May 30 – Morning Comments

In the overnight grains were mostly unchanged with corn up 1 ½ cents, soybeans  up ½ a cent and wheat down 2 cents.

Old crop soybean sales were reported at 60,030 MT this morning, at the high end of expectations. Accumulated export sales for the year now sit at 1.681 billion bushels, well above the 1.600 projected by the USDA for the marketing year. Many traders look for export sale revisions in the June 11th, USDA report. Considering old crop ending stocks are already just 130 million bushels, it could be a volatile day for old crop beans. New crop soybeans saw large sales of 821,100 MT in this morning’s report with China the largest reported buyer. Meal and soy oil sales came out in-line with expectations.

It was a very large week for old crop corn sales, with the USDA reporting 621,300 MT sold. This was well above trade expectations and should work to firm July corn futures. With July futures 50 cents off their highs and technically oversold, end users should view this as a buying opportunity.

Net cancellations of 52,400 MT were reported for old crop wheat, well below trade expectations for the week. This will only work to firm trade opinions that U.S. wheat has priced itself out of the world market. Just this morning a Ukrainian private analyst expected the 2014/15 Ukrainian wheat harvest to grow 1.2 million tonnes from last year’s harvest.


China had a state corn auction Thursday the 29th to help ease their tight domestic supply situation. In the auction the government sold 1,848,558 tonnes for an average price of $350 per tonne. Of the 3.5 million tonnes offered 52.6 percent of the corn was sold.

This morning it was announced that China will lower their reserve requirement to free up more cash for banks to make loans. This reserve requirement is targeted toward certain banks that will be able to qualify if the proportion of loans to smaller-sized firms and the farming sector compared to their total lending meets certain levels. On April 16th China lowered the reserve ratio which only applied to rural banks to help lift the agricultural industry. The lowering reserve requirements should help the agricultural industry to access capital, which has been more difficult for crush facilities recently.

May 29 – Morning Comments

Corn is trading down 2 1/4 cents this morning with soybeans up 5 1/2 cents continuing yesterday’s move. Wheat is also trading marginally higher up 3 3/4cents after finding some support in yesterday’s session.

Israeli private buyers purchased just over 108,000 tonnes of corn and 40,000 tonnes of feed wheat which closed yesterday. The grain was to be sourced from the United States and the Black Sea. Also across the news wires yesterday was a 110,000 tonne sale of U.S. Soybeans to China for the 14/15 marketing year and an additional sale of 172,000 tonnes of U.S. Soymeal to the Philippines for the same delivery period.

As corn futures continue to grind lower, basis levels are improving at a number of key facilities. Yesterday we saw spot corn basis improve 7 cents in Columbus, NE, now trading 2 cents above the July contract. This looks to be part of a larger trend in basis which has improved 2 cents on average across the country in just the last week. The river system has led the charge higher, averaging basis improvements of 4 cents over the week. With old crop ending stocks projected at just 1,146 million bushels basis may need to do the work in the summer months to pull remaining grain stocks from farmers. Contact the Grain Hedge office today to start taking advantage of our basis tools available free to trading clients. A Grain Hedge broker would be happy to discuss your best markets and help make the most of any remaining old crop sales.

On the weather front, today should be a nice window of planting for producers in North Dakota, South Dakota and Minnesota where planting pace continues to lag. However, tomorrow should usher in more rains for them which should continue until Tuesday next week. That weather system should track toward the east providing moisture throughout the grain belt. For the most part the market has shifted its focus away from planting pace concerns as planting pace is sufficient compared to the average pace. Traders focus is shifting more toward precipitation and emergence.

EIA ethanol numbers will be released later today and export sales will be released on Friday. Both reports were delayed one day in recognition of Memorial Day.

May 28 – Morning Comments

This morning corn and wheat are both trading lower, down 3 cents and 4 cents respectively. Soybeans however has jumped 8 ¼ cents on light overnight volume. Traders should be cautious of soybeans volatility in the last month as it has become quite common to have a sharp loss one day followed by a rebound the next. Yesterday we saw selling pressure as a result of Chinese soybean auctions, but keep in mind the last time we saw selling due to auctions in China the following day ushered in a sharp rebound.

