Morning Comments – June 29

In the overnight session, the grains traded higher with corn up 5 1/2 cents, soybeans up 3 3/4 cents and wheat up 9 cents by the pause of trade this morning. The U.S. dollar is up only a fraction of a percent and crude oil is down 71 cents. All traders in long July grain contracts will need to liquidate or roll their positions by the close of trade today with Tuesday the 30th being First Notice. Tuesday the 30th also marks the release of two major USDA reports including the Planted Acreage report and the Quarterly Grain Stocks report.

In a Reuter’s poll of analysts the average analyst guess for the quarterly grain stocks is 718 million bushels for wheat, 4.555 billion bushels of corn and 670 million bushels of soybeans. This would be a draw down in grain stocks from 1.124 billion bushels of wheat, 7.745 billion bushels of corn and 1.334 billion bushels of soybeans reported on March 1st. The Quarterly Grain Stocks report will be released at 11 AM CST tomorrow.

Weather this week is expected to bring cooler than normal conditions to the Midwest and leave the northwest significantly hotter than normal. Rains are expected to pass through the Midwest leaving Illinois, Indiana Michigan and Ohio with more precipitation than normal this week while North Dakota, South Dakota, Nebraska and Kansas expect drier weather.

Morning Comments – June 26

In the overnight session the grains traded sharply higher with corn up 10 1/2 cents, soybeans up 19 1/2 cents and wheat up 26 3/4 cents this morning. Wheat has broken through resistance which hovered around $5.36 3/4 and is building momentum to the upside, soybeans has been above its 100 day moving average since Monday and is now trading above 10 dollars. Next resistance level for July soybeans is around $10.42 3/4 which was a previous high back on February 26th. Corn is trading around 3.86 1/2 this morning which is just above its downtrend resistance of $3.81 and the 100 day moving average of $3.79. Keep a close watch on today’s trade action as we could see prices chop around throughout the trade day.

This morning’s rally is triggered by the strong amount of rain that went through the Midwest on Wednesday and the rain forecast throughout Thursday and Friday. On Wednesday evening a storm blew through Iowa and Missouri dropping as much as 7 inches of rain in some areas. Traders are concerned that the excessive rains will damage yield prospects for this growing season. Thursday will usher in a another storm into the Midwest bringing 1 to 3 inches of rain to South Dakota and then Missouri, Illinois, Indiana and Ohio on into Saturday.

In other parts of the world dry weather is beginning to be a concern. The conditions of French wheat declined this week according to the FranceAgriMer who cited dry weather as the main reason. As of June 22nd the good to excellent ratings fell to 81 percent compared to 85 percent a week earlier and 87 percent on June 8th. Weather in France is expected to remain hot and dry with temperatures forecast to hit record highs next week in many parts of the country.​

Morning Comments – June 25

In the overnight session the grains traded higher with corn up 2 1/2 cents, soybeans up 8 1/4 cents and wheat up 2 1/4 cents. The U.S dollar is mostly unchanged this morning and crude oil has slipped 29 cents lower.

The EIA ethanol production numbers showed that last week’s production was the largest this marketing year. Weekly production increased 14,000 barrels per day to 994,000 BPD. Ethanol stocks dropped 878,000 barrels to 19.840 million barrels helping to paint a more bullish picture. This marketing year ethanol production is up 4.7 percent compared to 2013/14.

This week’s export sales report showed that wheat booked 434,300 metric tons which was on the high side of analyst expectations which ranged from 200,000-450,000. Soybean sales fell 11 percent compared to last week to 118,000 metric tons but was still within the range of analyst expectations. Corn sales declined 21 percent to 496,800 metric tons. This was below the analyst estimates that ranged from 500,000-700,000 metric tons.

New crop sales were strong for corn however, booking 297,500 metric tons which was above the 100,000-200,000 metric tons expected this week. Soybeans booked 202,500 metric tons to be delivered in the 2015/2016 marketing year.

