Feb 28 – Morning Comments

Soybean prices were fairly quiet overnight following Thursday’s 60-cent trade range, which ended with the bean market to the downside. In the night session, beans were off 1 cent while corn gained 2 cents. Wheat futures recovered 6 cents from Thursday’s sharp selloff.

In beans, the market continues to see-saw between the near-term strength in export demand and prospects of large supplies from South America. Thursday’s export sales report again showed net gains to sales of over 300,000 MT for old-crop beans. Year-to-date total commitments of US soybeans are at 43.4 MMT with over half of the marketing year remaining, which is far higher than the 41.1 MMT USDA export forecast for the entire marketing year.  In Brazil, 9-inches of rain in the soy regions there have caused massive flooding and stalled crop harvests. However, longer term the prospect of large supplies should keep deferred prices on the defensive. Yesterday’s early morning bean rally saw fairly hefty farmer sales for new-crop November beans, which eclipsed the day ay $11.82 before falling back to the $11.50 area. Technically, the market showings signs of a reversal to the downside following Thursday’s move.

agwebblog_ad_2_quote

For corn, the market continues to be relatively quiet, although export business has been robust of late. Year-to-date export commitments are at 89% of the annual forecast for USDA, which is substantially higher than the 5-year average of 65% for this time of year. Furthermore, corn outstanding sales – which is the quantity committed for but not shipped yet – is a staggering 18.8 MMT but in the last 5 years the average outstanding sales for this time of year is 10.3 MMT, and the highest year in 2011 was 13.3 MMT. Without cancellations, it seems likely that the market will have to work hard to get that sizable quantity moved to the export market, either by basis or futures. Overnight, an Israeli buyer bought 60,000 MT of corn believed to be sourced from the Black Sea.

In wheat, as expected Egypt’s GASC bought non-US wheat in its latest tender, acquiring 295,000 MT from Russia and Romania.  Japan will raise the price of imported wheat to domestic millers from April by an average of 2.3 percent from the previous six-month period after higher import costs of Canadian wheat and a sales tax rise, a farm ministry official said on Friday. Japan, the world’s sixth-biggest wheat importer, buys the majority of its milling grain through import tenders for five types of feed quality wheat and sells to domestic millers at prices set twice a year.

Cash Grain Report – 2/21/14

Grain basis was weaker again across much of the US as rising futures prices give farmers the incentive to sell. For the week, both US average corn and bean basis lost one cent a bushel.

In the corn market, the only signs of real strength this week were at the Gulf were export basis levels jumped 8 cents a bushel. This helped lift some river terminal bids as well but logistics issues continue to hamper movement. Ice along the Illinois River has forced width restrictions on two locks and slowing traffic on the waterway, according to the Army Corps of Engineers, Rock Island (Illinois) district. Barge rate bids were flat at 600 percent of tariff on the Illinois while costs increased by 15 to 25 percentage points to 460 on 500 on the Mississippi River at St. Louis. For ethanol plants, losses of 5 to 10 cents were quite common in the Western Cornbelt and Northern Plains as heavy farmer deliveries have givenethanol plants plenty of supplies. Basis bids out through late spring also gave way a bit this week forethanol plants.

For soybeans, a similar story emerged this week to that of corn. Strong Gulf export basis levels gave a minor lift along river terminals with Ohio River markets and Lower Mississippi markets being the biggest benefactors of the increase. In the Northern Plains and Upper Midwest, spot bean basis levels were down by 5 cents or more.

Feb 27 – Morning Comments

Soybeans continue to climb overnight with front-month March futures adding 6 cents a bushel, and trading above $14.10. For corn and wheat, prices continue to falter with both markets giving up 2 cents a bushel in overnight trade.

Brazil’s crushing association, Abiove, is standing by its forecast for a record crop of 88.6 MMT despite concerns over heavy rain in top growing state Mato Grosso and dry weather in No. 2 growing state Parana. But the association, which added 1 MMT to its 87.6 MMT forecast on Feb. 19, doesn’t expect to raise it further. In Brazil, heavy rains are also disrupting transportation as flooding and delays along the “soybean highway” have slowed farmer deliveries to the port. The dry spell in the Brazil growing region over the past few days is expected to end with rains returning and expected to persist over the next week. This morning, USDA’s export sales report showed over 300,000 MT of old-crop bean sales, even though many had been looking for net cancellations this week.

agwebblog_ad_2_quote

In wheat, yesterday Argentina announced an increase in their export licenses by 500,000 MT which could potentially trim Brazil’s wheat purchases from the US. Also yesterday, Egypt’s GASC announced a fresh round of tenders to buy various wheat types, but it seems unlikely that the US will garner much of that business. Earlier in the week Egypt canceled 110,000 MT of US wheat orders. High freight and lack of capacity at US ports are expected to keep US interests limited in this latest tender. The last Egyptian tender put US freight to Egypt at about $40 MT as compared to $17 MT for Russia.

