Morning Comments – August 31

In the overnight session the grains are trading lower with corn down 2 1/2 cents, soybeans down 9 1/4 cents and wheat down 4 1/2 cents by the morning pause in trading. The outside markets are also trading lower with crude oil down $1.20, the U.S. dollar down .22 cents and the mini Dow Jones average down 1 percent. Today is first notice day for September grain contracts.

The grains could continue to move lower this week as optimal weather helps finish off the grain, however we believe that corn could show relative strength in a weakening grain complex. Planalytics, lowered its corn yield forecast by .4 bushels per acre to 166.8 bushels per acre on Friday. This is below the USDA estimate of 168.8 bushels per acre, but a couple bushels per acre higher than the Pro Farmer forecast a couple weeks ago. We believe that the USDA is more likely to move corn yield lower in the September report than higher, and the warm temperatures triggering rapid maturation of the crop will only rob yield potential in the eastern parts of the grain belt.  Planalytics soybean yield was increased last week up to 46.2 bushels per acre, just shy of the 46.9 bushels per acre forecast by the USDA in the August report.

Over the weekend Iowa received precipitation as the moisture passed eastward from the South Dakota. Over the next 5 days little if any precipitation will assist the filling grain. Exceptional coverage is however expected in the 6-10 day outlook and more precipitation covers the Midwest in the 8-14 day forecast. Chances of an early frost are still low. Temperatures in the 6-10 day forecast remain above average for the majority of the central to eastern grain belt.

Weekly Cash Comments

Cash Commentary-

Grain basis was mixed again this week with corn basis gaining 1.5 cents a bushel, while soybean basis gave up 4 cents on average across the U.S.

In corn, basis levels were bolstered by strength at river terminals and the Gulf. Gulf corn bids were up 12 cents a bushel this week and surpassed their 5-year historical average for the first time since mid-June. At river terminals, basis levels were up 4 cents a bushel as gains were muted by a slight uptick in barge freight costs.

For soybeans, the premium of spot delivery over new-crop fall delivery continues to erode with harvest likely to start in the next month. Spot bean basis was off 4 cents for the week, but at the Gulf basis levels bucked that trend by posting a 9 cent advance. River terminals, however, failed to follow the Gulf market as losses upstream were about 7 cents a bushel. For soybean plants, double-digit losses were fairly typical this week, although as a group soy plants lost 5 cents a bushel.

Futures Commentary-

This week, the grains traded lower with corn down 7 1/4 cents, soybeans down 35 1/4 cents and wheat down 22 cents. This week’s selling was driven primarily by sharp selling out of China which spread into other markets across the Globe. On Monday the Chinese Shanghai index closed down 8.5 percent which plunged soybeans as much as 30 cents lower by mid-morning before paring losses by over half by the close. China then stepped in and lowered their interest rates and bank reserve requirement ratio on Tuesday which was the 5th move since last November. Soybeans were the most affected to the macro selling because China is the main buyer of U.S. soybeans. As a result of the lower prices, soybeans were able to book three reportable sales of new crop soybeans to unknown destinations this week.

Last Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production was estimated at 3.887 billion bushels.

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons. Despite the strong new crop sales this week both corn and soybeans are still running only 73 percent of the 4 year average sales pace. We will need consecutive weeks of strong sales to catch up to the pace needed to meet existing USDA expectations.

Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week. Both old crop corn and soybeans are now behind the pace to meet USDA expectations with corn 1 million metric tons behind pace and soybeans 400,000 metric tons behind pace according to our export sales models.

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production, cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 mission barrels this week.

Weather this week was cooler than normal throughout the Midwest with precipitation Thursday in the northwestern part of the grain belt. The precipitation is expected to move east across the mid-west over the next couple days. The weather outlook then turns drier until late next week when above average precipitation is expected over the northern half of the Midwest. Monday’s latest crop conditions report showed 87 percent of the soybean crop is pod setting which is on par with the 4 year average. Corn conditions remained unchanged this week at 69 percent rated good-to-excellent; soybean conditions also remained unchanged. ​

Morning Comments – August 28

In the overnight session, the grains inched higher with corn up 1 1/4 cents soybeans up 5 cents and wheat up 1 cent. The U.S. dollar is trading mostly unchanged and crude oil is down 46 cents. The EU cut its corn production forecast this month to 58.7 million metric tons from 65.5 million metric tons last month. Europe was plagued by hot dry weather during a critical development period which reduced yield prospects significantly. The EU however raised their soft wheat harvest estimate to 140.7 million metric tons from 139.4 million metric tons last month.

