Weekly Cash Comments

Cash Commentary-

Grain basis levels were modestly higher this week with both corn and soybeans posting an anemic 1-cent a bushel gain on average across the US this week.

In corn, it was a quiet week for export basis with the Gulf basis unchanged. River terminals found only modest strength with barge rates slipping a bit from the previous week. For ethanol, production continues to be robust which is keeping plant bids for corn relatively strong. Although basis levels were up on average only about a penny for the week, some plants in IA and MN were posting 5-cent advances for basis.

For soybeans, Gulf bids were modestly weaker with a one-cent decline, but river terminals found added strength, posting a nearly 3-cent gain on the week. Export sales for soybeans continue to be positive and while not as big as early season sales, are significant enough to keep buyers aggressively trying to get beans out of farmer hands. For crushers, it was a pretty quiet week overall, but there was some modest strength in the Eastern Cornbelt with some plants up 5 to 7 cents on the week.

Futures Commentary-

The grains were mostly quiet for the week ending Thursday, April 23rd with corn falling 5 1/2 cents, soybeans rising 12 1/4 cents and wheat jumping 3 1/4 cents. Crop conditions on Monday showed that winter wheat ratings were unchanged. Spring wheat is now 36 percent planted compared to only 17 percent a week ago and a five year average of 19 percent. Corn planting seemed to disappoint analysts by showing only 9 percent had been planted, up from 2 percent last week and behind the five year average of 13 percent.

The avian flu has also been a concern for corn and wheat traders this week after Wisconsin governor declaring a state of emergency over the recent outbreaks. The governor authorized the National Guard to help contain the flu and clean infected sites. The largest of the recent bird flu instance occurred this week at a farm near Harris, Iowa. The bird flu was detected in a flock of 3.8 million hens at an egg laying facility. Following the release of this news, Mexico halted all imports of U.S live birds and eggs from the state of Iowa. Traders are concerned that these incidents will impact the export market and effect grain feed use. Since the beginning of the year the bird flu has been detected in Arkansas, Idaho, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin.

Export sales were very positive this week with corn reporting 867,000 metric tons of sales, an increase of 48 percent from the previous week and well above the 400,000-600,000 metric tons expected by analysts. Corn has booked cumulative sales of 39.5 million metric tons which is behind last year’s pace, but still well ahead of the 37.9 million metric tons needed at this time to meet current USDA expectations. Soybeans booked 102,100 metric tons of export sales which was bullish for the grain. Continued export sales for soybeans show that despite the record harvest in Brazil, demand for U.S. soybeans remains strong. Cumulative soybean sales now total to 48.6 million metric tons, well over last year’s pace and above the pace needed to meet USDA expectations. Wheat sales showed some strength this week booking 397,500 metric tons of sales, above the 0-100,000 metric tons expected by the market and well over the 47,000 reported last week.

On Thursday, the trucker strike in Brazil ignited again after negotiations failed to address the trucker’s main concerns. By Thursday, local authorities counted 17 strike locations. Although it is improbable that the most recent trucker strike will escalate to the level it reached over the last couple months, it is still an issue that deserves close attention in the coming week. The flare up of the trucker strike has some traders worried that a significant disruption in Brazil logistics could result in export sales being pushed onto U.S. books.

The Ethanol production reported a week over week increase of 6,000 barrels per day bringing the total to 930,000 barrels per day. This week ethanol stocks increased 697,000 BPD to 21.34 million BPD.

The International Grains Council raised its global corn stocks forecast by 10 MMT to 951 MMT on Thursday. The council also cut wheat production for the 15/16 crop by 4 million metric ton to 705 million metric tons. Also on Thursday the Argentinian Agricultural Ministry’s announced they expect a record harvest of 59 million metric tons of soybeans harvested this season, up from their previous forecast of 58 million metric tons. The USDA currently pegs Argentina production at 57 MMT, up from 56 MMT in March.

Morning Comments – April 24

In the overnight session the grains traded lower with corn down 2 cents, wheat down 1 3/4 cents and soybeans down 3 3/4 cents. The U.S dollar index is down 1/4 of a percent and crude oil is off 11 cents this morning. This morning a reportable export sale was announced for 121,400 metric tons of old crop corn to unknown destinations.

Yesterday, the Argentinian Agricultural Ministry is anticipating a record 59 million metric ton soybean harvest this growing year, up from their previous forecast of 58 million metric tons.  The increase in production was due to higher than expected yields in certain growing regions.

