Morning Comments – May 26

In the overnight session the grains are trading lower with corn down 2 1/4 cents, soybeans down 1 cent and wheat down 4 3/4 cents. The U.S Dollar is trading up over a percent this morning and crude oil has slipped 68 cents.  Japan is seeking to buy 100,262 metric tons of food quality wheat from the U.S or Canada in a regular tender closing tomorrow.

Heavy rains which ranged from 1-4 inches fell across Texas, Oklahoma and parts of Kansas causing localized flooding and adding to the concern of winter wheat crop quality. This is the 5th week in a row that significant rains have fallen throughout the southern plains. The southern plains are expected to receive more precipitation later on this week before the outlook turns drier once again.

Between 1/4 inch and 1 1/2 inch of rain fell throughout the majority of the Midwest this weekend providing excellent growing conditions for the newly seeded crop. Crop progress will be released at 3 PM CST today and will show the first crop condition ratings for corn. Last week the crop progress showed 85 percent planted with soybeans 45 percent complete.

UkrAgroConsult announced that it has raised its 2015 forecast for grain harvest to 54.9 million metric tons from 52.3 million in its previous estimate. The increased grain outlook was primarily due to revision higher in wheat production. Ukrainian farmers have planted 95 percent of acreage as of May 25th. SovEcon announced it expects Russia to harvest 95 million metric tons of grain this year down significantly from the 105 million metric tons last year.

 

Weekly Cash Comments

Cash Commentary-

Basis levels for corn were off 1 cent for the week adding to the previous week’s losses, while soybean basis managed a 2-cent advance thanks to a sharply lower week on the futures market.

For corn, there was modest weakness along the river markets this week with a 3-cent loss at the Gulf providing the biggest catalyst of change to upstream facilities. Corn buyers along the East Coast and Plains saw relatively more strength this week, but ethanol plants as a group were off 2-cents a bushel. Areas of Iowa and Minnesota were especially prone to losses this week with 5-cent a bushel losses being fairly typical at some key end users.

In soybeans, basis levels improved on average by 2-cents a bushel this week, although there was a distinct dichotomy between end-user groups. For export sensitive areas, losses of 5-cents a bushel at the Gulf kept river terminals mostly weaker. Although soybean export business has been winding down this week’s sales of 165,500 metric tons was a 21 percent improvement week over week. For soybean plants, crushing facilities raised their basis by 2 cents a bushel for the week, but Eastern Cornbelt plants saw more impressive gains with some facilities up 5 to 10 cents a bushel.

Futures Commentary-

This week the grains were mixed with wheat trading up 7 3/4 cents, soybeans down 18 1/2 cents and corn down 3 cents for the week ending Thursday, May 21st. The wheat market continues to move higher on short covering, triggered by heavy rains throughout the southern plains giving rise to wheat quality concerns. Wheat traders are also following the Russian wheat crop which is forecast to experience hot dry weather over the next couple weeks and is beginning to come under stress. Chicago wheat open interest fell 18,617 to 261,576 showing that traders during this week’s rally are exiting existing positions instead of adding bullish bets.

Corn and soybeans continue to be pressured by bearish news this week. The climate prediction center is expecting to see El Nino continue throughout the summer in the northern hemisphere which may point to another year of optimal growing conditions. They estimated that there is a 90 percent chance that El Nino will continue through the summer and an 80 percent chance that El Nino will last through the end of the year. El Nino typically brings cooler wetter growing conditions to the northern hemisphere and often leads to above average yields. Also pressuring the grains is the Informa economics announcement that it forecasts corn planted acreage at 88.737 million acres which is below the recent USDA most recent estimate of 89.199 million. Informa pegs its soybean acreage at 87.185 million acres which is 2.55 million acres over the USDA.

On Monday, Russia announced that they will remove the wheat export duty until a new formula can be introduced on July 1st. By removing the export duty, it is estimated that the country’s exports will increase by 1 million metric tons this marketing year.

