Morning Comments – September 22

Grains were subdued overnight with little movement beyond yesterday’s close. In outside markets, crude oil was up for the 3rd day in a row while the US dollar was sharply lower.

Heavy rains in SE Minnesota/NE Iowa/C. Wisconsin are causing some localized flooding. But, rains are are expected to taper off today, although they are expected to return early next week. Rains in 11-15 day keep harvest very slow in NW Midwest but E. 1/2 harvest delays remain minor next 2 weeks.

In export news, Morocco continues to shop the global market for wheat, buying 310,000 MT of wheat from the EU. Yesterday a deal for 235,000 MT of wheat from the US had been purchased. Egypt reentered the tender market looking to source wheat. It relaxed its ergot tolerance from 0% to 0.05% after no suppliers were willing to deliver under those specs.

On Wednesday, the Fed left interest rates unchanged but strongly signaled it could still tighten monetary policy by the end of this year as the labor market improved further. The Fed said U.S. economic activity had picked up and job gains were “solid” in recent months.

WEEKLY EXPORT SALES

Actual

Expected

Corn

921.9

700-900

Soybeans

875.7

900-1,200

Wheat

561.0

300-500

Morning Comments – September 21st

Grains dipped lower overnight while crude oil and equities were in positive territory to start the day.

After finding a one-month high yesterday, soybeans turned lower as active farmer selling yesterday kept basis levels softening. Corn tried for the 4th time in two months to clear the $3.42 area in yesterday’s trade but settled below the $3.40 mark and is off further today.

Morocco’s grain agency, ONICL, said on Wednesday it had bought 235,000 MT of U.S. soft wheat under a preferential tariff agreement. Earlier this month, ONICL launched a tender to buy 300,000 tonnes of U.S. soft wheat, 300,000 tonnes of EU soft and 45,000 of EU durum, with shipments that should arrive at Moroccan ports by Dec. 31. The North African kingdom has agreements with the United States and the European Union to import certain types of grain at preferential tariffs, with volumes depending on the size of the local harvest.

Investors will watch the U.S. Federal Reserve policy decision later on Wednesday. Expectations of a rate increase have all but evaporated after some weak economic data. The Fed is expected to keep rates unchanged, but may signal year-end hike. The Fed’s rate-setting committee will release its policy statement at 1 p.m. CDT. Fed Chair Janet Yellen is scheduled to hold her quarterly press conference half an hour later.

 

Morning Comments – September 20

Grains were again in positive territory to start the day with soybeans leading the complex higher. In outside markets, the US dollar was slightly higher as were equities while crude oil was slipping lower going into the start of the day session.

USDA’s crop progress report showed on change in the condition of the US corn and soybean crops, as both held steady on the week at 74% and 73% good-to-excellent, respectively. Corn harvest came in a little below expectations with 9% of the crop harvested versus an average trade expectation of 11%. Soybean plantings were at 4%, which was inline with expectations but slightly below the 5-year average pace of 5% harvested at this time of year.

Russia is expected to harvest a grain crop of between 110 and 116 MMT this year, Agriculture Minister Alexander Tkachev told a conference in Moscow on Tuesday. The country’s grain exports may total 35-40 million tonnes in the 2016/17 marketing year which started on July 1, he added. The ministry had previously expected the crop in a range of 113 million to 116 million tonnes

This morning Stats Canada revised higher their wheat crop forecast.  They pegged all wheat output up 14.3% to 31.32 MMT vs 27.39 MMT in 2015. Canola output was seen as unchanged at 18.31 MMT as compared to the same output level in 2015.

The U.S. Federal Reserve’s two-day Federal Open Market Committee meeting on interest rates begins today. The meeting concludes on Wednesday with an interest rate decision due at 1 p.m. CDT.

Morning Comments – September 19

Soybeans posted double digit gains to hit a one-week high to start the day while corn and wheat gains were limited to a few cents. In outside markets, crude oil found strength and helped push equities higher to start the week.

Crop consultant Safras pegs Brazil’s 2016/17 corn crop at a record 92.3 MMT versus 70.75 MMT in 2015/16 . They expect summer crops planted area for corn to rise 7.8% from year ago to 4.21 million hectares. The increase in summer crop area is linked to the improved price of the grain in comparison to soybeans.

Dry soil could hit the sowing of winter grain in Ukraine, analyst UkrAgroConsult said on Monday.
Winter wheat accounts for 95% of Ukraine’s overall wheat output, and the winter crop is also a significant part of the barley harvest. The consultancy said in a statement the average daily temperature was up to 6 degrees Celsius higher than the norm, and that had created poor conditions for preparing the soil for winter sowing.

Egypt was again tendering for wheat. But their last tender met with silence as no global sellers offered up wheat because of strict Ergot restrictions.

