Pre-Report Expectations (Mar 28)

This Thursday, at 11:00 AM Central Time, the USDA will release the Planting Intentions and Quarterly Grain Stock reports. Below are market expectations for the report, and what Grain Hedge analysts are looking for out of the numbers.

Once again, expectations are for very large corn and soybean acres to be sown this spring. Analysts are expecting soybean acres to pick up the most ground as a percentage of last year’s figures, with the average analyst guess looking for 1.6% more soybeans acres to be planted. This compares to 0.1% more corn acres and 1.2% more wheat acres expected.

13/14 Planted Acreage (Million Acres)
Avg. Analyst Guess
Analyst Range
12/13 Acreage
Corn
97.3
95.7-98.5
97.2
Soybeans
78.4
77.0-79.7
77.2
Wheat
56.4
55.6-57.3
55.7

March 1st quarterly stocks are expected to be lower than this time a year ago for corn, soybeans, and wheat. The USDA has raised their projected corn used for feed by 400 million bushels since the December WASDE report, and it will be important to see this higher feed usage reflected in the March 1st Quarterly Stocks Report. We have been talking a lot recently about the deep discount wheat has compared to corn in the cash market, and how many feed lots are starting to use wheat as a substitute for corn in feed rations. While Thursday’s numbers may show some signs of this substitution, we would expect the major impact of this to be reflected in the June Quarterly Stocks Report.

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March 1st Grain Stocks (Billion Bushels)
Avg. Analyst Guess
Analyst Range
March ’12 Stocks
Corn
5.01
4.89-5.25
6.02
Soybeans
0.94
0.91-0.99
1.37
Wheat
1.18
1.06-1.24
1.20

 

Grain Stalemate Continues (Mar 27)

Grain prices continued to trade in a narrow range overnight as participants eagerly await fresh supply and demand data from USDA on Thursday.  Corn and soybean prices were mostly unchanged over night while wheat posted a modest 1-cent gain.

In soybeans, the market has been bolstered of late by Brazil’s ongoing logistical problems and getting their record-large crop to the export market. There is now a 20km line-up of trucks and 65 days delay in shipping, mostly for soybeans, in Brazil. Further evidence of this bottleneck was apparent as Mato Grasso cash prices traded at a $5 a bushel discount to US front-month futures, the largest such discount in over 5 years. For Thursday, traders are looking for higher soybean plantings this spring as US farmers are expected to sow 78.4 million acres of soybeans, up from 77.2 million last year.

For corn, ethanol margins continue to show signs of improving which is helping push ethanol plants to bid more aggressively for corn. Credits for blending ethanol with gasoline jumped to a record $1.06 a gallon on March 8, from 7.1 cents two months earlier, boosting the incentive to produce more. Valero said March 15 it restored operations at a plant in Bloomingburg, Ohio, and restarted a mill in Linden, Indiana, on March 22. At least 19 plants had been idled since June, according to the Renewable Fuels Association in Washington. For Thursday, traders are looking for a modest gain in corn plantings with US farmers expected to plant 97.3 million acres of corn, up from 97.2 million last year.

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For wheat, temperatures have warmed up after the deep freeze conditions in the Southern Plains over the past few days.  It remains to be seen whether or there was widespread wheat freeze injury in the 2013 wheat crop, but some injury may have occurred in more advanced fields where jointing is occurring. Overnight, South Korea bought 38,000 MT of wheat from Australia.

Grains Await New Data in Quiet Trade (Mar 26)

Grain markets were mostly quiet overnight with changes limited to a few cents up or down across the board as traders await key supply and demand data on Thursday from USDA.

New-crop corn prices have been firming of late as thoughts of farmers planting fewer acres than was originally anticipated a few months back. Soybean prices have climbed relative to corn over the past few months which has some traders looking for only a small increase in corn plantings over last year. Furthermore, extreme cold in the key areas of the Midwest make early planting unlikely which could build more premium into the corn market as the calendar turns to April next week.

For soybeans, Monday brought fresh sales from China as private exporters reported to the USDA an  export sale of 234,000 MT of soybeans to China for the new-crop 2013/2014 marketing year. However, new business on old-crop beans continues to be non-existent, but the pace of exports and export sales is still well ahead of what is needed to hit USDA’s annual export target.

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In wheat, the cold snap across the Plains has some concerns about freeze damage as crops there begin to enter the jointing stage. Weekly state crop condition information showed steady to falling crop condition scores for wheat and an overall poor state of the wheat crop. Kansas held ground at 29% of its wheat crop in good-to-excellent condition this week, while Nebraska’s first reading of the season showed only 6% of the crop in good-to-excellent condition.

Grains Start Week in the Red

Grain markets were lower overnight as traders look for increased supplies in the coming USDA report on Thursday. Overnight, nearby May soybeans were off 6 cents a bushel, while wheat and corn were off 1-cent a bushel.

On Friday, Informa projected US corn acreage at 97.753 million, which would be the highest level in 77 years and up from 97.2 million last year.  Friday also brought news of poor feeder cattle numbers as USDA’s Cattle on Feed report showed February’s cattle placements were off 13.5% compared to last February and the lowest on record since the series began in 1996. Export business continues to be non-existent for the US as overnight a private buyer in the United Arab Emirates purchased 40,000 MT of corn likely to be sourced from South America.