Yesterday, the International Grains Council raised its global wheat production by 10 million metric tons to 720 million metric tons citing improved Russian production. The council also increased their global corn crop by 2 million metric tons to 968 million metric tons this month, mentioning a decline in EU production being more than offset by more favorable U.S. crop prospects.

The GASC tender set mid-week was won by Russia on Thursday with the low bid of $180.47 dollars per ton FOB. Egyptians grain buyer GASC issued another tender for 60,000 metric tons on Thursday which was also filled by Russian wheat at $190.07 per ton including freight.

The western grain belt saw rain last night with the heaviest rains in South Dakota. The storm should move eastward into the Midwest over the next couple days. Following this rain event the forecast looks mostly dry until late next week when the northern half of the grain belt looks to be wetter than normal. Showers will aid the crop in the 11-15 day forecast.

Morning Comments – August 27

In the overnight session the grains are trading higher with soybeans leading the charge up 14 1/2 cents, corn up 1 1/2 cents and wheat up 3/4 of a penny. The U.S. dollar index is trading 1/2 a percent higher and crude oil is up $1.33. This morning exporters sold 130,000 metric tons of new crop soybeans to unknown destinations making this the third reportable soybean sale this week.

Last night the China market rallied over 5 percent in the last hour of trading after the government took steps to stabilize their stock market before a September 3rd military parade which celebrates the 70th anniversary of the WWII victory over Japan. With China showing strength late in the session soybeans have been able to rebound. Positive news about the U.S. economy was also announced this morning with GDP expanding at a 3.7 percent annual pace up from the 2.3 percent reported last month.  Unemployment claims also fell more than expected last week by declining 6,000 to 271,000 for the week.

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons.  Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week.

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 million barrels this week.​

Morning Comments – August 26

In the overnight session the grains traded lower with corn up 1 cent, soybeans unchanged and wheat up 1 1/4 cents this morning. The U.S. dollar is trading up .38 percent and crude oil is 34 cents higher this morning. This morning the U.S. stock market is expected to open higher after a rally in European markets. China however, which has been the driving force in the recent sell-off, has been unable to see a market gains since the PBOC lowered interest rates yesterday. The Shanghai composite index fell another 1.27 percent last night.

The volatility over the last two days has triggered two reportable new crop soybean sales to be delivered to unknown destinations totaling to 330,000 metric tons. Despite this week’s sales, new crop soybeans has still only booked around 68 percent of sales volume compared to what we typically see around this time period.

Weather looks to remain cool and dry this week except for the western grain belt which should receive above average precipitation in the middle of this week. The 8-14 day weather outlook shows moisture forecast for the northern parts of the grain belt which should aid crops in main growing regions. Currently, there is no significant threat of an early freeze.

 

Morning Comments – August 25

In the overnight session the grains are trading higher with corn up 5 cents, soybeans up 14 1/4 cents and wheat up 6 1/4 cents. The U.S. dollar is trading .76 percent higher and crude oil is up $1.17. After experiencing another sharp day of selling, China announced they were cutting interest rates for the 5th time since last November and supplementing that with an additional move to lower the reserve requirement at major banks. This announcement triggered an immediate rebound in the market after 5 days of selling.

Export inspections were in line with analyst expectations with wheat showing 277,922 metric tons inspected for export. Corn recorded 883,987 metric tons inspected for export which was within the 825,000-1,000,000 metric tons expected by analysts. Soybeans recorded 210,128 metric tons inspected for export which was also on the high side of analyst expectations.

On Monday, Argentine farmers started a five day crop sales strike to help bring farm policies to the front of attention during an election year. Farmers have not been satisfied with the policies of President Cristina Fernandez saying that her policies have damaged profitability.

