Feb 12 – Morning Comments

Grains closed lower to end the overnight session, with corn down 1 3/4 cents, soybeans off 5 1/4 cents, and Chicago wheat down ½ cent.

Old crop soybeans continued to show strength in the early going, taking another run at $13.40. This area has acted as firm resistance since early December, with the March contract testing $13.40 on five occasions but unable to move higher. Bulls will be looking to a tender from the Egyptians in the overnight session to bring more export-side excitement to the bean market. In that tender Egypt sought 20,000 tonnes soybean oil for April delivery. South American weather may begin to pressure the soybean market as rains are falling today in northern Argentina and relief from near 100 degree temperatures is expected by Friday for southern Brazil.

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Corn slid lower in the overnight session, closing on its lows but down just 2 cents. Weekly ethanol production data will be released this morning, with expectations for another light weekly figure. Current ethanol crush margins now sit at $2.61 per bushel in eastern Iowa, off 5 cents last week and down 90 cents since the first of the year. The major driver of weaker crush has been the price of corn which has surged following the January USDA report. If corn continues moving lower, look for technical support at $4.35 on the March contract – the near term highs following the January USDA report.

Wheat was off ½ cent in Chicago, and down ¾ of a cent in Kansas City and Minneapolis in a very quiet overnight session. A French private analyst projected higher soft wheat stocks for France during the 2013/14 marketing year. This may pressure wheat futures as a big part of Monday’s price move was lower expected exports out of Argentina and the Black Sea region in the current marketing year.

Feb 11 – Morning Comments

Beans were weaker in overnight trade, giving up 11 cents a bushel with most of the losses happening at the end of the night session. Corn was mostly unchanged overnight, while wheat posted a 3-cent advance.

Mondays’ revised supply and demand estimates from USDA were thought to be bullish for corn and wheat bought only wheat found any real upside following the report. In corn, USDA increased the US export forecast from 1,450 MB last month to 1,600 MB in their latest estimates. This cut the carryout to 1,481 MB. On the world front USDA cut the Argentine corn crop estimate by 1 MMT to a new forecast of 24 MMT. However, traders seem reluctant to push prices higher as some analysts believe the feed use forecast for this year – a 22% increase over last year – is too high at 5,300 MB.

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For beans, analysts had been expecting at least a modest decrease in US ending stocks but the USDA kept their forecast unchanged and left carryout at 150 MB. On the international front, USDA trimmed the Argentine bean estimate by 0.5 MMT but raised the Brazilian crop estimate by 1.0 MMT. Soybean export premiums at the Gulf were mixed on Monday as new export demand is slowing as the South American harvest picks up, but tight loading capacity through March is keeping a floor under FOB basis offers. Some Chinese importers were said to be offering to resell some Feb and March US purchases today, traders said. That follows active buying of South American soy by China late last week, they said.

In wheat, USDA cut their US carryout forecast to 558 MB thanks to a 50 MB higher projection for US exports. However, overnight the Australian government revised their wheat crop estimate higher to 27.01 MMT, just above the USDA figure of 26.5 MMT.

 

Feb 10 – Morning Comments

Grains started the week on a down note, with corn and wheat trading 3-cents lower following last week’s advances, while soybeans were fractionally higher.

Traders are awaiting fresh supply and demand data to be released by USDA today at 11:00 am CST. The report is expected to show minimal changes in old-crop ending stocks, with the consensus of analysts looking for small cuts to the carryout for all three crops.  Higher exports of late have helped firm the price outlook.

2013/14 US Ending Stocks (Million Bushels)

February
Expected

January

Reported

Corn

1,619

1,631

Soybeans

143

150

Wheat

603

608

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In corn, Friday brought another announced sale with USDA stating that 141,200 MT of US corn had been sold to unknown destinations. Although China continues to block US shipments of GMO corn from the US, other Asian buyers have stepped up their purchases in recent weeks. A USDA attache’ report suggests Chinese corn stocks will reach their highest level in a decade thanks to above average yields this past growing season and slowing industrial usage. The attache’ report suggests China’s slow and unpredictable biotechnology regulatory system has created a challenging environment for agricultural imports that is likely to persist or worsen.

For beans, Brazil’s biggest grain cooperative, Coamo, said dry, hot weather has seriously hurt the country’s soy crop, which is in the early stages of a record 90-million-tonne-plus harvest. Coamo President José Aroldo Gallassini told Reuters in an interview on Friday that weather forecasts for 10 more days of drought and high temperatures will deepen the losses to the crop. “If it rains today — and it won’t — there will be losses. If it doesn’t rain for another 10 days, the losses will be more violent. We will need to wait and see” how big the losses will be, Gallassini said.

In wheat, prices are being pressured as weather models forecast moisture across key U.S. growing regions which have seen crops suffer due to dryness in January. Snow showers hit Kansas on Sunday, providing some relief for crops. Wheat had drawn support from declining crop rating conditions in Kansas, the top U.S. producer of the crop.