Export sales this week showed that wheat, corn and soybeans all met expectations. Wheat booked 74,400 metric tons of old crop sales and 128,200 metric tons of new crop. With analysts expecting to see as much as 200,000 metric tons of cancellations, this week’s sales were relatively positive. Old crop corn sales jumped 12 percent from the previous week with 812,600 metric tons booked above the 400,000-600,000 metric tons expected by traders. Soybeans also showed positive export sales this week with 165,500 metric tons of old crop sales which was a 21 percent improvement week over week. Soybeans continue to outperform sales expectations late in its export season.

On Wednesday, the EIA weekly ethanol report showed a sharp jump in production by 46,000 barrels per day to a total of 958,000 barrels per day. This decisively ends the two week slump in ethanol production that brought weekly totals below 2013 levels. However, routine facility maintenance played a big role in the early may production slump and it appears production is picking back up again as we move into driving season. Ethanol production year-to-date is up 4.8 percent compared to the USDA’s expectations which only show a 1.3 percent increase YOY. Ethanol stocks also climbed by 135,000 barrels to 20.43 million barrels this week.

The drought monitor has shown improvement over last week with the last of the severe and extreme drought in the southern Plains disappearing after four weeks of substantial rains. The rains have acted as a double edged sword providing moisture relief to parched soil, but causing quality concerns to a wheat crop late in its growing season. As a result of the heavy rains the western half of Kansas and Oklahoma and parts of Texas have been reduced to mostly moderate drought to abnormally dry from ratings like severe and extreme drought just weeks ago.

Morning Comments – May 22

In the overnight session the grains traded higher with wheat leading the way up 4 3/4 cents, corn traded up 1 3/4 cents and soybeans up 1/4 cent. The U.S. dollar index is trading about a 1/4 percent higher this morning and crude oil is down 58 cents.

Yesterday, Agroconsult raised its forecast for Brazil’s 2014/15 corn and soybean crop higher. The consultancy raised its forecast for soybean production from 95.8 million metric tons to 96.1 million metric tons, and raised their first corn crop forecast from 29 million metric tons to 30.7 million metric tons. The consultancy also raised their second crop production expectations to 51.4 million metric tons up from 50.4 in March.

Argentina exports have slowed recently as buyers hold back from purchasing grain hoping the government will turn up pressure to resolve a three week long strike by the Industrial Oilseed Complex Workers Federation.

The drought monitor has shown improvement over last week with the last of the severe and extreme drought in the southern Plains disappearing after four weeks of substantial rains. The rains have acted as a double edged sword providing moisture relief to parched soil, but causing quality concerns to a wheat crop late in its growing season. As a result of the heavy rains the western half of Kansas and Oklahoma and parts of Texas have been reduced to mostly moderate drought to abnormally dry from ratings like severe and extreme drought just weeks ago.

Morning Comments – May 21

In the overnight session the grains are trading higher, with corn up 1 1/2 cents, soybeans up 1 1/4 cents and wheat up 3 cents. The U.S. dollar is lower by 1/10th of a percent and crude oil is 48 cents higher. This morning a reportable export sale was announced for 152,400 metric tons of old crop corn to unknown destinations and 50,800 metric tons of new crop. Chicago wheat trades near its 100 day moving average (5.18 3/4) which has acted as strong resistance on Monday and Tuesday this week. Wheat traders are focusing on the heavy rains in the southern plains which have been causing concerns that the wheat will have quality issues at harvest. Wheat traders are also monitoring Russia whose forecast has turned dry over the next two weeks and whose crop is beginning to feel stress from the hot dry weather.

Export sales this week showed that wheat, corn and soybeans all met expectations. Wheat booked 74,400 metric tons of old crop sales and 128,200 metric tons of new crop. With analysts expecting to see as much as 200,000 metric tons of cancellations, this week’s sales were relatively positive. Old crop corn sales jumped 12 percent from the previous week with 812,600 metric tons booked above the 400,000-600,000 metric tons expected by traders. Soybeans also showed positive export sales this week with 165,500 metric tons of old crop sales which was a 21 percent improvement week over week. Soybeans continue to outperform sales expectations late in its export season.

