Morning Comments Jan 31

Grains consolidated overnight following yesterday’s sharp losses in soybeans. In outside markets, the US Dollar was weaker and equity futures continued their slump.

Soybeans got hit hard on Monday giving up 25 cents as traders bank on good crops in South America. Argentina will see showers in the south late today and Wednesday, with the north part of the country seeing rains Friday and Saturday. Rain totals of 1 to 3” are expected to benefit yield potential. In Brazil, yesterday saw scattered showers in Center-West/Center-South Brazil but over the next 2 weeks there should be wider coverage to benefit the crops. The dry areas of NE Brazil see brief showers by 11-15 day to ease dryness temporarily.

Japan’s Ministry of Agriculture is seeking to buy a total of 108,442 tonnes of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.

The euro jumped against the dollar on Tuesday after U.S. President Donald Trump’s trade advisor told the Financial Times that Germany was benefiting from a “grossly undervalued” euro. The euro climbed after the comments, reaching a five-day high and knocking the .DXY dollar index down 0.4 percent to below 100 for the first time in five days.

exports

Morning Comments – Jan 30

Soybeans were sharply lower overnight posting double-digit losses to start the week. Corn and wheat showed more modest losses of 3 cents ahead of the morning break. In outside markets, equity futures were in negative territory and the US Dollar higher.

USDA announced a 105,000 MT sale of corn to Columbia.

Brazil saw some rain over the weekend but dry conditions later this week and into next week in center west crop areas should help speed along early harvest there. Northeastern Brazil will get rain late this week through much of next week favoring some relief from recent dryness.

Argentina was dry during the weekend, but timely rain will fall later this week through next week. The recent dry spell has depleted topsoil moisture, but rain late this week will be timely and sufficient enough to prevent any long term stress.

On Friday, USDA reported cattle on feed numbers higher than expected with December at 100% of the same month last year vs 99% expected by the trade. More problematic was the 118% placement number vs 108.4% expected. This will likely pressure back months going into today’s cattle open.

Also on Friday Japan’s Ministry of Agriculture bought a total of 110,687 tonnes of food quality wheat from the United States and Canada in a regular tender that closed late on Friday, 60,000 MT of the deal going to the US.

Morning Commentary – Jan 27

Grains drifted lower for much of the night but were managing a late-session rally heading into the break. In outside markets, the US dollar was higher and crude oil lower.

Front-month March soybean futures sunk to fresh lows on this move of $10.43 and well off its highs of $10.80 established on Jan 18th. Easing concerns about flood issues in Argentina have helped in the pull back. Yesterday Argentina’s Buenos Aires Grain Exchange projected the bean crop there at 53.5 MMT at the high end of estimates floating around by private forecasters which have ranged from 51 to 54 MMT over the past week.

Corn has also moved lower this week as US-Mexico relations become stymied in a war of words about the US wall and potential trade restrictions. After Mexican President Nieto canceled his trip to the US, President Trump said the US would impose 20% tariffs on all Mexican imports to pay for the wall. This year so far Mexico is the single biggest buyer of US corn accounting for 10 MMT in sales of the total 39 MMT that has been purchased.

In Russia cold weather is expected to hit parts of the wheat crop there from Jan 27-Feb 4. Temperatures are expected to hit the low teens during this time period and there is no snow for protection with nearly 1 million hectares out of 17.4 million hectares of the crop. Jordan is seeking 25,000 MT of milling wheat.

 

Morning Comments – Jan 26

Grains continued to drift lower overnight but got late-session buying interest from new export sales data. Outside markets saw the dollar reverse course early this morning and move into positive territory as did crude oil.

Egypt’s state grain buyer GASC received offers from 13 suppliers at its wheat tender on Thursday. The lowest offer was for 60,000 tonnes of Russian wheat at $192.25/ MT (FOB). There was also a US HRW offer made at $197. Results for the tender are due later on Thursday.

A group of Israeli private buyers bought corn and feed wheat, all to be sourced from optional origins, in a tender that closed on Wednesday. Ton The tender had sought up to 85,000 tonnes of corn, 40,000 tonnes of feed wheat.

Soybeans took another shot at the $10.51 mark on the March contract marking the third session in a row the market has gone to that level but found little selling strength to push it thru.

US export sales this morning were impressive for wheat, with a marketing year high of 853,400 MT for the week for OC plus another 103,900 NC. Corn was also strong besting expectations by a wide margin while soybeans was inline with expectations.

Weekly Export Sales-

Actual

Expected

Corn

1,370 OC + 21 NC

700-1,000

Soybeans

539 OC + 126 NC

450-650

Wheat

853.4 OC + 103.9 NC

200-400

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 – January 25

Grains continued lower overnight although managed to curb losses heading into the morning break. In outside markets, the US dollar index fell below the 100 mark for the first time in 7 weeks and equity futures firmed into all-time high territory.

