Aug 21 – Morning Comments

Weekly export sales were released this morning, with very strong new crop corn and soybean sales reported. Corn sales beat out expectations coming into this morning’s report, with FAS reporting 719,300 MT of 2014/15 corn sold. Major buyers were Colombia, Mexico, and unknown destinations. Soybean export sales were a mixed bag, with net cancellations of 89,600 MT reported for 2013/14 and large sales of 1,420,000 MT reported for the new crop. Soybeans should have favorable Wheat saw relatively poor sales, with just 209,200 MT reported sold. This was below expectations and down 62% from the 4 week average.

The Pro Farmer Crop Tour enters day 4, with scouts moving from Coralville and Spencer Iowa to Rochester, MN. This will be the final day of the crop tour, and as shown by the map below has the potential to see some very good stands of corn. Follow #PFtour14 on twitter for live photos and comments from the crop tour.

NOAA will be releasing their September and 90 day weather outlooks this morning. A major focus of this report will be the potential for an early frost/freeze event. Monday’s crop progress report showed just 22% of U.S. corn dented compared to a 5 year average of 27% for this week in the growing season. In Iowa just 16% of corn is dented compared to a 5 year average of 25%. Soybeans remain less of a concern in terms of progress as 83% of the crop is setting pods compared to a 5 year average of 79%. Numerous reports have been made from the Pro Farmer Crop Tour that the soybean crop will need more growing degree days to maintain yield potential.

August 20 – Morning Comments

Grains are mixed this morning with corn off 3 cents, soybeans down 4 cents, and Chicago wheat up 2. Exporters sold 110,000 metric tons of soybeans to Vietnam for 2014/15 delivery.

Day 3 of the Pro Farmer crop tour is now underway with the eastern leg moving from Bloomington IL to Coralville, IA. Western crop scouts will be moving from Nebraska City, NE to Spencer, IA. This should show crop scouts some of the best corn of the entire trip, with our models projecting yields 10-30 bushels per acre better than last year along much of today’s route. In western Iowa we are projecting yield at 188 bushels per acre. Follow #PFTour14 and @GrainTV on twitter for live updates from the trip and to see crop photos as they are released.

With today’s crop tour is taking scouts through prime growing regions, strong yield potential is likely to cause some social media buzz. Expectations are for the market to trade lower as it is pressured from images of high yielding counties.  However, the corn market has been able to find its footing after a steep sell off starting early May. Price action will be critical to monitor over the next few days. If we can’t trade lower as scout’s survey some of the top fields in America, corn may have some more upside before resuming the bearish trend.

 

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August 19 – Morning Comments

Grains are trading lower this morning in Chicago with corn down 3 cents, soybeans of 6 cents, and Chicago wheat down 3 cents.

The Pro Farmer crop tour is entering day 2 this morning with the western leg moving from Grand Island to Nebraska City, Nebraska. The eastern leg will go from Fishers, Indiana to Bloomington, Illinois. The map below shows Crop Reporting District yield forecasts for corn with the Pro Farmer Crop Tour route highlighted in blue. Tour stops are shown as blue dots. As you can see from the map, day 1 and day 2 should produce the “worst” yield forecasts, relative to 2013, of the entire trip. Day 3 and Day 4 of the tour will be in Iowa and Illinois where we are projecting yields up sharply from 2013. Expect the corn market to be pressured by reports of exceptional crops on Wednesday and Thursday of this week.

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Crop Progress was released after the market close Monday, showing soybeans rated 71% good-to-excellent. This was up 1% week over week. 83% of the soybean crop is now setting pods – well above the 5 year average of 79%. Corn conditions slipped a percent, now rated 72% good to excellent. 22% of corn is now in dent stage.

This week we should receive wetter than normal precipitation across much of the northern grain belt, with South Dakota, North Dakota, Minnesota, Iowa, Indiana and Ohio all getting a drink this week. The cooler trend across the upper Midwest and the hotter trend in the southern Midwest should collide to provide a number of precipitation opportunities to finish off much of the corn and soybean crop.

This morning an 8,000 gallon diesel occurred along the Ohio River. The incident has shut down the river as officials have responded to the situation. The Ohio River is closed to vessel traffic near Cincinnati, OH to Dayton, Kentucky.

August 18 – Morning Comments

Corn is trading 3 cents higher this morning, soybeans are up 5 on September and unchanged on November, Chicago wheat is down 6 cents. S&P 500 futures are trading 11 points higher while crude oil is off 80 cents to 96.54 at 8:00 AM central time.

U.S. grains received spotty precipitation over the weekend, with parts of Iowa, Missouri and Illinois receiving 1-3 inches. The majority of the western grain belt received 0.20 – 0.60 inches of precipitation, which has helped to weaken November soybean futures this morning. China received 0.50 – 1.50 inches of much needed rain over night as most of the country continues to battle a severe drought. Weather over the weekend was generally supportive for growing conditions, and the USDA will receive their updated crop condition report today at 3:00 PM central time.