Soybean planting progress surged last week, now 59% complete across the country. The largest gains were seen in the North Dakota, South Dakota, and Minnesota where planting pace is now 31%, 64%, and 49% complete, respectively. Good planting conditions for much of the week helped farmers plant around 30% of the crop in each state, mitigating fears that northern states would struggle getting corn and soybean acres sown. Soybean planting pace is now 3% ahead of the five year average, with emergence off to a good start in the southern and central Corn Belt.

Corn planting pace was reported at 88% complete, up 15% on the week. Similar to soybeans, the largest gains were seen in the northern grain belt with North Dakota reporting 50% of the corn crop planted last week. Minnesota saw similar progress with 28% of the crop planted in just one week. Corn planting continues to be in-line with the 5 year average for this week in spring. Emergence and crop conditions will be the driving force in the weeks to come as planting wraps up across northern states.

Corn and Wheat inspections were positive yesterday, while soybeans inspections was reported on the lower half of expectations. Corn beat analyst expectations soundly with 1.16 million metric tonnes while wheat was reported at a strong 507 thousand metric tonnes. Soybean inspections were reported on the low side of expectations with 89 thousand metric tonnes last week.

May 27- Morning Comments

The grains traded lower in the night session following the long Memorial Day weekend. Corn is down 5 ¾ cents, Soybeans is down 11 ¾ cents and Chicago Wheat is down 9 cents going into the morning pause in trade. The USDA will be delivering the crop progress and the grain inspections report today which was delayed from its normal Monday release in observance of Memorial Day.

Chicago wheat is down in the overnight session falling below its 100 day moving average following moisture in the plains and a successful presidential election in Ukraine. Rainfall in the moisture deficient parts of the plains spurred on selling despite the fact that coverage was below expectations in some of the driest parts of central and southern Kansas. Texas got the better part of the deal over the weekend receiving 1-3 inches.

The Ukrainian presidential election held over the weekend resulted in an overwhelming win for the 48 year old billionaire Petro Poroshenko. Following the election Ukrainian forces mounted a strong offensive against the Rebels in the east that resulted in more than 50 pro-Russian casualties and no government casualties. With Petro Poroshenko winning more than 54% of votes compared to the 13% received by his closest challenger it would appear that a single voice of Ukraine has been elected. This could be the start to a resolution, barring any major Russian intervention.

Moisture across ND today should move toward the central and eastern parts of the Midwest opening up another planting window for the next couple days for the northern states. The next significant planting delays should arrive between Friday and Tuesday throughout ND and MN.

Soybeans are down sharply this morning, with another 300,000 tonnes of soybeans sold from China’s state reserves. The government sold 81.5 percent of soybeans offered, slightly higher than last week’s. The soybeans were sold for an average price of $660 per tonne. The Chinese government is scheduled to auction off 3.5 million tonnes of corn from its state reserves on the 29th.

May 23 – Morning Comments

This morning the grains are trading higher with July corn up 2 ¼ cents, July soybeans up 4 ¾ and July Chicago wheat up 3 1/2.

Soybeans are continuing their move higher this morning, up 4 ¾ cents for July and 2 ¼ cents on November. Thursday’s export sales report confirmed that international demand remains strong for old crop U.S. soybeans even with prices near $15.00 per bushel. Net old crop sales were reported at 73,600 metric tonnes, well above the 100 – 150,000 tonne cancellations traders were expecting. Weekly cancellations are needed for the USDA’s current export projection to hold, with accumulated exports now above the 1.60 billion bushels in exports projected for the entire marketing year in the May USDA report. Demand rationing will signal the top of this market, and many soybean bulls feel that this week’s export figure and current crush data point to a market that still has some legs as we enter the summer months. New crop futures continue to follow the July contract higher, with November 14 soybeans futures up 4% so far this week. With large carryout expected for the 2014/15 marketing year we still feel this is a good pricing opportunity for a portion of new new crop bushels.

Chicago wheat is up 3 ½ cents in the overnight session after finding some support at the 200 day moving average around $6.58. The wheat trade has continued to focus on the ample global ending stocks in the recent weeks, with wheat pulling back more than 8 percent in the last few weeks. There seems to be strong demand globally with a tender this morning from Turkey for 70,000 metric tonnes and yesterday’s announcement that Jordan issued a tender for 100,000 tonnes. The business however, seems to be going to Russia with U.S wheat still uncompetitive on the global market. Yesterday, wheat export sales were reported at 142,200 for 14/15 delivery which was within analyst expectations, but even those numbers are still lackluster.

