Weekly Cash Comments

Cash Commentary-

Cash markets saw positive movement as the 2016 year nears a close.

On average corn was up 1 3/4 cents, building on last week’s gains. Ethanol plants moved higher as well up 1 1/2 cents per bushel. Corn along the river broke its downward trend gaining 3 1/2 cents this week. Pork producer Smithfield Food Inc. has begun buyer grain elevators and purchasing grain directly from handlers. Last September Smithfield bought two Ohio grain elevators and now buys about 65% of its feed directly from farmers. The long-term effects on cash prices if any are yet to be know.

Soybeans saw upward movement as well this week gaining 1 1/4 cents per bushel. Crush facilities lost the momentum built over the past two weeks and lost 1/4 cents. Soybeans along the river moved higher, gaining 2 cents. Soybean exports were below expectations this week with only 974,000 MT of beans exported. USDA pegged expectations between 1 million MT and 1.5 million MT.

Corn_2016_12_29 Soy_2016_12_29

Futures Commentary-

Grain futures saw positive movement overall this week. Corn gained 2 1/2 cents, Soybeans 8 3/4 cents, and wheat 7 3/4 cents over last week.

Wheat futures are poised for an annual decline of 13%. Record global supplies have continued to drive prices lower. Corn is set to finish the year down nearly 3% after a huge US harvest. This will be the fourth year of annual declines for corn and wheat. Soybeans are expected to break their three-year declines and gain 17% over last year.

Cold patterns in the plains and midwest put wheat on alert for winterkill in the next 2 weeks according to Commodity Weather Group. However, there are no specific threats on their models yet.

Argentina is still getting hit with rain with their wettest days expected to be Saturday through Monday this week. Rainfall is expected to be about 3 inches during those three days. Late corn and double-crop seeding will struggle in nearly half of Argentina. Dryness in Brazil is expected to slow over the next 2 weeks with scattered showers on the horizon.

Argentina is predicted to harvest 15 million tons of wheat in the 2016/17 crop year, the Buenos Aires Grains Exchange said on Thursday, up from a prior estimate of 12.5 million tons as farmers plant the grain in some areas previously dedicated to soybeans. The 2016/17 crop year is the first since President Mauricio Macri ditched the wheat export curbs and taxes. Argentine growers are expected to plant 20.3 million hectares with soy this crop year, according to the Agriculture Ministry, short of the 20.6 million hectares dedicated to soy in the 2015/16 season.

China plans to boost its reserves of farm and arable land over the next three years. China currently has about 124.3 million hectares of arable land and more than 100 million hectares of farmland. The government said it will add 1.3 million hectares of arable land, partially replacing land lost over the past 13 years.

China has not yet set import taxes for 2017 yet and expects to do so by the end of January, a customs official said. This comes among speculation that China has ditched tariffs for U.S. and Brazilian importers. The 5% tariff was introduced at the start of this year and is set to expire December 31.

A rise in US inventory has helped stall the upward trend in oil prices that has pushed global crude prices to their highest levels since July of last year. Many analysts expect oil prices to continue moving higher in early January.

 

Morning Comments – December 30

Grains saw mixed movement leaving the overnight with only slight changes from the last session.

Wheat futures are poised for an annual decline of 13%. Record global supplies have continued to drive prices lower. Corn is set to finish the year down nearly 3% after a huge US harvest. This will be the fourth year of annual declines for corn and wheat. Soybeans are expected to break their three-year declines and gain 17% over last year.

Pork producer Smithfield Food Inc. has begun buying grain elevators and purchasing grain directly from handlers. Last September Smithfield bought two Ohio grain elevators and now buys about 65% of its feed directly from farmers. Large grain handlers have not commented specifically on Smithfield.

Egypt’s state grain buyer GASC bought 235,000 tons of wheat in a tender on Thursday. The total purchase comprised 175,00 tons of Russian wheat and 60,000 tons from Ukraine, traders said.

China’s Ministry of Agriculture said on Friday the recent outbreaks of bird flu have been handled in a “timely and effective” manner without spreading and have not affected chicken products or prices. China has culled more than 170,000 birds in four provinces since October and closed some live poultry markets after people and birds were infected by strains of the bird flu. South Korea and neighboring countries still battle outbreaks of various strains.

