Morning Comments – June 29

The grains were mixed to close the overnight with corn and soybeans trading lower and the wheats up a little more than a penny.

In overnight news, Romania is on track for another record year of wheat production 8.28 million tonnes. This is 4.5 percent higher than a record set just last year.

U.S. soybeans fell on Wednesday, retreating from Tuesday’s one-week high on expectations the USDA will estimate U.S. farmers have increased soybean sowings for this year’s crop.  Corn was supported by the view that U.S. farmers may have reduced corn sowings to switch into soybeans and by concern that expected hot weather could stress U.S. crops. Wheat recovered on buying interest after recent weakness.

Mexico is primed to overtake Japan as the single largest U.S. corn importer, knocking Tokyo from the perch it has occupied since the mid-1980s and taking the top spot for the first time ever. Despite a three-month buying flurry, Japan remains on pace to buy its second-smallest U.S. corn volume since at least 1999.

The 6-10 day weather outlook continues to trend warmer. However, there are chances that there will be a wetter holiday weekend with scattered rains in spots throughout Kansas, Missouri, and southern Illinois. The 16 to 30 day rains are forecast to favor the northwest Midwest, with the northeast 1/3 of the corn belt at most risk for heat/moisture stress to pollinating corn in late July.

Morning Comments – June 28

Grains turned higher overnight and finished the morning trade solidly higher. Outside markets were also reversing course from the two-day hammering they took post-Brexit.

On Monday after the close, USDA’s crop progress report showed the US corn crop holding firm at 75% good-to-excellent, unchanged from last week, while soybean conditions slipped to 72% this week versus 73% last week. Winter wheat harvest was speeding along with 45% of the crop cut versus 25% last week.

In overnight news, Egypt said they had enough wheat in their strategic reserves to last until January 2017 and that they have bought 5 MMT from local farmers, more than the 4 MMT they expected to get this season.

For weather, the 6 to 15 day has trended warmer, with mid 90s or better mainly focusing on the Plains, Delta, and southwest Midwest. Some models are looking for 100s late in the 6 to 10 day into the heart of the corn belt but other models don’t. Longer-term forecasts out a month show warm weather in the corn belt, with the biggest risks in the northeast 1/3 of the belt.

U.S. stock index futures rose sharply on Tuesday as investors rushed to pick up Brexit-hit stocks after Wall Street crumbled under fear and uncertainty to its worst two-day fall in 10 months. Crude oil was also up sharply trying to recover from steep losses while the US dollar reversed course to trade lower.

 

Morning Comments – June 27

Grains were higher in early morning trade on Monday with soybeans leading the complex higher on a 20 cent advance. In outside markets, active trading was still being tied to the outcome of the Brexit votes as the US dollar shot higher while equities and crude oil were lower.

Soybeans were catching up to other grains which were able to find some bounceback on Friday. Soybeans in particular have faced the biggest brunt of the selloff last week. This morning USDA announced a flash of 150,000 MT of soybeans to unknown destinations with 132,000 going for old-crop delivery.

In the weather, the corn belt is looking at temperatures in the high eighties today with  little chance of rain until Wednesday.  But, the current 6 to 14 day outlooks shows normal to below normal temperatures while precipitation forecasts show above averages chances for rain throughout much of the Midwest for this time period.

Crude oil prices fell sharply lower on Monday and is closing to testing support levels at the $46.30 mark. Strength in the US Dollar combined with potential economic weakness caused by the Brexit fallout continue to be catalyst for the selloff.

With results of the Brexit vote the sterling continues to slump as does, European stocks, S&P 500 Futures and the Dow Jones. The bank of England has said that they will step up and inject 250 BIllion Pounds (330 Billion USD) in order to support the financial system. The bank of England also stated that this was not the only additional measure available.

 

Weekly Cash Comments

Cash Commentary-

Corn basis was up this week by just under a cent. Soybeans saw an increase in basis to just over 3 cents as grain slumped throughout the week.

Corn basis along the river was up a cent and a half per bushel. A slight improvement considering last week’s lower than expected exports report.  Ethanol also made a modest improvement this week and was up nearly a cent and a half.

Soybean basis in the river and along the Gulf saw the most movement from last week, up almost 10 cents a bushel. This was followed by a two and a half cent increase in soybean basis. Plant basis was off a half a cent .

 

Futures Commentary-

Overall grains were slumped this week. Corn was down 38 cents, soybeans down 10 cents, and wheat was down 18.25 cents.

Brexit has had wide impacts on the grain markets. Throughout the week the polls were looking promising that the UK would remain in the EU. The result of the vote that took place yesterday indicated that the UK was in favor of leaving the EU. This  was no less than surprising for the market; resulting in the pound dropping the lowest point since 1985. Sterling also dropped  to a record low. We have been seeing surges in the gold where the market is up 5 percent, after rising as much as 8.2 percent. The strongest it’s been since March 2014. Oil sharply fell, down 5 percent.

