Apr 30 – Morning Comments

Grains were weaker overnight giving up 5 cents a bushel across the board in night trading.

In wheat, the first day of the Kansas Wheat Tour turned up below normal yields. The forecast for the first day was 34.7 bushels per acre compared to 43.8 last year and the five-year average of 43.8. Scouts sampled 271 fields on Tuesday. Today scouts will cross southwestern Kansas, from Colby to Wichita. An initial report this morning showed a 22.9 bushel field in Scott County where the soil is powdery dry. The tour is scheduled to release a final Kansas yield forecast on Thursday.  Tour leaders have warned that the crop is still behind in maturity and in northern parts of the state rains in the next couple of weeks could help boost crop potential.

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In corn, widespread rain over the past 24 hours will likely slow corn planting in the Midwest. Parts of the Upper Midwest, Illinois & Ohio received an inch or more in the past 24 hours. Looking ahead to the 6 to 10 day forecast, rain is expected over a wide swath of the Midwest which could further hamper the planting pace. At this point planting delays won’t be a big market mover but as we get into May, the trade could get excited by ongoing planting problems.

In beans, domestic soybean basis continues to be strong as buyers face a tight US supply situation. Heavy hog finishing weights are said to be increasing demand for soymeal. With pipeline stocks at minimal levels, this could suggest further upside for old-crop bean prices, but a better supply situation for new-crop could take out the rally. Picking the actual day and price when traders shift from 2013 news to 2014 news will be the difficult task in trading beans this year.

Apr 29 – Morning Comments

Grains were mixed in the overnight session with corn and beans posting modest 4 and 2 cent gains, respectively, while wheat gave up 3 cents in the night trade.

Corn got a lift from Monday’s planting progress report which showed 19% of the US crop had been planted, slightly below expectations of 21% by market analysts going into the report. Wet weather is hampering some of the progress with rains of 1 to 3 inches this week expected to slow plantings in the North Central and Upper Midwest. Monday’s export inspections report for corn showed 1,156,332 MT of exports for the week, below trade expectations which ranged from 1,400,000 MT to 1,650,000 MT. The US still has a large amount of corn left to ship based on total commitments. As of last week’s export sales report, the US has 16.5 MMT still left to ship of the total 43.1 MMT commitments to date, or 38% of overall commitments. That implies about 900,000 MT of weekly shipments needed for the remainder of the marketing year to satisfy what is already on the books, at a time of the year when exports are typically lower.

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In soybeans, prices continue to seesaw back and forth. Monday saw early gains of 20 cents a bushel on front month May futures get wiped out but May continues to trade above $15 with first notice day coming up tomorrow. Soybean exports came in strong for this time of year with 254,299 MT exported for the week versus trade expectations of 100,000 to 200,000 MT. US soybean plantings came in at 3% this week, the first report of the season and on par with what analysts had expected.

In wheat, the Kansas wheat tour will kick off today. Tour leader Rollie Sears from Syngenta said this year’s Kansas hard red winter wheat is at a similar stage of development as last year, which is about 2 weeks later than normal. He noted there is probably more winterkill than we have seen in many years. However, he cautioned at this time of year, the wheat plant is as tough and resilient as it’s ever going to be. It has great capacity to recover. It’s difficult to look at crop and get a picture of what yield is going to be. In export news, Argentina announced they will allow another 500,000 MT of exports. While their wheat is fairly high priced compared to the US, they still may capture some business from Brazil, which could take a bite out of US HRW wheat sales to that country.

Apr 25 – Morning Comments

Grains were higher in overnight trade with wheat leading the complex higher for its 4th consecutive day of gains, advancing 4 cents. Soybeans and corn were up 3 cents as well in the night session.

Wheat continues to find support from ongoing drought in the US Plains. Yesterday’s drought monitor showed expansion of drought conditions in the last week, with Kansas seeing 72% severe to exceptional drought vs 70% a week ago. In trade news, The United States and Japan have achieved a breakthrough on market access in bilateral talks on the Trans-Pacific Partnership trade deal, although no final agreement has been reached, a senior U.S. official said on Friday. A key focus of the talks was Japan’s Ag Sanctuary products including beef, dairy and wheat which could set the stage for less restrictive import policies by the Japanese.