Argentina is predicted to harvest 15 million tons of wheat in the 2016/17 crop year, the Buenos Aires Grains Exchange said on Thursday, up from a prior estimate of 12.5 million tons as farmers plant the grain in some areas previously dedicated to soybeans. The 2016/17 crop year is the first since President Mauricio Macri ditched the wheat export curbs and taxes. Argentine growers are expected to plant 20.3 million hectares with soy this crop year, according to the Agriculture Ministry, short of the 20.6 million hectares dedicated to soy in the 2015/16 season.

Weekly Exports

Actual

Expected

Corn

958

800-1,200

Soybeans

974

1,000-1,500

Wheat

596

200-500

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

Morning Comments – December 29

Grains moved higher coming out of the night session and a weakening dollar helps them recoup some of last session’s losses.

Cold patterns in the plains and midwest put wheat on alert for winterkill in the next 2 weeks according to Commodity Weather Group. However, there are no specific threats on their models yet.

Argentina is still getting hit with rain with their wettest days expected to be Saturday through Monday this week. Rainfall is expected to be about 3 inches during those three days. Late corn and double-crop seeding will struggle in nearly half of Argentina. Dryness in Brazil is expected to slow over the next 2 weeks with scattered showers on the horizon.

Egypt’s GASC received offers from ten suppliers in an international tender to purchase wheat earlier today. No purchases have been made yet and results are expected to be out later today. The lowest offer was $186.68 per ton FOB for Russian sourced wheat. No US wheat was offered despite GASC allowing US HRW this time around.

China plans to boost its reserves of farm and arable land over the next three years. China currently has about 124.3 million hectares of arable land and more than 100 million hectares of farmland. The government said it will add 1.3 million hectares of arable land, partially replacing land lost over the past 13 years.

A rise in US inventory has helped stall the upward trend in oil prices that has pushed global crude prices to their highest levels since July of last year. Many analysts expect oil prices to continue moving higher in early January.

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

Morning Comments – December 28

Grains moved lower exiting the overnight session while the US dollar continues to find strength.

Even with the slight dip in the overnight, soybeans look to be supported by fear about dry weather in soy production regions in parts of Argentina and Brazil. Wheat and corn are seeing some selling today after their strong rises on Tuesday, with little new news visible immediately to generate more price strength.

Chinese city Wuxi will suspend poultry trade amid fears about bird flu. The city plans to close live poultry wholesale markets, restrict vehicles carrying live poultry and temporarily ban the entry of outside poultry. At least seven people in mainland China have been infected with the H7N9 bird flu strain and two have died.

A wave of imports has bumped Chinese pork retail prices 10 percent since they hit record levels in June on a domestic supply shortage. Meantime, the price of soymeal has hit a 2-1/2 year high in Sichuan as farmers buy up stock to feed up pigs for the New Year “golden season”.

In outside markets, imports of crude oil by Iran’s four major buyers in Asia more than doubled from a year ago. Purchases by India and South Korea have been more than four times higher. China, India, South Korea, and Japan imported 1.94 million bpd of Iranian oil in November, an increase of 117% from last year.

Oil prices edged up for a fourth consecutive session on Wednesday, close to their peaks since mid-2015, with the market awaiting evidence of OPEC supply reductions in the new year. Oil prices have gained 25 percent since mid-November, helped by expectations for OPEC’s supply cut and solid U.S. economic figures that have also bolstered equity prices. Trading is expected to remain thin this week ahead of the New Year holiday.

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

Morning Comments – December 27

Grains saw higher movement coming out of the holiday weekend. Crude moved higher as well in outside markets.

Heavy rains in Argentina failed to make it Buenos Aires, where dryness is threatening to dent soybean production. The Buenos Aires Grains Exchange forecasts Argentina’s soy planting area at 48 million acres. The dry area of southeast Buenos Aires was originally slated for 4 million acres of soy, some of which may be lost. Nationwide, the exchange says about 76 percent of the 2016/17 soy crop has been planted so far.

