Morning Comments – August 23

Grains were weaker to start the day while crude prices continued to slide in overnight trade.

Pro Farmer’s crop tour concluded day 1 reporting estimates for OH & SD. Corn yields in Ohio were projected to come in roughly unchanged with last year and down from a three-year average after dry field conditions negatively impacted fields in parts of the state. Corn yields in Ohio are projected to be 148.96 bushels per acre, just above 148.37 bpa in 2015 and down from the three-year tour average of 167.37 bpa. USDA pegged Ohio yields at 163 bpa, up from 153 bpa in 2015. For soybeans, the tour estimated the amount of soybean pods in a 3-by-3-foot square in Ohio at an average 1,055.05 pods, down from 1,125.26 last year and the three-year average of 1,250.43 pods.

In South Dakota, corn yield was estimated at 149.78 bushels per acre, below the tour’s three-year average of 160.13. A year ago, scouts on the tour calculated the average South Dakota corn yield at 165.94 bushels per acre. Soybean pod counts in a 3-by-3 foot area were pegged at a statewide average of 970.61. That compares with average pod counts of 1,054.98 in 2015 and the three-year average of 1,043.15.

In overnight news, Egypt’s GASC was tendering for wheat. The lowest offer came from Ukraine for $171 /MT. Stats Canada released new crop estimates, pegging the all wheat crop at 30.49 MMT, up from last month’s forecast and up 10% from last year. Anola output was estimated at 17.02 MMT, off 1.2% from last year

Crude oil prices continued their slide this morning, giving up 50 cents a barrel after yesterday’s steep sell-off of a $1.70 a barrel.

 

Morning Comments – August 22

Grains were lower to start the week as were most of the outside commodity and equity markets.

The Pro Farmer crop tour gets underway today as two teams will traverse across the Midwest to come up with corn and soybean yield forecasts. This year, with USDA’s August forecast so much in question, the PF tour should take on added weight in helping the market determine a true value for yields.

This morning USDA announced the sale of 120,000 MT of new-crop sales to unknown destinations. That marks the 3rd trade day in a row of soybean deals announced by USDA.

In weather, rains return to the Midwest late Tue.-Thu., with the heaviest in C. & SW Iowa/N. Missouri/E. Kansas/far E. Nebraska. The 6-15 day shows rains in W. Midwest corn/soy and threaten pockets of excess rain (main risk in Iowa).

Crude oil prices fell Monday amid fading hope for a unilateral agreement on production cuts from major producers and as traders and money managers cashed in recent profits.The prospect of the OPEC agreeing with other major producers to cut or freeze production in September is now starting to fizzle out with most observers now convinced that there is little chance of a consensus being reached. Any tailwind this may have given to prices over the past week won’t be there in the coming five days.

 

Weekly Cash Comments

Cash Commentary-

Grain basis was mostly lower to unchanged to close the week.

On average, corn was down one cent this week. Ethanol plants followed closely losing one and a half cents. With recent decreases in demand for gasoline and large production expectations it seems ethanol buyers are hesitant to pay a premium for corn. Corn along the river and in the gulf saw a drop in basis of one and a quarter cents.

Nationally soybean basis was down slightly, losing half a cent per bushel. Soybean basis along the river was the biggest loser this week losing almost four cents per bushel. Although strong world demand has added support to the futures market that support has yet to be seen in the cash market along the river. Crush facilities have seen signs of support gaining nearly one cent this week. Continued global demand for for soyoil is expected throughout the year.

Futures Commentary-

The grains saw positive gains to close the week with corn and wheat up 11 cents. Soybeans led the movement higher and finally regained some losses, up 30 cents.

Wheat continues to struggle with ample domestic and world stockpiles. The US carry-out projections are giving us nearly half of a year’s crop (47.4%). While international players like France and Germany are having severe crop issues, the rest of the world remains replete in wheat stockpiles. However, the declining strength of the US Dollar should help competitiveness.