Oil prices rallied on Monday, after Venezuela said a deal to stabilize the global oil supply is imminent between nations inside and outside the Organization of the Petroleum Exporting Countries.

 

Weekly Cash Comments

Cash Commentary-

National basis levels moved lower after a taking a break last week. Historically basis levels are pegged to keep moving lower until mid to late October.

On average, corn lost half a cent per bushel.  Ethanol plants were down 1 cent per bushel this week. Corn basis along the river was off the most losing almost 3 cents. Basis along the river and at the gulf typically gets hit the hardest this time of year.

Soybean basis was hit especially hard this week off almost 4 cents nationally. Crush facilities took the lightest blow losing 2 3/4 cents. NOPA reported that soy processors crushed 2.6 percent fewer beans in August than a year ago and the pace fell below market expectations due to declines at plants in the Southwest. Soybeans along the river were the biggest loser, off 7 1/4 cents.

Futures Commentary-

Grains lost most of last week’s gains. Corn was off 8 1/2 cents, soybeans down 26 1/4 cents and wheat lost 6 1/2 cents.

USDA’s crop report on Monday did little to change the bearish sentiment gripping the market. Soybean production came in well above expectations, eclipsing a 4.21 billion bushel crop on a +50 bushel per acre yield. For corn, USDA was lower than their August estimate but not as low as the average analyst expectation.

Wheat continues to face pressure from abundant global supplies and uncertainty over demand from Egypt, whose strict terms relating to grain fungus have put off traders. Quarrels have persisted between the state’s agricultural quarantine office, which has maintained a zero tolerance policy since late last year, and ministries that support the international norm, sowing confusion among suppliers and frustrating GASC’s attempts to make purchases.

The long-term forecast for 16-30 days shows a wet trend, potentially slowing the US harvest. The first report by USDA on corn harvest pegged the US crop at 5%, behind the 5-yr. avg. of 7%, which was also the average of trade expectations. Both corn and soybean condition ratings held firm on the week.
On the international front, Australia raised its forecast for wheat production for the 2016/17 season by 14.6% to 28.08 MMT, up from a forecast in June for 25.51 MMT. The raised forecast is in line with a Reuters survey of 10 analysts and traders who said they were expecting an Australian wheat harvest of 28 million tonnes.

On Wednesday, EIA crude oil stocks were off for the week coming in 50,000 barrels below last week. Traders had expected a 3.8 million barrel build. However, gasoline stocks ballooned on the week helping push oil prices lower.

Morning Comments – September 16

Grains were weaker to start the day as outside markets for equities and oil were lower on thoughts that the Fed might raise interest rates next week.

Yesterday, NOPA soybean crush figures were a disappointing 131.8 MB for the month of August. That compared to an average analyst estimate of 136.2 MB and an August of 2015 crush of 135 MB.

In overnight news, global wheat sellers sat on their hands for the latest round of Egyptian wheat tenders. Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC), did not get any offers from global wheat suppliers at its purchase tender on Friday on the back of continuing worries over the country’s ergot fungus policy, Cairo-based traders said.

In weather news, overnight rains in the Western Cornbelt with heavier rains near Nebraska/Iowa & Iowa/South Dakota borders will slow harvest there. Rain is expected to head east next 2 days and favor OH/IN. Next week should be more favorable for dry conditions and harvest progress.

This morning fresh inflation data in the US showed consumer prices were rising faster than expected. That put Fed watchers on alert for a potential interest rate hike at the Fed meeting Sep 20-21. The US dollar index is up 0.5% while crude oil and equities are lower. The Baker Hughes rig count later today should provide more guidance for crude oil .US rig count numbers have been increasing steadily since the end of May.

 

Morning Comments – September 15

Grains were struggling to hold on to modest gains going into the morning break. Outside markets saw crude oil and equities also try to recover from yesterday’s sharp sell-down.

NOPA soybean crush figures are due out later this morning and are expected to reach 136.2 million bushels for the month of August. That would be a record large figure for the month if realized. Estimates range 128 to 142 MB.

In weather news, the Midwest should see rains return tonight into the weekend before breaking early next week. The long-term forecast for 16-30 days shows a wet trend, potentially slowing the US harvest.

Export sales this morning were unimpressive with all three commodities coming in at the low end of expectations for the week.

WEEKLY EXPORT SALES

 

Actual

Expected

Corn

724

800-1,100

Soybeans

1,012

900-1,200

Wheat

402

350-550

On Wednesday, EIA crude oil stocks were off for the week coming in 50,000 barrels below last week. Traders had expected a 3.8 million barrel build. However, gasoline stocks ballooned on the week helping push oil prices lower.

 

Morning Comments – September 14

Grains were unchanged to slightly weaker in overnight trade while in outside markets equity futures tried to recover some of yesterday’s sharp losses while crude oil continued to dip lower.