For corn, prices have found little support in the recent soybean rally as nearby March trades back down to the $4.50 level. Basis levels have continued to inch lower as well in the face of heavy farmer deliveries. In ethanol, weekly production figures came in at 905,000 BPD, up 2,000 BPD from last week’s total.

WEEKLY EXPORT SALES (in thousand metric tons)

Actual Expected
Corn 842.3 475-775
Soybeans 642.9 400-800
Wheat 564.9 300-500

 

Feb 25 – Morning Comments

Soybeans retreated in the overnight session giving up 6 cents a bushel. Wheat and corn were mixed with prices mostly unchanged in the night trade.

Beans have been on a tear in recent sessions thanks to weather problems in South America. In the key state of Mato Grasso in Brazil rains have been intense over the last week dropping 10 inches of precipitation as farmers there get ready to harvest. Overall, 30% of Brazil’s crop has been harvested, 5% below the pace this time last year. A large swath of rain is expected over key producing areas in the coming days which could further exacerbate the problems. Overnight, Brazil announced that its number 2 soybean port Rio Grande would be down for two weeks as a result of an accident. For the US, this has helped prop-up not only nearby prices but pushed May & July futures higher as well as the US export window could widen. On Monday, USDA released their export inspections report which showed beans at 1.27 MMT. Although this was at the low end of trade expectations of 1.2 to 1.5 MMT, it nonetheless is an impressive volume for this time of year.

agwebblog_ad_2_quote

In corn, prices have shown little upside after achieving the $4.50 mark last week. News that Ukraine’s political unrest could be ending has some thinking the export market there could improve. In the US, weekly export inspections totaled 791,497 MT, which was on par with trade expectations of 700,000 to 825,000 MT. Overnight, a South Korea feed group announced a tender to buy 70,000 MT of corn.

For wheat, weekly export inspections of 427,000 MT were on par with expectations of 350,000 to 450,000 MT. Canada continues to struggle with grain logistics, as Canada Ag Minister Gerry Ritz said railways there are delivering grain only to British Columbia ports for the short term, and not to the US or Thunder Bay, Ontario.  Overnight, the Taiwan flour millers association announced a tender to buy 83,150 MT of US milling wheat, while a South Korea feed group announced a tender to buy 60,000 MT of feed wheat from any origin. China’s wheat imports soared 305% year on year to reach 725,942 MT in January. The country mainly imported wheat from Australia, US, Canada and Kazakhstan.

Feb 21 – Morning Comments

Trade was mostly quiet overnight with all three grains giving up about one cent in the night session.

Yesterday’s USDA acreage estimates met with a bit of skepticism by analysts, as combined acreage for all principal crops was lower.  But, analysts contend that last year’s high prevented planting numbers, combined with an added one million acres coming in from CRP, will lead to crop acreage numbers higher than expected. This morning, USDA also put out supply and demand balance sheet estimates for new-crop 2014/15. Not surprising, USDA has penciled in higher ending stocks in all three grains for the next marketing year as compared to the current year. In corn, assuming a 165 yield and 92 million acres planted, USDA projects ending stocks to reach 2,111 MB next as compared to 1,481 MB this year.  Wheat shows a modest expected increase in stocks from 558 MB this year to 587 MB next year. But, the biggest change is expected on the soybean side. Here, USDA looks for stocks to top out at 285 MB up from 150 MB this year, assuming 2014 acres of 79.5 million and a US average yield of 45.2.

agwebblog_ad_2_quote

In international news, export tender activity has slowed of late on the recent runup in prices. Asian wheat importers reduced purchases this week as a recent jump in global prices to a two-month top curbed demand from top importers who are looking to cover supplies for May shipments.  Benchmark U.S. wheat futures WH4 climbed to $6.20-3/4 a bushel on Thursday, highest since December. Political unrest has sent the currency there in a free fall which has led farmers to hoard their grain supplies.

This morning’s export sales report was mostly disappointing with wheat and corn coming in at the low end of expectations. Although soybeans beat expectations, it was  solely due to large new-crop sales of 749,000 MT as only 86,300 MT for old-crop. China canceled 145,600 MT of old-crop sales an unknown destinations also canceled 268,500 MT.

WEEKLY EXPORT SALES (in thousand metric tons)

  Actual Expected
Corn 691.4 700-1,250
Soybeans 835.4 150-500
Wheat 491.5 400-700

 

 

Feb 20 – Morning Comments

Front month March beans fell 8 cents a bushel, taking it below $13.50 as improved weather seems to be the norm in South America. Corn and wheat followed with 2-cent losses in the night trade.

