Weekly Commentary – October 20

Cash Commentary-

Grain basis took a break from last week’s sell-off to mostly stabilize as slow harvesting keeps pipeline supplies relatively limited, especially for corn. On the week, there was no change in corn and soybean basis on average across the US.

Basis for corn continues to hold up with current basis levels running on par with the same time last year, but soybeans are about 10 cents a bushel weaker than this time last year.

This week saw some strength from corn buyers as end-users in the Western Cornbelt continue to see tight pipeline supplies. Double-digit gains in basis were showing up by feedlots and ethanol plants in NE and SD. River terminals saw some modest weakness along the lower MS River and the OH River region as harvest there picked up pace.

For soybeans, buyers were mostly steady to slightly weaker as harvest hits the mid-point for the year. Some soy crush facilities showed 10 to 15 cent losses this week across IA/IL/IN.

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Futures Commentary-

Another week of listless trade in the corn market as futures hold tight to the $3.50 mark. For the week, corn was unchanged while soybeans drifted 5 lower. Wheat managed to buck the trend with a modest 2-cent advance.

Harvest progress continues to be stymied especially for corn as wet weather and poor market conditions keep farmers from making significant progress. The latest Crop Progress report showed that only 28 percent of corn has been harvested as of October 15th compared to 47 percent normally. Soybean harvest is moving along a bit faster than corn with 49 percent harvested but is still behind the normal pace of 60 percent. Rains expected in the eastern Midwest will likely delay harvest over the weekend and into Monday. Further precipitation in the eastern Midwest is expected to delay harvest even more late next week.

On the demand side, there has been solid export business to help support prices. Weekly sales were stronger than expected for corn and wheat. Wheat sales of 615,000 MT were up sharply this week and were 75 percent over the four-week average. Corn export sales beat expectations but declined 21 percent from last week. Soybeans sales missed expectations, down 27 percent from last week. Flash sales also featured prominently this week with 584,000 MT of soy deals and 250,000 MT of corn in the last two days of the week.

In international news, Argentinean farmers are expected to plant 8.92 million hectares (22 million acres) with corn, up from 8.48 million hectares (21 million acres) in the 2016/17 crop year, the agricultural ministry said in its monthly crop report. For Brazil, weather continues to be an issue for planting. Welcome rain fell on many areas from southern Mato Grosso into Mato Grosso do Sul, northern Parana, and portions of western Sao Paulo Thursday. Meanwhile, hot and dry weather continued to stress crops and delay planting from central and northern Mato Grosso into much of Goias and northern Minas Gerais. Crops from Mato Grosso and northern Mato Grosso do Sul to Sao Paulo that missed out on rain Thursday will continue to suffer from hot and mostly dry conditions for at least the next two days while many farmers wait for rain before planting and replanting before shower activity increases Sunday.

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Morning Comments – October 20

In the overnight session soybeans pushed a bit higher with November up 4 cents. December corn traded up ¾ of a penny and Chicago Wheat was up 2 ¼ cents. Rains expected in the eastern Midwest will likely delay harvest over the weekend and into Monday. Further precipitation in the eastern Midwest is expected to delay harvest even more late next week.

EXPORTERS SELL 198,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 120,000 METRIC TONS OF CORN FOR DELIVERY TO SPAIN DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 125,000 METRIC TONS OF CORN FOR DELIVERY TO UNKNOWN DESTINATIONS DURING THE 2017/2018 MARKETING YEAR- USDA

Today the Ukrainian Agricultural Ministry announced that Ukraine has planted 90 percent of the expected winter wheat area. The report showed 5.5 million hectares of winter wheat compared to the 6.15 million hectares that are expected. Harvest pace in France has progressed this week with the latest report from FranceAgriMer reporting that 56 percent of the crop has been harvested, up from 28 percent last week. Soft wheat planting progressed to 47 percent complete up from 20 percent last week.

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Informa released their latest 2018 planting estimates yesterday. Their forecast is for corn plantings next year to be at 90.460 million acres and soybeans at 90.347 planted acres. This compares to the latest WASDE report that shows planted acreage for the 2017 crop at 90.4 million acres for corn and 90.2 million planted acres for soybeans. Informa also estimates  that all wheat acreage planted for the 2018 harvest will be at 45.875.

