August 1 – Morning Comments

This morning we have September corn trading down 2 cents, September soybeans trading down 5 ½ cents and September soybeans down 10 ¼ cents.

The weather forecast has shifted to a slightly wetter outlook for the southwest parts of the grain belt, but there are still areas in North Dakota, southern Nebraska and northern Kansas that could miss out some of the showers. Dryness has been developing throughout Nebraska, Iowa, Minnesota and Illinois has the chance of impacting soy yields until more substantial precipitation is received next week. In the longer term 16-30 day outlook the northwest could experience drier than average weather which could strain the soybean crop which has put down shallow roots due to the wet spring.

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Non-farm payrolls were released this morning, coming in slightly below market expectations. The U.S. economy created 209,000 jobs in July, below the 235,000 expected by the market. This was the sixth straight month with job creation above 200,000 – the first time that has happened since 1997. Unemployment increased a percent to 6.2%. In 2014 the economy has created 230,000 jobs per month on average, up 19% from the pace seen in 2013. S&P 500 futures are trading up a percent following the report. To add the September S&P 500 futures to your trading platform, add the symbol ZSU4.

July 31 – Morning Comments

Grains traded sideways to lower overnight, with corn down 2 cents, soybeans off 3 cents, and wheat trading a penny lower. November soybeans were trending lower before finding some strength on concerns about Argentine exports in the new crop year.

Argentina defaulted for the second time in twelve years last night, as the country was unable to resolve a legal battle with creditors following their last default in 2001. Standard and Poor’s labeled Argentina in default on some of their debt obligations early this morning and the move will impact the countries borrowing costs moving forward. As far as grain markets are concerned, inflation in the country is the largest issue as the Argentine Peso continues to devalue with respect to the Dollar. Argentine producers have been hoarding grain in recent months as an inflation hedge and this will only further inflame the issue. For the year inflation is expected to hit 40% in the country.

Export sales this morning were very strong for wheat, which reported sales of 801,000 metric tons up 81 percent from the week before. The large buyers included Nigeria, Panama and Brazil. Old crop corn sales slipped 40 percent from the week before reporting 173,000 metric tons sold which was also well below analyst expectations of 300,000 to 450,000 metric tons. New crop sales beat analyst expectations with 1,093,200 metric tons. Nearly half of the new crop sales were two Mexico. Old crop soybean sales were strong again with 187,400 metric tons which was on the high side of analyst expectations. New crop soybean sales were also strong booking 1,268,700 metric tons which beat analyst expectations. Soymeal reported strong export sales with both old and new crop on the high side of analyst expectations.

Overnight the southern plains received much needed precipitation with Northern Texas, Oklahoma, Kansas all receiving rain. Dryness remains a concern in Eastern Nebraska and Western Iowa as the soybean crop enters pod fill. Cool temperatures of limited loss in dry areas as temperatures across the entire grain belt remain below average. The 6-10 day outlook does look more promising for seeing above average precipitation in areas that need it most.

July 30 – Morning Comments

This morning the grains are mostly lower with September corn trading down 2 ½ cents, September wheat trading up ½ a cent and soybeans pulling back another 7 ¾ cents in the overnight. In the overnight session, November soybeans was able to fill a gap that it printed on Monday’s open and it will be interesting to see if that support area will hold.

Rain fall was light and spotty overnight, with the majority of rain hitting areas of the northern grain belt. The 6-15 day forecast has turned slightly wetter, but continues to look dryer than average. The soybean crop in the western corn belt has come under some stress as a result of light rains, but cooler than average temperatures have helped limit yield loss.

The Federal Reserve will release a policy statement at 1:00 PM central time which could signal a change in interest rate policies in the months to come. This report will be after the grain markets close and are not expected to have a major impact on U.S. grain prices in the near term. Equity markets and energies will watch this report closely.

Ethanol numbers will be released today and we are expecting another strong week of production. Crush margins remain around $3.18 per bushel as cheap corn spurs demand from the ethanol sector. We typically see a decline in weekly production during July and August, but this year production has remained strong on a weekly basis. The USDA is currently projecting a 25 million bushel decline in ethanol usage in 2014/15 from 2013, and this is one balance sheet item that may need to be adjusted if strong weekly figures carry into the new marketing year.

