Planting Delays Spur Market Recovery

Grains found mild support overnight after a limit move in the corn market on Monday pushed prices to their highest level since the March 28 Stocks report. Corn was up 2 cents a bushel, while soybean prices were up 5 cents a bushel. Wheat prices came under pressure, losing 6 cents.

In corn, USDA planting progress report showed only 5% complete, just 1% higher from a week ago.  This matches the slowest since 1984, when farmers also had completed just 5% of their corn planting and in that year acreage fell 2% from the USDA’s March Planting Intentions report. However, growing season weather is still the biggest driver for final yield but for the near-term traders will likely react with a bullish bias to the planting delays occurring. Looking at the weather, heavy rainfall and snow are expected this week across the western U.S. Midwest and eastern Plains. There is a big storm system starting Tuesday which will spread in intensity and coverage by Thursday and linger into the weekend. As a result, planting should continue to be stalled which should remain supportive for the corn market.

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For wheat, the Wheat Quality tour kicks off today in Kansas and continues through Thursday. Kansas State agronomist Jim Shroyer said to the tour participants that Central Kansas looks pretty good thanks to spring precipitation but he expects to  see freeze damage in some south-central areas around Great Bend, KS, including Pratt, Barton and Rice counties. He noted that in western Kansas, west of Jetmore and Quinter, KS, the wheat goes downhill in a hurry and speculated that some fields will not be harvested. Shroyer said that area of Kansas reminds him of 1989, when the state’s winter wheat struggled after the big U.S. drought of 1988. Internationally, South Korea purchased 48,900 MT of U.S.-origin milling wheat.

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For soybeans, export business continues to remain quiet while domestic crushing plants bid up basis levels to draw out beans from farmers. A key processor in Decatur was up 10 cents on basis on Monday.

Grains Rally Overnight on Wet Weather Outlook

Corn was up 10 cents a bushel on the overnight session as wet weather continues to plague corn planting. Soybeans found modest support posting a 2-cent gain while wheat was up 6 cents a bushel.

In corn, planting delays are starting to get the attention of the market as last week’s slow pace of only 4% planted combined with a wet and cold weather outlook for this put added pressure on getting the crop planted in a timely fashion. Weather models show a prolonged major rain event is likely to affect most of the Midwest, as well as the eastern portions of the central Plains over the next several days, with coverage around 75% over these areas and the rainfall amounts range from 1-4 inches. USDA’s planting progress report this afternoon is likely to show limited sowings of 8 to 10%.

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In wheat, the Wheat Quality tour begins this week which should provide key information on the state of the hard red winter wheat crop in Kansas and parts of Oklahoma. Early season drought along with severe cold snaps in the past month has likely put the crop below par but the extent of the damage remains unclear. Over the weekend, Egypt announced that they may reach 70% self-sufficiency in wheat production this year because of an expected boost in the local harvest. Egypt usually imports around 10 MMT of wheat a year but this year the state says it will buy only around 4 to 5 MMT from abroad, hoping to get the rest from local production.

For soybeans, near-term demand from domestic soybean crushers has helped keep nearby prices moving higher. Last week, crushing plants saw an average 4-cent gain in basis while the rest of the soybean buyers posted a 3-cent loss on average. However, new-crop beans may see more pressure as corn planting delays could signal more soybean acres as farmers switch from corn to beans.

Grain Basis Slips

Cash grain markets felt pressure this week from river flooding and the inverse carry in the futures market. For the week, US average corn basis slipped 3 cents a bushel while average spot soybean basis was off 2 cents a bushel.

Flooding along the Illinois River left many grain elevators shut down at the beginning of the week which caused bids to ease in these areas. However, the Ohio river was largely unaffected so basis levels from Southern Ohio to Southern Illinois found some strength. At the Gulf export market, corn basis was up 4 cents a bushel as limited supplies were able to move to the Gulf. For ethanol plants, average corn basis was off 3 cents a bushel with Eastern Cornbelt plants showing more weakness this week than Western Cornbelt plants.

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For soybeans, Gulf basis lost 3 cents a bushel as soybean exports continue to decline along normal seasonal lines.  Export sales hit a marketing year low this week with net reductions reported of 206,300 MT on the old crop.  River terminals were off 4 cents a bushel for the week while soybean crushing facilities bid up soybean basis by 4 cents a bushel.

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Grains Falter Overnight

Grain markets were lower overnight after a strong rally on Thursday.  Wheat was down 4 cents while corn was off 3 cents. Soybeans managed a small 1-cent gain after being in negative territory for much of the overnight session.

In wheat, traders will eagerly watch next week’s annual Wheat Quality Council tour of wheat fields. With only 35% of the U.S. winter wheat crop in good-to-excellent condition, and recent freeze conditions hitting much of the key wheat states, this could give traders a better indication of how bad the crop may be.  On Thursday, USDA’s weekly export sales showed only 71,700 MT for the old crop.  On the marketing year, wheat is still about 26.8 million bushels behind pace to meet the current USDA projections.