This morning, USDA’s chief economist Joe Glauber resented the first outlook for 2014 crops. The soybean forecast is for 79.5 million acres, up from 2013 actual plantings of 76.5 million acres, but slightly below recent analyst estimates of 80 million acres.  On Wednesday, Hamburg-analyst Oil World cut its Brazilian soybean forecast to 85 MMT from 89.5 MMT. However, recent rains seems to be helping the situation there. Southern Brazil soy region forecast calls for slightly wetter conditions on Friday and next Wed-Thurs to limit late crop stress. Brazil soybean region received 0.25 to 1.5 inch of rain in the past 24 hours, some areas saw more, 40% coverage and the forecast calls for 0.5 to 2.5 with 75% coverage over the next 5 days.

agwebblog_ad_2_quote

In corn, USDA pegged 2014 plantings at 92 million acres, off from 94.5 million in 2013. USDA also suggested only modest growth in ethanol over the next 8 years. University of Illinois economists have suggested that an EPA cut in the ethanol mandate is unlikely to happen based on prices for ethanol RINS. In recent days, ethanol RIN prices have risen sharply, suggesting traders believe there will be a need for the RINS to meet the normal mandate of 14.4 billion gallons, and not the lower 13 billion gallon proposal which would make RINS worthless. The EPA received over 15,000 comments on the 13 billion gallon proposal, and is expected to announce a final rule in spring or summer.

For wheat, the HRW market continues to be bolstered by demand from Brazil and HRS is benefitting from logistics problems in Canada. Wheat importers are largely covered through May and were expected to revert to hand-to-mouth buying as they await the next harvest, traders said. Grain exporters are also monitoring developments in Ukraine, where shipments have so far not been impacted by the unrest in Kiev. However, traders there expect prices to rise domestically which could hurt Ukraine’s competitiveness in the world market. At the USDA conference, the agency projected 55.5 million acres of wheat in 2014 versus 56.2 million in 2013.

 

Feb 19 – Morning Comments

Grains were mixed in a quiet overnight session following Tuesday’s sharp rally in soybeans. Corn and wheat had fractional losses while March soybeans managed to hold on to $13.60 with a small one-cent gain in the night trade.

Soybeans continue to be bolstered by strong exports. Weekly export inspections came in at the high end of expectations with 1.47 MMT for the week. However, monthly crush figures as reported by NOPA were lower than expected with January crush at 156.9 MB, off from December’s value of 165.4 MB and below the trade estimate of 162.4 MB going into the report. As futures has rallied, farmer sales continue to pickup with many buyers fading on basis following yesterday’s sharp move. Palm oil is also providing some strength to the bean oil market. Overnight Malaysian palm oil futures rose for the sixth day in a row as stronger export demand and concerns of dry weather curbing output buoyed prices to their highest level since September 2012. Market participants said the dry weather in Malaysia and Indonesia, where most of the world’s oil palm is grown, could hinder production and tighten supplies of the edible oil which is used to make soaps to cookies and biofuel.

agwebblog_ad_2_quote

For corn, export inspections were stronger than expected at 827,600 Mt versus trade expectations of 545,000 to 675,000 MT going into the report.  Ice along the Illinois River continues to hamper export movements. Still no offers for Illinois River barges until at least next week with ice forcing width restrictions forcing width restrictions on two locks and slowing traffic on the waterway, according to the Army Corps of Engineers, Rock Island (Illinois) district. Bids were flat at 600 percent of tariff on the Illinois while costs increased by 15 to 25 percentage points to 460 on 500 on the Mississippi River at St. Louis.

In wheat, Ag Canada expects farmers there to plant less wheat in the coming year following the bumper crop in 2013. According to their projections, they expect 24.7 million acres to be planted in 2014 off 6% from 2013. Overnight tender business was slow, with Japan announcing that they received no bids on their tender to buy 120,000 Mt of feed wheat. China sold 413,016 MT or 68.9% of the 599,756 MT of reserve wheat available at an auction on Wednesday, according to the National Grain and Oil Trade Center. The transaction rate is higher than the 60.7% at the previous auction last week. Transaction rates at domestic reserve wheat auctions have been increasing in the past several weeks as flour mills and traders are active in wheat buying on higher expectations for prices.

 

Feb 18 – Morning Comments

Soybeans started the week in positive territory with March futures once again taking on the $13.50 mark after advancing 12 cents in overnight trade. Wheat and corn also advanced with more modest 2 cent gains.

For beans, Brazilian consultancy AgRural shaved 1.8 MMT off their estimate for Brazil’s soybean crop on Monday, saying drought in much of the country in recent weeks had reduced yields. AgRural expects a crop of 87 MMT, down from 88.8 MMT in previous projections. The drought had not hurt top producing state Mato Grosso, however, where the harvest is now 37% complete, according to AgRural’s weekly report. Recent rains may help mitigate losses though and could help boost yields of late-planted beans. Today, the National Oilseed Processors Association’s will release their monthly report for January which is expected to show 162.4 MB crush, down 1.8% from December, a Reuters poll of nine analysts showed. NOPA reported that its members crushed 165.384 million bushels in December, the highest monthly figure in NOPA records dating back through 2002.

