September 30 – Morning Comments

ALERT: USDA Grain Stocks Report at 11:00 AM Central Time Today

In the overnight session some of yesterday’s gains have been erased as corn fell 1 ½ cents, soybeans fell 5 ½ cents and wheat dropped 4 ¾ cents as the U.S Dollar index rallied again this morning, up nearly ½ a percent. This morning Ukragroconsult raised their Ukraine 14/15 wheat export forecast by 5.3 percent, up to 10.0 million metric tons.

Today’s Quarterly Grain Stocks Report will be the focus for traders. Analysts expect September 1st stocks of soybeans to be reported at 1.185 billion bushels and soybean stocks at just 126 million. Soybean stocks will be watched the closest considering the exceptionally tight stocks during the 2013/14 marketing year. Historically this report has been volatile for prices, but today’s reaction should be quelled by the large 2014/15 crop which is expected to replenish tight stocks of corn and soybeans, in particular.

Rain across the Midwest may slow harvest over the next 6-10 days but is coming at a time when some corn and soybean stands have not yet reached maturity. Monday’s crop progress report had 69% of soybeans dropping leaves and 60% of corn mature. Conditions actually improved for soybean by 1 percent compared to last week. Corn’s good-to-excellent rating was unchanged. Harvest has been moving forward over the last week, but not as much as analysts were expecting with only 12% of corn harvested compared to estimates of 15%. For soybeans, 11% was reported harvested compared to estimates of 11%. Both corn and soybeans are behind the 5 year average harvest pace.

September 29th – Morning Comments

This morning the grains are mixed with corn up ¾ of a penny, soybeans down ¾ of a penny and wheat trading higher in the overnight session, up 4 ¼ in the overnight session. The U.S Dollar is trading slightly lower this morning, taking some of the pressure off the grain market.

Crop progress and conditions will be released at 3:00 pm central time following the market close. Conditions are expected to remain unchanged for corn and soybeans. Harvest pace should be near 10% for soybeans and approaching 20% for corn.

September 1st quarterly grain stocks will be released tomorrow at 11:00 AM central time. This will have important implications for 2013/14 balance sheet as it indicates how much corn and soybeans remained in stocks at the end of the old crop marketing year. In a poll released by Reuters, traders expect the USDA to report September 1st corn stocks at 1.185 billion bushels and soybean stocks at just 126 million.

Precipitation over the weekend helped out soil moisture in the northern plains. The weather this week should be, for the most part mild with some rains expected throughout the Midwest in the second half. Corn and soybean harvest should pick up its pace this week with some disruption as precipitation starts in the western grain belt and moves its way east. A freeze is expected in the 11-15 day forecast according to the latest weather models, but there are no real expectations for significant damage.

September 26 – Morning Comments

In the overnight session corn dropped another ¾ of a cent, soybeans fell 8 ¼ cents and wheat fell 4 ¼ cents as more selling pressure continues to weigh on the market. The U.S dollar is higher again this morning which will continue to weigh on commodities. This morning a sale of 59,309 tons of U.S corn was sold to Mexico for new crop delivery and 47,879 tonnes of corn was sold for 15/16 delivery.

China has delayed approving a GMO strain of soybeans, citing “low public acceptance”. It is unclear which variety of soybeans has been delayed in approval but we will continue to monitor the Chinese GMO soybean situation. Corn was pressured last year after the Chinese rejected several shipments of MIR 162 corn developed by Syngenta. Several of these corn cargo shipments were loaded in Louisiana by Cargill, and last week it was announced that Cargill is suing Syngenta over the rejected shipments. This will be a land mark case for grain shipments as the legal system will have to determine if seed providers or grain merchandisers are liable for rejected export shipments.

Australian wheat production could fall to as little as 24 million tonnes from the current USDA estimate of 25.5 million tons after a lack of rains in the western region and spotty rain in its eastern growing region damaged the crops potential. Western Australia’s output could drop by 20 percent from a year ago according to CBH Group, Australia’s biggest exporter. The conditions in Australia have been for the most part factored into the market.