Corn has made a strong technical move over the last three trade sessions, moving above the 20 day moving average on the December contract. This has been the first close above the 20 day MA since May 9th and will be viewed as a strong technical indicator for fund and spec traders. This market is ripe for a short covering rally, and we still feel any bounce is a good opportunity to make catch up sales.

Today the Pro Farmer crop tour kicks off with 130 scouts surveying fields throughout Minnesota, South Dakota, Nebraska, Iowa, Illinois, Indiana and Ohio. Half the scouts will head to survey fields toward Columbus, Ohio and the other half of scouts will survey fields west to Sioux Falls, South Dakota.

This morning Jordan’s state grain buyer issued a tender to purchase 100,000 metric tons of hard milling wheat. Wheat prices jumped on Friday after a Russian convoy was allegedly attacked in Eastern Ukraine. Details seem very unclear around this event, but the talk of such things marks an escalation of the situation.

August 15 – Morning Comments

The grain market is moving higher again in the overnight with December corn trading up 4 ½ cents, November soybeans trading up 8 1/2, and December wheat trading 4 cents higher. The dollar index moved lower in the overnight, providing some short covering support for the grains. A reportable sale of 110,000 metric tons of soybeans was reported by FAS to be delivered to China during the 14/15 marketing year.

NOPA crush numbers will be released today at 11:00 AM central time, with traders expecting July’s crush to be just 115 million bushels. This would be well below the 5 year average for July – but not overly surprising considering the very tight old crop soybean cash market. This is largely an “old crop” report and bull spreading has been a theme this week, with the September/November soybean spread increasing 12 cents since Monday. September is now trading at a 42 cent premium over November this morning.

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Overnight precipitation was limited across the grain belt, with some rain received in southwest MN and northwest IA. Precipitation over the next 10 days looks to be near average across much of the grain belt. Temperatures will remain cool across the grain belt with highs in the 70’s and 80’s for the next 10 days. China is expected to receive .25 to .75 inches of rain over 85% of their crop over the next 5 days, helping to mitigate drought conditions.

The Buenos Aires Grain Exchange has revised its 14/15 growing season wheat acreage estimates to 4.1 million hectares from 4.2 million hectares due to excessive moisture in some areas. Despite the reduction in planted acreage Argentina is still well above the 3.6 million hectares which it planted last year. Planting in Argentina is now 98 percent complete.

August 14 – Morning Comments

Grains are unchanged in the overnight session, with corn down a quarter cent, soybeans up a penny, and wheat up half a penny.

Export sales were slightly weaker than analyst expectations for wheat this morning with only 338,700 metric tons sold compared to the 450,000-650,000 MT expected. Wheat sales were down 43 percent from the previous week. Corn sales were also light on the old crop with only 117,100 metric tons sold but performed well for new crop, booking 787,800 metric tons for delivery in 14/15. Soybean sales continue to be positive, with 61,400 metric tons in the old crop and 1,050,000 metric tons in the new crop. Old crop soybean sales continue to show strength, posting positive sales without cancelations. Soymeal however did post net reductions of 31,700 metric tons of old crop, which was a marketing year low.

November soybean futures traded lower in the overnight session before rebounding into the morning trade break. Yesterday marked an important technical move for the contract as prices closed below $10.55 for the first time. This was a price level that acted as support on both July 22nd and August 4th, and this bearish signal opens the door to another move lower. Considering the 15 million bushel surprise on Tuesday, it is our opinion that undersold producers should put on some downside protection on any bounce we can find.

Looking at the weather forecast, the western corn belt remains the area of concern. Friday into Saturday there is a good chance to see between 0.5 and 2.0 inches of rain across South Dakota, Nebraska, and Iowa. The 6-10 day forecast projects above average precipitation for the grain belt and slightly above average temperatures for the central and eastern grain belt.

August 13 – Morning Comments

Grains are drifting higher following yesterday’s USDA report. Corn is up a penny, November soybeans is up 3 cents and Chicago wheat is up 4. Bull spreading continues to be a theme in the soybean market, with September soybean trading up 6 cents.

Two sales of U.S. corn were reported this morning, with Mexico purchasing 107,600 and unknown destinations purchasing 130,000 tonnes. Both sales were for the 2014/15 marketing year and we could be seeing some end users trying to price grain after the USDA came up short (relative to expectations) on their yield number yesterday.

Drought in the central Chinese province of Henan is one of the worst in forty years with the region only getting half its typical rain supply. Despite the losses in yield, it is unlikely that this drought will result a substantial need to increase corn imports into China because the yield declines are largely offset by the increases in planted acreage. China is also sitting on a massive supply of corn after a number of good producing years. Yesterday, the USDA left China’s corn production number unchanged at 222 MT.

NOPA crush numbers will be out Friday, detailing soybeans going to crush during the month of July. Spot crush margins remained favorable for much of the month, averaging 60 cents per bushel on the board. NOPA numbers will be out at 11:00 AM central time.

August 12 – Morning Comments

Grains are sliding lower into this morning’s USDA report. Corn is down 2, soybeans off 4 and Chicago wheat is down 6 cents. Today’s USDA report will be released at 11:00 AM central time.