Yesterday, Argentina’s government said they were considering postponing a tax cut planned for next year on soy exports, as a recession in Latin America’s third-largest economy eats into fiscal revenue. Also, Argentine farmers are expected to harvest at least 15 MMT of wheat in the 2016/17 crop year versus 11.3 in the previous season. Wheat planting in Argentina expanded dramatically when President Mauricio Macri eliminated export taxes soon after his December inauguration.

Japan’s Ministry of Agriculture is seeking to buy a total of 149,231 tonnes of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.

The US has issued a challenge with the WTO for China’s price supports for domestic production of rice, wheat and corn. The US Trade Representative’s office said China’s “market price support” for these grains was estimated to be nearly $100 billion above the WTO limits and constitutes an artificial government incentive for Chinese farmers to increase output.

The American Petroleum Institute (API) is reporting a 1.4-million-build in US crude oil inventory over last week—bursting the bubble created the week before when official data showed the biggest draw on inventory in a century. Still, the build is much lower than expectations of a 4-million-barrel build, in part because the release of shut-in oil following a Gulf of Mexico hurricane.

 

Morning Comments – September 12

Grains were lower overnight as traders wait for USDA’s report later this morning for further direction. In outside markets, crude oil and equities were sharply lower.

Today’s USDA report is expected to show a decline in US corn production and an increase in soybeans relative to USDA’s report in August.  Average analyst estimates call for a 173.4 bushel corn yield producing a 15.03 billion bushel crop. That is off from August’s estimates of 175.1 and 15.13, respectively

Meanwhile, good growing conditions in August have traders expecting a tick up in soybean production and yields. The August forecast by USDA was a 4.06 billion bushel crop on a 48.9 bushel per acre yield. Analysts are looking for today’s numbers to be 4.09 billion and 49.2 bushels per acre.

Taiwan’s MFIG purchasing group has issued an international tender to buy 40,000 to 65,000 MT of corn which can be sourced from the United States or Brazil.

Oil fell for a second trading day in a row on Monday, after speculators cut their bullish bets by the most in three months last week and U.S. crude drillers added more rigs for a tenth week running. Adding to the pressure on the oil price, the dollar rose against most emerging-market currencies, as traders look for a greater chance of U.S. interest rates rising next week, which forced up bond yields and dented the broader commodities complex.

 

Weekly Cash Comments

CASH MARKET COMMENTARY

Grain basis held steady after this week after a sharp turn lower last week.

Overall corn gained 1 cent per bushel canceling out last week’s move lower. Ethanol remained steady this week averaging no changes. Corn along the river moved slightly lower this week off ¼ cent per bushel. Even with strong exports that exceeded expectations, corn seemed to be in limbo waiting on the supply and demand report for further direction.

Corn_2016_09_08

Soybean basis continued lower following the very weak beginning to September. Basis levels are continuing to have trouble finding support and were off and average of 2 cents per bushel. Crush facilities managed to gain ½ cents per bushel and expected world demand for soyoil remains high. Soybeans along the river continued to move lower losing 7 cents this week.

 Soy_2016_09_08

 

FUTURES COMMENTARY

Futures finally gained some support after weeks of moving lower. Corn was up 14 ¾ cents, soybeans jumped 33 cents, and wheat moved 11 ¼ cents higher.

Private analysts continue to weigh in on the US crop size ahead of Monday’s USDA crop production report. Wednesday, Linn Group pegged the US corn yield at 171.5, well below USDA’s August forecast of 175.1. For soybeans, they expect a yield of 49.6 bushels per acre versus USDA’s previous forecast of 48.9. Planalytics final forecast for the season was also announced as 171.1 and 49.6.

In world news, China’s 2016 corn harvest is expected to 2.3% to 201.5 million tonnes. Farmers have been planting less of the grain following a change in government support.

On Wednesday, Stats Canada released stocks forecasts for wheat and canola. Canada’s wheat stocks were pegged at 5.17 MMT on July 31, down from 7.05 MMT a year ago. Traders had expected 4.29 MMT of stocks. Meanwhile, canola stocks were at 2.02 MMT, moving lower from last year’s inventory of 2.54 MMT but much higher than expectations of 1.27 MMT.

Oil prices rose 60 cents a barrel on Thursday after U.S. industry data showed a large draw-down in crude stocks, reflecting the temporary impact of an Atlantic storm. U.S. crude stocks fell by 12.1 million barrels last week, data from API showed after the market settled on Wednesday, compared with expectations for an increase of about 200,000 barrels.

Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future, sending prices higher on hopes the two top oil producers would work together to tackle a global glut. Even if the Monday statement was short on action, it marks a significant development in the Russia-Saudi relationship. The two countries have been effectively on opposing sides of the war in Syria, while Moscow is an ally of Iran, an important rival to Saudi Arabia.