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Morning Comments – October 19

In the overnight session the grains traded slightly higher with December corn up 1 cent, November soybeans up 1 cent and December Chicago Wheat up 1 cent. The U.S. forecast shows some chance for precipitation in the eastern Midwest early next week which could slow an already lagging harvest.

EXPORTERS SELL 384,000 METRIC TONNES OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR.-USDA

Yesterday’s rains favored southern Brazil and more precipitation is expected in the 6-15 day forecast which should ease concerns about dryness in that region. In Argentina however, it was wetter than expected and continues to put pressure on planting which has been delayed due to excessive moisture this season.

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Ethanol production over the last week increased sharply to 1.019 million barrels per day from 967 BPD. This was a strong increase from last week and was 2.1 percent above last year during the same time. Ethanol stocks were recorded at 902 million gallons which was down 2 million gallons from last week’s level. However, the drawdown in ethanol stocks which typically starts in September and continues into November hasn’t really happened yet this year. Ethanol stocks have actually increased since the first of September and are now 12.9 percent higher than last year. This is a development that needs to be monitored and brings into question how robust demand is for Ethanol as year-over-year production increases.

Export sales for wheat and corn were strong this morning with both grains beating trade expectations. Wheat sales were up sharply this week and were 75 percent over the four week moving average. The majority of wheat sales were to Mexico, China, Unknown Destinations and Japan. Corn export sales beat expectations but declined 21 percent from last week. Soybeans sales missed expectations, down 27 percent from last week with reductions reported from Unknown Destinations and Costa Rica.

Weekly Export Sales-

Actual

Estimated

Wheat

615

250-450

Corn

1,254

800-1,100

Soybeans

1,275

1,300-1,700

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Morning Comments – October 18

In the overnight session the grains traded slightly lower with December corn down ¼ cent, November soybeans down 1 cent and December Chicago wheat down 2 ¼ cents. Dry weather throughout the Midwest is expected to boost harvest pace according to the latest 6-15 day forecast.

Brazil has received scattered rain in the west and far south yesterday which will continue to aid planting which had been lagging at 12 percent planted due to dry weather. More precipitation is expected in the 11-15 day forecast which should provide widespread benefit for the Brazilian corn and soybean crop. Argentina is expecting showers in the eastern part of the country today but is expected to make progress planting over the next week.

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The U.S. Wheat Associates has announced that they will be closing their office in Egypt after 40 years. The trade group promotes U.S. wheat exports, but the sharp shift away from U.S wheat in favor of Russia and the Black Sea wheat has shrunk Egypt to the 37th buyer of U.S wheat overall. Egypt held the rank of fifth largest market for U.S. wheat and 2nd largest market for soft red winter wheat as recently as the 2012/13 marketing year. The U.S Wheat Associates is looking at refocusing its efforts toward higher value markets in Asia and Latin America.

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Morning Comments – September 17

In the overnight session the grains slid lower with December corn down 1 ¼ cents, November Soybeans down 5 ½ cents and December Chicago wheat down ½ penny. The latest forecast shows rain returning to the Midwest in the 11-15 day forecast which should slow an already lagging harvest progress.

Exporters sell 115,000 MT of Corn for delivery to Mexico during the 2017/2018 marketing year. Exporters sell 146,000 MT of Corn for delivery to unknown destinations during the 2017/2018 marketing year.-USDA

The latest Crop Progress report showed that only 28 percent of corn has been harvested as of October 15th compared to a four year average of 47 percent harvested. Corn condition increased 1 percent to 65 percent rated good-to-excellent. Soybean harvest is moving along a bit faster than corn with 49 percent harvested but is still behind the four year average of 60 percent. Soybean’s rated good-to-excellent held steady at 61 percent this week. The report also showed that 60 percent of wheat has been planted this year which is behind the five year average of 71 percent. There should be more opportunities for fieldwork this week with the forecast showing clear weather through the middle of next week.

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The NOPA Crush Report which was released yesterday showed that 136.419 million bushels of soybeans were crushed in the month of September, down 6.005 million bushels from August and below the average analyst guess of 138.071 million bushels. Despite missing expectations this year’s September soybean crush was 6.184 million bushels over last September’s numbers. The NOPA report showed that oil stocks were at 1.302 billion pounds, which was slightly below the expectations of 1.332 billion pounds.