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For corn, better weather is expected to jump start planting in the coming weeks for the Midwest after cold and wet weather has hampered progress. On Thursday, the International Grains Council projected world corn production will jump 10 percent in the 2013-14 season on increased planting and better yields, rising to 939 MMT up from 851 MMT. They also see higher global corn stockpiles at 143 MMT at the end of the next season from 117 MMT at the end of 2012-13. While US weekly corn sales were on par with expectations at 314,700 MT for the old crop, total sales for the year continue to run about 26.5 million bushels behind pace to meet the current USDA projections.

Soybeans found some technical support on Thursday after selling off sharply on Wednesday.  For the July contract $13.50 continues to hold support.  The November contract filled a gap that was left last June with $11.95 being the low.  The market bounced off these technical support levels leading to the rally Thursday.  Soybeans are becoming increasingly harder to come by in the cash market adding support to the futures.  Export sales hit a marketing year low with net reductions reported of 206,300 MT on the old crop.  With these reductions on old crop, soybeans stand about 89.4 million bushels ahead of pace to meet current USDA forecasts.

Grains Up Overnight

Grains were higher overnight as soybeans recovered some of their losses from Wednesday’s session. Overnight, soybeans were up 10 cents a bushel while corn and wheat managed a 4-cent advance.

Soybeans found selling pressure on Wednesday as many traders anticipate Chinese demand for soybeans, used to feed chickens and livestock, could remain weak for months, as poultry sales drop due to a deadly bird flu virus outbreak. Authorities have culled tens of thousands of birds in the effort to contain the spread the virus, which has killed 22 people and infected 108 since the first deaths reported in March. In addition, Brazil dock workers called off a strike, paving the way for more movement of grain.

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In corn, the market continues to eye weather as beneficial rains bring needed moisture dry soils, but further delays planting of new-crop corn. Wednesday’s ethanol number showed weekly production up  21,000 BPD to 853,000 BPD. Production was just 2,000 BPD short of the marketing year high from two weeks ago. Crush margin h

In wheat, China could be back in the market for more wheat soon. Reports indicate China’s stocks are enough to meet demand for six months, but substandard storage facilities have damaged part of the crop, some of which dates back to 2010. Traders said Beijing would continue to import to refill its depleted reserves whenever there was a slump in global prices. “We expect another 2-3 million tonnes of imports because authorities are very worried about the volume of deteriorating wheat among state stocks,” said Ma Wenfeng, an analyst with Beijing Orient Agri-business Consultant Co. Ltd.

WEEKLY EXPORT SALES

 

OC Actual

OC Expectations

NC Actual

NC Expectations

CORN

314.7 TMT

200-400 TMT

321.6 TMT

150-300 TMT

SOYBEANS

206.3 TMT

250-350 TMT

78.4 TMT

450-600 TMT

WHEAT

71.6 TMT

200-400 TMT

170.5 TMT

400-600 TMT

 

Corn Sells Off for 3rd Day

Corn and wheat prices found more selling pressure overnight as traders continue to point to better weather in the coming days. Corn was off 2 cents while wheat was down 4 cents a bushel. Soybeans posted a 4-cent advance in the overnight session.

The current 6-to-10 day weather outlook shows drier weather in the central and southern Midwest and northern Delta which could allow planting there to finally improve a bit. However, soggy fields after +6 inches of rain in the last week could still take time to dry out and get planting into full swing. On the demand side, ethanol producer Poet announced that it has restated a Missouri plant closed in February – in part for an upgrade as well as because of a margin squeeze. EIA ethanol numbers are due out this morning with traders looking for a rebound to mid-800,000 barrels per day of production.

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For soybeans, demand from China continues to keep a firm support under the market. Tuesday, USDA announced another sale of 392,000 MT of soybeans to China during the 2013/2014 marketing year, bringing the reported weekly total by China to over 560,000 MT. Brazil and Argentina are harvesting huge soybean crops this year but the transport problems in Brazil and low Argentine selling as farmers worry about Argentine government policy means that buyers are still having to turn to U.S. supplies for beans and meal.

In wheat, Black Sea markets are starting to return as an export force in the world market. Russia announced yesterday it was lifting its export ban, and allowing up to 500,000 MT of old-crop wheat for shipment, while Ukraine announced overnight that they would allow 200,000 MT of old-crop wheat to be exported.  Wheat prices continue to be pressured by thoughts of better crop-growing conditions as moisture has come to the Southern and Central Plains.

 

New-Crop Corn Threatens New Lows

Grains were lower overnight as an outlook for warmer and drier weather by the weekend helped give bears renewed selling interest. Nearby May corn fell 3 cents while May wheat futures were down 8 cents.  Soybeans bucked the trend, advancing 4 cents.