Morning Comments – June 24

In the overnight session the grains traded lower with corn down 3 1/4 cents, wheat down 2 3/4 cents and soybeans down 6 1/2 cents. Crude oil is trading 10 cents lower and the U.S. dollar is down a fraction of a percent. The market will be focusing on the June 30th planted acreage numbers that is expected to have the biggest impact on Soybeans.

Soybeans were only 90 percent planted as of Monday which is 5 percent behind normal pace. Rains forecast across the Midwest this week helped lift soybean prices as traders became nervous about the remaining unplanted acreage. Allendale estimates corn planted acreage at 91.742 million acres which is up from the 89.199 million acres forecast by the USDA in March. Allendale expects soybean acreage to increase to 85.105 million acres which is up from 84.635 million acres estimated by the USDA in the March 31st report. The July soybean contract is currently above the 100 day moving average but is giving back some of its gains this morning. Look at 974 1/4 as a support level for today and tomorrows trade session.

Winter wheat harvest is behind the average pace during this time of the year. On Monday, the crop progress announced that only 19 percent of the crop had been harvested which is behind the 31 percent harvested we typically see. Harvest prospects look to be mostly uninterrupted in the near term with some scattered storms expected on Thursday and Friday. However, the forecast turns wet again for the beginning of July which is likely to continue to disrupt harvest pace. Traders are also concerned about the wheat quality after the plains received significant moisture late in the growing season. Head scab has spread rapidly in the winter wheat fields of central Kansas.

Morning Comments – June 23

In the overnight session, the grains were mixed with corn up 1 cent, soybeans down 1 3/4 cents and wheat up 2 1/2 cents. Crude oil has slipped 57 cents lower this morning with the U.S. dollar index up by over 1 percent. The dollar gained some strength following U.S. housing data and the euro was unable to hold onto recent gains as deal surrounding Greece’s debt remains in debate.

This morning there was some demand activity with Ethiopia buying 240,000 metric tons of wheat from optional origins. Traders expect this wheat to be sourced from the Black Sea region. Japan’s ministry of agriculture is also buying 114,510 metric tons of food quality wheat from the United States or Canada.

Export inspections showed that 1,105,000 metric tons of corn was inspected for export which was above the 800,000-1,000,000 metric tons expected. Soybeans showed 178,000 metric tons inspected for export which was within analyst expectations and wheat inspections missed expectations. Wheat inspections totaled to 290,000 metric tons compared to 300,000-400,000 metric tons anticipated by analysts.

Corn rated good-to-excellent fell 2 percent in this week’s crop progress report which was a bit more than traders were looking for. At this point in the marketing year 71 percent of the corn crop is rated good-to-excellent compared to 74 percent last year. Corn conditions in the eastern grain belt states like Indiana and Ohio dropped the most.

Soybean rated good-to-excellent also fell 2 percent this week which was in line with trade expectations. However, only 90 percent of the crop was planted which is now behind the 4 year average of 95 percent planted during this time of year.

 

Morning Comments – June 22

In the overnight the grains are higher with soybeans leading the charge up 7 1/2 cents, wheat up 4 1/4 cents higher and corn down 1/2 a penny. July soybeans now trades above $9.74 which is the 100 day moving average after closing Friday below that level. Crude oil is up 22 cents this morning and the U.S. dollar is only a fraction of a percent higher. The USDA crop progress is expected out at 3 PM CST today.

On Friday, Informa Economics lowered its estimate of U.S. soybean plantings this year to 86.760 million acres down from 87.185 million acres in its previous forecast. Despite the downgrade, Informa is still above the current USDA estimates of 84.635 million acres which was released in March. The USDA will revise its Planted Acreage estimate on June 30th.

The European Union’s crop monitoring service MARS revised its yield estimates from 5.93 tons per hectare to 5.85 metric tons per hectare as a result of low soil moisture throughout the western and central parts of Europe. Higher than normal temperatures early this month accelerated development of crops in Spain Italy and Southern France, but the lack of soil moisture recently has begun to stress the crop. MARS has left corn yield estimates unchanged.