Yesterday, the EIA weekly ethanol report showed a sharp jump in production by 46,000 barrels per day to a total of 958,000 barrels per day. This decisively ends the two week slump in ethanol production that brought weekly totals below 2013 levels. However, routine facility maintenance played a big role in the early may production slump and it appears production is picking back up again as we move into driving season. Ethanol production year to date is up 4.8 percent compared to the USDA’s expectations which only show a 1.3 percent increase YOY. Ethanol stocks also climbed by 135,000 barrels to 20.43 million barrels this week.

A waterway leading to Argentina’s Rosario grain hub was blocked for the last two days after a ship ran aground. This disruption comes during the busiest season just following harvest

Morning Comments- May 20th

In the overnight session the grains traded lower with soybeans leading the charge down 6 ½ cents, corn down 1 ¼ cents and wheat down 4 cents going into this morning’s pause in trade. The U.S. dollar is positive this morning by a small margin and crude oil is up 59 cents. New crop soybeans has broken through 9.27 1/2 support that was its lows back in late September and early October. This technical failure could cause additional selling pressure as stops are triggered and momentum traders look to enter positions.

Yesterday the USDA released export inspections which are normally released on Monday. The report showed that 341,097 metric tons of soybeans were inspected for export which was just over analyst expectations. Corn also showed solid export inspections with 1,108,039 metric tons of grain inspected for export which beat expectations which ranged from 900,000-1,000,000 metric tons. Wheat inspections were within analyst expectations reporting 309,562 metric tons inspected for export.

Yesterday morning we also saw a 132,000 metric ton sale of old crop soybeans for delivery to China which supports the continued late season strength in export demand out of the U.S.

Weather throughout the Midwest seems to be positive for late corn and soybean planting as a drying trend takes hold throughout the remainder of the week. Next week should bring more showers scattered throughout the Midwest. Rains will be more prevalent in the southern Midwest which could begin to delay soybean planting throughout those areas.

The plains winter wheat forecast should be dry for a couple days as we head into the weekend after localized flooding and heavy rains early this week. Next week rains will return to the region bringing the fifth week of heavy moisture to the area. Rains are unlikely to taper off until the 11-16 day forecast which now has traders concerned about winter wheat quality and disease.

 

Morning Comments- May 19

In the overnight session the grains traded lower with corn down 4 ¼ cents, soybean sown 3 ¾ cents and wheat down 11 cents. The U.S. Dollar is up over 1 percent this morning with crude oil on the defensive, slipping nearly a dollar. Freeze warnings are being issued throughout most of North Dakota and parts of South Dakota which has some traders concerned about damage to the emerging corn crop.

Yesterday crop production was released showing that winter wheat rated good-to-excellent improved 1 percentage point over last week. Continued precipitation has been providing much needed moisture, but a forecast for continued precipitation has traders concerned about winter wheat quality issues. Temperatures are expected to be cooler than average this week across the majority of the Midwest and bring significant amounts of precipitation to states like Colorado, Kansas, Oklahoma and Texas.

Spring wheat planting is mostly complete with 94% planted as of Sunday. This compares to a four year average of only 65% planted during this period. Corn planting was 10 percentage points ahead of the four year average with 85 percent complete. Soybeans is also ahead of pace with 45 percent of the crop planted compared to the average of 36 percent normally.

UkrAgroConsult announced on Tuesday that they are raising the forecast for Ukraine’s wheat harvest by 1 million metric tons to 22 million. The consultancy cited positive planting conditions and good moisture lifting the production potential this year. However, some concerns are developing for the Russian wheat crop which is expected to remain dry over the next couple weeks.

Weekly export inspections data was not released yesterday, delayed by technical difficulties. There has been no sign of the numbers yet this morning.

 

Morning Comments- May 18

In the overnight session the grains are trading higher with corn up 3 ½ cents, soybeans up 5 ¼ cents and wheat in Chicago up 7 ½ cents going into this morning’s pause in trade. The U.S. dollar and crude oil are trading higher this morning.

