Morning Comments – May 26

Grains were higher this morning with soybeans reaching new heights on the rally, briefly getting close to $11 a bushel on front-month July futures. In outside markets, crude oil was also chartering fresh ground eclipsing $50 a barrel, its highest mark since last October.

Soybeans continue to be fueled by a surge in soymeal prices tied to the crop shortfall in Argentina. Meal prices bested $400 a ton in the last session and continue to move higher overnight. With Argentina’s soy crop problem, traders are looking for much lower soymeal exports from the world’s #2 supplier.

Russia’s Sovecon agriculture consultancy has raised its forecast for Russia’s 2016 grain crop to 107 MMT from a previously expected level of 105.4 MMT, its presentation at a conference in Moscow showed on Thursday. Its forecast for the wheat crop was raised to 64 MMT from 61.1 MMT. USDA currently has the Russian wheat crop at 63 MMT.

Overnight export deals saw Jordan tendering for 100,000 MT of optional origin milling wheat. Meanwhile, South Korea’s MFG walked away from the tender to buy 70,000 MT of corn, citing prices that were too high.

Crude oil continues to climb thanks to EIA data on Wednesday showing a 4.1 million barrel drawdown in crude stocks. Expectations were for only a 2.4 million barrel drop in inventories.

WEEKLY EXPORT INSPECTIONS

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

1,381

1,000-1,300

246

250-450

Soybeans

456

300-500

150

300-500

Wheat

-9

0-200

354

300-500

Morning Comments – May 25

Grains were in positive territory to start the day with soybeans leading on a 10-cent advance. In outside markets, crude oil and equity futures continued to add to yesterday’s gains.

Soybeans were up today buoyed by strength of late in soymeal. Slow farmer selling in Argentina is helping support soymeal prices as international buyers usually find ample supplies from South America this time of year. Also supporting soymeal was word that ADM’s Frankfurt, IN soybean plant was idling for maintenance.

In weather, rains is expected to be focused on the center of the US with rains across the W. Midwest will keeping planting slow. The western Midwest finally gets a needed break beginning the middle of next week which promises a longer window to catch up soy seeding and this will extend into the eastern Midwest as well.

 

In overnight export deals, a South Korea feed dealer bought 60,000 MT of feed wheat optional origin while another group in South Korea issued a tender for 70,000 MT of corn.

API crude stocks data on Tuesday was supportive as weekly inventories shrunk by 5.1 million barrels versus trade estimates of a 3.3 million barrel decline. That marks the 2nd week in a row of declining API crude stocks, and is the first time since early January that crude stocks reported by API fell for two weeks in a row. Official government data from EIA will be released at 9:30 am CDT today with the data expected to show a 2.4 million barrel drop from last week.

Morning Comments – May 24

Grains moved lower yet again overnight with soybeans continuing their selloff reaching their lowest mark since the May 10 crop report. In outside markets, the US dollar was stronger as was equity futures and crude oil.

After the close on Monday, USDA released their weekly crop progress report showing a big jump in soybean plantings from 36% last week to 56% this week. Corn planting looked to be mostly wrapped up with 86% of the crop planted. And winter wheat conditions held steady at 62% good-to-excellent versus last week. Spring wheat is also faring well at 76% good-to-excellent versus last year of 69%. Indiana and Ohio still lagging on planting.  For corn, Indiana is 62 percent planted (vs 5-year avg of 77 pct) and Ohio reaches 51 pct (vs 5-year avg of 66 pct).

In export news on Monday, weekly inspections from USDA showed sub-par movement for soybeans while corn and wheat were in-line with expectations. With only a few weeks left in the wheat marketing year it seems likely final year exports will come up 20 to 30 MB shy of USDA’s forecast. Corn is also lagging but the pace has been brisk of late and with 3 months left in the marketing year will likely meet USDA’s benchmark.

Overnight, Taiwan’s maize industry procurement association MFIG has purchased 65,000 MT of corn to be sourced from the United States in an international tender which closed on Tuesday, European traders said. The tender had sought corn from either the United States, Brazil, Argentina or South Africa. This morning USDA announced a 140,000 MT of soybeans for new-crop to unknown destinations. That makes two days in a row of new-crop bean deals.