U.S. weather is expected to bring widespread showers later on this week which should continue to help the crops development. Following the showers on Thursday and Friday the outlook shifts to a drier milder outlook.

Weekly Cash Comments

Cash Commentary-

Grain basis was mostly stable this week with both corn and soybeans unchanged for the week across the U.S.

Weather was the big concern this week as Tropical Storm Bill hit Texas and Oklahoma and made its way into the Ohio Valley by late in the week. Wet conditions are leading to not only planting problems, but shipping delays along the IL & MS River as swollen rivers are shutting down some stretches for barge traffic. In FOB market, export premiums were firmer on Thursday because of high water levels on Illinois and Mississippi rivers. FOB soybean basis offers for July were offered at 105 cents over CBOT July on Thursday, up 10c from Wednesday.

End users were mostly quiet this week with little directional movement for either corn or soybean plants. The sharp rally in soybean futures helped increase some farmer selling of old-crop which caused basis levels at soy plants to be weaker as a result. In ethanol, production levels were off this week by 12,000 barrels per day to 980,000 barrels. Basis levels in the Western Cornbelt tended to be weaker for corn end users this week.

Futures Commentary-

Grains found some support this week thanks to heavy moisture that plagued the Southern Plains wheat harvest and kept farmers from planting the last of the soybean crop.

After trading as low as $8.97 at the start of the week, new-crop November futures shot higher reaching $9.45 later in the week before running out of steam. USDA estimated that 67 percent of the crop was in good to excellent condition, below the 69 percent level in the previous week. Also, the pace of plantings has stalled as wet weather continues to hamper the last of the crop, with 87 percent of the crop planted versus a 90 percent 5-year average for this time of year. Early in the week, the NOPA crush estimate for May was released which came in at 148.4 MB, well above analyst estimates of 147.3 MB. However, substantially higher soy oil stocks kept a lid on soybean prices with inventories of soy oil pegged at 1.58 billion pounds versus estimates of 1.40 billion pounds.

In corn, crop conditions also slipped a bit in USDA’s latest report going to 73 percent this week versus 74 percent last week and 76 percent this time last year. Overly wet conditions in the Southern Midwest is causing modest concerns but with ample stocks and sluggish demand it may prove difficult to see a big rally on overly wet conditions at this time of year.  Weather forecasting firm Planalytics released their latest US yield forecast which they now peg at 166.2 bushels per acre, up from their previous forecast two weeks ago which came in at 164.1.

For wheat, harvest pace continues to drag in the Southern Plains as rain-soaked fields hamper the progress. The latest crop progress report from USDA shows only 11 percent of the winter wheat crop harvested versus 4 percent last week and a 5-year average of 20 percent. Crop conditions for winter wheat were unchanged from last week at 43 percent good-to-excellent, while spring wheat increased one percent to 70 percent.

Export sales this week were mostly on par with expectations. Wheat sales for the new-crop marketing year came in at 315,700 MT versus trade estimates of 200,000 to 400,000 MT.  Old-crop corn totaled 627,000 MT as compared to the trade estimate range of 400,000 to 600,000 and new-crop sales were 200,400 MT versus trade estimates of 50,000 to 200,000 MT. New-crop soybeans were well above expectations with 532,000 MT while analysts expected only 150,000 to 350,000 MT but old-crop sales came in at the low end of expectations at 132,900 MT versus trade estimates of 100,000 to 250,000 MT.

Morning Comments – June 19

Grains were lower overnight with soybeans leading the complex to the downside with a 5-cent drop in the night session.  Corn gave up 3 cents a bushel while wheat was fractionally lower.

