Weekly Cash Comments

Cash Commentary-

The cash markets remained relatively stable this week posing slight gains of an average of 1 cent per bushel.

This week Spanish energy firm Abengoa sold 5 of its Ethanol plants to Green Plains Inc. of Omaha, NE. There have not been many indications how this will affect ethanol basis in the short term. Ethanol plants regained last week’s losses gaining 1.5 cents. Corn basis along the river saw marginal gains of 1 cent per bushel. Nationally however, corn basis was down almost half a cent per bushel. This is the third week in a row corn basis has went down.

Soybeans have been a different story. Soybean demand remains high and analysts expect strong demand to continue despite the lower prices and strong yield potential. Basis at river terminals is most indicative of the strong demand and saw gains of 7.5 cents per bushel. Crush facilities saw basis gains as well, gaining almost 1 cent. Nationally soybeans gained 1.5 cents per bushel.

Futures Commentary-

Grain futures were down this week following strong yield prospects from the Pro Farmer Crop Tour. Corn lost 8.5 cents, soybeans down 39 cents and wheat fell 26 cents.

The Pro Farmer crop tour observed above average soybean prospects in southern Minnesota, which is in line with last year. Soybean potential in eastern Iowa looked on par with recent years. Pro Farmer scouts projected Illinois’ corn yield potential sharply higher than last year but the estimates trailed USDA’s record-large forecast. They predicted average corn yields in Illinois at 193.50 bushels per acre, up from 171.64 bpa last year and the three-year crop tour average of 179.69 bpa. The outlook was below USDA’s August 12th estimate of 200 bpa, which if realized would equal 2014′s record average yields in the state. Soybean pod counts in a 3-by-3 foot area were calculated at a statewide average of 1,318.09, up both from 1,190.47 pods in 2015 and the three-year tour average of 1,201.87 pods.

In world news, the French corn crop remained stable last week. After two weeks of decline data from farm office FranceAgriMer showed on Friday suggested dry summer weather was having an effect in the European Union’s biggest grain producer. Some 63% of the crop was rated good or excellent as of Aug. 22, unchanged from a week earlier.

The recent slide in the US wheat price and losses in the US dollar, combined with a move higher in Ukrainian prices has put the US in a better competitive position. Last month, Ukraine wheat prices were $17/MT lower than the US and today’s values are on par with each other.

The International Grains Council on Thursday raised its forecasts for both world wheat and corn production in the 2016/17 season.  The IGC projected world wheat production in 2016/17 at 743 MMT, up from a previous forecast of 735.  World corn production in 2016/17 was seen at 1.030 billion tonnes, up from a previous projection of 1.017 billion.

Crude started to regain strength after Monday’s losses of more than $1 a barrel using some of Thursday’s momentum to continue higher today.

 

Morning Comments – August 26

Grains were in positive territory to start today. Soybeans were trying to reverse yesterday’s punishing sell-off while wheat and corn were only fractionally higher in anemic trade.

Day 4 of the Pro Farmer Tour estimated corn yields in Iowa at 188.17 bushels per acre, up from 180.25 bpa last year and the three-year crop tour average of 176.98 bpa. The estimate trailed the U.S. Department of Agriculture’s forecast of 197 bpa. Soybean pod counts in a 3-by-3 foot area averaged 1,224.28 pods, just above last year’s total of 1,219.21 pods and the three-year tour average of 1,106.70 pods.

Corn yield potential and soybean pod counts in Minnesota were above average but lower than 2015, scouts on an annual tour found on Thursday. Average corn yield was pegged at 182.32 bushels per acre. That compares with the tour’s three-year average for the state of 180.91 bushels per acre and its 2015 findings of 190.87 bushels per acre. Minnesota soybean pod counts in a 3-by-3 foot area were at 1,107.60, down from 1,119.22 in 2015 but up from the three-year average of 1,006.73. Pro Farmer will release their US crop production forecasts today after the markets close.

In France, the corn crop there remained stable last week, data from farm office FranceAgriMer showed on Friday, after two weeks of decline that suggested dry summer weather was having an effect in the European Union’s biggest grain producer. Some 63% of the crop was rated good or excellent as of Aug. 22, unchanged from a week earlier.