 

Morning Comments – May 23

Grains started the week in negative territory with soybeans facing the biggest brunt of the selling pressure. In outside markets, crude oil fell for a 4th consecutive session and equity futures were steady to weaker in early trade.

Soybeans got pressured overnight on improved crop weather in the U.S. Midwest and a “risk-off” mood in the broader commodity sector. Ahead of USDA’s weekly crop progress report, early trade estimates were for the government to show U.S. soybean planting at 58 to 60 percent complete.

Overnight news saw some export tender activity. Taiwan’s MFIG purchasing group issued a tender to buy 40,000 to 65,000 MT of corn, while a group of Israeli buyers issued a tender to purchase 108,000 MT of corn. This morning USDA announced two export deals. Exporters sold 140,000 MT of new-crop soybeans to unknown destinations and a 20,000 MT deal for old-crop soybean oil.

In outside markets, the US dollar continued to climb higher this morning as the market starts to expect the US Fed to raise interest rates. The US dollar is at 2-month highs and posing problems for commodity prices in general. Crude oil in particular is off from its highs by $2 a barrel.

 

 

Weekly Cash Comments

Cash Commentary-

Corn basis was unchanged on the week while soybean basis firmed nearly two cents a bushel.

In corn, active farmer selling in the Western Cornbelt this week brought some pressure to basis levels as did weakness out of the Gulf. Ethanol plants as a group were mostly unchanged, but there was some weakness apparent in the Western Cornbelt where plants seemed to be 3 to 5 cents lower on the week. River bids were also weaker, giving up 2 cents a bushel on average.

For soybeans, farmer sales were limited after soybean futures backed off of recent highs. River terminals were up 3 cents a bushel on the week, while soybean crushing plants were up 2 cents on average.

Futures Commentary-

Grains finished the week with only modest changes, but the level of volatility continues to be rather high.

Early in the week, USDA’s crop progress report showed good conditions for the US crop. Corn plantings were 75% completed while soybeans were at 36% completed. The US winter wheat crop was rated at 62% good-to-excellent, on par with last week’s score. Private analyst Informa pegged US corn acres at 93.4 million versus USDA’s forecast of 93.6, while soybean acres were pegged at 83.0 versus 82.2 by USDA. Analysts have been suggesting as much as 2 million more acres of soybeans, so Informa’s number of only 800,000 more acres would be substantially below that.

In currency news, the US dollar hit a 3-week high this week after the Fed meeting showed a renewed interest in raising interest rates in June. The US dollar had been sliding over the past few months, but now seems on a higher trajectory pegged to the Fed policy. Any movement higher in the US dollar would not be supportive for grains.

In export news, USDA’s export sales report this week showed supportive corn numbers with a good showing on both old- and new-crop deliveries, which beat expectations. Wheat and soybeans were less impressive though still within expectations.

Morning Comments – May 20

Grains found strength overnight with soybeans leading the complex higher while corn and wheat followed with more subdued gains. In outside markets, equity futures were higher while crude oil and the US dollar were mostly steady.

Producers in isolated parts of Brazil’s main grain state of Mato Grosso started harvesting the winter corn crop earlier than expected to take advantage of near record prices, as the drought that has curtailed yields also accelerated the crop’s maturation. Reports of winter corn harvesting are still isolated in the center-west state of Mato Grosso, according to agronomists on the Rally da Safra crop tour.

French farmers had sown 91% of their corn crop, up from 78% but lagging the 96% progress seen a year ago, farm office FranceAgriMer said on Friday.  Corn planting has been slowed by wet, cool weather during much of spring so far and FranceAgriMer said the average sowing date was 15 days later than the average of the past five years.

South Korea’s KOCOPIA rejected all offers and made no purchase in a tender for 55,000 MT of corn which closed on Friday, European traders said. Prices were regarded as too high, they said. Lowest offer was $198.60 a tonne c&f including surcharge for additional port unloading, they said.

 

Morning Comments – May 19

Grains were weaker overnight as strength in the US dollar continued to weigh on all commodity markets especially crude oil which was off over a $1 a barrel.

The US dollar continued its rally overnight and into the morning session, gaining 0.4% overnight and reaching its highest mark since March 23. The Federal Reserve will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment, according to minutes from the U.S. central bank’s April policy meeting released on Wednesday. That view, expressed by most Fed policymakers at the last policy meeting, suggests the central bank is much closer to lifting rates again than Wall Street expects.

