September 2 – Morning Comments

In the overnight session the grains traded higher after an extended weekend. Corn is ¾ cents higher, soybeans is trading 4 ¾ cents higher and wheat is ½ a cent higher as we go into the morning pause in trading.

The central grain belt received 1-2 inches of precipitation over the weekend with most of Iowa, Missouri, Southeast Minnesota receiving good finishing rains. Trade consensus is that average rainfall and average temperatures will allow corn and soybeans to finish the growing season in good shape. At the moment an early frost is not projected for any portion of the grain belt.

China again received below average precipitation over the weekend with less than .25 inches reported in key growing areas. Drought remains a concern for their crop, although U.S. growing conditions have trumped any Chines concerns in recent weeks. Chinese demand may be a story as we exit harvest in the northern hemisphere.

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Wheat has been range-bound since the beginning of August with the range low around $5.43 and the high side of the range at $5.90. Last week increased tensions in Ukraine caused by talk of Russian troops fighting alongside Ukrainian rebels helped infuse a risk premium into prices. However, wheat was unable to mount its 50 day moving average which sits at $5.68 ¼. The US dollar is also helping to put pressure on Wheat as it rises again this morning at $83.095. A continued rise in the dollar will make it more difficult for wheat prices to show any kind of rally as U.S wheat struggles to maintain competitiveness on the global market.

August 29th – Morning Comments

This morning soybeans and wheat are trading higher up 2 ¼ penny and 5 cents respectively. Corn is trading down 1 ¼ cents this morning. The U.S dollar index is in a consolidation pattern after making a sharp move higher between the 18th and the 26th.

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The white house spoke last night and mentioned that “We are not taking military action to solve the Ukrainian problem” and that the “ongoing incursion into Ukraine by Russia will only lead to additional costs for Moscow.” With that being said, we can expect further sanctions by the west to be levied onto Russia. Over the last four days wheat has been able to rise to the top side of the range it has been trading in since early July. However, without a major disruption in the physical movement of grain out of Ukraine it is unlikely that wheat will be able to make any sort of meaningful rally.

Next week’s weather forecast will provide ample moisture to finish off crops in the fill stage of development with precipitation amounts of 2-6 inches covering eastern Nebraska, Iowa, Southeast Minnesota and Wisconsin. The 16-30 day forecast did trend cooler for the northwest Midwest and needs to be watched for frost risk in late developing fields. For now frost risk is still very low, and there is no freeze expected in the Midwest next week.

This year excess precipitation during wheat harvest has been the global theme with the latest reports of this out of Bueno Aires. The precipitation in central and southeast Buenos Aires province, an area that makes up 18% of the planted area, is likely to suffer substantial losses due to excessive rains. Last week the exchange cut its estimated wheat acreage by 247,000 acres due to excessive rain in the region.

 

August 28 – Morning Comments

Grains are slightly higher in the overnight session with corn up ¾ of a penny, soybeans up 3 cents and wheat up 6 ¾ cents as we move into the pause in trade. The tensions in Ukraine continue to escalate as reports out of Kiev accuse Russia of playing a major role in a counter offensive by the separatists. The concerns are that Russian boots and armored vehicles are on the ground, which if confirmed would be a significant escalation of the Ukrainian conflict.

Wheat export sales were reported at 403,600 metric tons for delivery in 14/15 which was up 98 percent from the previous week. Brazil was highlighted as a major purchaser of U.S wheat buying 94,000 metric tons. Old crop corn sales had net reductions of 32,700 metric tons which was within analyst expectations. According to our model this puts corn right on pace to meet the USDA expectations with only one week left in the marketing year. New crop corn sales were reported at 695,600 metric tons which was within expectations.

Old crop soybean sales recorded net reductions of 62,800 metric tons which puts soybean export sales at 35 million bushels ahead of pace to meet USDA expectations. It is likely we see the USDA revise their forecast in the September 11th WASDE report. New crop soybean sales were reported at 1,290,800 metric tons which was well above expectations. The majority of sales primarily went to China which booked 50 percent of this week’s new crop soybean sales.

Yesterday the EIA announced that ethanol production had fallen 24,000 barrels per day to 913,000 barrels per day. Ethanol stocks declined this week 934,000 barrels, bringing total stocks to 17.32 million barrels.

August 27th – Morning Comments

We have a mixed morning in the grains with corn trading down 2 ½ cents, soybeans increasing 3 ¾ cents and wheat trading up a penny as we go into the morning pause in trading.

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This morning the Taiwan Flour Millers Association rejected all offers for U.S wheat for a 99,410 metric ton tender which closed on Wednesday. The rejection came on the basis that prices were too high. Yesterday, the Russian Agriculture Ministry stated that they expect the 2014/15 grains exports to be at a record-high 27.5-30 million metric tons, up around 3 million metric tons from their previous forecast. GASC awarded the 175,000 metric ton wheat tender to Russia and Romania.