 

Morning Comments – August 25

Grains were mixed overnight with Nov beans spending much of the night below $10 while corn and wheat were holding onto small gains going into the break.

Day 3 of the annual Pro Farmer Midwest Crop Tour on Wednesday projected Illinois’ corn yield potential sharply higher than last year but the estimates trailed USDA’s record-large forecast.
Scouts on the four-day tour predicted average corn yields in Illinois at 193.50 bushels per acre, up from 171.64 bpa last year and the three-year crop tour average of 179.69 bpa. The outlook was below USDA’s Aug. 12 estimate of 200 bpa, which if realized would equal 2014′s record average yields in the state. Soybean pod counts in a 3-by-3 foot area were calculated at a statewide average of 1,318.09, up both from 1,190.47 pods in 2015 and the three-year tour average of 1,201.87 pods.

In Western Iowa, Pro Farmer pegged the crop there at 187.5 vs 181.5 in 2015 and a 3-year average of 175.9. For soybeans, the pod count came in at 1,290 this year vs 1,263 last year and a 3-year average of 1,161.

The International Grains Council on Thursday raised its forecasts for both world wheat and corn production in the 2016/17 season.  The IGC projected world wheat production in 2016/17 at 743 MMT, up from a previous forecast of 735.  World corn production in 2016/17 was seen at 1.030 billion tonnes, up from a previous projection of 1.017 billion.

WEEKLY EXPORT SALES

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

71

100-250

1,059

800-1,000

Soybeans

115

50-200

1,939

1,100-1,300

Wheat

379

400-600

Morning Comments – August 24

Grains continued to weaken overnight and crude oil was off nearly $1 a barrel.

Day 2 of Pro Farmer’s crop tour were in fields in Nebraska and Indiana. The crop tour projected Indiana’s corn yield at 173.42 bushels per acre, up both from last year’s estimate of 142.94 bpa and the three-year crop tour average of 165.11 bpa. USDA said yields in the state would average 187 bpa, up from 150 bpa in 2015.  The crop tour does not estimate soybean yields but projected the amount of soybean pods in a 3-by-3-foot area at 1,178.41 pods, up from 1,093.08 pods last year and the three-year tour average of 1,166.34 pods. USDA estimated soybean yields at 55 bpa, up from 50 bpa in 2015.

The forecast for Nebraska was 158.60 for corn, below 165.16 in 2015. The soy pod count came in at 1,178 vs 1,093 last year.

Yesterday, Egypt’s GASC canceled its tender to buy wheat. GASC did not give a reason for the cancellation. Cairo-based traders said they were surprised by the decision to cancel after hours of negotiations with several suppliers who had presented offers to GASC.

In international pricing, the recent slide in the US wheat price and losses in the US dollar, combined with a move higher in Ukrainian prices has put the US in a better competitive position. Last month, Ukraine wheat prices were $17/MT lower than the US and today’s values are on par with each other.

Crude oil prices continued to slump this week. Industry data from the American Petroleum Institute (API) showed on Tuesday that U.S. crude inventories had risen by 4.5 million barrels in the week ending Aug. 19. Analysts had expected a 455,000-barrel fall. Official EIA data on inventories will be out later this morning, and are expected to show a modest dip, but that was before API data came in surprisingly large.

 

Morning Comments – August 23

Grains were weaker to start the day while crude prices continued to slide in overnight trade.

Pro Farmer’s crop tour concluded day 1 reporting estimates for OH & SD. Corn yields in Ohio were projected to come in roughly unchanged with last year and down from a three-year average after dry field conditions negatively impacted fields in parts of the state. Corn yields in Ohio are projected to be 148.96 bushels per acre, just above 148.37 bpa in 2015 and down from the three-year tour average of 167.37 bpa. USDA pegged Ohio yields at 163 bpa, up from 153 bpa in 2015. For soybeans, the tour estimated the amount of soybean pods in a 3-by-3-foot square in Ohio at an average 1,055.05 pods, down from 1,125.26 last year and the three-year average of 1,250.43 pods.

