Morning Comments-July 25

Soybeans was a leader to the downside this losing 51.25 cents. Compared to soybeans, corn and wheat were down modestly, off 23.5 and 16.25 respectively.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

US Exports were mixed this week. Old and new crop corn came in slightly lower than analysts expectations. Old crop soybeans were in line with expectations, but new crop came in almost 300,000 MT above expectations.

Wheat exports have the potential to increase in the next few months. News out of Europe points to disappointing yields with French wheat yield estimates at the lowest seen in 13 years.

Crude oil continues to move lower. Rebalancing may take longer than expected as huge amounts of crude remain in vessels at sea and storage tanks on land. Data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

Weekly Cash Comments

Cash Commentary

Basis levels kept relatively steady during a week of volatile futures prices. Corn was up an average of 1.5 cents per bushel with soybeans slightly behind up 1.25.

Ethanol plants saw a slight rise higher this week up 1.5 cents per bushel. Ethanol production continues to stay strong, particularly in the midwest where we saw the highest production numbers this month. Corn along the river saw an average increase of 3.5 cents per bushel even with old crop and new crop exports coming in below expectations.

Plummeting futures prices kept soybean basis levels mostly stable to slightly stronger across some sectors this week. River terminals as a group were steady as old-crop business starts to trickle off. However, crush plants moved higher by 3.2 cents a bushel on the week.

Futures Commentary

Soybeans was a leader to the downside this losing 51.25 cents. Compared to soybeans, corn and wheat were down modestly, off 23.5 and 16.25 respectively.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

US Exports were mixed this week. Old and new crop corn came in slightly lower than analysts expectations. Old crop soybeans were in line with expectations, but new crop came in almost 300,000 MT above expectations.

Wheat exports have the potential to increase in the next few months. News out of Europe points to disappointing yields with French wheat yield estimates at the lowest seen in 13 years.

Crude oil continues to move lower. Rebalancing may take longer than expected as huge amounts of crude remain in vessels at sea and storage tanks on land. Data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

 

Morning Comments – July 22

Soybeans continued to plunge lower overnight giving up nearly 20 cents a bushel on new-crop November. Corn and wheat drifted lower as well.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

Yesterday after the close, Argentina’s government bumped up forecasts for the corn and bean crop for the 2015/16 marketing year. They pegged the soybean crop at 58.8 MMT vs 58.0 previously while the corn crop was projected to be 39.8 MMT versus a previous estimate of 37.9 MMT.

 

Wheat prospects deteriorated sharply in Europe in recent weeks due to worse than expected damage from heavy spring rain, prompting analysts to slash crop estimates with French output seen at its lowest in 13 years. Consultancy ODA Groupe expects the 2016 crop in the largest EU wheat producer and exporter to be less than 30 million tonnes, down from 32 million pegged last week and 35 million estimated on July 6. If realized, that would be the lowest French wheat harvest since 2003 and is far below the record 2015 crop of nearly 41 million tonnes.

Crude futures were on track for weekly losses on Friday as investors reassessed U.S. data on oil stocks and excesses in oil products in Europe and Asia. While many expect global oversupply of oil to ease in the near term, huge amounts of crude remain in vessels at sea and storage tanks on land as the rebalancing takes longer than some had anticipated. While U.S. production has been falling, crude inventories are at 519.5 million barrels, historically high for this time of year according to EIA.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

Morning Comments – July 21

Grains found modest support overnight trying to recover from the steep losses accumulated over the past three trade sessions. In outside markets, equities were lower as was crude oil and the US dollar.

Current weather models continue to point to a return to normal temperatures after today and Friday’s heat wave thru the Midwest.  The latest model shows heavier precip mid next week versus the model 24 hours ago.

In overnight news, Japan bought 165,048 MT in a regular wheat tender. Most of that or 99,473 MT was with the US, while the remainder was to Canada and Australia. South Korea’s state-run Korea Agro-Fisheries & Food Trade Corp. has purchased 20,000 tonnes of soybeans to be sourced from the United States and Canada in an international tender which took place on Thursday, European traders said.

Oil prices rose as much as 1 percent on Wednesday, lifting U.S. crude from two-month lows, after the U.S. government reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a glut. U.S. gasoline prices, however, hit four-month lows after the data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

WEEKLY EXPORT SALES

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

345

400-600

506

500-700

Soybeans

325

300-500

1,001

500-700

Wheat

478

350-550

Morning Comments – July 20

Grains posted anemic gains overnight after yesterday’s sharp sell-off.  Equity futures were up overnight and crude oil was hovering around unchanged waiting for fresh EIA inventory data later this morning.