Russia’s harvest is now 28 percent complete as a heatwave settles over the region. According to the Russian state weather forecasts, some areas in the North Caucasus and Southern federal district even face the possibility of fires.  The heat wave looks to cover a large swath of Eastern Europe, Ukraine and South Western Russia with high temperatures around 96-100 degrees Fahrenheit for the next seven days.

Yesterday, Europe and the U.S significantly expanded sanctions on Russia due to their political stance on the Eastern Ukrainian conflict. The sanctions were expanded onto banks, energy, arms and shipping sectors. Russia is a key supplier of Europe’s natural gas and oil which makes sweeping sanctions very difficult for the fragile European economy. More details on the sanctions will be published Thursday, but one thing is certain, new sanctions would severely curb major Russian banks ability to access global capital markets including VTB Bank, Russian Agricultural Bank and Bank of Moscow.

July 29 – Morning Comments

Alert: First Notice for August Soybeans is on Thursday, July 31st

Grains are trading lower in Chicago, with corn down 3 cents, soybeans off 10 and wheat unchanged to lower.

Crop conditions were released yesterday after the market close, with good-to-excellent ratings falling for both corn and soybeans. Corn is now rated 75% G/E, down a percent from the previous week. Soybean conditions fell 2% and is now rated 71% G/E. Soybeans have found some strength on weather concerns in recent sessions as the western corn belt has been dry as we enter pod fill. Looking at progress – 38% of soybeans are now filling pods and corn is 78% silking. 83% of winter wheat is now harvested.

Weather outlook seems to be supportive of a substantial rain event starting around the middle of next week and peaking during the weekend. The weather outlook favors the southwestern part of the grain belt which would eliminate any concerns for soybean yield in that area. Areas which could continue seeing dryness are parts of ND, SD, MN, WI, southern MI and northern OH.

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This morning Ukragroconsult raised its 2014 corn and wheat harvest forecasts for Ukraine. The wheat forecast was raised to 21 million tons from 20.5 million tons and the corn forecast was lifted to 27 million tons from 25.5 million tons, both of which are now in line with the estimates released in the July WASDE report. As of July 28th, Ukrainian farmers have harvested over 17.04 million acres and gathered a total of 23.6 million tonnes of grain. Of the grain harvested, the agricultural ministry said 16.3 million metric tons of it was wheat and 6.8 million metric tons of it was barley.

July 28 – Morning Comments

The grains are mixed this morning with corn trading 3 cents higher, wheat 3¾ cents lower and August soybeans 12 cents higher this morning. The August soybean contract is trading at $12.24 ½ cents and has first notice on Thursday the 31st. Currently, the spread between Augusts and September Soybeans is 96 ½ cents, down from over $1.40 at the beginning of July.

There were some reportable export sales this morning with China buying 486,000 tons of new crop soybeans and Nigeria buying 101,000 metric tons of wheat for the 14/15 marketing year. Of the wheat sold this morning 61,000 MT is hard red winter wheat and 40,000 tons is soft red winter wheat.

Over the weekend rains were scattered, but there are still areas of dryness in the western parts of the grain belt. This morning, the 6-10 day forecasts is showing a drier than normal trend throughout most of the grain belt, but 8-14 day forecast looks to bring in more precipitation in the eastern and southern parts of the corn belt. Dryness in some parts of the Midwest has been a concern, but the lack of heat stress has limited its damaging effects.

Europe’s wheat harvest has been interrupted again by more precipitation helping perpetuate the quality concerns for this year’s wheat crop. Currently there is a large gap of up to 40 dollars a ton depending on the quality of the wheat. In Germany, the showers should delay harvest only temporarily as hot weather allows producers to get back into the field following the rain event.

Australia which is currently struggling with dryness looks to see another three months without much relief. The Bureau of Meteorology said Thursday that dry weather is likely to persist across eastern Australia for the next three months. There’s around 60% chance of below median rainfall in northern Queensland, Southern New South Wales and most of Victoria. If these forecasts were to actualize we would see a drag on yield from the world’s 3rd largest wheat exporter.