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Soybeans have sold sharply since hitting contract highs late last week.  Technical support remains in the $14.65 area on the May contract with the bull trend being challenged.  Tight old crop stocks continue to support this market fundamentally.  International demand has waned with only 782 MT being reported this week for the ‘13/’14 marketing year.  New crop sales were abysmal too, only totaling 182,200 MT for ‘14/’15.  The weak sales over the last several weeks leaves soybeans about 145.9 million bushels ahead of pace to meet current USDA projections.  The USDA has yet to report on planting progress for soybeans.

For corn, strong export sales continue to underpin prices too.  This week, the USDA reported export sales of 618,937 MT for marketing year ‘13/’14.  On the year, corn is running approximately 179.4 million bushels ahead of the seasonal pace to meet USDA projections.

Apr 24 – Morning Comments

Grains were fairly subdued overnight. Wheat was the leader to the upside gaining 3 cents while corn was 1 cent higher. Soybeans slipped 2 cents in the night trade.

Soybeans continue to trade well below $15 for front month May futures as traders expect more cancellations of soybean exports and talks of Brazil bean cargoes coming to the US markets. Basis levels continue to hold up relatively well, but deferred delivery beyond June is starting to fade pretty quickly. Export sales were disappointing this week with only 800 MT of old-crop sales, but even more bearish was the lack of significant business for new-crop with only 118,000 MT of sales versus trade expectations of 350,000 to 550,000 MT.

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In corn, EIA weekly ethanol production showed a drop from the previous week with output off 29,000 barrels per day for a weekly average of 910,000 barrels per day. The weather is expected to be wet over much of Iowa and Illinois today and tomorrow which could hamper corn plantings. However, the longer term outlook is for dry weather to return to the Midwest and with it still being April, it is probably too early to be overly concerned about planting delays. On Wednesday, USDA reported China bought 120,000 MT of US sorghum for old-crop delivery, signifying they are still in the market for feed grain even if they aren’t buying US corn.

For wheat, markets have remained downwardly biased after rain helped give some modest relief to the Southern Plains. Over the past week, 1 to 2 inches of rain were observed in Southern Oklahoma and Western Kansas. However, dry conditions are expected over the next 10-day forecast period for much of the Southern Plains, so it seems drought conditions will likely persist. In international deals, Morocco bought 30,000 MT of wheat overnight from Poland. This morning Stats Canada released their wheat plantings estimate for 2014, which they pegged at 24.766 million acres, just a bit more than 24.4 million acres expected, but off from 2013 plantings of 26.1 million.

WEEKLY EXPORT SALES (in thousand metric tons)

  OC Actual OC Expected NC Actual NC Expected
Corn 618.9 500-800 382.9 150-250
Soybeans 0.8 -200 – +100 118.2 350-550
Wheat 339.1 200-400 271.7 250-500

 

 

Ar 23 – Morning Comments

Soybeans continued to move lower in the overnight session giving up 10 cents a bushel. Wheat and corn were mostly quiet in the night trade with fractional changes.

Front month May beans have tumbled 60 cents in the past 4 trading sessions as reports circulate of South American beans heading to the US. A pair of Brazilian soybean vessels initially sold to China by Marubeni are now US-bound. One is headed for Wilmington, NC, and the other to Mobile, AL. In production news, the Rosario Grains Exchange estimated Argentina’s 2013/14 soybean crop at 54.9 MMT versus a previous estimate of 54.7 MMT. USDA has Argentina’s crop at 54.0 MMT in its latest April WASDE report.

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In corn, weather models are beginning to hint at more rain in the Midwest in the coming week which could slow the pace of planting. Rain is expected to be about 1 inch over much of Iowa, Wisconsin and Minnesota in the coming 48 hours, with more rain expected early next week. On Tuesday, private exporters reported the sale of 240,000 MT of U.S. corn to Mexico for delivery in the 2014/15 marketing year.