Data from farm office FranceAgriMer showed the condition of French corn declined sharply last week. Sixty-three percent of corn crops were rated good-to-excellent on August 15, down from 68 percent a week earlier and 70 percent two weeks prior.

On Monday, USDA’s crop progress report showed corn and soybean condition unchanged from last week, with corn pegged at 74% good-to-excellent and soybeans at 72%. Also on Monday, NOPA’s monthly soybean crush report was disappointing showing 143.7 MB of soybeans crushed in July while traders had been looking for 146.7 MB.

Despite bearish signals in the soybean market there are still many bullish signs. Global soybean demand is strong and is still on the rise. Soybean use is already outpacing long-term expectations, making the ceiling difficult to identify. U.S. soybean exports are far outpacing these long term projections. Exports and crush are well ahead of USDA’s latest 10-year forecasts period, which is released each February. Currently crush for 2015/16 is 10 million bushels ahead of the February projections and 2016/17 is 30 million ahead.

Short-term soybean demand is holding its own as well. So far in August, daily soybean sales announcements to China and unknown destinations have been made on 11 separate days. There were only 6 such days in all of August 2015.

Crude oil fell on Friday after hitting an eight-week high, as weak fundamentals countered a lift in sentiment over talks next month on a possible output freeze, however futures remain on track to rise for a third consecutive week.

 

Morning Comments – August 19

Grains were off in overnight trade with soybeans again losing double digits.

Soybeans slid for a second session on Friday as beneficial rain in the U.S. Midwest buoyed expectations of a record U.S. crop this fall. Recent rain in key U.S. growing areas has helped ease concerns about dryness in the Eastern Corn-belt.

Grain millers in Bangladesh are boosting their wheat purchases from Russia and Ukraine as cargoes from key exporter India fade due to a supply squeeze in that country. Bangladesh has booked about 800,000 tonnes of wheat from the Black Sea region for shipment between mid-July and October, up from around 550,000-600,000 tonnes in the same period last year, two trade sources said.

Germany’s Farmers’ Association (DBV) said on Friday that the German 2016 winter wheat crop fell 13% on the year to 22.9 MMT. France also is suffering crop losses this year with forecasts there off 17%.

USDA’s Cattle on Feed Report will be released today at 2 pm CDT. Analysts expect cattle on feed as of Aug 1 at 101.4%, placements in July at 100.5% and marketings in July at 99.7%.

Crude oil prices were lower on Friday after gaining a $1.50 a barrel on Thursday to an eight-week high, capping a rally driven by speculation producers could agree to measures to support crude. Nigeria’s oil minister said on Thursday that while a cut in OPEC production is unlikely, there is hope a meeting of producers in Algeria next month could help shore up crude prices.However, analysts and traders warned the rally was overblown, especially since planned talks between the OPEC and other major producers like Russia to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang.

 

Morning Comments – August 18

Grains were off in overnight trade while crude oil hit the $47 a barrel mark and the US dollar continued to erode

In overnight news, South Korea’s DongAOne issued an invitation to bid seeking a total of 23,200 tonnes of U.S. origin wheat. The tender came after South Korea found no genetically modified wheat in U.S. wheat imports. Earlier in August the discovery of unapproved GMO wheat in shipments from Washington state prompted Japan and South Korea to suspend some U.S. imports. Japan’s Ministry of Agriculture bought a total of 87,430 tonnes of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday. This was below their usual volume purchased of 120,000 MT

In Argentina, farmers there are expected to boost corn plantings next season. The Buenos Aires Grain Exchange projects acreage will jump from 3.6 million hectares to 4.5 million hectares.

Yesterday, weekly ethanol numbers were positive as production hit a record high for this time of year with 1.03 million barrels per day of production and stocks were lower from the previous week.