Feb 7 – Morning Comments

Corn pulled back overnight but still manages to be on track for a third week in a row of advances. In the night trade, corn was off 2 cents while soybeans and wheat posted slight gains of 2 and 3 cents, respectively.

In corn, weekly export sales on Thursday came in at an impressive 1.7 MMT on Thursday, well over the trade expectations of 1.2 MMT going into the report. Japan was a big buyer, acquiring nearly 800,000 MT some of which was switched from China. Also on Thursday, USDA announced China had canceled 220,000 MT of US corn it had previously purchased. China still has about 1.5 MMT of US corn outstanding that it has not shipped. Overnight, South Korea was an active buyer as two different feed groups bought 59,000 MT of US corn that had been previously shipped to China.

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For soybeans, front-month March has not been able to hold above the $13.30 mark in the past two sessions. Upside resistance is around $13.38, which is the highest point of prices since the end of 2013,  is the next upside target. Old-crop soybean sales were still impressive for the week at 577,000 MT but soymeal was exceptionally strong at 283,700 MT. China has yet to cancel any significant quantities of US bean purchases as the latest data still showed them as net buyers of 436,400 MT of US soybeans for the week. Monday’s USDA report could prove interesting as soybean bookings of 43 MMT for the marketing year already surpass USDA annual forecast of 40.7 MMT.

In the wheat market, US exports have ticked higher in recent weeks thanks to logistical problems out of Canada and the Ukraine. However, Russia found renewed business overnight with a 25,000 MT deal with Lebanon, and part of a 400,000 MT purchase by Iran of Russian and European wheat.  Japan is seeking to buy 28,655 MT of late June-arrival Canadian Western Red Spring wheat, in an atypical tender issued on Friday, after failing to pick up that amount of the grade in a regular tender, a farm ministry official said on Friday. On Thursday, Japan bought a total of 284,161 MT of food quality wheat from the U.S., Canada and Australia in its regular tender, or all of the 312,816 MT it tendered for except for the one Canadian lot in the reissue.

Feb 6 – Morning Comments

Grains held on to gains across the board in the night session, as prices continue to try to move higher on strong demand. Beans were up 3, corn gained 2 and wheat posted a 1-cent gain in the overnight trade.

For beans, traders are looking for only modest changes to South American production in Monday’s USDA report. Average trade estimate for Argentine soybeans is 54.13 MMT vs USDA Jan estimate of 54.5 MMT and Brazilian soybeans is projected to come in at 89.76 MMT as compared to the January USDA estimate of 89.0 MMT. World soybean ending stocks are expect to inch higher to 72.67 MMT versus 72.33 MMT by USDA in January. On Wednesday, soybean bids faded by 5 cents at a processor in Lafayette, Indiana, but basis was mostly unchanged as snowfall brought movement to a halt and farmers returned to the sidelines after selling big on Tuesday.

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In corn, prices continue to build support above the $4.40 level as expanding export business helps lift prices. On Wednesday, Ethanol production was off 5,000 BPD, averaging 895,000 BPD during the week ending 1/31/14. DDG prices have improved week over week, but ethanol margins continue to slide lower as corn futures have increased 8% since the January 10th USDA report and ethanol prices in Iowa are down 30 cents per gallon during the same time period. Given higher corn and lower ethanol prices, ethanol plants are likely to use basis as a tool to preserve margins in the spot corn market. One example of this was Cargill in Blair, NE which has steadily lowered basis over the last week, now 8 cents below the board.

Japan’s Ministry of Agriculture bought 50,310 MT of Hard Red Winter and 82,454 MT of Dark Northern Spring grades from the United States, as well as 99,522 MT of late June-arrival Canadian Western Red Spring wheat. Japan typically buys about 20,000-30,000 MT each of the five grades of food quality wheat from the U.S., Canada and Australia in tenders typically issued three times a month. But, Canada’s shipping problems led to more supplies being garnered from the US. Also overnight, Oman bought a 20,000 MT shipment of wheat from India. Indian state trading companies have been holding a series of international tenders to sell part of India’s huge wheat stocks, generating cheap supplies for Middle Eastern buyers.

WEEKLY EXPORT SALES (in thousand metric tons)

  Actual Expected
Corn 1,700 900-1,200
Soybeans 796.5 550-850
Wheat 733.6 500-750

 

 

Feb 5 – Morning Commets

Tuesday sharp rally found little follow thru in the overnight session with March soybeans briefly hitting $13.20, but pulling back to $13.12, leaving it unchanged. Corn and wheat fell giving up 2 and 4 cents, respectively in the night trade.

