Weekly Commentary – November 28

Cash grain markets continued to post gains this week with corn basis advancing 4 cents on the week while soybeans added 3 cents on average to US basis levels.

River terminals found the greatest strength this week thanks to a continued slide in barge rates. At the Illinois River, barge rates at the start of November were around $1.20 a bushel but have now fallen below 80 cents a bushel for the first time since late summer. River terminals as a group were up 7 cents a bushel. For ethanol plants, basis levels were up 3 cents a bushel as a group but there was noticeable weakness this week with about a third of the ethanol plants posting unchanged to lower basis levels. Production at ethanol plants continued to be strong, posting above last week’s marketing year high coming in at 982,000 barrels per day and sets the year-to-date total at 4.5% above last year.

For soybeans, basis levels mostly improved and the falling barge rates helped push basis levels higher there by 7 cents a bushel. For bean plants, basis levels were modestly higher advancing 3 cents a bushel. Eastern CornBelt soy plants found greater strength than those in the West.

This week wheat seemed to finally gain some traction with supply concerns out of Russia and Ukraine, closing up 10 ¼ cents on the week ending Wednesday the 26th. Soybeans jumped 26 ½ cents and corn improved 5 ¼ cents on the week.  First notice day was on Friday November 28th for the December grain contracts causing traders to have to roll out of those positions by the close of trade on Wednesday the 26th.

This was another positive week for soybeans which has been able to hold onto its gains that it has achieved since the first of October. Export inspections and sales have both maintained a strong pace. On Monday, soybean inspections showed 2,784,913 metric tons inspected at all ports which was on the high side of estimates. Later in the week export sales showed 1,485,400 metric tons were booked which was well above analyst expectations and nearly 1 million metric tons over last week’s sales.

Corn also had a positive week although export inspections were a slight disappointment Monday.  Friday’s export sales showed 944,900 metric tons were sold which was up 4% from last week and above the analyst forecasts between 600,000-800,000 metric tons. This week’s ethanol production also showed improving demand with production improving 12,000 barrels per day to 982,000 BPD. This was the strongest weekly ethanol production figure this year.

The wheat market has been supported recently by cold weather which has threatened next year’s crop in the U.S, Russia and Ukraine. In the U.S., winter wheat conditions dropped 2% on Monday in the crop progress report bringing good-to-excellent ratings on the crop to 58% percent. The Russian wheat crop has also been suffering from a lack of precipitation which started to affect the area as far back as August. Recently, the situation has intensified with precipitation 60% below normal over the last month. Weather models show no relief in sight for the Russian crop with the next 1-2 weeks continuing to point to dryer weather. SovEcon estimated Russia’s grain crop may fall to 86 million metric tons in 2015 compared to 104 MT produced this year.

November 28 – Morning Comments

Attention: Following the Thanksgiving holiday the markets will open at 8.30 CST but close early at 12 CST.

Export sales for wheat were reported within analyst expectations booking 431,500 metric tons which was up 19% week over week. Corn sales beat analyst expectations recording 944,900 metric tons of sales, up 4 percent from last week. Soybeans also beat analyst expectations with net sales of 1,485,400 metric tons which was well above the analyst expectations of between 700,000-1,000,000 metric tons. Soybean sales were up sharply from the previous week which only booked 483,020 metric tons and provides a strong case for steadfast short-term demand.

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SovEcon said in some materials prepared for a conference that Russia’s grain crop may fall to 86 million metric tons in 2015 compared to 104 MT produced this year. Dryness has taken its toll on the wheat crop since it was seeded in late August. The dry conditions are forecast to continue into the first part of December.

The European benchmark for oil, Brent Crude, has fallen $6 per barrel to below $72 following the OPEC meeting which decided to keep oil output steady despite the falling prices. The decisions to keep output the same was largely a result of Saudi Arabia which is trying to keep its share of the energy market. Lower prices will force higher priced energy producers to lose share of the market if they are unable to withstand the lower prices in the near term.

November 26 – Morning Comments

ATTENTION: First Notice day is on Friday the 28th. All traders need to be out of their long December grain contracts by the end of today to avoid delivery.