The latest weather models show hot weather on Thursday and Friday in the Midwest, but subsiding after that.  By early next week high temps are expected to be 7 degrees lower and by late next week be as much as 10 degrees lower. Rain also appears to be most likely this weekend into next week in the heart of the Corn Belt.

In overnight news, a South Korea feed buyer bought 70,000 MT of optional origin corn. Jordan passed on its tender aiming to buy 100,000 MT of wheat while Syria bought 200,000 MT of Russian wheat.

Crude oil is holding ground at a 10-week low, after the American Petroleum Institute reported that U.S. crude supplies fell by 2.3 million barrels for the week ended July 15, according to sources. The closely watched Energy Information Administration report will be released Wednesday. Analysts polled by S&P Global Platts forecast a decline of 1.25 million barrels for crude inventories.

Morning Comments – July 19

Grains were lower overnight while the US Dollar hit its highest mark in 4 months. Crude oil recovered some of yesterday’s losses while equity futures drifted towards negative territory to start the day.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

Precipitation totals were light in the last 24 hours with some rain events hitting W NE and S IN/OH. Intense heat sets up in the Midwest US and northern Plains from Wednesday through Saturday, with high temperatures between 95°F to 105°F and low temperatures near 80°F; temperatures normalize early next week, but warmth returns thereafter. The latest weather models show cooler temps and more precip for the Midwest in the next 3 to 5 day period.

Oil prices erased early losses on Tuesday after falling on concerns over a crude and refined fuel glut outweighed an expected cut in U.S. shale production and a probable further draw in U.S. crude inventories. Prices turned higher as an official said oil production at Libya’s Sarir field had been suspended due to protests at the Hariga terminal. Output at the Messla field was also at risk if ports shut, the official said.

 

Morning Comments – July 18

Grains traded both side of unchanged overnight but came into the morning break with losses, especially for soybeans.  In outside markets, crude oil started the week lower while equity and bond futures posted modest gains.

Weather for the 2nd half of the month looks to be hot and wet which gave the soybean market a reason to head lower. After a cooler than normal first half of July, Corn Belt temperatures will heat up later this week to average 6 to 9 degrees hotter than normal and much of the rest of the nation will also be hot. New GFS maps have the next 16 days with widespread storms east of the Mississippi, limited moisture and some heat across the WCB and N Plains and very limited storminess and excessively hot and dry over the S Plains.

NOPA June crush came in at 145.05 mb compared to trade est. of 155.4 and May’s crush of 152.82. The avg. daily rate of crush was 4.84 mb which is the lowest rate of the year, just below the Jan rate of 4.85 mb. Oil stocks were 1.985 bln lbs vs. 1.994 in May. Meal exports were 594 tst vs. 682 in May.

Crop conditions will be released later today after the market close. Crops should show a deterioration in SD, NE, MI, OH and IN while rains benefited crops in ND, MN, KS, much of MO, and good portions of IL, IN and WI.

Oil prices fell on Monday as traders shrugged off the impact of the attempted coup in Turkey and the market turned its attention to bearish fundamentals, while disruptions to crude exports in Libya lent prices some support. A report by Morgan Stanley raised concerns about the longer-term outlook for oil consumption as demand for petrochemicals rather than fuels such as diesel and gasoline is clouding the outlook for crude demand.

In export news, Egypt is in the market for wheat although the US is likely not to garner the business as last week’s deals to Egypt went to Ukraine and Russia.

Weekly Cash Comments

Cash Commentary-

On average, national basis was lower this week with corn off 2 cents a bushel and soybeans lost almost 3.5 cents per bushel.

Even with strong exports this week, corn river basis was off the most this week, losing 7 ¾ cents per bushel. However, corn barge basis has moved up 10 cents in the last two days which could indicate expectations for continued export strength. Ethanol plant basis was lower as well, off almost 3 cents per bushel.

Soybean crush facilities were off almost 4 ½ cents this week, losing all of last week’s gains. Along the river, soybean terminals lost 1 ½ cents. Soybean barge basis was down as well, off 11 cents, potentially following the drop in exports this week. 

Futures Commentary-

Grains were lower to close the week. Wheat was off 8.5 cents a bushel, the lightest change of the week. Corn followed lower, losing 16 cents and soybeans led the pack down 33.25 cents a bushel.

Weather continues to be a key driving factor in this week’s trading action. As we approach the weekend, there are signs of moisture along much of the Midwest. However, looking at the 6-10 day temperatures along the central plains are predicted to reach as high as 110.

Crude was oil prices were capped by the persistent glut of oil. As of now there are few signs that oil production will slow. Last week, industry group Baker Hughes Inc. reported that the number rigs looking for oil in the U.S. rose by 10, the fifth increase in the past six weeks, bringing the total rig count to 351.

