Morning Comments – November 30

Grains swung back into positive territory overnight following Tuesday’s sharp selloff. Crude oil catapulted higher overnight gaining $3 a barrel on news OPEC would cut production.

USDA announces a sale of 123,000 MT of soybeans to China.

Palm oil was up sharply overnight but China soybeans and soymeal were off following the US lower from Tuesday. Crush margins and hog margins in China, but there is signs that they are starting to move to South America for supplies.

In the long-term China’s grain production will fall by 15 MMT, or about 2.5 percent, in the five years to 2020, as the government withdraws severely polluted or degraded farmland for rehabilitation, a state planner official said on Wednesday. Under the proposal, some five million hectares of land – about four percent of the country’s total arable land – will be taken out of production and either rehabilitated or turned over to forest or grasslands,

On Tuesday, USDA released their long-term forecasts for agriculture. Looking at their 2017 acreage numbers, call for a big drop of 4.5 million acres in corn and soy acres up only 1.8. Traders expect a much bigger swing high in beans and a less dramatic drop in corn. Yesterday was FND-eve, sending longs exiting heavily in Dec corn and wheat which contributed to widening of spreads to March and a sharp plunge in flat price.

Crude oil got a jolt as top oil producer Saudi Arabia said a deal was close despite some loose ends. Iran, which is considered crucial to a breakthrough because its output has been rising after western sanctions were lifted, said it was also “optimistic”.

 

Morning Comments – November 29

Grains were lower overnight led by soybeans which gave up most of Monday’s strong gains. In outside markets, crude oil fell sharply while equities and the US dollar sat in positive territory to start the trade day.

Yesterday, USDA’s crop condition for the US wheat crop held steady at 58% , unchanged from last week, but slightly better than last year’s reading of 55%. However Plains states of OK/KS/TX saw declines in key HRW wheat conditions. Egypt’s GASC was tendering for an unspecified quantity of wheat.

In Asian markets overnight, China’s Dalian Exchange soy futures were lower and palm oil took a breather from 6 days of advances. US basis levels continue to erode on the rally as end users showed sharp declines on Monday as farmer selling was active.

The CFTC report on Monday showed a continued expansion in fund longs in commodities and in particular funds at 15K contracts to soybean longs.  

In global markets, OPEC will meet in Vienna on Wednesday aiming to implement a deal outlined in September to cut output by around 1 million barrels per day from around 33.82 million bpd in October. But key OPEC members appear to disagree over details of the agreement and some analysts have suggested the meeting may fail to reach a deal or produce one that is unworkable.

Morning Comments – November 28

Soybeans started strong on the week holding on to double-digit gains overnight, but corn and wheat continued to sag. Outside markets saw crude oil trade both sides of unchanged but was heading into the day session in positive territory while the US dollar and equities were slightly lower.

Asian markets continued to show good strength as palm oil hits its highest market since 2012. China soybean futures were also up strong overnight posting a 26-cent advance. Meanwhile, in South America weather continues to be favorable with Argentina getting better than expected rains over the weekend as one third of the bean crop has been planted there.

In Brazil, rains hit 45% of the crop area there over the weekend and the 5-day calls for 50% coverage.  The longer-term forecast of 16-30 day forecast shows wet over northern Brazil and normal to below normal across southern Brazil and Argentina.

In global markets, Saudi Arabia has said they won’t attend meetings today & tomorrow ahead of the oil summit on Nov 30. There is some conjecture this may be signs of dissent in an oil output cut deal.

 

Weekly Cash Comments

Cash Commentary-

The cash markets saw relatively small gains this week with basis along the river beginning to taper off.

On average corn gained 1 1/2 cents per bushel, slowly grinding higher for the third week in a row. Ethanol plants saw gains as well up 2 1/4 cents. Ethanol production was off slightly, down 3,000 BPD. Even so, stocks remained high gaining 343,000 barrels. Corn along the river remained unchanged from last week.

Soybeans held onto last week’s numbers remaining unchanged both nationally and at crush facilities. Soy oil continues to get a boost from strength in palm oil market. Wednesday saw the largest movement higher for soy oil futures in the past year. Soybeans along the river saw relatively large losses this week, off 5 1/2 cents per bushel.

Futures Commentary-

Corn and soybeans saw strong movement from last week. Corn gaining 8 3/4 cents and soybeans surging higher with a 44 3/4 cent gain. Wheat was off 1 1/2 cents from last week.

Strong US exports and a robust demand from China sent soybean prices sharply higher on Monday. China’s October crush surged 24% year-on-year as the country continues to have a vigorous appetite for soybeans. China is said to be shopping for US beans to reduce shipping time from the US Gulf.

Looking at export competitiveness, US corn values were higher in against Europe, the Black Sea, and Brazil over the past week. In wheat, the US gained some competitive ground against Argentina and Europe, but fell against the Black Sea. US soybeans managed to improve on the week against Brazil and Argentina.

South African farmers are expected to bolster corn plantings by 35% over last year. South Africa’s Crop Estimates Committee (CEC) is expected to forecast the planted area at 2.62 million hectares, 35% higher than 1.947 million hectares planted last year, according to an average estimate of five trading houses polled by Reuters.