By Thursday night truckers in Brazil took to the roads to strike again, with local authorities counting 17 strike locations. Truckers began striking again after not adequately addressing their issues in the latest negotiations. Although it is improbable that the latest Brazilian trucker strike will escalate to the level it reached over the last couple months, it is still an issue that deserves close attention over the coming week.

The weather outlook next week is positive for U.S. planting and fieldwork with limited showers expected in the forecast. Planting pace was reported at 9 percent for corn in the last planting progress report, while spring wheat made the largest gains, jumping to 36 percent planted compared to a four year average of 19 percent during the same time period.

Morning Comments – April 23

In the overnight session corn, soybeans and wheat are trading higher with corn up 1 cent, soybeans up 4 3/4 cents and wheat up 3 1/2 cents. The dollar is trading down nearly 1/4 of a percent and crude oil is up 56 cents a barrel.

Export sales were very positive today for the grains with corn, soybeans and wheat either beating analyst expectations or reporting weekly sales on the high side of expectations. Corn reported 867,000 metric tons of sales, an increase of 48 percent from the previous week and well above the 400,000-600,000 metric tons expected by analysts. Corn is still well ahead of the pace needed to meet USDA expectations. Soybeans booked 102,100 metric tons of export sales which was a decline of 67 percent from last week. With the market expecting cancellations however, positive soybean sales are bullish news. Continued export sales show that despite the record harvest in Brazil, demand for U.S. soybeans remains strong. Wheat sales showed some strength this week booking 397,500 metric tons of sales, above the 0-100,000 metric tons expected by the market and well over the 47,000 reported last week.

The Ethanol production reported showed an increase in production last week by 6,000 barrels per day bringing the total to 930,000 barrels per day. This was the first increase reported in three weeks, but despite the trend lower in weekly production since the beginning of the year we are still 5.3 percent ahead of last year’s production levels. Ethanol stocks increased week over week by 697,000 barrels per day to 21.34 million barrels per day.

The International Grains Council raised its forecast for global corn supply by 10 million metric tons to 951 million metric tons this morning. The council also cut wheat production for the 15/16 crop by 4 million metric ton to 705 million metric tons, citing a decline in crop predictions across Argentina, China and India. The international grains council’s global wheat forecast is a substantial decline from last year’s 721 million metric tons.

Morning Comments – April 22

In the overnight session the grains were mixed with corn down 1 3/4 cents, soybeans down 3 3/4 cents and wheat up 1 1/4 cents going into this morning’s pause in trading. The U.S dollar is trading mostly unchanged and crude oil is off .25 percent.

Concerns about the reaction to the bird flu have the corn market nervous that feed use for hens could start to slow. Although the number of birds killed by the flu may not directly affect the feed use in a big way, the reaction by importers could hurt the demand for U.S poultry. Mexico in response to the growing cases of bird flu has stopped all imports of live birds and eggs from the state of Iowa.

Precipitation throughout the Midwest is expected over the weekend and again in the middle of next week. Heavier precipitation in the western grain belt is forecast later in the 11-15 day outlook. The U.S is now 9 percent planted for corn, just behind the four year average of 13 percent at this point of the season. There are no significant planting delays expected in the forecast.  The plains should continue to receive precipitation throughout next week which helps limit the stress on the winter wheat crop.

Morning Comments – April 21

The grains are all trading lower in the overnight with corn down 3 3/4 cents, soybeans down 1 1/4 cents and wheat down 3/4 cents going into the pause. The U.S dollar is trading a fraction of a percent higher and crude oil is mostly flat after consolidating for the last couple days.

Crop conditions were released yesterday which showed that winter wheat rated good-to-excellent remained unchanged at 42 percent compared to last week. All other wheat rating categories stayed the same as well. This week’s crop progress report also highlighted the planting progress for spring crops. The most remarkable number was the amount of spring wheat planted. Spring wheat is now 36 percent planted compared to only 17 percent a week ago and a five year average of 19 percent. Corn planting seemed to disappoint analysts by showing only 9 percent had been planted, up from 2 percent last week and behind the five year average of 13 percent.

The avian flu is in the news lately with the Wisconsin governor declaring a state of emergency over the recent outbreaks in the state. The governor authorized the National Guard to help contain the flu and clean infected sites. Another bird flu instance was recently reported in a 3.8 million chicken flock inside Iowa. The birds were being raised by Sunrise Farms near the city of Harris. Since the beginning of the year the bird flu has been detected in Arkansas, Idaho, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin.

Morning Comments – April 20

In the overnight session corn is down 1 3/4 cents, soybeans are up 4 1/2 cents and wheat in Chicago is up 1 1/2 cents. The U.S dollar is trading nearly .5 percent higher this morning with crude oil down .75 percent. Over the weekend china’s central bank cut the reserve requirement by 100 basis points to 18.5 percent in an attempt to encourage bank lending to help revive economic growth. This is the second industry-wide cut in two months and frees upwards of a trillion yuan of liquidity.