The USDA crop report this week reported improving crop conditions with corn 75% good-to-excellent, and soybeans at 73% good-to excellent both improvements from last week’s report. The winter wheat harvest was reported to be 25% complete.

Exports reports correlated with what was expected for this week. Reported exports were 870 MMT of corn and 660 MMT of soybeans. Notable sales that occurred during the week occurred Tuesday when exporters sold 132,000 Metric tons of US Soybeans to China. Another 126,000 MT of US Soybeans was sold to unknown destinations. Additionally, Wednesday night, South Korea’s FLC bought 130,000 MT of optional origin corn while Taiwan’s MFIG bought 65,000 MT of optional origin corn. Regardless of price slide this week Asia continued to be proactive in exports.

Ukrainian crop tours showed yields of wheat could reach record highs in the area. Resulting in the crop estimate being lifted to 23.0 million from 1.1 million.

In the 8-14 day outlook there are signs of dryness and above average temperatures in the northern corn belt. Weather analytics company, Planalytics, released preliminary yield forecasts for corn and soybeans. Corn yield potential is reported to remain positive in the event it can retain moisture during silking. Soybeans have an above-trend yield forecast.

Morning Comments – June 24

Grains were off substantially as we see improving crop conditions and flight from risky investments following the Brexit results.

The corn belt is looking at temperature in the high eighties low nineties and partly cloudy but precipitation expected. Further south, parts of Kansas are expected to see rain today and scattered thunderstorms and temperatures in the high eighties.

Brazil cuts 700,000 tonnes from corn view after heavy frosts. However, analysts still expect a large crop around 50 million tonnes.

Following the UK’s leave from the EU, we are seeing surges in the gold market up 5 percent, after rising as much as 8.2 percent. The strongest it’s been since March 2014. Oil sharply fell, down 5 percent. Sterling prices are at a 31 year low and the pound reached a 30 year low.

Regardless of the Brexit, some European markets are appearing steady. With Euronext wheat now up 0.25 euro. Also, Russia is planning to to supply China initially with 2-3 million tonnes of grain a year via a grain hub that will be built in Siberia.

A U.S. shipment of wheat was rejected by Egypt. Egypt recently declared they would be allowing a small amount of ergot in wheat shipments, however Egyptian quarantine authorities have refused to let in any wheat affected by ergot. The rejected U.S. shipment tested for a 0.006 percent level of ergot, below the international standard of 0.05 percent. Traders speculate that left unresolved, the ergot issue will translate to higher prices at the next GASC tender.

 

Morning Comments – June 23

Grains were mixed overnight as corn moved lower while soybeans and wheat posted modest gains. In outside markets, equities and crude were sharply higher and the US dollar was on the decline as the world waited for the results on today’s Brexit vote.

In corn, Asian buyers continue to step up after this week’s big price slide. Overnight, South Korea’s FLC bought 130,000 MT of optional origin corn while Taiwan’s MFIG bought 65,000 MT of optional origin corn. However, traders continue to focus on good weather forecasts thru the July 4th weekend which show moderating temperatures and better odds of rain in parts of the dry Western Cornbelt.

With showers expanding in the southwest Midwest and Delta in the next 10 days, current crop stress due to heat and recent dryness should ease in parts of northern Arkansas/Tennessee/central and southeast Missouri/southwest Iowa/Kansas/southeast Nebraska. This should narrow the most notably dry areas to parts of east-central South Dakota, central Iowa, southern/west-central Illinois, and central/southeast Michigan by the end of the 15-day period.

In outside markets, eyes are on the Brexit vote in Britain which will decide whether the country will stay or leave the EU. Recent polls seem to suggest a leaning by voters towards staying in the EU. Voting results are expected after the polls close at 3 PM CDT. Yesterday, EIA crude stocks data showed a 2nd consecutive week of crude inventory draw-downs, albeit the stock declines have not been as big as analyst had been expecting

USDA WEEKLY EXPORT SALES

Act-OC

Exp-OC

Act-NC

Exp-NC

Corn

870

750-1,000

550

200-400

Soybeans

660

400-700

661

600-800

Wheat

462

400-600

Morning Comments – June 22

Corn edged up slightly overnight after it fell nearly 6 percent yesterday, the biggest 1 day slide in three years. July corn contracts were down 1 percent, the lowest they have been since May 24th.  Both wheat and soybeans made a slight advances overnight.

In the weather, parts of the corn belt should be expecting rain today with temperatures still in the nineties. Extended forecasts and looking at rain and cooler temperatures throughout the week. Global La Niña conditions will continue into mid-July, continuing to elevate the risk of hot and dry weather across many crop production regions of the Northern Hemisphere

Chemical and seed companies DuPont and Bayer have launched a $15 million dollar accelerator fund. $6 million has been initially committed but the companies receiving the money were not identified.

Wheat firmed on concerns over possible quality damage to the Black Sea region crop. Extensive rains are threatening the Russia and Ukraine area with crop damage. Rain has reduced protein levels in Russian wheat and raised concerns over both disease in Ukraine Wheat

In exports, 132,000 tonnes of U.S. soybeans were sold to China. News states that there will be further soybean exports to ChIna because of strong demands.