Brazil is expected to see favorable moisture over the next two weeks, while Argentina is expected to net drying in portions of the south and timely rain in the north late this week and into the weekend that will maintain favorable crop development conditions.

On Wednesday, the US Government announced finalized targets for bio-fuel use for next year, requiring that energy companies blend 19.28 billion gallons of renewables into the nation’s fuel supply. The Environmental Protection Agency (EPA) in a statement set the target for conventional bio-fuel, or ethanol, at 15 billion gallons and the advanced bio-fuel target at 4.28 billion gallons for 2017. The agency set the mandate for biomass-based diesel at 2.1 billion gallons for 2018. That compares with the total 18.8 billion gallons the Environmental Protection Agency proposed in May and would be up 6 percent from this year’s 18.11 billion gallons.

The USD got a boost from the US Durable Goods report which showed a pick-up in spending by 4.8% as expectations had been for only a 1.5% boost.

Crude oil got a boost to start the week on discussions by OPEC members with Iran to reach an output cut. Both sides discussed the prospects of upholding a production ceiling proposed in September in Algeria and, if it’s formalized, Iran’s oil minister said crude oil prices could rally up to 25 percent.

 

Morning Comments – November 25

Grains were closed overnight but will reopen for trade at 8:30 am CDT. In outside markets, the USD drifted lower while crude oil was off in early trade and equities were higher.

Lower output of palm oil into early next year and tight supplies of rival soybean oil are likely to bolster prices for the tropical product in the short term after they hit a four-year high this week. Higher mandates for biodiesel production in the United States and Indonesia will further squeeze inventories of palm oil, used in products ranging from candy to cosmetics and cooking oil. Palm oil futures rallied 1% overnight and is up 5.7% on the week.

Russia’s food safety watchdog said on Thursday it would have to introduce a quarantine that could hit agricultural exports if there were more outbreaks of African Swine Fever (ASF) at pork breeding facilities in the southern Krasnodar region. The watchdog said on its website a quarantine could affect, for example, grain exports. Analysts said this would be due to concerns ASF – a highly contagious hemorrhagic fever among pigs – could be transmitted via animal feed.

The dollar retreated against its major currency peers on Friday, a pullback in U.S. bond yields spurring some profit-taking as it headed for its best run in almost two years. Expectations of rises in U.S. inflation and interest rates have driven the greenback to a more than 6 percent gain over October and November, its strongest showing over a similar period since early 2015.

WEEKLY EXPORT SALES

Actual

Expected

Corn

1,668

900-1,200

Soybeans

1,898

1,200-1,500

Wheat

712

350-550

Morning Comments – November 23

Soybeans took a break from their two-day rally, giving up a dime in overnight trade. This drug down wheat and corn as well. In outside markets, the USD shot higher, making new highs on the move and reaching its highest point in 14 years; crude oil slipped in early trade.

The USD got a boost from US durable goods orders this morning.

Overnight a South Korea feed buyer bought 55,000 MT of optional origin corn but it is thought to be sourced from the US. Indonesia hopes to stop importing corn in 2017, an agriculture ministry official said on Wednesday, referring to a national program aimed at achieving self sufficiency in basic foods. “We’re making a nationwide corn development program, with the hope that from 2017 we no longer import corn,” Nasrullah, director of animal feed at the ministry, told Reuters.

In soybeans, spec funds are said to be extending their length in this rally, all the while spot basis levels continue to erode. US Gulf export basis is off about 5 cents in the past few days, and is trading 30 cents a bushel below the same time last year.

The USD got a boost from the US Durable Goods report which showed a pickup in spending by 4.8% as expectations had been for only a 1.5% boost.

In export competitiveness, US corn values were higher in against Europe, the Black Sea, and Brazil over the past week. In wheat, the US gained some competitive ground against Argentina and Europe, but fell against the Black Sea. US soybeans managed to improve on the week against Brazil and Argentina.

 

Morning Comments – November 22

Grains were mildly lower overnight although prices in China continued to surge. The two-day gain for Chinese soy prices is +38 cents and soymeal up $14. In outside markets, bonds, equities and the US dollar were in positive territory while crude oil gave back some of the $2 a barrel gains from Monday.

USDA reported 30,000 MT of soybean oil to China.

Strong US exports and a robust demand from China sent soybean prices sharply higher on Monday. China’s October crush surged 24% year-on-year as the country continues to have a vigorous appetite for soybeans. China is said to be shopping for US beans to reduce shipping time from the US Gulf.

South African farmers are expected to bolster corn plantings by 35% over last year. South Africa’s Crop Estimates Committee (CEC) is expected to forecast the planted area at 2.62 million hectares, 35% higher than 1.947 million hectares planted last year, according to an average estimate of five trading houses polled by Reuters. The CEC will announce the data on Thursday.