July 25 – Morning Comments

This morning we have the markets trading lower here with September corn down 3 cents, September wheat unchanged, and September soybeans down 8 ¾ cents as better than expected precipitation covered a good portion of the Midwest last night.

Showers over the Midwest were better than expected over the last 24 hours, helping to alleviate some concern over dryness in the northern and eastern Iowa, overall 30% of the Midwest received timely rains. Planalytics is looking for a dramatic cooling trend to begin this week and into next week that will have temperatures in the Northern and Central Plains into the 70’s and 80’s.

Ukraine’s ag minister said the country could lose between 500,000 and 550,000 tonnes of grain in Eastern Ukraine due to the ongoing war. This would represent 1.5% of total production expected by the USDA in the July WASDE report. Wheat futures have continued to find limited buying as traders seem comfortable with the state of Ukraine grain exports. Several export sales from Ukraine to Egypt were booked last week, indicating the world’s largest wheat buyer is confident in Ukraine’s ability to supply grain through the fall.

The weather doesn’t appear to be cooperating with European wheat harvest this year as more rain is expected over the next 10 days. The wetter than normal harvest has many grain buyers concerned about quality and has caused the spread between feed wheat and milling wheat to widen. Talks that feed wheat is trading at a $40 per ton discount to milling wheat has analyst thinking about the implications of this on corn imports from other countries. With cheaper feed wheat, corn imports into Europe will likely decline.

July 24 – Morning Comments

Grains are moving higher across the board in Chicago with corn up 5 cents, soybeans up 22 cents, and Chicago wheat up 7 cents.

Export sales this morning were very positive for soybeans which had sales of 291,500 MT for old crop which was on the high side of expectations and new crop sales of 2,451,100 MT which beat the high side of analyst expectations by about one million bushels. China was a large buyer this week, accounting for 70% of old crop sales and 52% of new crop sales. Unknown destinations made up another 37% of new crop soybean sales. Old crop sales are now 63 million bushels ahead of pace to meet USDA expectations and if no sales were reported from now until the end of the marketing year would finish out 44 million bushels above USDA forecasts.

Corn export sales came in below analyst expectations at 291,500 MT compared to 300,000-500,000 expected. Sales for old crop corn were down 49 percent from the week before. New crop sales met analyst expectations at 1,143,400 MT. Old crop corn is now 63 million bushels ahead of pace to meet USDA expectations.

Wheat sales this morning met expectations reporting 443,200 MT of sales compared to expectations of 350,000-550,000 MT.

Even before this morning’s export sales report, November soybean futures were trading 21 cents higher on some concerns about final yield. Concerns are starting to circulate through the trade that a cooler / dryer August leaves questions about final yield as we enter the pod setting stage for much of the crop. Non-commercial traders held a near record short soybean position – making the market ripe for a short covering rally.

July 23 – Morning Comments

This morning the grain markets are mostly unchanged to slightly higher here with September corn up ½ a cent, September wheat up 2 cents and august soybeans up 2 ¾ cents.

The weather forecast has turned drier in the western half of the grain belt with the next 10 days looking to bring more dry weather to that region.  Today should bring some showers to southeastern Minnesota, northeastern Iowa, Illinois and southern Ohio. Rains will be needed during August to maintain the crop quality in the western half of the grain belt. Right now, soybeans and corn in Minnesota, North Dakota, South Dakota and Wisconsin which received significant precipitation during the earliest parts of the season will be most susceptible to moisture stress due to their shallow rooting. Despite the drier weather outlook, we continued to see selling pressure yesterday as soybeans broke through key support of $10.65 and impulse lower.

Two military jets were shot down in Eastern Ukraine this morning, but at the moment wheat futures are not showing any buying interest as a result. The USDA’s attache in Ukraine released a report yesterday after the market close stating that harvest in Eastern Ukraine had been slowed by the military conflict but “Grain exports for the new marketing year are starting off well.” U.S. wheat futures are showing very little interest in the Ukraine story following one day of buying last week. We will continue to monitor the situation for any changes in the export outlook.