 

Morning Comments – June 21

U.S. Corn fell to its lowest in more than two weeks. This was a result of the USDA rating corn in better condition than the market had expected with regards to the weather. The USDA rated corn 75% good-to-excellent, which is unchanged from last week. Analysts had expected lower value. Soybeans were reported as 73% good-to-excellent one percent higher than last week’s report and 8% higher than last years report at this time which totaled at 65%. Winter wheat reached 25% complete.

This morning exporters sold 132,000 Metric tons of US Soybeans to China for 2016/17 delivery. Another 126,000 MT of US Soybeans was sold to unknown destinations, of which 66,000 MT is for 2015/16 delivery, and 60,000 MT is 2016/17 delivery.

Agritel Consultancy lifts Ukrainian wheat crop estimate by 1.1 million to 23.0 million after crop tours shows yields could approach record highs.

Sterling silver hit its highest point against the dollar yesterday since early May, a result of worries that Britain will vote to leave the European Union .

China sold 1.14 million tonnes of corn from the state reserve at auction national trade center. The amount sold was about 58% of the total volume on offer.

The CME Group announced it will be adding European Wheat futures and options on September 12th of this year.

Heavy debts have been hindering Brazilian producers abilities to expand and reinvest in farming activities. Total area planted to grains grew by only 0.3 percent this year, compared with growth of 3 percent in 2015 and 5 percent in 2014.

The weather outlook continues to look supportive of good crop production. The 16 to 30 day is still showing little support for severe heat in the corn belt as pollination ramps up, which could lessen stress. In addition, the western Midwest trended wetter today for the 16 to 30 day, as a monsoon feed of moisture expands out of the Rockies.

 

Morning Comments- June 20

Grains prices were lower overnight along with gold. Crude prices rallied after trading as low as $47  last Thursday.

Moscow and Beijing will sign a large contract on Russian wheat supplied to China and the construction of a new grain terminal in Siberia. The MARS service estimates EU soft wheat yields to be 3.4% below last year’s yield. However, this is still 4.1% above the five-year average.

USDA crop report  is expected to shed fresh light on crop conditions this week.

Rain is looking promising to catch nearly half of the Midwest this week with Iowa and Ohio looking the most likely to receive this rain. The heat is forecasted to be the most severe west of the corn belt. Missouri, Kansas and Nebraska will be prone to consecutive days in the nineties.

Crude Oil prices rally after Brexit concerns begin to subside. Prices are nearing the $51 highs set early this month..

Gold sunk the most it has in a month, about 1.6 percent. This is the biggest drop report since May 24th.

Feeder cattle hit a three year low following the steady increase of corn prices.

 

Weekly Cash Comments

Cash Commentary-

Corn basis was off again by 1 cent while soybeans saw a 3 cent advance as futures dropped sharply off two year highs.

Corn basis along the Gulf and river followed the national trends and were off a modest 1 cent per bushel. Export business this week was slightly lower than expected, partially driving the basis shifts. Ethanol plants surprised the market and were also off 1 cent even with record production levels.

Soybean crushing facilities saw the largest basis increase this week, up 5 ¼ cents. River terminals and the gulf facilities were not far behind with increases of 4 ½ cents, responding in part to strong soybean exports this week.

Futures Commentary-

Overall grains slumped this week. Corn was down 1.25. While beans and wheat were down 41.5 and 37.75 respectively.

Crude oil was lower this week, following the grim economic prospects in Europe and Asia, the strengthening US dollar, and by an expected buildup in US inventories. API pegged US crude inventories to be up 1.5 million barrels from last week as traders had expected a 1.4 million barrel drop. All of this resulted in a slump with crude being off $5 a barrel compared to last week’s 7 month high. This was crudes biggest weekly drop in 2 months. Crude is reported to be rising this morning.

Exports from this week were lesser compared to last week’s exertion. Two large South Korea feed millers bought corn on Thursday. One bought 130,000 MT of optional origin corn while another bought 55,000 MT of US origin corn.

This week, a private analyst released U.S. acreage projections, with a predicted outlook of a 1 million acre increase in bean acres. EIA’s weekly ethanol production was a record at 1.01 million barrels per day. Likewise, U.S. soybean processors possibly boosted crush levels to the highest ever for the month of May due to stepped-up demand for U.S. soymeal originating from continued issues with the South American crop. Because of the expected low yields this year, Brazil raised their GDP outlook for next year from 0.85% to 1%.

The weather in the corn belt was consistently in the low nineties and high eighties.  Predicting a forecast with mostly normal temperatures until june 25th and rain looking likely in the western corn belt, an abnormal increase for this time of year in that region.

The USDA crop report for the week showed improvement in beans 74% compared to last week’s 72% good-to-excellent. Corn was unchanged at 75%. Winter wheat harvest is now 11% complete.