China has culled more than 55,000 birds after an outbreak of bird flu last week. The H5N6 strain was confirmed in Yining and has killed 10,716 birds, according to China’s Ministry of Agriculture. This is the fourth flu outbreak among poultry since October and brings the total cull since then to more than 170,000 birds.

China has not set import taxes for 2017 yet and expects to do so by the end of January, a customs official said. This comes among speculation that China has ditched tariffs for U.S. and Brazilian importers. The 5% tariff was introduced at the start of this year and is set to expire December 31.

Weekly Cash Comments

Cash Commentary-

The cash markets saw mostly higher movement this week with prices continuing to stay in a tight range.

On average corn was up 1 cent after moving lower last week. Ethanol plants moved higher as well, up 2 cents per bushel. Weekly EIA report was close to expectations, finding only a small reduction in run times off last week’s record high levels.  Production slipped less than one-half percent to a 1.036 mil bbl/day rate.  Carried forward, such a rate would utilize 5.54 billion bushels of corn.  Corn along the river was off again this week, moving 1/4 cent lower.

Soybeans saw relatively strong movement this week gaining 2 cents per bushel. Crush facilities were once again the biggest movers gaining 3 1/2 cents. Soybeans along the river also moved higher, gaining 1/4 cents. Yesterday the EU released their official soybean import data. Soybean imports in 2016/17 were reported as having reached 6.2 million tonnes by Dec. 20, down 5 percent from 6.5 million at the same stage last season.

Futures Commentary-

Grain futures dropped off this week with corn losing 9 1/4 cents, soybeans off 34 1/2, and wheat off 12 1/4 cents.

Yesterday, Brazil analyst AgRural estimated Brazil’s 2016/17 winter Corn crop at 59.9 MMT versus last season’s crop of 40.7 MMT. They estimated the total Brazil 2016/17 Corn crop at 88.3 MMT up from last season’s poor crop of 67.0 MMT. Meanwhile Rabobank commodity analysts are forecasting 16/17 Brazil first season corn crop at 28.0 MMT and the second season 16/17 corn crop at 56 MMT, with total 16/17 crop at 84.0 MMT.

Soybeans are still being pressured by expectations of good rain in Argentina mid-week and into the weekend. Brazil has widespread rains as well except for the far North where there is limited grain crop production.

Argentina growers are expected to plant 20.3 million hectares of soy this crop year, the report said, slightly above the 20.2 million hectares previously forecast but still under the 20.6 million hectares dedicated to soy last year. Their agriculture ministry also raised its projection for the country’s 2016/17 wheat crop to 15.7 million tonnes from a previous estimate of 14.9 million.

Chinese November customs data showed strong U.S. soybean purchases for November, up 32% versus last year. However, China has found two more cases of human bird flu infection, bringing this week’s total to three and stoking fears the deadly virus could spread at a time when other Asian nations are battling to control outbreaks of the disease. Health officials in nearby South Korea and Japan have been scrambling to contain outbreaks of different strains of bird flu, with the poultry industry there bracing for heavy financial losses.

EIA crude oil inventories yesterday showed a 2.25 million barrel build versus a 2.5 million barrel draw-down in stocks, which had been expected. Net imports grew by 1 million barrels to 7.9 million barrels in the period which fueled much of the inventory jump.

Morning Comments – December 23

Grains saw mostly lower movement in the overnight with soybeans managing a slight upward bump. In outside markets crude continued lower.

The WTO dispute panel ruled against Indonesia on Thursday in twin cases brought by New Zealand and the United States against its import restrictions on food and animal products. New Zealand Trade Minister Todd McClay on Friday welcomed the ruling, saying the restrictions were estimated to have cost the country’s beef sector up to $550 million US.

India wheat stocks are likely to be at their lowest levels in more than a decade after two consecutive droughts. Lower stocks will force India to import about 6 million tonnes of wheat in the fiscal years ending March 2017 and March 2018 to curb local prices, which have leapt 40 percent since the current year began in April 2016.