In wheat there was notable global business overnight but yet again US exporters fell short.  Australia was the lowest bidder for an Iraqi wheat tender of a minimum 50,000 MT, while India came in as the lowest bidder on a Bangladesh tender for 50,000 MT. Snow and rain continue to pass through large areas of the Plains and Midwest helping to improve soil moisture conditions there. The Southern Plains received about a 0.50 inch of moisture over the weekend with more expected later in the week.

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For soybeans, China continues to be absent from the US bean market which has put bean prices on the defensive. Informa forecasted US soybean plantings at a record 78.457 million acres, versus last year’s final plantings of 77.2 million.

Basis Levels Slump on Slowing Demand

Corn and soybean basis fell this week as rallies in the futures market helped entice farmer selling. Corn basis was off 4 cents on average for the week while soybean basis was off 1-cent a bushel.

In the corn market, a 40-cent gain in nearby corn futures over the past two weeks coupled with discounted deferred prices helped move grain into the pipeline. Weak export demand continues to take its toll on the Gulf, with corn basis plummeting 9 cents this week. River markets saw similar hits with losses of 5 to 10 cents fairly common at key markets in the Midwest. For ethanol plants, they backed off on basis by 6 cents a bushel for the week.

spotcorn_2013_03_22

For soybeans, basis levels were off 1-cent a bushel as falling futures for much of the past week kept pipeline supplies fairly tight. Grain buyers continue to offer premiums for spot delivery versus deferred delivery. However, some buyers are backing off basis as the inverted carry and the prospect of large South American supplies hitting the market keep basis levels in check. At the Gulf, basis levels were off 13 cents a bushel on the week but river terminals fell only 2 cents a bushel but some areas of the lower Mississippi  and Ohio rivers saw much deeper basis losses. Soybean plants were mostly unchanged on the week.

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spotsoy_2013_03_22

 

Profit Taking Eases Grains Overnight (Mar 22)

Grains were lower across the board overnight as traders locked in profits from sharp gains in recent trading sessions. Soybean and wheat prices were down 2 cents a bushel while corn was off 3 cents.

In wheat, South Korea rejected all offers on its tender for 55,000 MT of feed wheat overnight. In addition, India continues to push hard to move wheat in the global market announcing they were offering 160,000 MT of milling wheat to international buyers. In the US Plains, weekend weather looks to be cold with potential temperatures falling into the low 20s as far south as Oklahoma, but limited crop development at this time could help mitigate the damage.

For corn, prices have rallied hard over the past two weeks gaining 40 cents. But, further gains will likely depend on the outcome of the March 28th reports on old-crop stocks and planting intentions for 2013/14. Beneficial moisture is expected to hit much of the Midwest this weekend with a snowstorm bringing 3 to 8 inches of snow. However, cold temperatures will likely delay early plantings and keep farmers from getting much in the ground for early April. In global markets, Argentina approved another 2 MMT in 2012-13 corn exports raising the season’s full export quota to 17 MMT while Ukraine is likely to raise its grain exports by about 26 percent to 27 MMT in the July 2013-June 2014 season thanks to the expected record crop of more than 53 MMT.

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In the bean market, export sales on Thursday were disappointing as both old-crop and new-crop sales came in below expectations. Even so, prices managed a sharp rally in Thursday’s session as port delays in Brazil give hope to further business hitting the US market. However, a weakening hog sector in China may start to cool Chinese demand. China may purchase about 59 MMT in the 12 months through September, compared with 63 MMT projected by USDA, according to the median of a survey of three researchers and two traders by Bloomberg News.

Beans Rally Off of Lows (Mar 21)

Beans rallied in the overnight session adding 10 cents to nearby May futures, while corn and wheat took a breather from recent gains, posting 3-cent and 5-cent losses, respectively.

Soybean prices seem to have found a near-term bottom as concerns about Brazil’s shipping delays support ideas of strong near-term demand for US soybeans. However, as of yet no significant business has been reported by China for US beans and eventually Brazilian beans will have to come onto the market, leading to price weakness, especially with a recovery in US supplies in 2013/14. On that front,  weather forecaster Lanworth projected US soybean plantings at a record 81.3 million acres this spring, up from 77 million in 2012.

For corn, prices have rallied off of their lows from March 7th, gaining 40 cents a bushel on ideas of improved demand from the ethanol sector.  Valero Energy said on Wednesday it will soon have all 10 of its plants back online and operating at or close to capacity. Data from the US Energy Dept on Wednesday showed an increase in weekly ethanol production of 12,000 barrels/day to 809,000 bpd as more US plants come back online. However, global buyers continue to shun US corn, as Taiwan rejected all offers and made no purchase in a tender for 23,000 MT of U.S.-origin corn and 12,000 MT of U.S.-origin soybeans. Prices were said to be too high.