This morning, USDA’s export sales report had supportive corn numbers with a good showing on both old- and new-crop deliveries, which beat expectations. Wheat and soybeans were less impressive though still within expectations.

WEEKLY EXPORT SALES

OC-Act OC-Exp NC-Act NC-Exp
Corn 1,473 900-1,300 541 100-300
Soybeans 556 300-500 158 50-250
Wheat 175 0-250 573 200-400

 

 

 

Morning Comments – May 18

Grains were weaker overnight, led by soybeans. In outside markets, the US dollar was higher while equity futures came under pressure.

The dollar rose to a three-week high against the euro and a basket of currencies on Wednesday on renewed expectations that the Federal Reserve could raise interest rates soon.  Stock markets in Europe and Asia weakened on Wednesday in the wake of accelerating U.S. inflation and comments from Federal Reserve officials that rekindled prospects of an interest rate rise within months.

Showers are exiting the far eastern Corn Belt currently, and a system later this week has shifted farther to the south. This will allow most of the eastern Corn Belt to remain dry until the latter 1/2 of the 6 to 10 day, with intermittent showers during the balance of the 15-day period resulting in brief interruptions. However, the seeding pace should improve, particularly as warmer weather develops early next week.”

Showers will still move through the Delta/Southeast on Friday/Saturday, but drier weather will then also aid late fieldwork in these areas until the 11 to 15 day. The wettest 6 to 15 day conditions are expected from the Plains into the southwest Midwest, with extensive rain also occurring in the far S. Plains in the next two days. While the moisture is aiding winter wheat yields during late growth, the active pattern will also hinder maturing wheat in Texas/Oklahoma.

 

Morning Comments – May 17

Grains were mixed overnight with soybeans higher and corn lower. Wheat was nearly unchanged. In outside markets, crude oil was higher but off of its highs at $48.40 while equities and the US dollar were mostly directionless.

On Monday, private analyst Informa pegged US corn acres at 93.4 million versus USDA’s forecast of 93.6, while soybean acres were pegged at 83.0 versus 82.2 by USDA. Analysts have been suggesting as much as 2 million more acres of soybeans, so Informa’s number of only 800,000 more acres would be substantially below that.

In other news on Monday, USDA’s crop progress report showed a strong pace for corn and soybean plantings.  Corn plantings were 75% completed while soybeans were at 36% completed. The US winter wheat crop was rated at 62% good-to-excellent, on par with last week’s score.

Overnight, South Korea’s largest feed-maker NOFI issued an international tender to purchase about 65,000 tonnes of corn, an unspecified volume of feed wheat and 7,000 tonnes of soymeal. UkrAgroConsult raised its forecast for Ukraine’s 2016 wheat harvest to 21.5 million tonnes from 19.8 million. The consultancy’s Yelizaveta Malyshko told Reuters that favourable weather this spring and “ideal” moisture content in soil were the main reason for the improved outlook.

Morning Comments – May 16

Grains were lower overnight while crude oil continued to reach fresh highs since its low in January.

Rains were fairly common over the US grain belt over the weekend as a quarter to a half inch of rain hit most of the key growing regions. After a cold start to the week (record cold for some) temperatures will warm across the Plains, Corn Belt and East and moisture will remain plentiful.  Temperatures are expected to surge to above normal later this week and continue “warm” next week too across the Plains and Corn Belt.

A one-day strike at the Rosario grains export hub in Argentina ended on Friday after the government compelled union and company officials to enter into wage negotiations for 15 days, a union leader said. The strike began at midnight local time and ended around noon after the union agreed to the government mandate for a “reconciliation” period to settle the dispute.

Soybean prices have floundered in recent sessions as expectations that farmers are switching planting intentions to beans and away from corn. There are expectations the USDA’s June 30 acreage report could show a shift of 1-2 million acres from corn into soybeans, compared with the government’s March 31 planting intentions report.

Crude oil prices are on the upswing to start the trading week as markets shrug off initial negativity in the wake of soft data from China reported over the weekend. China’s domestic oil production dropped 5.6 percent from a year ago to 16.59 million metric tons in April, the steepest slide since November 2011, according to government data released Saturday. The trend is likely to worsen in the months ahead and, along with U.S. production declines, will help re-balance the global oil market later this year.