WEEKLY EXPORT SALES

Act-OC

Exp-OC

Act-NC

Exp-NC

Corn

167.4

250-450

1,042

800-1,100

Soybeans

177.9

100-300

1,597

1,500-1,800

Wheat

489.5

400-600

Morning Comments – August 17

Grains were higher overnight again led by soybeans while wheat was in the red for much of the night session. In outside markets, the US dollar was fractionally higher after yesterday’s steep sell-off and crude oil was also lower in limited trade

Wheat continues to struggle with ample domestic and world stockpiles. The US carry-out projections are giving us nearly half of a year’s crop  (47.4%). While international players like France and Germany are having severe crop issues, the rest of the world remains replete in wheat stockpiles. The US dollar has moved 2% lower in the past two weeks which should help bolster US competitiveness in wheat trade.

Soybean prices continue to rally off of their lows from August 2nd, adding nearly 60 cents a bushel in that time frame. Corn, while higher, has found less enthusiasm to the upside only adding 13 cents. Farmers continue to struggle with holding old crop corn inventories to make way for the new crop in the next month. Storage space will surely be at a premium this fall.

Crude oil prices fell in early Asia trade Wednesday, as optimism that major producers would agree to a production freeze agreement ebbed after Iran signaled it has little interest in such a deal. Traders and investors are focusing on the weekly U.S. oil data to be released later today. Estimates by the American Petroleum Institute indicate U.S. crude stocks fell 1 million barrels, but gasoline inventories rose 2.2 million barrels.

Morning Comments – August 16

Grains were mostly higher overnight as soybeans and corn continue to add to recent gains while wheat slipped. In outside markets, the US dollar was sharply lower while crude oil slipped lower from 5-week highs.

On Monday, USDA’s crop progress report showed corn and soybean condition unchanged from last week, with corn pegged at 74% good-to-excellent and soybeans at 72%. Also on Monday, NOPA’s monthly soybean crush report was disappointing showing 143.7 MB of soybeans crushed in July while traders had been looking for 146.7 MB.

In international news, the head of Russia’s grain union expects the wheat crop there to be 69.5 MMT. That would be a lower number than the 72.0 MMT pegged by USDA. Germany’s 2016 wheat harvest will fall 8.8% on the year to 24.21 MMT after crops suffered from bad weather this summer with rain and lack of sunshine, the country’s association of farm cooperatives said on Tuesday. This was down from the 25.4 MMT the association had previously forecast in July with crops in the meantime suffering from persistent harvest-time showers in major German grain belts.

Oil prices remained near five-week highs on Tuesday, fueled by talk of producers taking action to prop up the market, although some investors cashed in during Asian hours on the 16% rally since early August. Asian equity markets rose to one-year highs, expanding their gains this year to 10 percent, supported by a jump in oil prices and investor expectations of an extended phase of easy monetary policy around the globe.

 

Morning Comments – August 15

Grains were higher to start the new week, shrugging off Friday’s bumper crop forecasts by USDA. Crude oil was also higher, trading briefly above $45 for the first time since Jul 21.

Friday’s crop report couldn’t have been much more bearish as both corn and soybean production forecasts came in well above analyst expectations, but traders seemed skeptical of 175 yield on US corn as prices ended up rallying on the news and continue to trade higher today. Export prices for US corn has achieved the low price medal in the world market, which should help keep export business brisk.

Saudi Arabia’s main state wheat buying agency the Saudi Grains Organization (SAGO) said on Monday it has purchased 640,000 tonnes of hard wheat in a tender. A tender for for 600,000 tonnes content had closed on Friday seeking wheat with 12.5 percent protein for October and November shipment. The accepted origins in the tender were the European Union, North America, South America and Australia at the sellers’ option.

NOPA July crush estimates are out later this morning. The report is expected to show a crush of 146.7 million bushels of soybeans in July. That would have been the biggest crush ever for any July. The previous record of 145.227 was set in July 2015. In June, NOPA processors crushed 145.050 million bushels of soybeans. Crush forecasts ranged from 142.643 million to 150.000 million bushels, with a median of 147.500 million bushels.