May 22 – Morning Comments

Soybeans surged higher in the overnight session, breaking through technical resistance on both the July and November contracts. July is now trading at contract highs and the next area of technical resistance is between 1280 and 1290 on the November contract. This morning’s export sales report could give more fuel to the old crop rally, with 73,600 tonnes of old crop soybeans reported sold last week. This was well above trade expectations for net cancellations of 50,000 – 100,000 tonnes. Today’s export sales report indicates that $15.00 soybean futures may not be rationing demand in the way many traders expected.

Corn futures are drifting higher at the moment, up 2 – 3 cents in Chicago. Old crop corn exports came in at 343,000 tonnes this morning, toward the low end of trade expectations. Once again China was a net canceller of U.S. corn on the week. Traders will be watching mainland China today as the government prepares to auction corn from state reserves. 1 million tonnes of corn will be offered in the sale and this will be an important indicator of mainland Chinese demand. Looking at old crop export data, China has not been a net purchaser of U.S. old crop corn since mid-March.

The wheat market continued to trade sideways in the overnight session on light news. Coming into the morning trade break Chicago wheat is up 3 cents while KC and MN wheat are unchanged. Export sales of wheat were in line with trade expectations. Rain is possible for the southern plains over the weekend although recent rain events have done little to improve crop conditions. With Texas harvest starting in early June, time is running out for this year’s hard red winter wheat crop.

May 21 – Morning Comments

Corn futures were positive for most of the night before sliding lower into the morning trade break. At the moment July 14 corn is unchanged and December 14 is down just a penny. Selling has subsided in the corn market for largely technical reasons as the July 14 contract approaches the 50% Fibonacci retracement at $4.75. Fundamental factors remain negative, with rumors circulating yesterday that China is planning to cancel all outstanding old crop corn purchases from the U.S. Outstanding export sales to China currently stand at 32 million bushels, or about 4% of total corn exports projected for 2013/14. China has been a net canceller of old crop U.S. corn on a weekly basis since March and considering the state corn auction scheduled for tomorrow, it appears China is in a position to cancel a large portion of old crop sales still left to ship. This information should be priced into the market given recent price action so any confirmation of these cancellations would not be overly bearish in our opinion.

November Soybeans traded out near the lows of the day yesterday after failing to break out of the highs set on April 29th. The failed breakout is typically a very strong warning signal that a change in trend could be near, but the recent volatility in the soybean market needs to be taken into consideration. One possible explanation for the selling was the Chinese state soybean auction held yesterday. In that sale, 80.9% of soybeans offered were sold at an average price of $690 per tonne. This average sell price was $10 per tonne higher than was received in the previous week’s sale, but the percentage sold was down. Many traders believe that we need to see more evidence of demand destruction for crushing plants before prices can break in a meaningful way.  In the overnight session November soybeans rebounded 8 ½ cents.

May 20 – Morning Comments

The grains traded higher in the overnight with July corn trading up 2 cents bouncing off its 100 day moving average, soybeans up 6 ¼ cents on strength out of soymeal and Chicago wheat rebounding 7 cents off of technical support.

July and new crop soybeans both traded higher in the overnight supported by the strength in soymeal which has maintained a strong up-trend since February, recently making fresh contract highs. Adding to the soymeal strength has been talk that crushing plants around the Midwest are running low on soybean stocks. In the last week the average U.S soybean basis has jumped 4 ¼ cents supported by strength at processing plants and along the river.

Yesterday’s crop progress report showed 73% of corn now planted, up 14% on the week and slightly below trade expectations. This puts planting pace now 3% behind the 5 year average for this week in May. Key states to watch moving forward are North Dakota, Minnesota, and Wisconsin where a cold rainy spring has put planting pace well behind schedule.

Soybean planting is now 33% complete, up just 13% on the week. Following last week’s rain, soybean planting progress is now 5% behind the 5 year average and giving some traders concerns about planting progress. North Dakota, Minnesota, and Wisconsin will also be important to watch in terms of soybean sowings. This week’s report showed just 16% of Minnesota, 5% of North Dakota, and 8% of Wisconsin soybean acres planted.