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Weekly Cash Comments

Cash Commentary-

In the cash market this week there was a bit of buoyancy as river barge markets reverted to more normal pricing and corn harvest ground to a near halt. On the week, soybean basis was up 2 cents while corn basis posted a modest 1-cent advance.

With the slow progress for corn harvest, basis levels held mostly stable on the week with some modest gains in the Upper Plains and Western Cornbelt where wet weather has hampered cutting progress. Along the river system, a drop in barge rates helped fuel a big 10-cent advance on the week. But for ethanol plants as a group they were off 1-cent on the week.

For soybeans, the river markets also catapulted higher by 16 cents a bushel from last week’s disastrous readings. Soy crush plants added 2 cents a bushel as a group but plants located closer to river markets followed higher with double digit gains.

Harvest delays are still expected as this weekend should bring rain into the NW part of the grain belt. Some localized flooding is possible, especially in central and southern Iowa, southern Wisconsin, northern Missouri, and northwestern Illinois. This could continue to provide support to corn basis.

Futures Commentary-

A late week surprise from USDA helped give the soybean market a 23-cent advance on the week while corn was fractionally lower and wheat was off 10.

Early in the week the Crop Progress Report showed corn harvest had gained little ground going from 17% last week to 22% this week, and well below the 37% normal pace for this time of year. The soybean crop was at 36% harvested up from 22% last week but behind the 5-year average pace of 43%.

At the end of the week, USDA’s monthly Supply and Demand Report brought some buying enthusiasm for beans. The USDA lowered soybean yields from 49.9 last month to 49.5 while the trade was expecting a slight uptick to 50.0. However, harvested acreage was increased by 800K acres to keep production unchanged at 4.431 but slightly below trade expectations of 4.447. Carry-out was reduced by 41 MB thanks to lower quarterly stocks reported in September.

For corn, it was mostly a negative to neutral report with US yield coming in high at 171.8 and well above expectations at 170.1. However, a slight drop in harvested acres help mute the overall impact as production was at 14.28 billion vs 14.18 last month. Ending stocks were mostly unchanged month-to-month at 2.34 billion bushels. The one shining nugget was a slight dip in world carry-out forecasts to 201 MMT from 202.5 MMT in September. This was mostly due to a 1.2 MMT cut in Black Sea corn production.

On the export front, there were some decent flash sales this week which helped limit downside moves in the market. The daily sales had 597 TMT corn reported. China and Mexico were also in the US market for beans, with China expected to be a bigger buyer in the coming days after being off a week.

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Morning Comments – October 13

In the overnight session, Dec Corn was up 1.5 cents, Nov Soybeans were up 3.75 cents and Dec Wheat was up a little over 1 cent.

Chicago soybean futures rose on Friday, a day after the US Department of Agriculture (USDA) unexpectedly cut its forecast of the US soy crop. The USDA report put out a bullish yield number for the US crop of 49.5 bushels an acre, down from last month’s forecast of 49.9 bushels. Corn was weakened by the USDA’s expectation of a larger US crop, while wheat was underpinned by improving export prospects for US supplies.

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China, the world’s top soybean buyer, imported 8.1 million tonnes of the oilseed in September, up 12.7 percent on a year ago, after crushers saw margins improve over the summer and anticipated healthy demand for soymeal from hog farms. The September figure brings imports for the 2016/17 crop year, running from October to September, to 93.5 million tonnes, well above the prior year’s 83.2 million, and another record, according to Reuters calculations.

Net Weekly Export Sales-

 

Actual

Estimated

Wheat

175

300-500

Corn

1,593

800-1,100

Soybeans

1,747

900-1,200

Wheat net sales of 175,000 metric tons for delivery in marketing year 2017/18 were down 65 percent from the previous week. Corn net sales of 1,593,200 MT for 2017/18 were reported; Soybean net sales of 1,747,300 MT for 2017/18 were reported.

US consumer prices recorded their biggest increase in eight months in September as gasoline prices soared in the wake of hurricane-related production disruptions at oil refineries in the Gulf Coast area, but underlying inflation remained muted. The increase was the largest since June 2009 and followed a 6.3 percent advance in August. The Labor Department said Harvey was reported to have impacted refinery capacity in the Gulf Coast.