In wheat, a strong surge in prices on Wednesday helped erode some of the discount to corn. In the US cash market average bids of buyers for SRW wheat versus corn went from a 37-cent a bushel discount of wheat on Tuesday, to a 26-cent discount on Wednesday with the strength in the wheat market.  A week ago it traded as low as a 46-cent discount. However, announced export business has been largely going to foreign competitors. On Wednesday, Algeria made a large 350,0000 MT purchase of French wheat, while smaller tenders went to India. Jordan, Bangladesh and Iraq all have wheat tenders pending.

WEEKLY EXPORT SALES

CORN:  92,200 OC / 183,300 NC (expected 0 to 250,000 MT for OC / 50,000 to 400,000 MT for NC)
SOYBEANS:  107,800 OC / 234,000 NC(expected 300,000 to 600,000 MT for OC / 150,000 to 400,000 MT for NC)
WHEAT:  484,500 OC / 88,800 NC (expected 450,000 to 800,000 MT for OC / 100,000 to 320,000 MT for NC)

 

 

Grains Find Positive Territory (March 19)

Grain futures managed positive gains in the overnight session after suffering steep losses across much of the complex on Monday. Soybeans and corn were up 4 cents while wheat posted a 2-cent gain.

Nearby May corn futures reached its highest level since February 6th trading up to $7.24 in the overnight session. News from Taiwan that they were seeking a 23,000MT cargo of corn from the US helped provide small boost. However, exports in general continue to underperform with Monday’s USDA export inspections putting the year-to-date pace still below USDA’s annual projection by 24 MB.

For beans, China announced they were canceling 2 MMT of Brazilian soybeans due to shipment delays. The cargos were to be shipped in January and February, and traders in China now expect to substantially increase shipments into April through June, although it remains to be seen where those beans will be sourced from. Brazil’s port congestion is reported to have waiting time for ships to load beans stretching to around 40 days. Even so, news of late on US exports has been dismal, and US Gulf basis levels have backed off sharply falling 20-cents a bushel in the past week on sluggish demand.

In wheat, crop conditions improved again this week in Oklahoma and Kansas but slipped in Texas and Colorado’s first report of the season showed only 12% of the winter wheat crop in good-to-excellent condition. In international markets, India announced a 65,000 MT tender to export wheat in its ongoing effort to cut its huge stockpiles, while Bangladesh was seeking a 50,000 MT shipment of wheat.

 

Supply Pressure and Cypress Bailout Push Grains Lower

Soybean futures started the week like it finished last week, in negative territory. Front-month May futures was off 15 cents a bushel, while wheat was off 9 cents and corn lost 5 cents a bushel.

An unusual bailout plan for Cyprus triggered selling in global financial markets overnight after Euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to its neighbor Greece.  The decision, announced on Saturday morning, stunned Cypress consumers and caused a run.

On Friday, NOPA pegged the U.S. soybean crush in February at 136.322 MB, off from trade forecasts pof 141.6 MB. Continued pressure from large South American supplies coupled with weak nearby US export demand should keep soybean prices under pressure. On Friday, private analyst Allendale projected record US soybean plantings at 78.3 million acres, up 1.1 million from last year.

For wheat prices have been recovering from recent lows on expectations of better export demand. But, an outlook for growing global supplies and improved US wheat crop conditions should keep the market on the defensive.

In the corn market, signs of idled ethanol plants coming online could be mildly supportive. Poet announced it restarted production in its Bloomingburg, OH plant and will resume production in the next couple of week for its Linden, IN plant. Allendale projected US corn plantings this spring at 96.9 million acres, off from last year’s plantings of 97.2 million.

Bean Selloff Continues

Soybeans slumped further overnight losing 7 cents a bushel, adding to its 23-cent loss on Wednesday. Corn spent much of the overnight session unchanged while wheat prices posted a slim 1-cent advance.

Soybeans continue to be pressured by lack of new export business from China as well as the impending threat of South American supplies hitting the global market. Traders report that Brazilian beans are now being offered at a price competitive enough to U.S. supplies to appeal to traders despite a backlog of shipments.

For corn, prices were fell sharply on Wednesday’s EIA ethanol numbers which showed production was off 8,000 barrels per day to 797,000 barrels per day. With current ethanol margin’s and the dim pace of production, Grain Hedge analysts still expect annual corn use for ethanol to fall short of the 4,500 MB target projected by USDA. In international markets, India sold a small shipment of 13,700 MT of corn to Japan a central US customer, signaling the lack of competitiveness of US corn in the global market and the rise of India as an international presence in global grain trade.

In wheat, prices have firmed on the board relative to corn prices but cash values continue to trade at a discount helping push more wheat into feed markets in Texas and Kansas. Last week, BNSF Rail cut its rate to ship U.S. soft red winter wheat from Chicago to the U.S. cattle hubs of west Texas and western Kansas.

WEEKLY EXPORT SALES

CORN: 282,000 OC/371,000 NC (expected: 150,000 OC/250,000 NC)
SOYBEANS:  657,000 OC/126,000 NC (expected: 400,000 OC/850,000 NC)
WHEAT:  885,400 OC/198,500 NC (expected: 500,000 OC/250,000 NC)