Soybeans traded higher in the overnight session in response to lowered reserve requirement in China. With China importing roughly 60 percent of soybeans traded worldwide, news of increased liquidity and access to capital will impact the price of Soybeans in Chicago.

The plains saw beneficial rains over the weekend which should continue to weigh on wheat prices. More showers are possible on Tuesday and Wednesday and further precipitation is expected in the 6-10 day forecast. The crop conditions will be released today after the close. Analysts are expecting an overall increase in the good-to-excellent rating after widespread rains last weekend helped to lower the risk of crop damage to the winter wheat crop. Last week good to excellent ratings were at 42 percent, down from 44 percent the week earlier. Over the weekend Egypt’s GASC purchased 300,000 metric tons of French, Romanian and Russian wheat.

Weekly Cash Comments

Cash Commentary-

Grain basis levels continued to stagnate this week with both corn and beans each posting less than a 1-cent improvement on the week.

In corn, the biggest movement occurred at the Gulf where export bids were up 3 cents a bushel on nearby basis, but river terminals as a group posted only a 2-cent improvement. Strength was more prominent along the Ohio River areas were many terminals were up a nickel on basis. For the ethanol sector, production levels continue to slip along normal seasonal lines but plants as a group managed a modest 1-cent advance. In eastern Nebraska the two big plants continued to jockey for corn, raising nearby basis by 7 cents a bushel and currently stand at +10K, which exceeded the recent high of +8K in mid-March.

For soybeans, crushing plants were up a modest 1 cent a bushel but several plants in the Western Cornbelt boosted basis by 5 to 10 cents a bushel.  In Minnesota, key crushing plants have been steadily ramping up basis with gains of 25 cents a bushel since the first of March. At river terminals, basis levels were up modestly with a 1-cent gain on average, but like corn, bean basis along the Ohio River should greater strengthen the rest of the country.

Futures Commentary-

This week wheat declined the most falling 24 1/4 cents for the week ending Thursday, April 16th. Corn fell 1 3/4 cents while soybeans actually gained 12 1/2 cents this week. Wheat prices declined as a result of crop saving precipitation throughout the plains last weekend. Between .5-1.5 inches of rain fell in the Texas panhandle and western third of Kansas and between .25-.75 inches of rain was seen across most of Iowa, southern Minnesota and northern part of Missouri. Precipitation should expand into the central plains over this weekend bringing an expected .5-2 inches of rain to 80 percent of the wheat belt. The improvement in the weather, coupled with yesterday’s disappointing export sales provides little fundamental support for the grain going into the weekend.

On Monday, the Crop Progress report showed winter wheat conditions slipped to 42 percent rated good to excellent, down 2 percentage points from last week but still well over last year’s 34 percent good to excellent rating. However, conditions are expected to improve next week after a week of meaningful precipitation throughout the drought stricken plains.

Export sales were slow for wheat this week booking 47,900 metric tons of old crop sales, down 85 percent from last week’s sales. This week’s wheat sales were a marketing year low, missing analyst expectations which ranged between 100,000-300,000 metric tons. Old crop corn sales were reported at 588,200 metric tons which was down from 639,000 metric tons reported last week. Corn sales were on the high side of the analyst expectations which ranged from 400,000-600,000 metric tons. China purchased 62,000 metric tons of old crop corn which was unusual activity for the week. Cumulative corn export sales total to 38.6 million metric tons, which is behind last year’s pace but ahead of the seasonally adjusted pace expected to meet USDA expectations. Soybeans beat analyst expectations by booking 312,000 metric tons this week. This week’s soybean sales were a large improvement from last week which saw 176,000 metric tons of cancellations. Notable sales were reported to Germany, Netherlands, unknown destinations and South Korea. Soybeans now totals to 48.5 million metric tons of cumulative export sales compared to an expected pace of 45.1 million metric tons needed to meet the USDA expectations.

NOPA soybean crush came in well over analyst expectations with 162.822 million bushels of soybeans crushed in the month of March. Analyst expectations ranged from 150.5 to 159.5 million bushels with the average analyst guess expecting 155.261 MBU. The latest NOPA report marks the largest March soybean crush on record. Soyoil stocks were reported at 1.420 billion pounds well over analysts’ expectations of 1.383 billion pounds, but below last year’s levels of 2.023 billion pounds.

