Morning Comments – October 31

Beans continued to drift lower to start the week, falling below its 100-day MA. Corn also drifted lower while wheat was slightly higher. In outside markets, crude oil was off 50 cents a barrel while equities showing slight improvement.

This morning USDA announced a 100,973 corn sale to Barbados while China bought 264,000 MT of soybeans. China also was in the market for sorghum, buying 110,000 MT.

South America weather was mostly benign over the weekend as Argentina was dry helping to ease flooding concerns during wheat harvest and spring crop planting. Rain is expected with some 1.00 to 3.00-inch totals but the flooded area of NW Buenos Aires will receive 0.50 to 1.50 inches of additional moisture. Brazil saw rain amounts of 0.80 to 3.46 inches in northern Minas Gerais easing long term dryness and excessive heat.

A group of Israeli private buyers has issued international tenders to purchase up to 95,000 tonnes of corn and 45,000 tonnes of feed wheat. Russian wheat prices rose for the 6th consecutive week as Ukraine prices have also been bolstered by deals with India.

OPEC reached no deal over the weekend as some countries continued to falter on reaching any output deal to cut production.

 

Weekly Cash Comments

Cash Commentary-

Corn and soybeans continued to move lower, still searching for support in the cash market

National corn basis was mixed but balanced out to no-change from last week. Ethanol facilities were unchanged from last week as well. Ethanol output was off 7,000 BPD to 991,000 BPD while stocks rose 877,000 barrels to 19.92 million barrels. Corn along the river was off by 1 cent, drug down by exports and barge rates.

Soybean basis moved lower by an average of 3 1/2 cents this week. Crushing plants were off by 3/4 of a cent, moving in lockstep with last week’s losses. River terminals continue to struggle to keep basis levels. This week river terminals were off by 13 1/4 cents as exports remain strong and barge rates continue to climb higher.

Futures Commentary-

The grains saw mostly positive movement this week. Corn moved higher by 6 1/2 cents while soybeans leaped higher by 38 3/4 cents. Wheat was off slightly this week, down 2 1/2 cents.

On Monday USDA reported that the US corn crop was 61 percent harvested versus 46 percent last week and 63 percent for the 5-year average. Soybeans was 76 percent harvested versus 62 percent last week and is on par with the 5-year average.

Soymeal was sharply higher Wednesday, helping fuel the bean rally while domestic prices for soybeans are up over 50-cents a bushel in the past few days, doubling up the US gains. Traders are looking for big US exports to China to continue as crush margins and import margins for beans the best they’ve been in a year.

In South American weather, Brazil looks good for ample moisture over the next several weeks. Argentina will be dry thru the weekend but rains are expected to bring beneficial moisture early next week.

Russian wheat export prices rose for the fifth consecutive week on continuing demand from Egypt, the world’s largest wheat importer, analysts said on Monday. Egypt’s state grain buyer acquired 120,000 tonnes of Russian wheat on Oct. 20 in its third tender since the start of October. Black Sea prices for Russian wheat with 12.5 percent protein content were at $175 a tonne on a free-on-board (FOB) basis at the end of last week, up $1 from a week earlier, Russian agricultural consultancy IKAR said in a note.

Crude oil took a hit this week as API stocks data after Tuesday’s close showed a 5 million barrel build in oil inventories and a nearly 2 million barrel build. For today’s official EIA data, the trade is only looking for a 750,000 barrel build in oil and a 1.25 million barrel decline in gas inventories.

 

Morning Comments – October 28

Chicago soybean prices rose for a third consecutive session on Friday, with the market on track for its biggest weekly gain since early July with support from strong demand for US supplies. Wheat and corn edged lower as traders took a breather after strong gains earlier in the week.

The very strong demand for US soybeans at present is driving the prices up, analysts state. Robust US exports are not unusual at this time of year because harvesting is currently underway in the US, whereas planting has not even begun yet in South America.

US Department of Agriculture said on Thursday that exporters had sold 396,000 tonnes of US soybeans to China and 129,000 tonnes to unknown destinations. US soybean export data shows 2.045 million tonnes of soybeans sold last week.

The International Grains Council raised its forecast for the 2016/17 world corn crop on Thursday to a record high 1.035 billion tonnes, boosted by upward adjustments for the US, Argentina and India.

Gold is expected to post its highest average annual price in four years in 2017, a recent Reuters poll showed on Friday.

The US economy grew at its fastest pace in two years in the third quarter as a surge in exports and a rebound in inventory investment offset a slowdown in consumer spending. That is the strongest growth rate since the third quarter of 2014.