Weekly ethanol production will be released at 9:30 central time and is expected to show another strong week of U.S. ethanol production. A collapsing corn market has helped to offset lower DDG prices and a sideways ethanol market. Ethanol facilities remain aggressive bidders of old crop corn. Anyone with remaining old crop bushels may find premium at ethanol facilities for late season sales.

July 21 – Morning Comments

The grain markets moved a couple cents higher in the overnight after trading down for the better part of yesterday. September corn is up 1 ¼ cents September wheat is up 4 ½ cents and august soybeans is up 14 cents on the day.

Crop conditions were released yesterday after the market close, showing small changes week over week. Corn conditions were left unchanged at 76% good-to-excellent while soybean conditions improved a percent, now rated 73% good to excellent. Progress is moving along nicely, with 56% of corn now silking and 19% of soybeans setting pods. The next several weeks will be critical for final yield and the forecast for pollination is looking very favorable. The 6-10 day forecast from Planalytics shows above average precipitation and below average temperatures for the U.S. grain belt.

A string of export sales were reported this morning with exporters selling 225,000 metric tons of U.S new crop soymeal to unknown destinations, 180,000 metric tons of U.S new crop soymeal to Vietnam and 20,000 metric tons of U.S. new crop Soyoil to unknown destinations.

Also on the demand front, Taiwain flour millers association has released a tender overnight to purchase 80,900 tonnes of milling wheat from the United States. The tender will close on Friday, July 25th, and will give a better idea of demand following a three month price decline. Japan’s Ministry of Agriculture also issued a tender to buy 94,586 metric tons of food quality wheat from the United States, Canada and Australia. The tender should close Thursday.

Yesterday, new crop soybeans were able to hold the key support level of $10.65 after twice attempting to penetrate that price level. However, November soybeans were able to rally 6 cents off their lows to close out the day, giving hope that we have found a short term bottom. Today it will be important to watch the $10.65 price level again since another test of that level will likely yield lower prices.

This morning there was talk out of Argentina that grain shipments out of the port of Rosario started up again on Monday after several unions’ suspended strikes. The unions will continue to hold talks with the companies, but at least for now it seems that grain will once again be moving out of the country. We have seen these strikes end only to start back up again last week so we will keep a close watch on any further developments out of Argentina. The strikes out of Argentina have been a supporting factor for old crop U.S soybeans.

July 21 – Morning Comments

This morning all the grains are trading lower as ideal weather during pollination weighs heavily on the market. September corn is trading down 6 cents, September wheat is down 3 ¾ cents and August soybeans is trading 4 ¾ cents lower.

This afternoon’s crop progress report should show unchanged conditions ratings and nearly 50% of the corn and soybean crop entering the reproductive phases. Weather looks to remain very favorable for the remainder of the week with NOAA and private analysts both expecting cool temperatures across much of the grain belt. Showers should be light and intermixed, continuing to support soil moisture.

The longer term outlook remains favorable, with the 8-14 day forecast from Planalytics projecting below average temperatures and above average precipitation for the majority of the grain belt. This is confirmation of NOAA’s projections from last week for a cool, wet, August for the U.S. grain belt.

New crop soybeans are now 6 cents away from the low printed at $10.65 per bushel following the last USDA supply and demand report. Since then new crop soybeans rallied to $11.18 ¾ last Thursday, helped to its high on Thursday by the Malaysian airlines incident over eastern Ukraine. The geopolitical event was used as a selling opportunity after the initial reaction sent soybean prices higher. Keep a close watch on new crop soybeans around $10.65 which should act as a strong support level during today’s trade.

Over the weekend France and Germany both received precipitation that stopped fieldwork during harvest. The moisture throughout Europe during harvest has caused quality concerns for the wheat in that region. This is has been an ongoing problem this year for European wheat and the U.S markets are unlikely to respond to the situation in a meaningful way.

On the demand side this morning we have a few wheat tenders across the news wires that shouldn’t affect the overall direction of the trade here this morning. Turkey’s state grain agency issued an international tender to import 165,000 metric tons of milling wheat and 65,000 metric tons of animal feed barley. Also, private Egyptian buyers were in the market purchasing 60,000 metric tons of wheat from the Black Sea region.