the amount of harvested acres in the U.S jumped only 7 percent. 
 
Soybean harvest progress also came in on pace with expectations, reporting 53% harvested compared to a five year average of 66%. Over the last week harvested acreage improved by 13 percent.  
 
Weather throughout the grain belt should be clear today with some slight showers coming into the picture in the western grain belt on Wednesday. Any delays due to the precipitation should be minor. Friday should usher in more precipitation before the forecast clears up over the weekend. 

 

 

 

October 20 – Morning Comments

In the overnight session corn is down 5 ½ cents, soybeans is down 13 ½ cents and wheat is down 6 cents as we head into this morning pause in trading. Dry weather conditions forecast for this week should allow harvest progress to move ahead rapidly. On Sunday Jordan issued an international tender to purchase 100,000 metric tons of wheat from optional origins.

Crop progress will be issued today at 3.30 PM CST with many analysts expecting corn harvest progress to be in the low thirties and soybeans to be around 50% percent complete. The five year average from 2008-2012 is 53% percent harvested for corn and 69% harvested for Soybeans. The weather looks to allow field work early this week with today and tomorrow dry throughout the entire corn-belt.  Wednesday looks to bring some light showers that shouldn’t impact harvest significantly. The 6-10 day forecast looks to be drier than average allowing producers a window to wrap up their harvest.

Informa released their most recent 2015/16 acreage estimates on Friday, once again showing expectations for a very large 2015/16 soybean crop. Soybeans were projected at 88.5 million acres while corn was projected at just 87.8 million for the upcoming growing season. This compares to 90.9 million acres of corn and 84.2 million acres of soybeans planted this year, per the USDA’s October estimate. November 2015 soybeans are still trading at a 17 cent premium to the front month, November 14, contract. Last trade on November 2015 this morning was $9.55. If you need help adding new crop 2015 contracts to your trading platform please call our office.

 

 

October 17 – Morning Comments

In the overnight session corn soybeans and wheat are trading slightly lower with corn down 2 cents soybeans down 5 ½ cents and wheat down 1 ¼ cents going into the market pause. Kansas city wheat is trading 3 cents higher here this morning. UkrAgroConsult said this morning that milling wheat consisted of only 58% of harvested volume compared to 75 percent last year in Ukraine. Protein content eroded during summer rains which left 12.5% protein levels accounting for only 18.7 percent of harvest while 11 percent protein wheat accounted for 38.4% of harvest.

Export sales were released out this morning which showed that wheat met market expectations by booking 454,000 metric tons which was up 22 percent from the week before. Wheat sales estimates were between 350,000-550,000 metric tons. Corn sales were reported at a marketing year high with 1,922,800 metric tons sold for delivery in the 14/15 season. This included the large sale to Mexico reported on October 10th. Corn’s sales number was on the high side of expectations. Soybeans sold 935,000 metric tons which was also on the high side of analyst expectations, with China being the primary buyer.

Yesterday’s ethanol report showed sliding production as crush margins continue to sag across the grain belt. Lower crude oil prices have pressured ethanol prices to the downside, but positive price action for cash corn has been the greatest impact on crush margins. Crush margins now sit below $2.00 per bushel in Iowa for the first time since August 2013. Basis at ethanol plants has reflected this weak margin environment, with cash basis for spot corn delivery down an average of 2 cents just yesterday. We will detail the entire move for ethanol in this afternoon’s cash grain report.

Outside markets are finally finding bottom after several days of hard selling. This morning S&P 500 futures are up 23 points while crude oil is trading a dollar per barrel higher. The dollar index had a relatively quiet trade in the overnight.

October 16 – Morning Comments

In the overnight session corn slipped a penny, while soybeans increased 3 ¼ cents and wheat improved by ½ a penny. At 8 AM CST a reportable sale was announced showing that 12,000 metric tons of U.S corn is to be delivered to unknown destinations for 14/15 delivery. In the overnight session Tunisia issued a tender to buy 159,000 metric tons of optional origin durum wheat.