NOPA crush numbers were released on Friday and showed a record April crush of 150.363 million bushels, which was well above the average trade guess of 147.827 million bushels and a significant improvement over last year’s total of 132.667 MBU. Soy oil stocks were reported slightly lower than expected with 1.441 billion pounds on hand in April compared to expectations of 1.461 billion pounds.

Traders will be looking forward to the crop progress report released at 3 PM CST after the market has closed. Early expectations are for the report to show 85 percent of corn planted and 50 percent of soybeans planted as of Sunday.

Continued precipitation throughout the Southern Plains has some traders now concerned about wheat quality after spending most of the late winter and early spring worrying about drought conditions which covered most of the winter wheat growing area. Rains over the weekend have caused some localized flooding in Texas and Oklahoma, while other areas in in Colorado and western Kansas only received light showers.

Weather turns dryer throughout Russia over the next 1-7 days which is stoking some concerns that this year’s weather patterns share a close similarity to the 2010 and 2012 growing seasons which resulted in lower yields.

Weekly Cash Comments

Cash Commentary-

Corn basis was mostly unchanged for the week with US average basis levels stagnate. However, a late week increase in futures prices but cash corn basis levels on the defensive. For soybeans, basis levels posted a modest 1-cent a bushel advance as nearby futures prices gave up 18 cents on the week.

In corn, Thursday’s 6-cent advance was met with relatively sharp drops in basis by corn merchants. Even Friday morning there was clear follow through with major plants in MN & NE posting lower basis compared to Thursday’s quotes. On average, ethanol buyers were off 1 cent a bushel but in the Western Cornbelt basis levels showed more weakness with some plants giving up 5 cents or more on the week. For export sensitive areas, basis levels were weaker thanks to a 2 cent drop at the Gulf. Upstream river terminals came under more pressure giving up 3 cents a bushel on average for the week.

For soybeans, USDA’s supply and demand report early in the week pointed to ample supplies of stocks in the coming growing season, and with near-term export business winding down, there seems like little incentive for end-users to aggressively bid higher for beans. At the Gulf, basis levels were up 3 cents a bushel, but river terminals on average only showed a 1-cent gain. For soy plants, there was only modest changes for the week with a 1-cent improvement on average. However, mid-week one Indiana plant was aggressively bidding up beans, but it was short-lived as pipeline supplies quickly filled the needs.

Futures Commentary-

This week the grains were mixed with corn trading 6 1/2 cents higher, wheat 41 1/2 cents higher as a result of a sharp short covering rally on Thursday and soybeans fell 18 cents. Friday morning the NOPA crush figures will be released at 11 AM CST with the average analyst expecting to see April crush reach 147.827 million bushels, up from 132.667 million bushels last year. The average analyst guess pegs soyoil stocks at 1.461 billion pounds.

Crop progress was reported on Monday and showed strong planting progress for the grains this week and improved winter wheat conditions. Corn plantings jumped 20 percent last week reaching 75 percent planted. This year’s planting pace is well ahead of the four year average of 57 percent complete. Soybean planting pace is also ahead of the four year average with 31 percent planted compared to 20 percent usually. Spring wheat is now 87 percent planted, up from 75 percent planted last week and now 36 percentage points ahead of the four year average.

Yesterday, the USDA released its May WASDE report which had little effect on corn and wheat, but sent soybeans into a tailspin by the end of the day. Old crop soybean demand was revised higher by 20 million bushels to 350 million bushels after crushing and exports were increased by 10 million bushels each. The bullish old crop surprise was overshadowed by increased South American production and ominous new crop ending stock projections of 500 million bushels. The average trade guess expected new crop carryout to total 443 million bushels.

Old crop corn ending stocks increased 23 million bushels to 1.851 billion bushels which was shy of expectations. A 48 million bushel decline in feed and residual use was partially offset by a 25 million bushel increase in exports. New crop ending stocks were mostly on par with expectations with 15/16 carryout forecast at 1.746 billion bushels with a new crop yield pegged at 166.8 bushels per acre.