In the soybean market, a new-crop sale of 174,000 MT for delivery to China was announced Monday morning although weekly export inspections for soybeans were only 4.97 MB. In Brazil, port delays continue to be the norm, as farmers there have taken to making a 1,000 mile detour to avoid Brazil’s two most congested ports, instead taking their soy crop to the country’s southern tip where wait times for ships are as much as a month shorter.

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For corn, Monday’s planting progress showed only 4% of the crop had been planted. This is the slowest start to planting since the 2008 crop year when only 51% of the crop got planted by mid-May. However, improved weather should help give a boost to planting delays. Temperatures are expected to reach the 70s and 80s over much of the Midwest by the weekend with drier weather in the cards. As a result, Dec corn is trading at $5.27, within striking distance of recent lows at $5.25.

In wheat, crop conditions slipped slightly in the last week as 35% of the crop was rated good-to-excellent versus 36% last week.  In Europe, the long winter has delayed the development of plants in key growing regions. The European Commission did not see any reason to modify its prediction that wheat yields in 2013 would be in line with the long-term average. For Northern and Central Europe, on the other hand, clear reference was made to the risks posed by the delayed development.

Grains Weaker on Renewed Hopes for Better Weather

Grain markets were lower overnight as new weather predictions call for slightly better conditions for planting in the coming week and Chinese bird flu continues to threaten US export business. In the night trade session, corn and wheat were off 5 cents a bushel,  while soybeans lost 7 cents.

Heavy rains in the last week have caused flooding on the Mississippi and Illinois rivers. Several of the locks on the Mississippi and Illinois are closed due to high waters.  In addition, many river terminals in the region have halted grain deliveries as a result of the flooding. Some farmland is starting to get flooded which opens up the possibility of shifting out of corn into soybeans as the planting season gets prolonged. This afternoon USDA will release their latest planting progress estimate which is expected to show only a modest increase from last week’s slow pace of 2%.

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For soybeans, the Chinese bird flu issue continues to pose problems as 2 more people died taking the nationwide death toll to 20. The rising death toll from avian flu is intensifying concerns that China’s corn and soybean imports may decline.

In wheat, another winter storm out of the Rockies is expected to push across the Plains for the next three days bringing the potential for record low temperatures. Areas frm South Dakota down to Oklahoma are expected to see temperatures well below freezing bringing another threat for freeze damage to the wheat crop.

Soybean Basis Feels Effects of Domestic & International Markets

It was a tale of two markets this week in the cash soybean market.  Domestic end users were sharply lower on basis as soybean crushing plants begin to cut back production in anticipation of future lower prices, while river markets continue to be bolstered by strong international demand. For the week, U.S soybean basis fell 5 cents a bushel while corn basis continued to tow the line at unchanged.

In the corn market, sluggish export demand keeps basis levels stagnate although still mostly holding up at lofty levels. Ethanol processors did bid up basis this week by 1-cent a bushel on average as ethanol processing margins continue to hold up at their highest levels of the marketing year. However, at the Gulf spot corn basis was unchanged as US export business continues to be non-existent.   Basis levels at river terminals averaged a 1-cent loss.

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For soybeans, the average US spot soybean basis was down by 5-cents a bushel, but this masked the divergence across the two key sectors. At the Gulf, export basis levels bucked the broader trend which helped push basis levels along the lower river system higher. Upper river terminals are starting to run into flooding issues which is beginning to cause some stoppages of deliveries and limiting basis gains there. For crushing plants, double-digit losses in the Eastern Cornbelt were fairly widespread, while Western processors were down only slightly or even stronger.

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Grains Weaker Overnight

Grain markets started the overnight session on positive footing, but eroded ground as the night trade went on. Corn and soybean futures had modest 1-cent losses towards the end of the overnight session while wheat futures were more aggressive showing 3-cent losses in Chicago and 5-cent losses in Kansas City.

Thursday’s steep sell off in the corn market seemed driven by expectations of better planting weather towards the end of the month, as well as continued slow demand for exports. Thursday’s weekly export sales report came in at 400,300 MT for old-crop, toward the high end of expectations. But, thoughts of slowing demand from China is still a concern and Thursday, the China National Grain and Oilseed Information Center estimated a reduction in corn used for feed by about 2 million metric tons.  Weather over the next 10 days still looks below normal for temperatures as Iowa looks to see only a couple of days above 60 degrees in the 10-day forecast. Monday’s planting progress report should show limited activity over the last week.

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For soybeans, export sales were reasonably good at 339,400 MT for old-crop and 227,400 MT for new-crop, which was up 48% from the combined total from last week. Domestically, some bean plants are showing sharply higher basis as tight-fisted farmers continue to hold tight to their remaining old-crop stocks.  In Brazil, vessels are waiting as long as 51 days to load at Paranagua port and 41 days at Santos, twice as long as last year, SA Commodities said.

In wheat export sales for old-crop and new-crop were a combined 1.6 MMT. Although impressive, much of that was from the large sale to China that the market had traded for the past week. Threats of freeze damage continue to underpin the market and heavy snow cover in the Northern Plains has concerns about spring planting delays.