Beans continue to find it difficult to trade for an extended time above $9.40 basis the new-crop November contract. After trading as low as $8.97 early in the week, the market bolted higher on flooding concerns and planting delays but over the past two sessions that bullish rally has grown tame.  As Tropical Storm Bill’s impact reaches the Ohio Valley, rainfall totals are not expected to be as large as once feared.  In other news, Argentina’s Ag Ministry bumped their old-crop soybean forecast to 61 MMT from its previous estimate of 60 MMT.

In wheat, harvest progress continues to be slowed in the Southern Plains due to excess moisture.  U.S. HRW wheat harvest summary released on Friday by Plains Grains, a company that tracks wheat quality based in Oklahoma, reports Texas harvest is 49 percent complete and Oklahoma wheat is 41 percent done. In export news, a South Korean flour mill bought 73,000 MT of US wheat overnight.

For corn, weather forecasting firm Planalytics released their latest US yield forecast which they now peg at 166.2 bushels per acre, up from their previous forecast two weeks ago which came in at 164.1. Flooding halted barge traffic on the Illinois River. Traders said the disruptions would likely have a limited impact on grain trading because they will probably be over before the end of the month, when traders can begin delivering crops against futures contracts. The Illinois River is forecast to crest at many locations by early next week, according to the National Weather Service.

Morning Comments – June 18

Grains dipped lower in the night trade after taking a breather from the two-day rally that pushed soybean prices to their highest level in a month. Going into the morning break, soybeans were down 5, corn was down 1 and wheat was fractionally higher.

Wet weather continues to be a concern for the markets as soybean planting still needs to be completed in some areas where excessive moisture is present.  Also, soggy fields are taking a bit of a toll on the crop health with the condition of the US corn crop slipping 1 percent last week and soybean condition dipped 2 percent. The remnants of Tropical Storm Bill are expected to push through southern Missouri, Illinois and Indiana over the next few days bringing as much as 3 to 5 inches of precipitation to already soaked fields. However, once this system blows through temperatures are expected to rise and precipitation should be limited.

On the river systems, high water is causing issues with barge traffic and the result has been a sharp increase in barge costs.  In ethanol news, output for the week was off 12,000 barrels per day to 980,000 barrels per day but the big change was a large jump in ethanol stocks, which were up 472,000 barrels to 20.72 million barrels, the highest point since May 1.

Export sales this morning were mostly on par with expectations. Wheat sales for the new-crop marketing year came in at 315,700 MT versus trade estimates of 200,000 to 400,000 MT.  Old-crop corn totaled 627,000 MT as compared to the trade estimate range of 400,000 to 600,000 and new-crop sales were 200,400 MT versus trade estimates of 50,000 to 200,000 MT. New-crop soybeans were well above expectations with 532,000 MT while analysts expected only 150,000 to 350,000 MT but old-crop sales came in at the low end of expectations at 132,900 MT versus trade estimates of 100,000 to 250,000 MT.

Morning Comments – June 17

Grain futures continued their recovery in the night session as heavy rains and declining crop conditions have the markets moving higher. Corn was up 3 cents a bushel while wheat and corn are up 6 cents a bushel.

In wheat, heavy rains from Tropical Storm Bill will push through Eastern OK/TX over the next few days. While this is not in the path of the major HRW wheat belt, the rains should eventually find their way to SRW wheat territory of IL/IN/MO. In export news, Taiwan bought 97,420 MT of US wheat and the market is waiting to see the outcome of the Japanese wheat tender expected to be announced in the next day.

For soybeans, new-crop November futures posted its largest daily gain since February closing up 23 cents. It continued higher in the overnight session but met some selling pressure going into the break. Although planting delays are a moderate concern, excess moisture at this time of year may not be a catalyst for a sustained rally. This year is still expected to be another year of record production and acreage so any slip in acres would likely be muted by the beneficial soil moisture for much of the country.

In corn, prices moved higher on Tuesday and in the overnight session but the gains are rather tepid. The one bright spot of late has been two large purchases announced by USDA on Monday and Tuesday morning which showed over 100,000 MT booked for new-crop delivery by Japan and over 100,000 MT booked for old-crop delivery by unknown destinations.