USDA announced export sales 141,224 of corn to unknown destinations

Conditions in Argentina appear to be stabilizing for after serious flooding after Christmas stoked fears of big crop losses. Hot and dry weather in the past week has helped limit the potential for loss. Analysts down there suggest only about 10% of the production is at risk which is in-line with estimates floating around the Argentina’s crop size will be 52 to 54 MMT vs 57 current projected by USDA. One other potential driver for beans is the thought that Argentina farmers will be slow to sell beans but quick to let go of corn off the combine as the eliminated export tax on corn will give farmers incentives to sell. Meanwhile, the soy export tax remains intact until Jan 2018.

On the soy chart, yesterday saw a couple of tests of fresh lows around 10.51 versus March before closing at 10.59. But, in overnight trade, the market quickly returned back to the recent lows testing the 10.50 wall a couple of times overnight before recovering to the 10.54 area.  Watch the 10.50 area as it seems to be serving as key support right now.

New procedural moves by the Trump administration are causing concern in grain after the EPA announced a delayed implementation of its RFS for 2017. China’s corn futures are on track to rise almost 3 percent this month, on speculation that major corn-growing provinces in the world’s top producer are preparing to buy grain in a bid to support farmers as demand is expected to drop. March corn futures came off the recent highs yesterday, posting a key reversal on the charts.

Japan’s Ministry of Agriculture is seeking to buy a total of 110,687 tonnes of food quality wheat from the United States and Canada in a regular tender that will close late on Friday.

 

Morning Comments – January 24

Soybeans turned higher overnight trying to recover from 3 days of losses while wheat and corn were coming into the morning break mostly steady from yesterday’s close.

USDA announced the sale of 163,000 MT of soybeans to Unknown (60,000 MT for NC 2017), 112,000 MT of soybeans to Mexico and 125,000 MT of corn to Mexico.

Argentina’s dry spell is expected to persist Jan. 24 through Jan. 30. Temperatures are expected to be hot late this week, the weekend and early next week with upper 90’s and lower 100’s and possibly causing some crop stress. Areas of southern Argentina that missed meaningful rainfall this past weekend will have increasing crop stress.

In Brazil, conditions remain nearly ideal in key crop areas. Espirito Santo north through much of eastern and central Bahia will continue to miss meaningful precipitation. This, combined with the summer heat, will lead to more crop stress for this portion of the country.

The Chinese New Year gets going at the end of this week and coincides with a downtime in economic activity for the country. China did release their latest trade data for December. This showed Dec DDG’s were 70 TMT taking total year to date to 3.07 MMT off 55 percent on the year. Ethanol was 125 TMT taking total for the year to 890 TMT. Bean imports for Dec were 9.0 MMT taking total year to date to 83.9 MMT, up 2.7 percent on the year.

Wheat continues to inch higher mostly driven by short-covering. The recent weakness in the US Dollar has helped give a boost to wheat prices, as did a bigger than expected cut in US winter wheat plantings. Russian wheat prices have also shown a slow creep higher on low farmer sales there. But large US and global stocks continue to keep a lid on big rallies. Informa will release 2017 US acreage forecasts later today.

On Monday, the Trump administration withdrew from the Asian TPP trade deal and drew criticism from the ASA soybean association and the National Cattlemen’s Association. The dollar steadied on Tuesday, recovering from a dip on fears that U.S. President Donald Trump’s focus on protectionism over fiscal stimulus suggested his administration might be content to gain a competitive advantage through a weaker currency.

Morning Comments – January 23

Soybeans started the week the same way they finished last week, heading lower. Corn and wheat were also under modest pressure. In outside markets, US equities and the dollar moved south as did crude oil.

Soybeans slid for a third straight session on Monday as forecasts of dry weather in Argentina’s flooded crop areas eased concerns over harvest losses in the major exporter. The weather there over the next week is expected to be hot and dry, helping ease flooding issues. Last week, the Rosario grains exchange cut its forecast for the 2016/17 Argentine soybean crop to 52.9 MMT from 54.4 MMT previously. In Brazil, heavy rains have slowed soybean harvest and could put at risk some production from spoilage. Farmers institute, Imea, said the soy harvest in Mato Grosso was 11.9% complete on Friday, an advance of more than 6% over the past week.