Prospects of heavy global supplies from Argentina and the EU continue to push US wheat prices lower. Argentina’s agriculture ministry raised its projection for the country’s 2016/17 wheat crop to 15.7 million tonnes from a previous estimate of 14.9 million. In Europe, the Commission lifted its estimate of 2016/17 EU common wheat production to 134.1 million tonnes from 133.8 million seen at the end of November.

Argentina soybean production is projected to be higher as well. growers are expected to plant 20.3 million hectares with soy this crop year, the report said, slightly above the 20.2 million hectares previously forecast but still under the 20.6 million hectares dedicated to soy last year.

Yesterday the EU released their official soybean import data. Soybean imports in 2016/17 were reported as having reached 6.2 million tonnes by Dec. 20, down 5 percent from 6.5 million at the same stage last season.

 

Morning Comments – December 22

Grains continued to move lower with soybeans leading the complex on a 5-cent decline. In outside markets, crude oil also was on a downward trajectory.

In South America, the evening GFS model run had no major changes for week 1. In week 2, rainfall amounts were increased for a majority of southern and central Argentina Jan. 1-2. Amounts were also increased from northern Argentina north through Paraguay and west-central Brazil for Jan 3-5.

Chinese November customs data showed strong U.S. soybean purchases for November, up 32% versus last year. However, China has found two more cases of human bird flu infection, bringing this week’s total to three and stoking fears the deadly virus could spread at a time when other Asian nations are battling to control outbreaks of the disease. Health officials in nearby South Korea and Japan have been scrambling to contain outbreaks of different strains of bird flu, with the poultry industry there bracing for heavy financial losses.

Weekly EIA report was close to expectations, finding only a small reduction in run times off last week’s record high levels.  Production slipped less than one-half percent to a 1.036 mil bbl/day rate.  Carried forward, such a rate would utilize 5.54 billion bushels of corn.  Note, though, that the marketing year to date level is closer to 5.35 billion versus USDA at 5.3.

Weekly Export Sales-

Actual

Expected

Corn

1,251

800-1,100

Soybeans

1,812

1,100-1,400

Wheat

297.8

300-500

 

EIA crude oil inventories yesterday showed a 2.25 million barrel build versus a 2.5 million barrel draw-down in stocks, which had been expected. Net imports grew by 1 million barrels to 7.9 million barrels in the period which fueled much f the inventory jump.

 

December 21 – Morning Comments

Grains were mixed overnight with soybeans trying to erase part of the 30-cent losses in the week. Corn and wheat drifted lower.

Brazil analyst AgRural estimated Brazil’s 2016/17 winter Corn crop at 59.9 MMT. versus last season’s crop of 40.7 MMT. They estimated the total Brazil 2016/17 Corn crop at 88.3 MMT up from last seasons poor crop of 67.0 MMT. Meanwhile Rabobank commodity analysts are forecasting 16/17 Brazil first season corn crop at 28.0 mln mt and the second season 16/17 corn crop at 56 mln mt, with total 16/17 crop at 84.0 mln mt.

Overnight, the Taiwan Flour Millers’ Association has purchased 93,125 tonnes of milling wheat to be sourced from the United States in an international tender which closed on Wednesday. Importers in the Philippines have issued an international tender to purchase about 25,000 tonnes of milling wheat to be sourced from Australia.

EIA crude oil inventories will be announced later this morning. Traders look for a 2.5 million barrel cut in stocks from last week. If realized, that will be the 5th week of inventory draws.

 

Morning Comments – December 20

Grains continued to sink lower on expectations of huge crops out of South America, while in outside markets equity futures and the USD moved higher.

Soybeans are still being pressured by expectations of good rain in Argentina mid-week and into the weekend. Beans fell below $10.20 for the first time since November 22 and has it sights set on the 50-day MA around $10.08. For corn, the 50-day MA is around $3.50 right around the $3.52 last trade. Brazil has widespread rains as well except for the far North where there is limited grain crop production.

In China, soybean futures also fell overnight, but hog margins continue to be strong. There was some interest in wheat buying as Taiwan and Egypt were tendering for wheat.

Crude oil found strength as traders look for shrinking US inventories. The US dollar continues to firm touching back to the 14-year highs hit late last week.