Ending stocks for old crop wheat were increased by 25 million bushels to 709 million bushels after the USDA bumped imports by 5 million bushels and slashed exports by 20 million bushels.  Export pace has been softening recently with the last couple weekly reports showing cancellations totaling to 597,000 metric tons. New crop wheat ending stocks were forecast at 793 million bushels which was above expectations of 750 million bushels.

Global carryout for the 2015/16 marketing year looks to be higher than the expectations for soybeans and wheat. Global wheat ending stocks were pegged at 203.32 MMT up from 200.97 MMT in 14/15 and above the average trade guess of 193.53 MMT. Global corn ending stocks are expected to hold mostly steady at 191.94 MMT compared to old crop carryout of 192.5 MMT. Global soybean carryout is expected to rise significantly to 96.22 MMT, above expectations of 95.17MMT and last years ending stocks of 85.54 MMT.

Export sales were relatively unimpressive on Thursday with old crop corn sales the most disappointing. Old crop corn sales were reported at 370,000 metric tons, down 56 percent from last week and missing expectations which ranged from 600,000-800,000 metric tons. Old crop wheat sales reported 115,000 metric tons which was on the high side of expectations which ranged from cancellations to sales of 100,000 metric tons. This week’s wheat sales were a significant improvement over last week’s 148,000 metric ton cancellations. Soybeans reported sales of 136,000 metric tons which was down 60 percent from the previous week and on the low end of expectations.

Morning Comments – May 15

In the overnight session the corn traded a 1/4 cent higher, soybeans traded 2 cents higher and wheat in Chicago fell 2 1/4 cents. Wheat traded sharply higher in yesterday’s session fueled by rapid short covering and is now close to its 100 day moving average at 521 3/4 which will most likely offer up some resistance.

This morning Russia announced that they will remove the wheat export duty until a new formula can be introduced on July 1st. By removing the export duty, it is estimated that the country’s exports will increase by 1 million metric tons this marketing year.

Keep a close watch on NOPA crush numbers today which will be released out at 11 AM CST. Analysts are expecting to see April crush at 147.827 million bushels up from last year’s 132.667 million bushels. The average analyst guess pegs soyoil stocks to be at 1.461 billion pounds.

The climate prediction center is expecting to see El Nino continue throughout the summer in the northern hemisphere which may point to another year of optimal growing conditions. They estimated that there is a 90 percent chance that El Nino will continue through the summer and an 80 percent chance that El Nino will last through the end of the year.

Yesterday Informa announced it sees corn planted acreage at 88.737 million acres which is below the recent USDA most recent estimate of 89.199 million. Informa pegs its soybean acreage at 87.185 million acres which is 2.55 million acres over the USDA.

 

Morning Comments – May 14

In the overnight session the grains moved higher with corn up 2 3/4 cents, soybeans up 1/4 cent and wheat up 8 1/4 cents. The dollar index continues to move lower this morning following yesterday’s April retail numbers. Crude oil is down 30 cents this morning trading around the $60 mark.

Export sales were relatively unimpressive this morning with old crop corn exports the biggest disappointment. Old crop corn sales were reported at 370,000 metric tons, down 56 percent from last week and missing expectations which ranged from 600,000-800,000 metric tons. Old crop wheat sales reported 115,000 metric tons which was on the high side of expectations which ranged from cancellations to sales of 100,000 metric tons. This week’s wheat sales were a significant improvement over last week’s 148,000 metric ton cancellations. Soybeans reported sales of 136,000 metric tons which was down 60 percent from the previous week and on the low end of expectations.

Ethanol production jumped week over week by 25,000 barrels per day bringing total weekly production to 912,000 bpd. Despite the weekly improvement ethanol production is still in a downward trend that began in December. This week’s figures mark only the third time this marketing year that weekly production fell below 2013 levels. Cumulative ethanol production is up 4.8 percent from 2013, which is ahead of USDA expectations for an increase of 1.3 percent over last year. The May WASDE report left corn used for ethanol unchanged on the balance sheet.