Wheat exports came in below expectations with old crop at 318,000 tonnes and new crop at 397,000 tonnes. Corn exports were above expectations with old crop netting 667,800 and new crop at 772,500. Soybeans exports were at the low end of expectations with old crop at 364,200 and new crop at 429,000.

On Tuesday, the Ukrainian agriculture ministry claimed that it expects Ukraine to export 35.33 million tonnes of grain this season. This is a significant increase from the previously reported 11.64 million tonnes.

Russia’s head weather forecaster, Hydromet Centre, reported that Russia’s favorable weather could result in the largest grain crop in post-Soviet history. Harvest is expected to be around 110 million tonnes of grain this year, up 2 million from tonnes from the record crop of 2008 according to the agricultural ministry.

The crop conditions were better than expected on corn and soybeans. To recap, Corn was reported at 76% good-to-excellent, up 1% and compared to 69% last year. The crop was 32% silking which normally looks at averages of 26% this time of year. Soybeans saw an increase as well at 71% good-to-excellent; also up 1% compared to last year’s rating at this time of 62%. The crop was 7% setting pods versus the 5% average. Spring wheat is down 2% at 70% good-to-excellent. Last year spring wheat was 71% good-to-excellent. Winter wheat was reported at 66% harvested versus the 65% average.

Tuesday’s WASDE report numbers were mostly in line with analyst expectations. Corn new crop at 2,081 and old crop at 1,701. Soybeans new crop was reported at 290 and old crop was 350, and wheat new crop was reported at 1,105.

China was scheduled to auction around 300,000 tonnes of soybeans from its temporary reserve. The auction took place last night and resulted in 99.7 percent of the auctionable product being sold.

Morning Comments – July 15

Grains edged up overnight. Soybeans moved up slightly after a major slide in yesterdays session.Corn gained 0.7 percent while wheat gained more than one percent.

U.S. Soybeans fell 3.8 percent on Thursday, giving up early gains after new weather forecasts boosted expectations of a robust harvest in the U.S. Additionally wheat and corn closed lower.

China’s first soybean auction of the year was off to a flying start with 99.7 percent of what was offered being sold. Additionally, in the second quarter, China’s GDP rose 6.7 percent from a year earlier. Resulting in slightly better number than what economists were expecting.

Exporters sold 320,000 MMT of US soybeans to unknown destinations for a 2016/2017 delivery.

The weather outlook over the weekend and into early next week is calling for rain from the northeast to the southwest across the corn belt. Favored areas include a good portion of the Dakotas, central Nebraska, northeast Iowa,southern Minnesota, southern Wisconsin, northern Illinois, and northern Indiana. The additional showers and lack of notable heat will continue to provide very good pollination conditions through the first half of the week in the corn belt.

Crude futures dipped toward $47 a barrel on Friday on concerns that a persistent global glut of crude oil and refined products will impede any price recovery. While the price collapse over the past two years has led to a sharp drop in global oil production, stored inventories remain at high levels, particularly for refined products, weighing on a recovery in prices.

 

Morning Comments – July 14

Grains traded higher yet again in the overnight session. Corn was up 10 cents, soybeans up 12, and wheat up 5.

In world news, China is scheduled to auction around 300,000 tonnes of soybeans from its temporary reserve on Friday, a move that analysts think may help ease tight domestic supplies of the oilseed. China has not revealed the size of its reserves but it is thought to hold about 5 million tonnes of soybeans in its temporary reserve, said Liang Yong, an analyst at Galaxy Futures.

Crude prices recovered more than a dollar a barrel  from sharp losses that took place this Thursday. Brokers said the downtrend could be expected to resume given a worry over slowing economic growth along with record highs in stocks.

Exceptionally hot (10°F to 15°F above normal) and dry weather begins early next week in the Midwest US, continuing through the end of July; some indication that ridge pulls back towards the Rockies in early August, offering potentially cooler/wetter weather for the eastern Soybean Belt but uncertainty remains high.

A U.S. government weather forecaster said the La Nina weather phenomenon will likely develop during August through October of 2016. The climate prediction center, an agency of the national weather service said in its monthly forecast there is a 55% to 60% chance that the La Nina weather phenomenon will develop during the fall and winter of 2016/20/17

Wheat exports came in below expectations with old crop at 318,000 tonnes and new crop at 397,000 tonnes. Corn exports were above expectations with old crop netting 667,800 and new crop at 772,500. Soybeans exports were at the low end of expectations with old crop at 364,200 and new crop at 429,000.

Gold gained for the first  time in five sessions, resulting from a recent rally for U.S. stocks that took a slight pause.