This week should remain cooler than normal throughout the Midwest with precipitation expected during the middle of the week in the northwestern part of the grain belt. According to the latest crop conditions report 87 percent of the soybean crop is pod setting which is on par with the 4 year average. Corn conditions remained unchanged this week at 69 percent rated good to excellent. Soybean conditions also remained unchanged.

Morning Comments – August 24

In the overnight session, the grains are trading sharply lower with corn down 10 cents, soybeans down 31 1/4 cents and wheat down 8 1/2 cents today. The U.S. dollar index is trading down 1.26 percent and crude oil is trading down $1.57 at $38.875 per barrel. This morning a global sell-off is pressuring the grains lower with the Shanghai index closing down 8.49 percent, Japan’s Nikkei 225 down 4.61 percent, the German DAX down 3.73 percent. Corn, Soybeans and Wheat are not immune to this sort of macro selling and have moved sharply lower this morning. This morning a reportable export sale of 120,000 metric tons of new crop soybeans did little to slow the slide in prices.

On Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production is estimated at 3.887 billion bushels.

The EU crop monitor cut its forecast for corn yield to 6.4 tons per hectare, down 4.6 percent from last month’s forecast. The EU crop monitor kept its yield forecast for soft wheat mostly unchanged at 5.81 tons per hectare.

Weekly Cash Comments

Cash Commentary-

Divergence was the game this week, as corn and soybean prices continued to move in opposing directions. Corn managed a 7 cent advance in futures while cash basis levels were firmer by 1 cent a bushel, but beans couldn’t shake their negative fundamentals giving up 9 cents on the board and 4 cents on spot basis.

In corn, basis levels were bolstered by modest gains in ethanol plants and a more robust move by river terminals. Ethanol plants showed the most strength in the Western Cornbelt with a handful of plants posting gains of 5 to 10 cents a bushel. But in the Eastern Cornbelt gains by ethanol plants were mostly non-existent with a few plants bidding lower. At the Gulf, bids were up 6 cents a bushel, but increasing barge rates on the week, muted the Gulf’s impact on upstream river terminals with bids up only 2 cents a bushel.

For soybeans, basis levels were off 4 cents a bushels as late-season cash premiums paid by buyers have eroded quickly since the USDA report last week. Soybean plants in particular were hard hit this week, giving up 7 cents a bushel on average and many plants posting losses of 10 to 20 cents on basis for the week. At the Gulf, export basis was 8 cents higher but it had little impact on upstream river terminals which lowered basis by 3 cents on average for the week.

Futures Commentary-

This week the grains were mixed with corn showing some strength and climbing back 7 1/4 cents, wheat gaining 3 cents and soybeans falling 14 3/4 cents for the week ending August 21st. The Pro Farmer crop tour was the main focus this week as traders watched scouting reports from the fields to help confirm or refute the August USDA crop production estimates released on August 12th.

Pro Farmer’s crop tour involved two groups split up between seven states. The western leg started in South Dakota and traveled through, Nebraska, Iowa and finally Minnesota, while the eastern leg started in Ohio and moved through Indiana, Illinois, Iowa and finishing the tour in Rochester, MN. Each day the tour would release a summary of their findings and yield estimates for the states they scouted.

On Day 1, the crop tour estimated Ohio corn yield at 148.37 bushels per acre which was significantly lower than the August USDA forecast of 168 bpa. However, Pro Farmer’s South Dakota yield estimate was higher than the latest USDA forecast,  estimating yields of 165.94 bpa for the state compared to 160 bpa by the USDA. On Day 2, Pro Farmer’s Illinois yield forecast was in line with the USDA at 171.6 bushels per acre. Nebraska yield was lower than the USDA’s forecast by a significant margin with Pro Farmer’s yield estimate at 165.16 bushels per acre compared to 187 bpa by the USDA. On Thursday, Pro Farmer released Minnesota and Iowa yield forecasts which shows Minnesota’s corn production appears to be extremely good this year. Pro Farmer estimate for Minnesota yield is 190.87 bpa compared to 184 bpa estimated by the USDA and a 2014 final yield of 156 bpa. Iowa production was 2 3/4 bpa lower than the USDA with Pro Farmer’s Iowa yield estimate of 180.25 bpa. Pro Farmer will release the national yield estimates after the close of trade on Friday.