A group of Israeli private buyers has issued international tenders to purchase up to 85,000 tonnes of corn and 40,000 tonnes of feed wheat. Egypt’s GASC bought 60,000 MT of Ukraine wheat. Offers came from Russia, Ukraine and Romania. SovEcon said in a note that Russia needs to find new markets for its grain exports and speed up its supplies abroad to ease pressure on the domestic market after a record crop of 119 MMT in 2016. Customs data shows Russia’s December grain exports fell to 3.18 million tonnes from 4.05 million tonnes in November due to storms in ports and the rouble strengthening against the dollar.

The US Dollar felt some pressure for the first week of Trump’s presidency as traders expect his tax & fiscal stimulus policies to take time to enact and have yet to be spelled out by the new President. Also, a bow shot about American nationalism in his inauguration speech has the potential to cut into global trade.

Morning Comments – January 20

Chicago soybeans slid for a second session on Friday with a strong dollar weighing on prices, although crop-damaging floods in Argentina kept a floor under the market. The dollar recouped earlier losses on Friday while stocks were little changed as investors refrained from big bets ahead of Trump’s inauguration as US President.

Soybeans are drawing support from the threat of rain-damage to crops in Argentina, the world’s third largest soybean exporter and the top supplier of soymeal and soyoil. Argentina will harvest 52.9 MT of soy this season, the Rosario grains exchange said on Thursday, cutting its previous 54.4 MT forecast due to bad weather.

US producers are poised to plant 90.52 million acres of soybeans later this year, topping the all-time high set in 2016 by about 7 million acres, a recent Farm Futures survey indicates.

Wheat fell for a third consecutive session on concerns over slowing demand after prices earlier this week climbed to their highest since August.

Weekly Export Sales-(based on reports from exporters for the period Jan 6-12, 2017)

Actual

Expected

Corn

1,368

900-1,200

Soybeans

980

400-600

Wheat

243

250-450

Export sales numbers for corn were up noticeably from the previous week and 69 percent from the prior 4-week average; soybeans were also up from the previous week and 22 percent from the prior 4-week average. Wheat was down 38 percent from the previous week and 33 percent down from the prior 4-week average.

The dollar held its gains on Friday as investors braced for US President-elect Donald Trump to be sworn in, while the Euro rebounded as the European Central Bank held policy steady. A stronger dollar makes US agricultural producers uncompetitive in the world market, giving advantage to rival exporters in South America and the Black Sea region.

 

Morning Comments – January 19

Beans took a break from its 4 day rally giving up 6 cents in the overnight. Wheat was also posting modest losses going into the break while corn was fractionally lower.

Soybeans eased on Thursday as prices consolidated from a six-month high a day earlier that was driven by the threat of rain damage to crops in major exporter Argentina. But with drier weather forecast in Argentina this week and neighboring Brazil already harvesting what is expected to be a record crop, investors were reassessing the impact on international supply.

Consultancy, Strategie Grains lowered its forecast for the 2017 soft wheat harvest in the European Union by 1.2 million tonnes to 143.8 million as it factored in expected damage to crops in the eastern EU due to severe cold weather this month. The reduced forecast would be 6 percent above estimated production of 135.9 million tonnes last year, when output was curbed by a very poor harvest in top EU wheat grower France, Strategie Grains said in a monthly report.

The International Grains Council raised its forecast for the 2016/17 world corn crop on Thursday by 3 million tonnes to a record 1.045 billion tonnes, mainly reflecting an improved outlook for China.  The IGC raised its outlook for world wheat production in 2016/17 by 3 million tonnes to 752 million tonnes.

South Korea’s state-run Korea Agro-Fisheries & Food Trade Corp. has purchased 140,000 tonnes of soybeans to be sourced from the United States in an international tender which closed on Thursday.

 

Morning Comments – January 18

Beans posted a small loss overnight taking a break from its 3-day rally of over 60 cents a bushel. Corn and wheat were little changed heading into the morning break. In outside markets, crude oil was seeing big losses while the US dollar and equity futures were in positive territory.

Conditions will trend much drier for much of central and northern Argentina over the next 7 to 10 days. Some of the wettest locations from Cordoba east through Entre Rios will have plenty of opportunity to dry out. This will lead to improvements in crop conditions. Meanwhile, Brazil continues to have good conditions for crop development.

On Tuesday, NOPA released their crush estimate for member plants in December. Their report showed 160.2 MB of soybeans were crushed in December, falling well short of the 162.8 MB that had been expected. Stocks of soybean oil also ballooned to 1.434 billion pounds, above trade estimates of only 1.352.

In wheat news, Minneapolis wheat was sharply lower on Tuesday easing the white-hot spread to KC & Chi on heavy farmer sales. Overnight the Philippines bought feed wheat from Australia. Indonesia may see limited needs for importing wheat and corn feed grains as production there is up sharply on the year. Indonesia imported 2 MMT of feed wheat last year and 840,000 tonnes of corn.