This morning’s USDA report will be the first survey based yield estimate of the year. Yield figures will be the focus of the report following a July that saw ample moisture in the eastern grain belt but a return of drought conditions in Nebraska and the Dakotas. Below are trade expectations for the report and our take on the numbers. Please call our office if you have questions about speculative or hedge positions coming into the report. Our number is 877-472-4607 and we are available between 8AM and 5PM central time.

2014/15 Corn July Reported August Expected
Production (MB) 13,860 14,253
Yield (BPA) 165.3 170.098
Ending Stocks (MB) 1,801 2,005

 

2014/15 Soybeans July Reported August Expected
Production (MB) 3,800 3,823
Yield (MB) 45.2 45.583
Ending Stocks (MB) 415 414

Crop conditions were released yesterday at 3 PM CST and showed that the soybean good-to-excellent rating had slipped by one percent to 70%.  The expectation for both corn and soybeans was to leave conditions unchanged.   Corn’s good-to-excellent rating met those expectations by maintaining 73% of the crop rated good-to-excellent. Spring wheat conditions were also left unchanged at 70% good-to-excellent. Spring wheat harvest has officially kicked off with 6% of the crop harvested about on pace with the five year average.

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China sold 23% of soybeans offered a state auction overnight. In total, 82,489 tonnes were sold compared to 69,243 in last week’s sale. This was a good signal for mainland Chinese demand, although it is important to note that most of the sales went to food companies who use non-GMO varieties exlusivle. Because of this, Chinese imports should not show a major impact from recent state auctions.

August 11 – Morning Comments

ALERT: USDA report out tomorrow at 11:00 AM central time (expectations below)

Grains are trading sideways to lower this morning in Chicago. Corn is down a penny, November soybeans down a penny, and Chicago wheat off 4 cents. Bull spreading is once again a theme in the soybean market, with September trading up 5 cents.

The wheat market is trading a bit lower this morning after a strong short covering rally which started at the end of July after tensions mounted at the boarder of Ukraine and Russia. The building of Russian troops at the boarder had some analysts worried that a Russian intervention was looming. However, as time passes without any further escalation we start to see wheat turn back over and move toward its lows.

The U.S Army Corps of Engineers completed temporary 200-foot wide channels in the Mississippi river yesterday allowing them to reopen the channel to commercial traffic. Emergency dredging operations were being conducted between Wabasha, Minnesota and Alma, Wisconsin after flood damage had restricted commercial passage.

Weather outlook this week continues to show a drying pattern over the northwest grain belt, one area in particular that could use the precipitation. The 6-10 day forecast is showing a fair possibility of precipitation in the western grain belt and this could drive trade action later this week. Temperatures are expected to increase at mid-week, but only to the mid 80’s to low 90’s.

A reminder of USDA report expectations:

This report will be released at 11:00 AM Central Time and be the first survey based yield estimate of the year. Yield figures will be the focus of the report following a July that saw ample moisture in the eastern grain belt but a return of drought conditions in Nebraska and the Dakotas. Below are trade expectations for the report and our take on the numbers. Please call our office if you have questions about speculative or hedge positions coming into the report. Our number is 877-472-4607 and we are available between 8AM and 5PM central time.

2014/15 Corn July Reported August Expected
Production (MB) 13,860 14,253
Yield (BPA) 165.3 170.098
Ending Stocks (MB) 1,801 2,005

 

2014/15 Soybeans July Reported August Expected
Production (MB) 3,800 3,823
Yield (MB) 45.2 45.583
Ending Stocks (MB) 415 414

August 8th – Morning Comments

Grains are sliding lower over night, with corn down 2, soybeans unchanged, and wheat down 4 in a very quiet overnight session.

China imported 7.47 million tonnes of soybeans in July, outstripping an official government forecast from June. Imports are expected to fall to 3.84 million tonnes in August, as we reach the end of the old crop marketing year.

Transportation costs for the rail market have been rising lately with bids in the secondary market for guaranteed grain car placement in October ranging between $2500-3,300 above tariff per car. This is very non-typical for this time of year where railcars infrequently trade over $700. Although this is not a new development, this will be a big influencing factor as we move throughout the marketing year. States like North Dakota, South Dakota and Minnesota have all experienced rail delays over the last year on the BNSF and UP lines, and continue to experience a large list of railcar backlogs. A recent article in Agweek highlighted a merchandiser in South Dakota, who has received 25%-50% of his normal rail supply at this time of the year. He is unable to move the grain in his facility fast enough and is currently closing his facility doors to any more grain from producers until his inventory can be loaded out. Without increased velocity in the rail system, we are likely to see another difficult year for basis in the northern plains.

As a reminder, the USDA will be releasing updated production and usage numbers next Tuesday. Below are the key points coming into the report and trade estimates. Call the office to discuss hedge or speculative positions coming into the report.

2014/15 Production and Ending Stock Estimates:

Corn July Reported August Expected
Production (MB) 13,860 14,253
Yield (BPA) 165.3 170.098
Ending Stocks (MB) 1,801 2,005

 

Soybeans July Reported August Expected
Production (MB) 3,800 3,823
Yield (MB) 45.2 45.583
Ending Stocks (MB) 415 414