On Monday, the NOPA crush numbers were released which showed slightly stronger crush than expected with 145.227 million bushels crushed for July. Traders expected to see crush around 141.5 million bushels which provided some bullish news for soybeans. Soy oil stocks were above expectations with 1.624 billion pounds in July.

Corn conditions rated good-to-excellent fell 1 percentage point this week to 69 percent which was in line with analyst expectations. Corn development is still in line with the 4 year moving average with 71 percent of the crop in the Dough stage this week.  Soybean conditions were better than expected with 63 percent rated good-to-excellent, unchanged on the week. Traders were looking for at least a percentage point decline in corn and soybeans. Pod setting is 79 percent complete throughout the majority of the crop.

Export sales were positive this week falling within analyst expectations for all the grains. Old crop corn booked 282,700 metric tons which beat analyst expectations and soybeans booked a positive 46,400 metric tons which was above the 0-200,000 metric tons expected by analysts. Wheat sales were on the low end the expected range at 314,400 metric tons. New Crop corn and soybeans were on the high end of expectations, with corn booking 576,400 metric tons and soybeans with 784,400 metric tons this week.

Ethanol production was unchanged this week at 965,000 barrels per day. Ethanol production this week was around 90,000 barrels per day over the 4 year average and significantly 28,000 barrels per day over last year during the same time period. Ethanol stocks increased 32,000 barrels to 18.56 million barrels this week.

Morning Comments – August 21

In the overnight session the grains were mostly mixed with corn showing relative strength with a 3/4 cent gain. Soybeans slipped 5 1/4 cents lower and wheat fell another 4 cents. The U.S. dollar is trading down .6 percent and crude oil is off 41 cents. Pro Farmer will release its U.S. yield forecast today after the close of trade.

Last night Pro Farmer announced its Minnesota Corn yield estimate at 190.87 bushels per acre which was up significantly from last year’s 170.76 and the USDA’s August estimate of 184 bushels per acre. The scouting tour also counted an 8 percent increase in soybean pods over last year with a count of 1,119.22 in a 3×3 foot area. Pro Farmer estimated Iowa corn yield at 180.25 bushels per acre, down from the August USDA production estimate of 183 bushels per acre. Soybean pod count in Iowa was up 3.8 percent this year with 1,219.21 pods counted in a 3×3 foot area. 

In Europe, FranceAgrimer rated the French corn crop 55 percent good-to-excellent this week which was unchanged from the previous week showing some stabilization in the crop after hot, dry conditions stressed the crop this growing season.

China soybean imports rose to 9.5 million metric tons in the month of July, an increase of 27 percent over last year. China’s corn and corn substitutes also hit record highs in July as buyers took advantage of cheap South American prices.

Morning Comments – August 20

In the overnight session the grains traded mixed with December Corn up 2 1/2 cents, soybeans down 1 cent and wheat in Chicago up 4 cents. The U.S dollar is down .12 percent and crude oil is mostly unchanged.

Pro Farmer went through Iowa and Illinois on Wednesday and reported at the end of the day its forecast for Illinois is 171.64 bushels per acre which is on par with the August USDA forecast of 172 BPA. This would be a 14 percent drop in yield from the previous year. Both Pro Farmer and the USDA are below the latest Planalytics forecast of 176.2 BPA. The soybean pod count was 1,190.47 in a 3×3 foot area which was down 12 percent from the previous year. The Pro Farmer crop tour will be leaving Iowa this morning and scouting crops in Minnesota today. The tour will meet in Rochester, MN and release their final U.S yield projections later today.

Export sales were positive this week falling within analyst expectations for all the grains. Old crop corn booked 282,700 metric tons which beat analyst expectations and soybeans booked a positive 46,400 metric tons which was above the 0-200,000 metric tons expected by analysts. Wheat sales were on the low end the expected range at 314,400 metric tons. New Crop corn and soybeans were on the high end of expectations, with corn booking 576,400 metric tons and soybeans with 784,400 metric tons this week.

Ethanol production was unchanged this week at 965,000 barrels per day. Ethanol production remains well over the 4 year average and significantly higher than last year at this time. Ethanol stocks increased 32,000 barrels to 18.56 million barrels this week.