 

Morning Comments – October 27

Soybeans continued to climb reaching fresh 2-month highs and above its 10-day moving average while corn and wheat also added to yesterday’s gains.

Soymeal was sharply higher yesterday, helping fuel the bean rally while domestic prices for soybeans are up over 50-cents a bushel in the past few days, doubling up the US gains. Traders are looking for big US exports to China to continue as crush margins and import margins for beans the best they’ve been in a year. Also with the harvest now likely past 80% harvested it seems bear positions may be leaving the building.

South Korea’s largest foodmaker, NOFI, purchased about 273,000 MT of corn in a tender which closed on Wednesday. The corn was bought in four consignments which can be sourced from the United States, South America or worldwide origins. Taiwan’s maize industry procurement association, MFIG, purchased 65,000 tonnes of corn to be sourced optionally from the United States or Brazil in an international tender which closed on Thursday.

Oil prices fell nearly 2% on Wednesday on growing doubts OPEC will cut production, giving back the gains after the EIA inventory data. US crude stockpiles fell 553,000 barrels last week, the U.S. Energy Information Administration (EIA) said, a result contrary to the 1.7 million-barrel build that analysts polled by Reuters had forecast.

Weekly Export Sales

Actual

Expected

Corn

799

900-1,200

Soybeans

2,045

1,500-2,500

Wheat

646

350-550

Morning Comments – October 26

Soybeans continued to ratchet higher while corn and wheat had some modest gains in sympathy. In outside markets, the US dollar and equity futures were lower and crude was sharply off.

Palm oil continued to rally overnight hitting a two-month high helping push soybeans higher and approaching the $10-mark. Egypt overnight announced they bought 420,000 MT of wheat from Russia and Romania. Although there was a US offer thrown into the pool, but none was accepted.

A South Korean feed maker is said to be shopping for 276,000 MT of corn and 69,000 MT of wheat for early 2017 delivery.

In South American weather, Brazil looks good for ample moisture over the next several weeks. Argentina will be dry thru the weekend but rains are expected to bring beneficial moisture early next week.

Crude oil took a hit as API stocks data after Tuesday’s close showed a 5 million barrel build in oil inventories and a nearly 2 million barrel build. For today’s official EIA data, the trade is only looking for a 750,000 barrel build in oil and a 1.25 million barrel decline in gas inventories.

 

Morning Comments – October 25

Grains were mixed overnight as soybeans were tending weaker while corn and wheat were hovering around unchanged going into the morning break. In outside markets, equity futures and crude oil were in slightly positive territory.

On Monday USDA reported that the US corn crop was 61% harvested versus 46% last week and 63% for the 5-year average. Soybeans was 76% harvested versus 62% last week and is on par with the 5-year average.

In overnight action, Egypt tendered for more wheat and 7 offers were made with the lowest coming in at $182.74/MT from Russia, although there was one US offer by Cargill for $185. South Korea was also in the market for 70,000 MT of corn. This morning USDA announced a 516,000 MT sale of US soybeans to China.

Barge rates shot up yesterday along the river with gains of 10 cents or more a bushel in barge freight costs. River terminals had steep losses in basis, especially soybeans which saw CME delivery point markets lose 15 cents on spot basis. Current basis levels at CME soybean delivery facilities are running 25 cents below normal as we head closer to first notice day on Monday for November futures.

 

Morning Comments – October 24

Soybeans started the week in positive territory posting double-digit gains and at one point hitting the $9.99 mark in the night session. Corn and wheat were slumping however.

Malaysian palm oil futures climbed to their strongest levels in a week in early trade on Monday. Palm oil futures for January were up 3.4 percent. Nearby Dec soybean oil futures were also surging, gaining 2.4 percent in the night trade.

Weekend weather was nearly ideal for harvest with rain keeping confined to the far East and Northwest of the country, while the Midwest was dry. Northern U.S. Midwest will receive rain Tuesday into Thursday of this week
With totals of 0.50 to 2.50 inches likely. US corn harvest is estimated to be  60-65% completed and beans at 75-80%.

Russian wheat export prices rose for the fifth consecutive week on continuing demand from Egypt, the world’s largest wheat importer, analysts said on Monday. Egypt’s state grain buyer acquired 120,000 tonnes of Russian wheat on Oct. 20 in its third tender since the start of October. Black Sea prices for Russian wheat with 12.5 percent protein content were at $175 a tonne on a free-on-board (FOB) basis at the end of last week, up $1 from a week earlier, Russian agricultural consultancy IKAR said in a note.

 

Weekly Cash Comments

Cash Commentary-

Corn and soybeans were off yet again but potentially nearing a bottom.