In the overnight session corn increased 2 cents, soybeans declined 2 ½ cents and wheat in Chicago rose 4 ¾ cents as we go into the morning pause in trading. The U.S dollar is trading lower for the 3rd day in a row. This morning 120,000 metric tons of soybeans were sold to China for 14/15 delivery.

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John Deere quarterly earnings report was released today and provided U.S corn and soybean yield estimates. For corn John Deere put U.S yield at 171.7 bushels per acre which is 1.7 BPA below the existing USDA forecast. For soybeans, Deere put yield at 46.6 BPA which is .9 BPA below the latest WASDE report.

The wheat market has been supported recently by the cold weather which has threatened next year’s crop in the U.S, Russia and Ukraine. In the U.S winter wheat conditions dropped 2% on Monday in the crop progress report bringing good-to-excellent ratings on the crop to 58% percent. A warming trend next week in the 6-15 day will unlikely help germination for Midwest wheat. The Russian wheat crop has also been suffering from a lack of precipitation which started to affect the area as far back as August. Recently, the situation has intensified with precipitation 60% below normal over the last month. Weather models show no relief in sight for the Russian crop with the next 1-2 weeks continuing to point to dryer weather.

Morning Comments – November 25th

In the overnight session the grains moved higher with corn trading up 2 cents, soybeans traded 11 ¾ cents higher and wheat in Chicago up 1 cent. In the hourly chart January soybeans seemed to consolidate between $10.20 and $10.40 yesterday as the range narrowed toward the end of the day. Today, prices have broken out of the $10.40 resistance. Be cautious here if you intend to get long as this week’s low volume may cause more of a fake out than a push to new highs. For January Soybeans overhead resistance is at 10.59 ¼.

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Today and tomorrow we will see heavy liquidation of the December contracts as First Notice day is on the 28th following the Thanksgiving holiday. Open interest in the December contracts are 147,663 contracts of corn, 26,577 in wheat, 1,822 contracts in oats, 31,029 in soymeal and 25,149 contracts of soyoil.

Yesterday morning there were a few reportable sales which included 235,000 metric tons of U.S soybeans for deliver to China for 14/15 crop, 174,000 metric tons of soymeal to Thailand for 15/16 delivery and 116,000 metric tons of Sorghum to unknown destinations for 14/15 delivery. This morning it was reported that a South Korean company purchased 93,000 tons of corn to be sourced from the U.S.

Export inspections yesterday showed that wheat outperformed analyst expectations with 447,353 metric tons compared to expectations that ranged between 225,000-375,000 metric tons. Soybeans reported 2,784,913 metric tons inspected for export which was on the high side of analyst forecasts. Corn was disappointing only showing 529,801 inspected over the last week.

 

November 24 – Morning Comments

First notice day for December grain contracts is on Friday, November 28th. All longs should liquidate before the close of trade on Wednesday. The Market will be closed on Thursday, November 27th to observe the Thanksgiving holiday.

In the overnight session corn slipped 2 ¾ cents lower, soybeans fell 10 ¾ cents and wheat fell ¾ of a cent. Friday’s trade session for corn was relatively bearish, with prices rising to 3.81 ½ cents and then selling off to finish the day near the lows of the day.

Rain is covering the eastern part of the Midwest today but should mostly clear up tomorrow providing an opportunity to wrap up harvest for the crops still left in the field. Significant showers are expected early next week and then a wetter weather pattern expected to settle in, halting the remainder of harvest.

Internationally, more rain is in the forecast for southern/western Buenos Aires and southern Cordoba for later today and again this weekend with a significant storm in the forecast. This next storm is likely to cause some areas of excessive rainfall and continue to delay planting progress which was off to a slow start this year due to excessive dryness. Soybean planting pace in Brazil is 76% complete as of Friday, improving 13% week over week and is now only 3 percent behind last year’s pace at this time. Argentina planting is 36% complete versus 44% last year.​

 

GeoGrain Comments – November 21st

Cash grain markets found strength as futures prices were down on the week. Both spot and corn bean basis levels posted impressive gains, advancing 5 and 3 cents a bushel, respectively, on the week.