On Tuesday China’s state soybean auction sold 34% of the state reserves that were made available for sale, which was better than last week’s 24% sold when a similar volume of soybeans was offered by the state. This week’s Soybeans sold for an average of 24 yuan per metric ton more than last week.

There has been increased observation of SDS (Sudden Death Syndrome) spotted in fields throughout Illinois, South East Iowa, Northern Missouri and North East Kansas. In the Indiana crop progress report it was mentioned that “While soybeans setting pods received much needed moisture, excess water and humidity in the fields contributed increased SDS and foliar lesions in certain counties.” SDS seems to be appearing rather quickly and will likely be mentioned in next week’s crop progress report. This will be an issue to monitor closely going forward.

August 26th- Morning Comments

The grains are slightly lower to unchanged this morning with corn down ½ of a cent, soybeans down 4 ¼ and wheat down ¼ a cent this morning. On Monday Egypt’s GASC announced a tender to buy an unspecified amount of soft wheat or milling wheat for delivery Sept 21 to 30. Traders are looking for Russia, Ukraine and Romanian wheat are likely to win the tender since Black Sea wheat is nearly $4 a metric ton more competitive than Chicago Wheat. GASC tender results are expected later today.

Crop progress was released on Monday at 2 PM CST and showed that corn rated good-to-excellent has improved by 1% while soybeans have fallen 1% over the last week. Spring wheat conditions have also declined, falling to 66% good-to-excellent from 68% a week ago. Soybean harvest is now starting in the south with Missouri 2% complete and 8% complete in Texas. Early harvested soybeans have a strong cash market to sell into, with the spread between Sep/Nov at 79 ¾ cents this morning. The spread has been wildly volatile in the last week trading as high as 151 yesterday morning before seeing the gains evaporate by the end of the day. The start of southern soybean harvest will be putting pressure the old crop, new crop spread and has already started to affect Gulf bids which moved 10-17 cents lower yesterday.

This week’s weather is showing a wet pattern over the next 10 days with the majority of the grain belt receiving meaningful precipitation. The precipitation should cover the remaining dry spots which had developed over most of July and had been cause for concern for late planted soybean development. Currently, there are no early frost threats over the next 30 days.

On Friday, Pro Farmer announced the aggregate U.S corn yield estimate at 169.3 bushels per acre which is 1.9 bushels per acre higher than the August USDA forecast and .9 bushels higher than the latest Planalytics yield forecast.

August 25th – Morning Comments

This morning the grains are trading slightly lower with corn down 3 ½ cents, soybeans down 7 cents and wheat down 1 cent as we go into the morning pause in trading. The spread between the September soybean contract and the November contract has taken another giant leap higher, up 15 cents just in the overnight. The spread is now trading at 139 3/4, up from 15 cents on August 6th.

There should be more moisture this week throughout the Midwest as a storm tracks from Nebraska to the Great Lakes region from Tuesday to Friday. The storm should help the later planted corn and soybeans giving eastern Nebraska, Iowa, Southern Minnesota, and Wisconsin between ½ -1 inch of precipitation.

Heavy rains fell this weekend in Montana and the Western Dakotas which halted harvest and gave cause for concern about crop quality. In Montana, the higher elevations received snow which is still sticking on the peaks this morning. The wet growing season has caused concern about the emergence of Vomitoxin as harvest progresses. Vomitoxin has already been present in some of the early harvested crop.

France was able to wrap up wheat harvest over the weekend. Germany however, who has been struggling with wet weather during harvest, is still looking for a break in the forecast to cut the remaining acres.

Trading opened at 8:30 PM Sunday night, which was 1.5 hours later than expected after the CME ran into unspecified technical problems. Those problems have since been resolved.

August 22 – Morning Comments

The grains moved slightly higher in the overnight session with corn increasing ½ a cent, soybeans up 3 ¼ cents and wheat up 4 1/4.

Yesterday, the Pro Farmer crop tour released their yield estimates for Iowa at 178 ¾ bushels per acre which is below the USDA’s August forecast of 185 bushels per acre and well below the latest Planalytics yield forecast of 187.4 bushels per acre. In Minnesota the crop tour projected 170.76 bushels per acre which was down from last year but still higher than the 168 bushels per acre forecast by the USDA.

Yesterday, we continued to see end users increase their basis for spot soybeans. The tight old crop stocks have the September/November soybean spread rocketing higher. The spread is now trading at 106 ½ cents, up from 11 cents on August 4th. End users have supported the bullish spreading with the Gulf CIF basis now trading +325 off the November contract and a processor out of Claypool, IN bidding $4.00 over the November contract for soybeans delivered by September 3rd.