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Morning Comments – October 12

Grains mostly stable in the overnight session with Corn unchanged, Nov Soybeans up 2.5 cents and Dec Wheat down three-quarters of a cent.

Exporters sell 120,000 MT of Corn for delivery to Mexico during the 2017/2018 marketing year-USDA

Whenever the US Department of Agriculture updates supply and demand outlooks, adjustments to the US corn and soybean production typically steal the spotlight from other items on the global balance sheets at this time of year. But, since the market expects marginal changes to these usual favorites, elements outside the US-particularly in wheat-may be the ones moving the world balance sheets this month. -states an analyst from Reuters

The US Department of Agriculture will release its monthly supply and demand estimates along with the US crop production report at 11 am CST. Analysts predict on average that the US Corn and Soybean harvests will each rise by fractions of a percent.

At the world level, the trade expects USDA to slightly trim 2017/2018 global ending stocks for wheat, corn and soybeans, the latter to the greatest degree at 1 percent. There could be some opposing movement in the grains, however, as adverse weather may have hurt Southern Hemispheric wheat crops. But losses could be offset with a potential supply expansion, especially in India, and China’s massive inventory always has the power to swing the wheat and corn balances. Although adjustments to US corn supply are expected to be minor, possible tweaks on the demand side could prove more influential to domestic stocks. -Reuters

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China on Thursday increased the forecast for its deficit in corn supply in the 2017/2018 crop year to 4.31 million tonnes from the 890,000 tonnes predicted last month, stoked by lower-than expected output and higher anticipated demand. Corn output is expected to drop to 210.1 million tonnes versus last month’s forecast of 212.48 million tonnes, the agriculture ministry said, adding that less land had been planted with corn than earlier thought following reduced government support.

In the weather, rains return this weekend, slowing Midwest corn/soy harvest; however, drier pattern next week aids recovery. Plains hard red winter wheat seeding improving with drier pattern next 10 days, but brief rains early in weekend. Rains expected to return in 11-15 day, slowing Midwest corn/soy harvest and Plains hard red winter wheat seeding.

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Morning Comments – October 11

Grains continued to inch lower overnight with corn down 1, beans off fractionally and wheat down 2.

USDA reported 264,000 MT of soybeans sold to China, 132,000 MT to unknown destinations. They also reported a 150,000 MT of corn to Mexico and 104,202 MT of Hard Red Winter Wheat to Mexico.

Yesterday after the market closed USDA released their crop progress report. The soybean crop was at 36% harvested up from 22% last week but behind the 5-year average pace of 43%. Meanwhile, corn gained little ground going from 17% last week to 22% this week, and well below the 37% normal pace for this time of year.

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Tomorrow will bring fresh input from USDA on the supply and demand situation. Traders look for fractionally higher production figures in the US and a slight cut to ending stocks thanks to smaller than expected old-crop stocks from USDA’s September Quarterly Stocks report.

Brazilian farmers will likely produce a smaller amount of corn and soy in the 2017/18 season due to less favorable weather than the prior crop year, food supply and statistics agency Conab said on Tuesday. In its first forecast for the 2017/18 crop, Conab estimated Brazilian grain production at between 224.1 million tonnes and 228.2 million tonnes, compared with 238.5 million tonnes in the prior cycle. The lower end of the range would represent a 6 percent drop in output. “The highly favorable climate conditions that contributed to a record grain output last season are unlikely to be repeated,” Conab said in a statement.

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Morning Comments – October 10

Grains continued to flounder overnight with corn and wheat dipping further into negative territory while beans put on a 4-cent going into the break.

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Today will bring USDA reports on export inspections and crop progress as Monday’s Columbus Day holiday delayed the reports. Weather yesterday was mostly dry with the exception being some rains showers in MO/IL. Harvest progress is expected to show more advancement for soybeans than corn over the last week.

France’s farm ministry raised its forecasts for the country’s 2017 corn and wheat crops. The ministry pegged the corn crop at 13.0 MMT from 12.75 million last month, putting the crop 11.4 percent above last year’s level. Soft wheat output was increased slightly to 37.9 MMT from 37.8 last month. This put the 2017 crop up 37.7 percent compared with weather-hit 2016 output and on course to be the third largest on record, the ministry said.

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