National corn basis was off by nearly 1 cent per bushel this week.  Ethanol facilities were again the big movers this week, off by 2 1/4 cents. River basis is beginning to find support from exports and low barge freight.

Cash soybeans were off an average of 2 cents per bushel this week. Crushing plants and river terminals were off by 3/4 of a cent. Monday saw some big hits to spot bean basis with losses at 5 to 10 cents at some key river terminals and processors.  Basis levels at interior crushing plants are running about 25 cents below normal for this time of year while river terminals are only off about 15 from the historical norm thanks to surging exports and lower barge freight.

Futures Commentary-

Crop futures saw positive movement overall this week. Wheat and corn were up slightly gaining 1 cent and 1 1/2 cents, respectively. Soybeans was the big mover this week up 19 1/4 cents.

On Monday, USDA’s attaché to Argentina forecast the soybean crop there to be 55 MMT, below USDA’s official forecast of 57 MMT.  2016/2017 expected area harvested is revised down to 19.3 million hectares due to greater competition from alternative crops – corn and sunflower – and lower than expected wheat plantings resulting in lower 2nd crop soybean area. Adverse weather conditions, crop damage, and harvest delays forced a number of producers to abandon their plans to plant wheat for the 2016/2017 winter crop season.

In climate news, there is a growing consensus that La Nina may be developing as indicators are showing a shift. The Climate Prediction Center says there is a 70 percent chance that La Niña will develop during the Northern Hemisphere autumn 2016 and there a 55 percent chance it will persist during winter 2016-17. This is up from last month’s forecast of a 40 to 45 percent chance of development. The growing season for corn and soybeans in Argentina and southern Brazil can become unfavorably dry during a La Niña phase, and the US is prone to hotter than normal temperatures in the Midwest.

China will reduce the area planted with corn and lift soybean acreage in the next five years, said the country’s cabinet on Thursday, reiterating goals outlined earlier this year to adjust the nation’s crop structure to better meet demand. China has encouraged farmers to expand corn planting and abandon soybeans in recent years by paying them inflated prices for corn. The policy, abandoned earlier this year, has left China with huge reserves of corn.

Crude oil prices rose to a 15-month high on Wednesday after a US inventory draw-down, which boosted energy shares. Energy stocks led the way up on Wall Street, boosted by the higher oil prices. Also in the crude market, sharp cuts to Chinese oil production and falling inventories of refined fuel products are mounting signs that Asia’s oil markets are slowly returning to balance.

Morning Comments – October 21

Chicago soybeans were set to post a third week of gains today after strong demand underpinned prices of the oilseed and offset pressure from a record US harvest and a rising dollar.

Corn and wheat are on track to fall slightly over the week as abundant global grain supplies continue to keep a lid on the cereal markets. The USDA reported export sales of US soybeans in the latest week at just over 2 million tonnes, well above the range of trade expectations for the 1.0 million to 1.3 million tonnes. The agency also said private exporters sold 192,000 tonnes of US soybeans to unknown destinations.

Private analytics firm, Informa Economics, projected a 5.7 percent increase in US soybean plantings for 2017 and a 3.7 percent decline in corn plantings. Informa forecast 2017 soybean plantings at 88.487 million acres, an all-time high if realized. The firm projected US corn plantings at 90.971 million acres.

Global stocks were set for their first weekly gain in four weeks on Friday and the dollar rose to its highest since March. Oil edged higher as Russia reiterated its commitment to joining a producer’s’ output freeze to stem a 2-year slide in prices.

 

Morning Comments – October 20

Chicago corn and soybean futures rose for a second straight session on Thursday as favorable demand news helped curb supply pressure from an advancing US harvest that is tipped to bring in record crops.

China, the world’s top soybean importer, has been snapping up US soybean cargoes in recent weeks. Soybeans drew additional support after the USDA confirmed that private exporters sold 185,000 tonnes of US soybeans to unknown destinations for delivery in the 2016/17 marketing year.

The world faces plentiful wheat supplies in coming months and this is coming into attention again. After its recent rises, US wheat needs a price pullback for export competitiveness, said Stefan Vogel, head of agricultural commodity markets research at Rabobank.

Corn drew support from weekly data on ethanol. US Energy information Administration said on Wednesday that ethanol production last week increased by 36,000 barrels per day while stocks of the biofuel fell by 351,000 barrels.

Crude oil prices rose to a 15-month high on Wednesday after a US inventory draw-down, which boosted energy shares. Energy stocks led the way up on Wall Street, boosted by the higher oil prices.