Looking ahead, rain is likely over the next several days across northern tier states but the 6-10 forecast looks favorable for planting. Friday and into the weekend we should see a warming trend develop that will extend from Montana into northern Illinois and help keep planters rolling as insurance deadlines approach.

May 19 – Morning Comments

Wheat is trading lower this morning after shedding 45 ½ cents last week. In the overnight, Wheat traded as low as 6.65 ½ which is around the 38% retracement measured from the February lows to the recent highs. This price area should also serve as support from the previous low of $6.63 which was tested twice back on April 10th and April 11th.   Despite the positive technical factors this morning, it does look like there will be moisture moving through the southern plains the early part of next week. Although this would usually be very positive for the ailing crops many worry that it’s too late for the rains to help the wheat crop significantly in that region of TX, OK and Southern Kansas. Seeding delays for spring wheat in ND and MN will likely be slowed by some precipitation early this week, and also in the 6-10 day outlook.

Last Friday it was reported that Egypt bought 60k Tonnes of wheat from Ukraine which again shows the confidence in Ukrainian ability to continue delivering on their obligations, but also highlights that U.S. grain has lost its competitiveness in the global market after the run-up in prices triggered by drought in the southern plains. This morning there was also talk of dryness expanding in the former Soviet Union during over the next 10 days which could have a supportive effect on prices.

Crop progress and condition ratings will be released this afternoon at 3:00 pm. Last week’s report showed 59%, 20% of soybeans, and 34% of spring wheat planted. This put corn and soybeans on track with the 5 year average while spring wheat lags behind following a cold and wet spring across the northern Plains. Expectations are for this afternoons report to show corn 70-75% complete while soybean sowing at 30-35%.

At the moment, corn July corn is down 3 while July soybeans is off 2. New crop beans are trading 4 cents higher as the old crop / new crop spread continues to unwind and some soybean planting concerns remain in the market given weather. This may be a story supporting November soybeans in the short term but longer term we expect the crop to be planted and acreage numbers to weigh on U.S. soybean futures.

Chinese grain auctions will continue to be a trade topic this week. Tuesday the Chinese will auction 300,000 tonnes of soybeans from state reserves followed by a 1.0 million tonne corn auction on Thursday, May 22nd. Chinese auctions are typically bearish U.S. prices, as fresh grain supplies in mainland China should weaken demand for U.S. grain. Last’s week’s soybean auction actually had a positive impact on U.S. grain futures as the average price and quantity sold was much higher than trade expectations. This week’s grain auctions will be an important indicator of Chinese demand moving forward.

May 16 – Morning Comments

Grains traded unchanged to lower in the overnight session following yesterday’s sell-off.

Corn futures are trading 1-2 cents lower this morning on light news. New crop corn futures are technically oversold but the rapid pace of planting across the heart of the grain belt has worked to pressure prices this week. Expectations are for Monday’s crop progress report to show another strong week of corn planting in the western corn belt, with the eastern corn belt showing some weather delays. Moving forward, emergence and crop conditions will drive prices as planting pace is slightly ahead of the 5 year average.

Soybeans are down 2 cents on the July contract while trading unchanged on the new crop November contract. Yesterday’s NOPA crush report showed the largest April crush in five years but given the trade reaction this is being  viewed as confirmation of strong crush rather than fresh bullish news for the soy complex. The  Chinese will hold more state soybean auctions next week, with 1.3 million tonnes to be offered in two separate auctions. Typically these Chinese auctions have a negative impact on U.S. prices, but the auction held earlier this week actually seemed to support old crop soybean futures. In that auction, 92% of the soybeans offered were sold and at a much higher average price than the trade was expecting. This has worked to quell some trade concerns about domestic Chinese demand for soybeans.

Wheat traders will be watching a tender by the Egyptians for 55,000 – 60,000 that will be closing this afternoon. That tender is for wheat delivered June 20 – 30 and will be an important gauge of export demand for U.S. wheat. Yesterday’s export sales report showed just 55,000 tonnes of old crop U.S. wheat sold, the second lowest weekly quantity since January. Considering large world ending stocks the U.S. wheat market may need to see lower prices before international demand returns. The next area of technical support sits at $6.70 – $6.75 for July Chicago wheat futures.