In South Dakota, corn yield was estimated at 149.78 bushels per acre, below the tour’s three-year average of 160.13. A year ago, scouts on the tour calculated the average South Dakota corn yield at 165.94 bushels per acre. Soybean pod counts in a 3-by-3 foot area were pegged at a statewide average of 970.61. That compares with average pod counts of 1,054.98 in 2015 and the three-year average of 1,043.15.

In overnight news, Egypt’s GASC was tendering for wheat. The lowest offer came from Ukraine for $171 /MT. Stats Canada released new crop estimates, pegging the all wheat crop at 30.49 MMT, up from last month’s forecast and up 10% from last year. Anola output was estimated at 17.02 MMT, off 1.2% from last year

Crude oil prices continued their slide this morning, giving up 50 cents a barrel after yesterday’s steep sell-off of a $1.70 a barrel.

 

Morning Comments – August 22

Grains were lower to start the week as were most of the outside commodity and equity markets.

The Pro Farmer crop tour gets underway today as two teams will traverse across the Midwest to come up with corn and soybean yield forecasts. This year, with USDA’s August forecast so much in question, the PF tour should take on added weight in helping the market determine a true value for yields.

This morning USDA announced the sale of 120,000 MT of new-crop sales to unknown destinations. That marks the 3rd trade day in a row of soybean deals announced by USDA.

In weather, rains return to the Midwest late Tue.-Thu., with the heaviest in C. & SW Iowa/N. Missouri/E. Kansas/far E. Nebraska. The 6-15 day shows rains in W. Midwest corn/soy and threaten pockets of excess rain (main risk in Iowa).

Crude oil prices fell Monday amid fading hope for a unilateral agreement on production cuts from major producers and as traders and money managers cashed in recent profits.The prospect of the OPEC agreeing with other major producers to cut or freeze production in September is now starting to fizzle out with most observers now convinced that there is little chance of a consensus being reached. Any tailwind this may have given to prices over the past week won’t be there in the coming five days.

 

Weekly Cash Comments

Cash Commentary-

Grain basis was mostly lower to unchanged to close the week.

On average, corn was down one cent this week. Ethanol plants followed closely losing one and a half cents. With recent decreases in demand for gasoline and large production expectations it seems ethanol buyers are hesitant to pay a premium for corn. Corn along the river and in the gulf saw a drop in basis of one and a quarter cents.

Nationally soybean basis was down slightly, losing half a cent per bushel. Soybean basis along the river was the biggest loser this week losing almost four cents per bushel. Although strong world demand has added support to the futures market that support has yet to be seen in the cash market along the river. Crush facilities have seen signs of support gaining nearly one cent this week. Continued global demand for for soyoil is expected throughout the year.

Futures Commentary-

The grains saw positive gains to close the week with corn and wheat up 11 cents. Soybeans led the movement higher and finally regained some losses, up 30 cents.

Wheat continues to struggle with ample domestic and world stockpiles. The US carry-out projections are giving us nearly half of a year’s crop (47.4%). While international players like France and Germany are having severe crop issues, the rest of the world remains replete in wheat stockpiles. However, the declining strength of the US Dollar should help competitiveness.

Data from farm office FranceAgriMer showed the condition of French corn declined sharply last week. Sixty-three percent of corn crops were rated good-to-excellent on August 15, down from 68 percent a week earlier and 70 percent two weeks prior.

On Monday, USDA’s crop progress report showed corn and soybean condition unchanged from last week, with corn pegged at 74% good-to-excellent and soybeans at 72%. Also on Monday, NOPA’s monthly soybean crush report was disappointing showing 143.7 MB of soybeans crushed in July while traders had been looking for 146.7 MB.

Despite bearish signals in the soybean market there are still many bullish signs. Global soybean demand is strong and is still on the rise. Soybean use is already outpacing long-term expectations, making the ceiling difficult to identify. U.S. soybean exports are far outpacing these long term projections. Exports and crush are well ahead of USDA’s latest 10-year forecasts period, which is released each February. Currently crush for 2015/16 is 10 million bushels ahead of the February projections and 2016/17 is 30 million ahead.

Short-term soybean demand is holding its own as well. So far in August, daily soybean sales announcements to China and unknown destinations have been made on 11 separate days. There were only 6 such days in all of August 2015.