OPEC experts discussing how to implement a plan to cut oil output are likely to reach agreement later on Tuesday, a Nigerian delegate said, a possible sign of progress in finalizing the group’s first supply-limiting deal since 2008. The key issue before the committee is how to implement a September agreement by the OPEC Countries to reduce production to between 32.5 million and 33 million barrels per day in an effort to prop up prices.

Morning Comments – November 21

Grains started the week in positive territory with soybeans leading the complex with double-digit gains while wheat and corn advances were more anemic. In outside markets, crude oil jumped $1.30 a barrel and equity futures were pointing to a higher open to start the week.

Overnight, a Taiwan flour miller was tendering for 85,000 MT of US wheat. Russian wheat export prices have risen for the ninth consecutive week, reflecting stronger global markets. Black Sea prices for Russian wheat with 12.5 percent protein content for November supply were at $183 a tonne on a free-on-board (FOB) basis at the end of last week, up $2 from a week earlier.

In South America, no major weather threats have emerged to crop development. Brazil is expected to see favorable moisture over the next two weeks, while Argentina is expected to net drying in portions of the south and timely rain in the north late this week and into the weekend that will maintain favorable crop development conditions.

Crude oil got a boost to start the week on discussions by OPEC members with Iran to reach an output cut. Both sides discussed the prospects of upholding a production ceiling proposed in September in Algeria and, if it’s formalized, Iran’s oil minister said crude oil prices could rally up to 25 percent.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

 

Weekly Cash Comments

Cash Commentary-

Cash markets continue to see movement higher. On average, corn moved higher by 1 cent per bushel; ethanol plants moved higher by 3 cents. EIA reported strong numbers this week; ethanol production was up 15,000 BPD and stocks were off 620,000 barrels. Corn along the river, was off slightly by 1/2 cent per bushel.

Soybeans saw relatively strong movement again this week, up 2 1/2 cents on average. Crush facilities were the biggest movers this week up 5 3/4 cents. On Monday NOPA soy crush numbers came in much bigger than expected with a monthly October crush of 164.6 MB, well above the average analyst estimate of 160.5 MB. However, bean oil stocks were also slightly higher at 1.343 billion pounds versus expectations of 1.323 billion. Soybean river terminals were also up this week, gaining 2 1/2 cents.

Futures Commentary-

Grains closed lower this week; corn off 1 1/2 cents, wheat off 1 3/4 cents, and soybeans off 8 1/2 cents; losing all of last week’s gains.

On Monday, the USDA pegged the corn and soybean harvest nearly complete with 94% and 97% harvested, respectively. Winter wheat ratings inched higher hitting 59% good-to-excellent versus 58% last week and 52% last year.

Weekly USDA Export Sales were above expectations for corn and at the high end of expectations for soybeans and wheat. Export values for corn held up well this week as Argentina and Europe corn prices strengthen relative to US values. However, soybean prices in Brazil and Argentina turned sharply lower relative to US values this week which could hamper US competitiveness.

Curbs on speculation in Chinese markets continued to take their toll as Chinese soybean prices fall drastically earlier this week. Chinese investors renewed their push into commodity futures this month and increased their bets shortly after Donald Trump’s presidential win on last week amid a sell-off in global markets.

EU farmers are expected to sow 24.3 million hectares of soft wheat for next year’s harvest, little changed from 24.2 million in 2016, consultancy Strategie Grains said on Thursday. For the 2016 crop, they shaved the corn estimate from 59.8 MMT to 59.6, and the wheat crop estimate from 135.9 to 135.7.

In South America, moisture continues to improve for N. Brazil over the next 2 weeks while it tends to drier conditions in C. Brazil. Rains should be limited next 10 days in wet SW 1/4 of Argentina and far Southern Brazil, but wetter trends in 11-15 day. Argentina corn and soy seeding remains slow to recover in SW region but moves along well elsewhere.

Oil prices shed more than one percent on Wednesday, returning some of the gains made in one of the year’s biggest rallies a day earlier, after weekly U.S. crude stocks rose beyond expectations and a strong dollar weighed on commodities. Weekly U.S. crude oil stocks surged by 3.6 million barrels last week, the American Petroleum Institute (API) industry group said, exceeding analyst expectations of a 1.5-million-barrel rise.

Morning Comments – November 18

Grains were modestly weaker overnight as the US dollar continued its ascend to fresh 14-year highs. Crude oil and equity futures were mostly unchanged.

USDA reported a 165,000 MT of soybeans were sold to China.

In international news, Ukraine’s ag minister said the country’s 2016 grain harvest will be record-large of 64 MMT up from a previous forecast of 63 MMT.

Rain is expected in northern half of Brazil the rest of the month and is expected to hit the southern one-third of Brazil late in the 6-10 day forecast. Central Brazil continues to remain dry with the best rain chance in central in the 11-15 day, which will be needed to ease dryness.

The US dollar climbed to its highest level in almost 14 years against a basket of currencies on Friday, while U.S. bond yields were set for their biggest rise in 13 years on bets U.S. inflation and interest rates are headed higher.   A growing perception that the economic policies of U.S. President-elect Donald Trump will push up consumer prices helped put the dollar on track for its biggest two-week rise against Japan’s yen in almost 30 years.