For wheat, Oklahoma State Agronomist Jeff Edwards found damage from last week’s freeze in field trial plots, although damage was quite variable ranging from 5% to 80% depending on the location. Edwards goes onto to state “The drought has severely limited resilience in our crop and we are entering late April, so I do not anticipate there will be much of a recovery or rebound in fields that were severely damaged. It is important to note that 50% injury does not necessarily mean 50% yield loss. In most cases the actual yield loss will be less than the % injury. So, it is reasonable to expect that 50% injury might only result in a 35 or 40% yield loss.” In overnight deals, Japan’s Ministry of Agriculture bought a total of 108,789 MT of food quality wheat from the United States, Canada and Australia in a regular tender. In Australia, timely rains will boost wheat plantings by farmers when the seeding window opens later this week, analysts said, but the threat of an El Nino dry weather system may see production fail to capitalize on the good start to the season.

 

Apr 22 – Morning Comments

Grains found modest support overnight following Monday’s sharp selloff. Soybeans and wheat were up 5 cents in the night session while corn climbed 3 cents.

Beneficial weather was a key driver in Monday’s selloff as wet weather was in the forecast for the Southern Plains, which has been engulfed in a massive drought. By the weekend, a low pressure system will be approaching the Plains another opportunity for thunderstorms in the Central-Southern Plains for the weekend. Monday’s crop progress report showed no change in the overall condition of the winter wheat crop, which held steady at 34% good to excellent. In overnight deals, Iraq’s state grain board has rejected all offers and made no purchase in a tender for at least 50,000 MT as prices were said to be too high. Meanwhile, Japan’s Ministry of Agriculture is seeking to buy a total of 108,789 MT of food quality wheat from the United States, Canada and Australia in a tender that will close late on Wednesday.

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In corn, a dramatic warm-up in the Midwest is helping give farmers a chance to catchup on planting. All though this week’s planting pace was at 6%, below expectations of 9% by analysts, the weather outlook for the remainder of the week looks very favorable for farmer planting. Monday’s export inspections report showed another strong week with total exports hitting 1.6 MMT, above trade expectations which ranged from 1.05 to 1.55 MMT. Overnight a South Korea feed group bought 60,000 MT of corn with optional origin from the US or South America.

For soybeans, Chinese customs data released on Monday showed the country has kept up its strong appetite for beans, with total imports up 33% year to date, and most of the volume coming from the US so far. Weekly US export inspections were slim with 138,777 MT of shipments for the week, at the low end of expectations which ranged from 135,000 to 350,000 MT. In the cash market, slow farmer selling is being largely offset by limited exporter and processor demand. Bids for soybeans were weaker in Davenport along mid-Mississippi River after dealers there felt there were a touch too aggressive in hiking their bids last week. A firmer tone in barge freight costs amid lock delays on that stretch of the river also weighed on basis.

 

Favorable Weather on the Horizon

The grains are trading lower this morning on improving weather outlook for the next 10 days. This morning May corn is down 3 3/4, May soybeans is down 8 ½ and May wheat is down 12 ½ cents.

The central plains saw temperatures in the 70’s over the weekend, with Chicago recording temperatures at 79F degrees on Easter Sunday. The weather outlook favors a dramatic warm-up throughout the U.S and parts of Canada over the next 10 days which will have speeding effect on planting. Planalytics is expecting temperatures average 3 to 6 degrees F above normal in the major corn producing areas which will improve soil temperature throughout the grain belt. Two low pressure systems are expected over the Central Plains this week which are expected to move eastward. This first low pressure system is expected on the 23rd and the second is expected on the 24th and 25th. These events will interrupt planting slightly but not impact progress for more than a day.

The crop progress report will be released later today at 3 PM CST. Analysts are expecting corn plantings to be 15 percent complete which would be only 3 percent behind the average by late April.

China’s customs data was released overnight which showed that soybean imports through March were up 33.5 percent year over year with the U.S supplying the vast majority. Corn imports were up 14.7 percent year over year with the imports largely sourced from Argentina, while U.S corn imports to China fell 16.1 percent.

Apr 17 – Morning Comments

Grains climbed higher overnight with soybeans once again leading the charge for its 4th consecutive day of gains. In the night trade, front month May soybean futures were up 7 cents a bushel while wheat posted a 3 cent advance. Corn followed with a 1 cent gain.