The next big reports for grain traders will be on September 30th, when the USDA releases their September 1st grain stocks report. This will have important implications for 2013/14 balance sheet as it indicates how much corn and soybeans remain in stocks at the end of the old crop marketing year. In a poll released by Reuters, traders expect the USDA to report September 1st corn stocks at 1.185 billion bushels and soybean stocks at just 126 million.

Today is the last trading day for short dated October options. Any options in-the-money at the close will be assigned futures positions. If you have questions about assignment or liquidation please contact our office.

September 25 – Morning Comments

The grains are mixed here this morning with corn up ¼ penny, soybeans up ¼ penny and wheat down 3 ¾ cents as we move into the morning pause in trading. The USDA reported a number of export sales this morning. 115,000 tonnes of soybeans were sold to China for 2014/15. Nigeria purchased 120,000 tonnes of HRW wheat. Export demand is returning to the US what marketing as today’s sale follows an Egyptian sale earlier in the week.

Export sales were reported this morning with corn and soybean reporting strong while wheat continues to struggle as it reports sales on the low side of analyst expectations. Corn sales were reported at 836,400 metric tons with over half the sales this week going to Mexico. Soybean sales were reported at 2,565,600 metric tons of which 92% of the sales went to China. Soybean sales were especially large this week after a Chinese delegation toured the Midwest making significant purchases last week. Wheat sales were reported at 396,300 metric tons which was an improvement of 26 percent compared to last week but still managed to come in on the low side of expectations which were between 350,000-500,000 metric tons.

The U.S. dollar index surged another leg higher overnight now trading at 84.465. This is up 7% from July lows and has been a contributing factor to weakness in the grain market. Expectations for increasing interest rates in 2015/16 have contributed to strength in recent weeks.

September 24 – Morning Comments

In the overnight session the grains moved higher with corn up 1 ¾ cents, soybeans up 2 ¾ cents and wheat in Chicago up 5 ¾ cents. Wheat was helped higher this morning by the announcement by the Ethiopian government that it has issued an international tender to purchase 200,000 tons of milling wheat.

This morning the Ukrainian agricultural ministry cut this year’s harvest forecast to 60 million metric tons down from 63 MMT which was its previous estimate. There was no specific reason cited for the cut in production other than the bloody conflict in eastern Ukraine and the loss of Crimea in the production count. This drop in production is a positive for wheat which has been pressured by ample global ending stocks and a very smooth Russian harvest.

The western grain belt received 0.2 – 0.6 inches of precipitation over night with very little reported out east. Conditions remain relatively favorable for harvest although the 6-10 day forecast is beginning to show an increased chance of precipitation across Indiana, Illinois, and Iowa. Frost/freeze remains off the table until at least October 5th.

Weekly ethanol production figures will be released today and we expect another very strong usage figure from U.S. ethanol producers. Weekly figures have been exceptionally strong compared to the last 4 years as lower corn prices have helped firm demand. Crush margins were around $2.26 last week in the central grain belt and ethanol producers remain aggressive bidders of spot and forward corn deliveries.

September 23 – Morning Comments

The overnight session was relatively quiet with corn slipping 2 ½ cents lower, soybeans increasing by ½ a penny and wheat slipping ¼ cent. The next major support level for Soybeans is around $8.78 which was a previous support from July 2009 to July 2010. Corn support looks to be around $3.02 which was a previous support level back in September 2009.

After the close of yesterday’s session crop conditions were released showing that corn rated good-to-excellent had stayed at 74% which was unchanged from last week. Soybeans rated good-to-excellent declined by 1% from the previous week. This week’s report was the first to show the progress of soybean harvest which was recorded at 3% harvested this Monday compared to a five year average of 8%. Corn harvest is running a bit behind the average pace only recording 7 percent cut compared to a 5 year average of 15 percent.

Weather should remain favorable for harvest over the next 10 days with precipitation average to below average for the majority of the grain belt. Frost/freeze concerns remain off the table with a major warm front lingering over the grain belt through October 5th.