The NOPA report is scheduled for release on Monday at 11 a.m. CDT

Weekly Cash Comments

Cash Commentary-

National basis was mixed yet again. Soybeans saw slight basis gains while corn moved lower.

On average, corn lost ½ a cent per bushel. Ethanol basis followed in lockstep, losing ½ a cent as well. Even with strong exports this week, corn along the river dropped of 5 ½ cents per bushel.

Soybean crush facilities lead the move higher gaining 4.64 cents per bushel. Reports of increased worldwide demand for soyoil could be helping. Overall soybean basis edged up 1.5 cents this week on strong export demand. Soybean river basis broke the trend and was off almost a cent to close the week.

Futures Commentary-

Grains were higher this week with corn advancing ¼ cent, wheat up 13, and soybeans up 27 cents. Upside momentum has been limited as brokers get ready for the USDA’s monthly supply/demand reports.

This week was marked with strong export numbers with corn coming in at the high end of analyst expectations. New crop soybeans and wheat both saw exports that exceeded analyst expectations.

A U.S. government weather forecaster reduced its outlook that La Nina conditions would develop in the next few months but was still expected in the late fall or early winter months.

After the close on Monday, USDA’s crop ratings showed a drop in corn conditions from 76% good-to-excellent last week to 74% good-to-excellent this week. Soybean conditions held steady on the week. In the Eastern Corn Belt of IN & OH, conditions continue to be sub-par. Corn in Ohio slipped on the week from 54% to 47%, soybeans 58% to 52%, Indiana corn from 77% to 73%; soy 75%  to 74%.

Updated yield data gathered the NASS will be released today. Although most corn ears in major production areas should be fully elongated by Aug. 1, some of the later planted or less mature fields may be difficult to assess depending on the stage. This is always the risk with field-based surveys early in the game, but NASS will be able to confirm initial observations on its follow-up visits.

This is even more of a problem for soybeans. Aug. 1 is still a re-productively early time for soybeans in most major production states, as plants are still flowering and forming pods. Interestingly, NASS’s August corn yield projections deviate from final roughly 2 percent less than those for soybeans over the past 20 years.

Bad weather continues to plague key wheat areas in the EU. France’s exports of soft wheat outside the EU will fall to 4.8 million tonnes in 2016/17 from an estimated 12.5 million last season due to a weather-hit harvest in the bloc’s biggest grain grower, agricultural group InVivo forecast on Wednesday. French soft wheat shipments within the European Union were expected to fall to 6.7 million tonnes from 7.5 million, which would give total exports of 11.5 million tonnes, down about 40 percent from last season and the lowest volume since 2001/02.

Recent bad weather has not seemed to have had an impact on Canadian crop yields. Analysts are expecting very large harvests of wheat and canola. These large yields have raised concerns about whether grain-handling systems and railways will have ample capacity to move them smoothly.

As of this morning, crude is on the rise helped by a weakening dollar and reports of increased demand in the Middle East.

Morning Comments – August 12

Grain markets drifted lower overnight as traders await news from USDA at 11 am CDT this morning about the size of the corn and soybean crop.

Traders are looking for big bumps in the yield and production forecasts relative to USDA’s numbers in July. For corn, traders expect a 170.6 corn yield and a production forecast of 14.76 billion bushels. This would be up from the July forecast of 168.0 and 14.54, respectively. For soybeans, July’s estimates by USDA were 46.7 for yield and 3.88 for production. Traders expect those numbers to grow to 47.5 and 3.94, respectively.

In overnight news, the Taiwan Flour Millers’ Association purchased 85,250 tonnes of milling wheat to be sourced from the United States in a tender which closed on Thursday, European traders said on Friday. The wheat was bought for September/October shipment in two consignments comprising different wheat types, they said.

USDA reported a sale of 258,000 MT of soybeans to China.