Crude oil futures continued to march lower in the overnight session, with Brent Crude futures now testing $80 per barrel. Ethanol futures have remained steady in recent sessions despite the sharp move lower in crude. Ethanol production figures will be out today and, considering margin, should show seasonally strong weekly production.

The latest Strategie Grains forecast for the 14/15 European Union corn crop was increased to 73.3 million tons up from 71.3 million tons expected in their last month’s forecast. The company’s 2015 acreage estimates showed expectations for European Union soft wheat acreage maintain 2014 levels, while winter wheat, barley and corn slip 2 percent each. Strategie grains expects Durum acreage to increase 6 percent in the European Union.

At 10 AM CST the weekly ethanol production and stocks report is scheduled for release after being delayed a day due to Columbus holiday on Monday.

October 15 – Morning Comments

In the overnight the grains moved lower a couple pennies with corn falling 2 ¾ cents, soybeans falling 2 ½ cents and wheat falling 4 cents. There was an international tender by South Korea for 24,600 tons of U.S milling wheat. Although, there was light selling in the overnight we will be watching the open closely for continuation to yesterday’s sharp move higher.

Septembers NOPA crush data will be released at 11 AM central time with the average analyst expecting 107.553 million bushels crushed. Stocks are estimated to be around 476,730 metric tons. These numbers will most likely be market moving as the expectations for soybean crush would be the largest amount of soybeans crushed since late 2009.

Crop progress and conditions were released yesterday, showing good/excellent ratings unchanged for corn and soybeans. Harvest pace continues to lag, with just 40% of soybeans and 24% of corn harvested. Typically we see 53% of soybeans and 43% of corn harvested this week in the marketing year. Weather has been very wet across the southern grain belt this week, although a drying pattern is excepted Thursday and into the weekend.

October 14 – Morning Comments

Corn and wheat are unchanged overnight while soybeans continue to surge higher, up 12 cents trading at 957 1/4. This move has now made it through heavy resistance at $9.55 and indicates a change in the trend observed during July, August, and September looking at the November 14 daily chart. Further short liquidation is certainly possible during today’s day session. Coming into this week funds were sitting on a massive short soybean position. The next area of resistance would be at $10.00 on the November contract, but we will be waiting to see how the trade reacts during the day session for confirmation of the move. This move in the overnight was made on just 21,000 contracts traded. Soybean fundamentals remain unchanged and our bias remains bearish long term.

The Ukrainian analyst UkrAgroConsult said on Tuesday that Ukraine’s corn exports are likely to fall to 18.5 million metric tons due to the smaller harvest caused by the heavy fighting in the eastern part of Ukraine and the large global supply. The decrease in production represents a fall by 7 percent year over year.

Russian wheat exports, which beat out U.S wheat in a tender issued late last week by Egypt, has been seeing sideways price movement over the last week after declining for three weeks straight. Although there was talk that Russian wheat was priced out of the global market due to strong domestic demand, it appears that prices have corrected once again bringing Russia back to strongly competitive price levels.

October 13 – Morning Comments

In the overnight session corn slipped lower by a penny, soybeans increased by ¾ of a cent and wheat fell by 3 cents. Soybeans traded 15 cents higher in the overnight session before cupping over and closing near the open. Corn had a similar pattern in the overnight session. The Columbus day holiday will likely keep the trading thin throughout the day. Export inspections and Crop Progress reports, typically released on Monday, will be out tomorrow.

Friday, GASC announced that the tender for 175,000 which was announced on Thursday will be filled by French and Russian wheat. This is not supportive of U.S wheat which struggled to meet expectations in the last export sales report announced on Thursday.

Rains throughout the Midwest will likely delay harvest for the next couple days. The storm, which works its way east by Wednesday will bring heavier rain to the eastern grain belt, but will likely clear off for some meaningful harvest progress by the end of the week.

China has announced plans to stop weekly soybean sales from state reserves as harvest nears. China has sold 2.48 million metric tons of soybeans since May in their most recent round of sales. A halt in state sales would be generally positive for prices, but since this news comes just as harvest peaks domestically it should have limited impacts on U.S. prices.

NOPA crush numbers will be released on Wednesday at 11:00 AM central time.