Corn found strength from slow farmer sales as harvest wrapped up as well as underlying demand.  Ethanol plants as a group were up 7 cents a bushel with 10 cent gains fairly typical as plants push well above harvest lows. Production at ethanol plants for the week were above last week’s marketing year high coming in at 970,000 barrels per day and sets the year-to-date total at 4% above last year. At river terminals, barge rates fell sharply on the week helping improve basis levels at river markets.

For soybeans, basis levels mostly improved and the falling barge rates helped push basis levels higher there. However, soybean sales were on the light side of expectations with only 483,000 MT of new business as compared to expectations of 700,000 to 1,000,000 MT. For bean plants, basis levels were mostly flat but overall slightly improved with a 2-cent gain. Monthly NOPA crush for October was the strongest on record for soybean crushing, 7 million bushels above estimates.

Wheat showed relative strength closing 4 ½ cents higher for the week ending Thursday, November 20th. Corn declined 4 ½ cents and soybeans fell 27 ¼ cents during the same time period. Technically, corn and soybeans are below the trend line that supported the rally which started in the beginning of October. Those trend lines, which once were support, could now serve as resistance to prices if they push higher from here. Technically speaking, wheat looks the strongest the 100 day moving average and previous high set on October 30th acted as strong support during Thursday’s day session. Harvest pace is 89% complete for corn and 95% complete for soybeans.

This week’s grain inspections set a record with all major export regions reaching 3.69 million metric tons, nearly 34 percent above the three year average for this week.  Soybeans made up most of the inspections showing 3,113,311 metric tons well above the analyst guesses of 2-2.3 million metric tons. Wheat and corn inspections both fell short of expectations reporting only 139,351 and 401,116 metric tons respectively.

NOPA crush numbers also showed strong demand reporting that October crush increased 58% month over month bringing crush to the largest on record for October. Despite these strong demand numbers out early this week soybeans suffered following Monday’s trade session. Traders seemed to look at these demand numbers as an explanation for prices rising over $10.80 last week than for a reason to push prices into new highs. As harvest wraps up and the short term tightness in the soybean and soybean meal pipeline begins to soften attention will start to shift toward south America which has not shown any significant reason for crop concerns. Export sales later in the week also didn’t support the story of strong demand with bookings only reaching 483,000 metric tons, well below the analyst expectations for nearly 700,000-1,000,000 metric tons.

Corn demand continues show signs of life this week despite the weak export inspections on Monday. Ethanol production, which was released on Wednesday, increased 24,000 barrels per day over last week bringing production to a marketing year high for ethanol. Export sales on Thursday also supported the demand story for corn with 908,000 metric tons booked which was up 80% from last week.  Wheat export sales also were relatively positive booking 361,700 metric tons which was within analyst expectations.

November 21 – Morning Comments

In the overnight session corn traded down 1 ½ cents, soybeans traded up 5 ¾ cents and wheat in Chicago traded down 2 ½ cents. Keep in mind that today is the LAST TRADE FOR DECEMBER OPTIONS.

Precipitation is developing over the Delta region which will likely expand to bring moisture to the eastern two thirds of the grain belt throughout the weekend. The 6-10 day forecasts show drier than normal precipitation throughout the majority of the Midwest. North Dakota and Minnesota look to be wetter in the 6-10 day forecast.

Crop concerns are still minimal in South America other than planting delays in Argentina. Pockets of the country continue to receive precipitation keeping planting pace behind the average pace. About 20% of corn and soybean acres and about 30% of wheat cause some concern about timely planting.

Winter weather in Russia is bringing Rostov on Don water levels to 2.3-2.4 meters, which will stop shipment from that region. This is a shallow draft port with a grain export capacity estimated at 3 million metric tons a year, and typically loads 3,000-5,000 metric ton vessels destined for Mediterranean countries.

 

November 20 – Morning Comments

Soybean sales lagged expectations providing little support for a continued move higher.

In the overnight session corn increased 2 ¼ cents, soybeans increased 1 ¾ cents and wheat fell 3 cents as we go into the morning pause in trade. Export sales which were released at 7:30 CST caused soybeans to give back most of the gains it had achieved in an overnight bounce.