In corn, markets have found modest support of late from growing US exports and a tighter old-crop stocks situation. However, overnight Libya bought 30,000 MT of Ukraine corn for immediate spot shipment. Ukraine has ample corn supplies bought logistical problems have hampered their ability of late to move it to international markets. February exports are expected to be only 2.7 MMT for all grain, versus 4.7 MMT in December.  If Ukraine begins to move more corn, this likely will hamper US exports in the latter half of the marketing year.

agwebblog_ad_2_quote

For wheat, front month March futures is trying to hold on to $6 at the close for the first time since early January. A strong Euro currency is helping keep European wheat less competitive in the world market.  However, global supplies of wheat continue to be adequate. French winter wheat is 75% good to excellent, which is up from 66% this time last year.

Feb 14 – Morning Comments

Soybeans continued to rally overnight gaining 8 cents and eclipsing $13.50 for the first time since September. Wheat was also strong to the upside advancing 7 cents while corn lagged behind with only a 2 cent gain.

Soybeans continue to find support from strong short-run demand. Although Thursday’s export sales were below expectations, there continues to be buyers of US beans when many traders had expected it to dry up completely with Brazil beginning to harvest.  Total bean sales year-to-date of  43.2 MMT far exceed the 41.2 MMT forecast for the entire year by USDA.  Also helping give the market some upside was a forecast by USDA for long-term supply and demand showing 2014 soybean plantings at only 78 million acres, while some in the trade are expecting that number to come in at 80 million in USDA’s first survey at the end of March.

agwebblog_ad_2_quote

For corn, USDA’s 2014 planting numbers were higher than expected at 93.5 million. The big shocker is an ending stocks projection for 2014/15 of 2.6 billion bushels, a big jump from current stocks, just under 1.5 billion bushels. If realized, that kind of stocks would likely push corn futures into the mid $3 level. Corn exports continue to benefit from lack of competition from Ukraine. The ag minster their reported that Feb exports will continue to be slow with corn exports expected to only reach 2.4 MMT for February.  In January, Ukraine grain exports fell by 40% month-on-month mainly due to port and rail issues which limited movement.

For wheat, flooding in Europe and dry weather in the US Plains is helping to give a bit of a lift to wheat prices after they hit a3-year low last month.  However, India expects to harvest a record crop in 2014 with the ag minister there projecting production to top 95.6 MMT, up from 92.5 MMT projected by USDA in 2013. India already has burdensome stockpiles of wheat and continues to aggressively move supplies to the world market.  Overnight, Iraq announced a tender to buy at least 50,000 MT of wheat from the US, Canada or Australia.

 

Feb 13 – Morning Comments

Soybeans were rallying back to the $13.30 mark in the overnight trade, but may selloff thanks to weaker than expected weekly exports. Corn was up 1 cent while wheat gained 2 cents.

For soybeans, Wednesday brought an announcement of China cancelling 272,000 MT of old-crop US beans, but at the same time buying 240,000 MT of new-crop US beans. On Thursday, China has begun testing imported U.S. soybean cargoes at the southern province of Guangdong for contamination with the unapproved genetically-modified MIR 162 strain of corn. Weather in South America also showed signs of improving putting the bean market under pressure. Most Brazilian growing regions will see decent rains over the next few days and continue for the next 10 days. All of Argentina becomes dry by later today, and should stay dry for the rest of the week and the weekend, with just a bit of light rain in the early part of next week. A favorable pattern for them where rains have been somewhat excessive.

agwebblog_ad_2_quote

In corn, Wednesday’s weekly ethanol report production was up 7,000 BPD this week, averaging 902,000 BPD. The ethanol crush margin in eastern Iowa declined 5 cents week-over-week, now down 90 cents from the first of the year. A sideways to lower corn market and steadily rising DDG prices could support crush margin in the coming weeks. Last year ethanol production reached marketing year lows in late January before climbing into the summer months; this year is shaping up very similarly. The Andersons Grain estimated on their earnings call a 2014 US corn plantings at 93-94 million acres, off from 95.4 in 2013.

For wheat, export tenders have been light of late. But drought continues to be an issue in Australia. Soaring demand for Australian wheat to feed starving cattle is diverting grain away from export markets, as embattled ranchers are forced to send tens of thousands more animals than usual to feedlots to fatten them up before slaughter.

WEEKLY EXPORT SALES (in thousand metric tons)

  Actual Expected
Corn 1,340.9 800-1,200
Soybeans 296.2 600-950
Wheat 626.6 450-750