September 22 – Morning Comments

This morning corn and soybeans are trading lower as wheat shows some relative strength for the first time in a while. Corn is down 2 ¾ soybeans is down 15 cents and wheat traded 4 ¼ cents higher into the morning pause in trading.

November soybeans gapped lower to start the overnight session and are currently trading 15 cents lower in Chicago. Trade chatter has been surrounding strong yield reports over the weekend but nothing firm has been announced. No new fundamental stories are pressuring things lower this morning so it looks like a continuation of the large bear move we have seen since June 30th. Our bias continues to be that there is more downside risk in the soybean market than corn even at current prices.

This week’s weather looks to be relatively dry with only one widespread rain forecast over the next two weeks. The 8-14 day forecast looks to be wetter than normal throughout the western part of the grain belt encompassing a large area from North Dakota to Texas. Temperatures during that same time period are expected to be 60-70% warmer than normal throughout the majority of the grain belt.

The wheat market is taking a bounce this morning after an Egyptian purchase over the weekend. Egypt bought 55,000 tonnes of U.S. soft red winter wheat for delivery during October. The U.S. wheat market has struggled to find interest from Egypt over the last several months and this sale will signal that prices have moved low enough to compete with Black Sea exporters.

The USDA crop report will be released at 3 PM CST and will be the first week the USDA reports soybean harvest.

September 19 – Morning Comments

Grain markets are trading lower again this morning with corn down 2, soybeans off 7, and Chicago wheat down 5 cents.

Fundamental news was very light overnight and traders remained focused on harvest pace and early yield reports.

Yields have been varied but in general have confirmed expectations for a very large crop. Harvest weather looks promising over the next two weeks as a dry weather system is expected to bring below average precipitation to the majority of the grain belt. Frost/freeze concerns should not enter the market until early October as temperatures are expected to be above average through October 1st. The threat of an early freeze on late developing crops remains the last hurdle for yield on this year’s corn and soybean crops.

Scottish citizens voted down a referendum to leave the United Kingdom on Thursday. The final vote was close with 55% voting to remain in the United Kingdom and 45% favoring separation. British and European markets are rallying as a result after results were announced and the dollar index is bouncing back from Thursday’s sell off.

September 18 – Morning Comments

U.S. grain futures slipped lower over night with corn trading down 2 cents, soybeans off 2 cents, and Chicago wheat down 5 cents.

This morning’s export sales report showed strong sales for U.S. corn and soybeans while wheat missed expectations. Soybean sales were reported at 1.466 mill tonnes, just above the high end of expectations. China was the largest buying accounting for a third of reported sales while 1/3 went to “unknown destinations”. Corn sales were reported at 659,000 tonnes which was in-line with strong expectations for the week. Wheat sales came in below expectations at just 314,000 tonnes for the week. This was down 15% from the previous four week average.

Outside markets and currencies will be watching the Scottish independence vote today. Scotts will vote whether to separate from the United Kingdom and establish a sovereign state. Results will be tallied late this evening so any volatility will most likely be seen during Friday’s trade session. Most analysts agree that a strong knee-jerk reaction from equities and currencies is likely but the long term impacts should be minimum – regardless of the votes outcome.

Our weather models continue to show temperatures above normal through the end of September. Frost/freeze threat remains very low and will not be a supportive story in the grains for a couple more weeks.

September 17 – Morning Comments

Grains once again experienced a very quiet overnight session with corn down 2 cents, soybeans up 2 cents, and Chicago wheat down ¼ cent.

The Federal Reserve is meeting today to discuss interest rate policies and economic direction. Fed Chairmen Janet Yellen will deliver comments at 2:30 pm central time and is expected to lay the ground work for interest rate increases sometime during 2015. These comments will be closely monitored by equity markets, energies, and most importantly for the grains – the dollar index. The dollar has remained exceptionally strong July only adding pressure to the recent selloff.

Weekly ethanol production numbers will be out today and are once again expected to show strong production across the grain belt. Ethanol production remains very strong seasonally as crush margins are well above $3.00 per bushel at many facilities. Ethanol facilities remain aggressive bidders of spot and new crop corn as this crush margin allows merchants to firm basis levels.