Wheat quality problems continue to be a concern in Europe with more rain in the forecast for Germany as it looks to harvest the remaining 25% of its crop. Quality specifications for the delivery locations of the European wheat contract have been changed weeks ago to ensure that foreign buyers are not delivered feed wheat. Recently across the newswires there is talk that Lithuanian wheat and English wheat are being imported to mix with French wheat to get quality up to spec.

Aug 21 – Morning Comments

Weekly export sales were released this morning, with very strong new crop corn and soybean sales reported. Corn sales beat out expectations coming into this morning’s report, with FAS reporting 719,300 MT of 2014/15 corn sold. Major buyers were Colombia, Mexico, and unknown destinations. Soybean export sales were a mixed bag, with net cancellations of 89,600 MT reported for 2013/14 and large sales of 1,420,000 MT reported for the new crop. Soybeans should have favorable Wheat saw relatively poor sales, with just 209,200 MT reported sold. This was below expectations and down 62% from the 4 week average.

The Pro Farmer Crop Tour enters day 4, with scouts moving from Coralville and Spencer Iowa to Rochester, MN. This will be the final day of the crop tour, and as shown by the map below has the potential to see some very good stands of corn. Follow #PFtour14 on twitter for live photos and comments from the crop tour.

NOAA will be releasing their September and 90 day weather outlooks this morning. A major focus of this report will be the potential for an early frost/freeze event. Monday’s crop progress report showed just 22% of U.S. corn dented compared to a 5 year average of 27% for this week in the growing season. In Iowa just 16% of corn is dented compared to a 5 year average of 25%. Soybeans remain less of a concern in terms of progress as 83% of the crop is setting pods compared to a 5 year average of 79%. Numerous reports have been made from the Pro Farmer Crop Tour that the soybean crop will need more growing degree days to maintain yield potential.

August 20 – Morning Comments

Grains are mixed this morning with corn off 3 cents, soybeans down 4 cents, and Chicago wheat up 2. Exporters sold 110,000 metric tons of soybeans to Vietnam for 2014/15 delivery.

Day 3 of the Pro Farmer crop tour is now underway with the eastern leg moving from Bloomington IL to Coralville, IA. Western crop scouts will be moving from Nebraska City, NE to Spencer, IA. This should show crop scouts some of the best corn of the entire trip, with our models projecting yields 10-30 bushels per acre better than last year along much of today’s route. In western Iowa we are projecting yield at 188 bushels per acre. Follow #PFTour14 and @GrainTV on twitter for live updates from the trip and to see crop photos as they are released.

With today’s crop tour is taking scouts through prime growing regions, strong yield potential is likely to cause some social media buzz. Expectations are for the market to trade lower as it is pressured from images of high yielding counties.  However, the corn market has been able to find its footing after a steep sell off starting early May. Price action will be critical to monitor over the next few days. If we can’t trade lower as scout’s survey some of the top fields in America, corn may have some more upside before resuming the bearish trend.

 

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August 19 – Morning Comments

Grains are trading lower this morning in Chicago with corn down 3 cents, soybeans of 6 cents, and Chicago wheat down 3 cents.

The Pro Farmer crop tour is entering day 2 this morning with the western leg moving from Grand Island to Nebraska City, Nebraska. The eastern leg will go from Fishers, Indiana to Bloomington, Illinois. The map below shows Crop Reporting District yield forecasts for corn with the Pro Farmer Crop Tour route highlighted in blue. Tour stops are shown as blue dots. As you can see from the map, day 1 and day 2 should produce the “worst” yield forecasts, relative to 2013, of the entire trip. Day 3 and Day 4 of the tour will be in Iowa and Illinois where we are projecting yields up sharply from 2013. Expect the corn market to be pressured by reports of exceptional crops on Wednesday and Thursday of this week.

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Crop Progress was released after the market close Monday, showing soybeans rated 71% good-to-excellent. This was up 1% week over week. 83% of the soybean crop is now setting pods – well above the 5 year average of 79%. Corn conditions slipped a percent, now rated 72% good to excellent. 22% of corn is now in dent stage.

This week we should receive wetter than normal precipitation across much of the northern grain belt, with South Dakota, North Dakota, Minnesota, Iowa, Indiana and Ohio all getting a drink this week. The cooler trend across the upper Midwest and the hotter trend in the southern Midwest should collide to provide a number of precipitation opportunities to finish off much of the corn and soybean crop.

This morning an 8,000 gallon diesel occurred along the Ohio River. The incident has shut down the river as officials have responded to the situation. The Ohio River is closed to vessel traffic near Cincinnati, OH to Dayton, Kentucky.