Soybeans rallied 20 cents on Tuesday thanks to strong near-term demand for exports and soymeal. Hot weather in South America continues to linger. Southern Brazil looks to be hot and dry in the coming days with temperatures expected to hit the mid-90s and little signs of significant precipitation through the end of the week. On Tuesday, Informa lowered its Argentina bean crop to 57 MMT, off from 57.5 MMT from the previous month but still well above USDA’s latest projection of 54.5 MMT. For Brazil, Informa bumped up their forecast to 89.7 MMT, just slightly above USDA’s projection of 89 MMT. Although US export business has been slowing in recent days, the lack of export cancellations by China has given the market new life. Export sales to date are 43 MMT for beans, which surpasses the total for the year projected by USDA at 40.6 MMT. In addition, pipeline supplies are not picking up with the rally as farmer bean sales have been limited during the last few days of escalating futures.

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For corn, it’s another story. Farmers have been actively selling their corn crop in recent days, and pipeline supplies are building leading to lower basis levels at key buyers around the country. CIF corn basis values at the Gulf fell on Tuesday by 3 cents to +77H. At a key processor in Blair, NE, corn basis fell for the fourth straight day to -8, its lowest level in more than two years. On the international scene, buying activity was limited overnight with no big tenders announced. Informa lowered their estimate for South American corn production, with Brazil and Argentina combined at 89.15 MMT, which is 3.4 MMT lower than Informa’s projection in January.

In wheat, Tuesday’s 20 cent rally helped push prices off their lowest level in 3.5 years. Stats Canada on Tuesday gave a slightly lower than expected wheat stocks estimate of 28.4 MMT, but it still represents a 38% increase over stocks last year. Oklahoma and Kansas reported deteriorating crop conditions for the winter wheat crop, as dry and windy weather took its toll on rating. Kansas reported 24% of the crop in poor to very poor condition in January, versus only 8% in December. However, the recent snow storm helped give needed moisture to the Plains as Kansas is expected to see nearly a foot of snow from the latest winter system.

Feb 4 – Morning Comments

Grains found modest support in overnight trade with soybeans within striking distance of the $13 benchmark on a 6 cent advance. Corn was also higher, but only gaining a cent while nearby March wheat posted fractional gains in the night session.

Beans found support on Monday from a drier and hotter outlook in Brazil. On Monday, USDA said private exporters reported sales of 40,000 MT of U.S. soyoil to unknown destinations for 2013/14 delivery. Back months continue to be pressured by looming South American harvest, with strong yield reports from the early harvest in Brazil. Dry weather in most soy areas of Brazil this week should limit harvest delays.  Export inspections for soybeans came in at 45 MB, below expectations of 50 to 58 MB going into the report.

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For corn, prices continue to inch higher and Monday’s small rally helped motivate some farmers to move cash grain. Farmer selling has been light in the New Year, and stocks in the hands of farmers seem plentiful compared to recent years so it seems that in rallies could be short-lived. Weekly export inspections were 216 MB, lower than projections of 28 to 33 MB by analysts going into the report. Overnight, a South Korean feed group bought 65,000 MT of US corn for June delivery.

In wheat, the market continues to struggle with plentiful world supplies. Weekly export inspections of US wheat were 11.6 MB below forecasts of 16 to 22 MB ahead of the report. Overnight, India offered 200,000 MT of wheat to export as it continues to try to unload 2 MMT of stockpiles in government warehouses. South Korea was a buyer of 65,000 MT of feed wheat from optional origins. Japan’s Ministry of Agriculture offered on Tuesday to buy a total of 312,816 MT of food quality wheat from the United States, Canada and Australia in a regular Thursday-closing tender. Japan, the world’s sixth-biggest wheat importer, keeps a tight grip on imports of its second most important staple after rice and buys the majority of the grain for milling via tenders typically issued three times a month.

Feb 3 – Morning Comments

Grains were quiet to start the new week as overnight trade was mostly listless. Corn advanced 2 cents a bushel, while front-month March beans was down 1 cent. Wheat posted a fractional increase in the night session.

Farmers in Brazil’s top-soybean-producing state Mato Grosso are reporting soy harvest yields well above what they had expected, which if the trend continues, could result in a record crop and make Brazil the world’s top producer of the oilseed, based on official forecasts. Fields like Seibeneichler’s throughout Mato Grosso are producing up to 70 60-kilogram bags per hectare, as much as a third higher than a January estimate for average yields in the state by Agroconsult, which expects a record 91.6 MMT crop from Brazil.

Winds and snow are hindering grain supply from southern Russia to Novorossiisk on the Black Sea, the port’s operator and traders said on Friday, slowing the country’s return to the global wheat market. Russia, one of the world’s top five wheat exporters to regions including North Africa and the Middle East, became competitive again on international markets in January, after a three-month hiatus, because the ruble has now weakened along with emerging market currencies.

In corn, US export business has likely benefited from the problems in Ukraine getting corn to export. On Friday, USDA announced another sale of US old-crop corn to Spain for 110,000 MT. On Friday, CIF corn  basis bids were mostly steady at the Gulf. Spot barge freight is steady with a weak tone as demand softened after shippers fulfilled their January loading needs. Navigation on the Illinois River remains a major challenge with heavy ice buildup limiting tows to 6 or 8 barges. Peoria Lake remains one-way traffic only. Problems on the Illinois are backing up the upriver traffic down towards St Louis.