Crude oil fell on Friday after hitting an eight-week high, as weak fundamentals countered a lift in sentiment over talks next month on a possible output freeze, however futures remain on track to rise for a third consecutive week.

 

Morning Comments – August 19

Grains were off in overnight trade with soybeans again losing double digits.

Soybeans slid for a second session on Friday as beneficial rain in the U.S. Midwest buoyed expectations of a record U.S. crop this fall. Recent rain in key U.S. growing areas has helped ease concerns about dryness in the Eastern Corn-belt.

Grain millers in Bangladesh are boosting their wheat purchases from Russia and Ukraine as cargoes from key exporter India fade due to a supply squeeze in that country. Bangladesh has booked about 800,000 tonnes of wheat from the Black Sea region for shipment between mid-July and October, up from around 550,000-600,000 tonnes in the same period last year, two trade sources said.

Germany’s Farmers’ Association (DBV) said on Friday that the German 2016 winter wheat crop fell 13% on the year to 22.9 MMT. France also is suffering crop losses this year with forecasts there off 17%.

USDA’s Cattle on Feed Report will be released today at 2 pm CDT. Analysts expect cattle on feed as of Aug 1 at 101.4%, placements in July at 100.5% and marketings in July at 99.7%.

Crude oil prices were lower on Friday after gaining a $1.50 a barrel on Thursday to an eight-week high, capping a rally driven by speculation producers could agree to measures to support crude. Nigeria’s oil minister said on Thursday that while a cut in OPEC production is unlikely, there is hope a meeting of producers in Algeria next month could help shore up crude prices.However, analysts and traders warned the rally was overblown, especially since planned talks between the OPEC and other major producers like Russia to rein in on ballooning overproduction were unlikely to lead to a reduced supply overhang.

 

Morning Comments – August 18

Grains were off in overnight trade while crude oil hit the $47 a barrel mark and the US dollar continued to erode

In overnight news, South Korea’s DongAOne issued an invitation to bid seeking a total of 23,200 tonnes of U.S. origin wheat. The tender came after South Korea found no genetically modified wheat in U.S. wheat imports. Earlier in August the discovery of unapproved GMO wheat in shipments from Washington state prompted Japan and South Korea to suspend some U.S. imports. Japan’s Ministry of Agriculture bought a total of 87,430 tonnes of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday. This was below their usual volume purchased of 120,000 MT

In Argentina, farmers there are expected to boost corn plantings next season. The Buenos Aires Grain Exchange projects acreage will jump from 3.6 million hectares to 4.5 million hectares.

Yesterday, weekly ethanol numbers were positive as production hit a record high for this time of year with 1.03 million barrels per day of production and stocks were lower from the previous week.

WEEKLY EXPORT SALES

Act-OC

Exp-OC

Act-NC

Exp-NC

Corn

167.4

250-450

1,042

800-1,100

Soybeans

177.9

100-300

1,597

1,500-1,800

Wheat

489.5

400-600

Morning Comments – August 17

Grains were higher overnight again led by soybeans while wheat was in the red for much of the night session. In outside markets, the US dollar was fractionally higher after yesterday’s steep sell-off and crude oil was also lower in limited trade

Wheat continues to struggle with ample domestic and world stockpiles. The US carry-out projections are giving us nearly half of a year’s crop  (47.4%). While international players like France and Germany are having severe crop issues, the rest of the world remains replete in wheat stockpiles. The US dollar has moved 2% lower in the past two weeks which should help bolster US competitiveness in wheat trade.

Soybean prices continue to rally off of their lows from August 2nd, adding nearly 60 cents a bushel in that time frame. Corn, while higher, has found less enthusiasm to the upside only adding 13 cents. Farmers continue to struggle with holding old crop corn inventories to make way for the new crop in the next month. Storage space will surely be at a premium this fall.

Crude oil prices fell in early Asia trade Wednesday, as optimism that major producers would agree to a production freeze agreement ebbed after Iran signaled it has little interest in such a deal. Traders and investors are focusing on the weekly U.S. oil data to be released later today. Estimates by the American Petroleum Institute indicate U.S. crude stocks fell 1 million barrels, but gasoline inventories rose 2.2 million barrels.