Ethanol production declined for the second week in a row bringing weekly ethanol production to 924,000 barrels per day. This week’s 12,000 barrel per day decline in ethanol production marks the first time since October that weekly 2014-15 production has fallen below 2013-14 levels.  Despite falling below last year’s weekly production level, cumulative ethanol production this year has increased 5.4 percent compared to a USDA expected increase of 1.3 percent. This year’s ethanol stocks increased 162,000 barrels to 20.65 million barrels this week.

 

Morning Comments – April 17

In the overnight session corn is down 3/4 of a penny, soybeans are up a cent and wheat is up 3 1/4 cents. The dollar is trading slightly higher this morning, now hovering at 97.640 while crude oil is trading down nearly a percent after news that OPEC’s production in March added to the burgeoning global supply.

Wheat prices have suffered this week from beneficial rains to the plains region. Precipitation should expand into the central plains over the weekend bringing an expected .5-2 inches of rain to 80 percent of the wheat belt. The improvement in the weather, coupled with yesterday’s disappointing export sales provides little fundamental support for the grain going into the weekend.

The Russian Agricultural Ministry recently proposed to end the export tax on Russian wheat after July 1st. The decision will be voted on in either May or June after this year’s crop yield becomes clearer. Also on the international front, the Ethiopian government has issued an international tender to purchase 400,000 metric tons of milling wheat to be sourced from optional origins. Traders are waiting on the results of that tender.

 

Morning Comments – April 16

In the overnight session corn and soybeans traded a relatively wide range but went into the morning pause mostly unchanged. Wheat increased 3 1/4 cents in the overnight and the U.S. dollar index continued its slide for the third straight day. Crude oil is also trading lower this morning off nearly 1/4 of a percent.

Export sales were slow for wheat this week booking 47,900 metric tons of old crop sales, down 85 percent from last week’s sales. This week’s wheat sales were a marketing year low, missing analyst expectations which ranged between 100,000-300,000 metric tons. Old crop corn sales were reported at 588,200 metric tons which was down from 639,000 metric tons reported last week. Corn sales were on the high side of the analyst expectations which ranged from 400,000-600,000 metric tons. Soybeans beat analyst expectations by booking 312,000 metric tons this week. This week’s soybean sales were a large improvement from last week which saw 176,000 metric tons of cancellations. Notable sales were reported to Germany, Netherlands, unknown destinations and South Korea.

NOPA soybean crush came in well over analyst expectations with 162.822 million bushels of soybeans crushed in the month of March. Analyst expectations ranged from 150.5 to 159.5 million bushels with the average analyst guess expecting 155.261 MBU. The latest NOPA report marks the largest March soybean crush on record. Soyoil stocks were reported at 1.420 billion pounds well over analysts’ expectations of 1.383 billion pounds, but below last year’s levels of 2.023 billion pounds.

Ethanol production declined for the second week in a row bringing weekly ethanol production to 924,000 barrels per day. This week’s 12,000 barrel per day decline in ethanol production marks the first time since October that weekly 2014-15 production has fallen below 2013-14 levels.  Despite falling below last year’s weekly production level, cumulative ethanol production this year has increased 5.4 percent compared to a USDA expected increase of 1.3 percent. This year’s ethanol stocks increased 162,000 barrels to 20.65 million barrels this week.

Morning Comments – April 15

In the overnight session the grains were mixed again with corn down 2 cents, soybeans up 1 3/4 cents and wheat in Chicago up 3 cents. The NOPA crush numbers will be released at 11 AM CST this morning which is expected to show a record amount of soybeans crushed for the month of March. Analysts are expecting March soybean crush to be reported at 155.261 million bushels with a range of estimates from 150.5 to 159.5 million bushels. In the same poll conducted by Reuters the average guess for soyoil stocks was 1.383 billion pounds. Estimates for soyoil stocks ranged from 1.275 to 1.463 billion pounds of oil on hand.

A few wheat tenders were reported in the overnight session which helped to support wheat prices after two days of selling. In a tender that closed Wednesday, the Taiwan Flour Millers Association purchased 85,710 metric tons of hard milling wheat sourced from the United States. Jordan’s state grain buyer issued a tender to purchase 100,000 metric tons of optional origin hard milling wheat.

An announcement out of Russia also helped support wheat prices this morning with Russian Agriculture Minister announcing that there is no reason to cancel the wheat export tax ahead of schedule. The tax is set to expire on June 30th and the ministry has made no decision yet on whether or not to extend the tax.

This morning the U.S dollar is continuing higher, up nearly 1/2 a percent which should put some pressure on commodities. Oil is trading higher as well, but currently trades near the 100 day moving average which may act as a resistance level to any attempt at a rally.