In this morning’s export sales report, wheat sales fell within market expectations booking 361,700 metric tons, down 13 percent from the previous week. Corn booked 908,700 metric tons, up 80% from last week and beating expectations by a large margin. Expectations for corn sales ranged from 500,000-700,000 metric tons. Soybean sales for 483,000 metric tons disappointed traders with expectations for sales between 700,000-1,000,000 metric tons. Export sales for soybeans fell from the previous week by 55 percent. Soybean Meal sales were strong however with 265,700 metric tons of new sales well over the analyst range of 100,000 metric tons of cancelations to 100,000 tons of new sales.

Ethanol production numbers showed another week of increased production with 970,000 barrels per day reported on Wednesday. Ethanol production improved 24,000 barrels per day compared to last week. Ethanol stocks declined week over week by 370,000 barrels to 17.34 million barrels.

December corn looks to have found some support at $3.62 which also is the 100 day moving average. Strong ethanol numbers yesterday and exceptionally strong export sales this week should help to support corn in today’s trade. Keep in mind that CIF basis at the Gulf has slipped to the lowest levels in three weeks as farmer sales and declining barge rates pressure basis.

November 19 – Morning Comments

In the overnight session the grains were lower with corn down 2 ¾ cents, soybeans down 9 ¾ cents and wheat down 3 ½ cents.

U.S weather continues to look dry and clear for the next two days to help wrap up harvest, however the delta could receive more rains next week which would further delay corn, soybean and cotton harvest. Wheat should find support from the possible winterkill scenario in the 6-10 day forecast throughout the Plains, however this is still a low confidence event.

Yesterday, a number of international wheat tenders were announced with Jordan’s state grain buyer issuing a tender for 100,000 metric tons of hard milling wheat, Tunisia issued a tender to buy 92,000 metric tons of milling wheat and Quatar issued a tender for 40,000 metric tons of milling wheat. This morning a tender to purchase 116,400 metric tons of feed wheat was issued by a large animal feed producer from the Philippines. We will see if the U.S wins any of these milling wheat tenders as the U.S dollar hovers near five months highs. A surplus of feed wheat out of Europe which was the result of a wet harvest has traders talking about a shipment of French feed wheat bound for U.S soil. This would be the first time French wheat would be shipped to the U.S in 12 years.

 

Keep a close watch on the Federal Reserve minutes which will be released at 1 PM CST. The fed minutes will give the market a better look as to how the Federal Reserve will approach weaker inflation, and give the market some clarity as to how the first cycle of rate hikes will begin.

 

November 18 – Morning Comments

In the overnight session corn traded down 1 ¾ cents, soybeans traded up 1 ¼ cents and wheat fell 4 ½ cents. Yesterday, soybeans saw some strong fundamental data which lifted the price into the close. In the first part of the trade the export inspections number supported prices as 3,113,311 metric tons of soybeans were inspected this week for export. The inspections number was well outside of the 2-2.3 million metric tons analyst were expecting.

Export inspections for corn and wheat were not nearly as impressive. Wheat missed expectations by only recording 139,351 metric tons and corn missed expectations to the low side with only 401,116 metric tons inspected for export.

NOPA crush numbers were released at 11 CST and showed a 58% improvement in crush over last month. According to the National Oilseed Processors Association 157.960 million bushels of soybeans were crushed in the month of October which was well above expectations for only 150.781 million bushels. Soymeal exports increased to 707,934 tons in October from 308,515 tons in September. Following the report, the market was able to rally over 10 cents to break through the 100 day moving average. We feel that the strong NOPA crush numbers are likely to explain why soybeans was able to trade over $10.80 last week, but not provide enough of a case for prices to set new highs in the coming weeks. Although demand is currently quite strong, soybean prices are expensive at these levels and we have a huge soybean crop that is now out of the fields.

In the latest crop progress report the USDA announced that 94% of soybeans were harvested up from 90% last week and corn was 89 percent harvested up from 80% last week. Winter wheat crop conditions maintained 60% good-to-excellent.