Soybeans continue to be fueled by tight supplies in the US where strong exports and crush have cut into available supplies. This week’s sales showed only 19,000 MT of old-crop for the week, but the total commitments for the year still far exceed USDA’s projections. Total export commitments for old-crop stand at 44.6 MMT versus USDA’s projection of 43.0 MMT to be shipped for the entire year.

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In corn, weather conditions look fairly good for planting. The next few days look fairly dry across the Midwest, although a system is expected from Sunday into Monday. After that, the southern half of the Midwest through the Delta should be fairly dry in the 6-10 period. The 11-15 day, the last five days of April, looks dry across most of the central U.S. as well. Weekly ethanol production released on Wednesday by EIA showed strong levels at 939,000 barrels per day, up 45,000 from last week and the highest weekly total since December.

For wheat, weather continues to be a factor in the southern Plains. There might be some rain tomorrow, and then a better chance this weekend. But most areas are expected to see at most 0.5 inch of moisture, not enough to dramatically improve the situation. Looking ahead in the 6-10 and 11-15 outlook the region looks fairly dry across those areas

WEEKLY EXPORT SALES (in thousand metric tons)

  OC Actual OC Expected NC Actual NC Expected
Corn 601.9 550-850 192.6 0-150
Soybeans 19.2 -100-100 400.7 175-350
Wheat 438 50-250 359.9 225-375

 

Apr 16 – Morning Comments

Soybeans moved sharply higher in the overnight session with front-month May futures gaining 17 cents a bushel and new-crop November up 8. Wheat was also higher with a 3 cent advance, while corn was fractionally lower.

Yesterday brought bullish news for beans with NOPA monthly crush figures being released. For the Month of March, US crushers used 153.8 MB which was above trade expectations of 146.1 MB going into the report. With tight stocks and strong exports, the strong crush number suggests even more tightness going forward. While some imports have occurred of late to help alleviate tightness, it seems the US is well shy of reaching the 65 MB import projection to keep stockpiles from disappearing altogether by the end of the marketing year. Some crushers are boosting their basis sharply in recent days with +50K or higher becoming the norm across much of the Midwest with 2 weeks left until first notice day on May beans.

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For wheat, prices were weaker on Tuesday for the first time in three sessions, but recovered some of the losses overnight. Damage from the freeze in the southern Plains is still being debated. Oklahoma State agronomist Jeff Edwards said “Most of Oklahoma spent at least four hours below freezing last night and some areas spent an extended period of time below 28F. While temperatures in the wheat canopy might have remained slightly higher than reported air temperatures, they were still probably low enough to result in significant injury to wheat.”  In Ukraine, the situation is getting worse and more and more operators are challenging the ability of the country to properly produce and export grains. But no concrete impact can be observed for the moment.

In corn, the market continues to be somewhat of a follower of the wheat and soybean market. However, its own fundamentals remain supportive with export activity exceptionally strong, and ethanol margins running high. Today will bring the latest EIA ethanol production figures which should continue to show robust production for the ethanol producers.

 

Apr 15 – Morning Comments

Grains were mostly lower overnight following Monday’s rally. Nearby May soybeans was the exception, gaining 8 cents a bushel, while corn and wheat lost 2 cents each.

Cold temperatures across the southern Plains poses a threat to the wheat crop. According to Oklahoma State agronomist Jeff Edwards, wheat in Oklahoma ranges from just past jointing to late boot and if forecasts are correct wheat injury is likely. Given the limited moisture and limited time prior to harvest, Edwards thinks, it is not likely that the crop will recover from a complete loss of tillers. In Monday’s Crop Progress report, USDA saw ratings slip slightly, going from 35% good to excellent last week versus 34% good to excellent this week for the winter wheat crop.

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In corn, plantings got underway this past week with 3% of the corn crop planted according to USDA. That’s up from 2% last year, but behind the 5-year average pace of 6%. Export inspections for corn were strong, totaling 1.44 MMT, which was above the 1.350 MT upper end of trade expectations going into the report. It was also the highest weekly total going back to 2008.

For soybeans, export inspections were on the low side of trade expectations. Actual inspections came in at 267,000 MT versus analyst expectations of 325,000 to 450,000 for the week. Soybean cash basis bids are mostly steady at elevators and processors around the U.S. Midwest, a touch firmer on the Mississippi River.