Morning Comments – April 28

Moderate to heavy weekend rain stalls Midwest/Delta corn and soybean seeding, locally 4 to 8 inches in S Missouri/N Arkansas/C & SW Illinois/NW Indiana. Nearly a week of drying ahead then allows recovery in most of the Midwest; limits risk for standing water in corn and wheat. 11-15 day rains favor W Midwest; far S Midwest/Delta dry out after next Wednesday to limit wetness concerns. Warmer but wetter start to 11-15 day still slows early seeding in parts of N Plains; some improvement in Canada.

The Brazilian farmer’s reluctance to sell newly harvested soybeans may have finally paid off for US soybean merchants, who could be in for some better-than-expected export sales in the coming months. –Reuters

By the end of March, Brazilian farmers had sold 49% of their soybean crop, the lowest in seven years and well behind the five-year average of 63%, according to consultancy AgRural. And, although the country’s harvest is nearly complete, farmers are still holding on to their beans, hoping for prices to rise.  Brazil is the world’s leading supplier of soybeans, shipping the majority of their product to top-consumer, China. The US is a close second in terms of export volume, and it often competes with Brazil for business depending on prices, logistics and domestic supply.

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A Chinese consumer backlash against genetically modified (GMO) crops is beginning to dent demand for soy oil, the nation’s main cooking oil, and could spell crisis for the multi-billion-dollar crushing industry, which depends on GMO soybeans from the US and elsewhere.

Soyoil sales account for about 36% of cooking oils used in Chinese kitchens, more than three times the next highest, and most of it is made from imported soybeans, which are nearly all genetically modified.

Oil prices rebounded on Friday after dropping to a one-month low the previous day, prompting investors to buy at cheaper levels ahead of a May OPEC meeting at which producers could extend output cuts.

Optimism is rising about the prospect of a year-long production curb deal, with most analysts polled by Reuters expecting the accord between the Organization of the Petroleum Exporting Countries and the non-OPEC producers, struck at the end of the last year, to be extended to the end of the year.

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Morning Comments – April 27

Grains were in positive territory to start the day trying to recover some of yesterday’s selloff. In outside markets, crude oil was down nearly a $1 a barrel making a run to the $48 a barrel mark.

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Yesterday saw selling midday after the White House hinted they were preparing an executive order to pull out of NAFTA. But then, late Wednesday night the White House softened its stance saying it wouldn’t kill NAFTA but instead work to renegotiate it. At risk is Mexico’s business which is the largest US buyer of corn and in the top 3 for US beef.

In US weather, heavy rain is still expected in MO/IL over the next two weeks. A storm system is moving across the Central and Eastern Plains the next two days and should bring upwards of 3 to 5 inches of rain in parts of OK/AR/MO before moving East.

Weekly export sales were strong for OC corn and beans and NC wheat. With active competition from South America it may be a sign that NC export deals will be harder to come by.

Export Sales-

Actual

Estimated

Wheat – OC

61

300-500

Wheat – NC

305

50-250

Corn – OC

987

700-900

Corn – NC

11

50-250

Soybeans-OC

808

250-450

Soybeans-NC

72

100-300

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Morning Comments – April 26

Grains were mixed overnight with soybeans in the red and wheat in the black. Corn was unchanged heading into the morning break. In outside markets the USD was higher after being beaten down early in the week.

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The weather continues to point to heavy rains thru the next week in the Plains and Western Cornbelt. Major corn growing regions in the West could receive a total of more than 4-7 inches of rain by May 10, well above average levels. Rain is also expected to fall on most days, giving wet fields little time to dry out before another round arrives.

In international news, Taiwan’s feed industry procurement association, MFIG, purchased about 65,000 MT of corn likely to be sourced from Brazil in an international tender which closed on Wednesday. Tunisia’s state grains agency purchased around 67,000 MT of soft milling wheat to be sourced from optional origins in an international tender which closed on Wednesday.

Ukraine boosted its grain exports to 4.54 MMT in March up 52% from 2.98 MMT in February thanks to record sales of maize, analyst UkrAgroConsult said on Wednesday. The corn shipments jumped to 3.1 MMT in March, the highest so far for the 2016/2017 marketing year that runs from July to June, from 1.8 MMT in February.

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Morning Comments – April 25

Grains gave up yesterday’s gains in the overnight session as planting pace jumped higher than expected.

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USDA’s crop progress report showed corn planting at 17% completed, up from 6% planted last week and higher than expectations of 15% going into the report. This slightly below the 18% pace on the 5-year average but well off last year’s plantings of 28%. Soybeans came in at 6% planted, up from 3% last year and the 5-year average. Winter wheat condition was unchanged from last week at 54% good-to-excellent.

China’s 2017 planned acreage dedicated to soybeans will go up 8.1% while the planned acreage dedicated to corn will drop 4%, according to survey results from the National Bureau of Statistics published on Monday. The nation’s planned acreage dedicated to wheat in 2017 will go down 0.8%. For March, China soy imports were 6.3 MMT, that’s slightly above the 6.1 MMT imports in March 2016. Q1 imports tallied a record high of 19.5 MMT.

In the export arena, the recent slide in the US Dollar is starting to slant the trade more to the US in relative commodity pricing. This is especially true for wheat vs Europe where the Euro has shown sharp gains in recent days following the election primary in France. Corn prices in Brazil continue to trade at a hefty discount to the US. This morning Iraq was tendering for 50,000 MT of wheat to be sourced from Canada, the US or Australia.

WORLD EXPORT PRICE SPREADS RELATIVE TO US

Crop

Country

Today

Last Week

Last Year

CRN

ARG

+$3.1

+$3.1

+$2.0

CRN

BRZ

-$16.1

-$16.0

-$18.2

CRN

EUR

+$9.7

+$8.8

-$19.2

SBN

ARG

-$12.3

-$15.8

-$10.3

SBN

BRZ

+$1.7

+$1.0

+$2.1

WHT

ARG

+$16.4

+$11.9

+$0.5

WHT

EUR

-$11.8

-$16.7

-$55.3

Export spreads represent a foreign country price minus US price at export destinations, in USD per metric ton.  A higher spread indicates the foreign price has risen relative to US prices, making the foreign country less competitive and the US more competitive.

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Morning Comments – April 24

Grains were trying to start the week in positive territory as soybeans led the complex higher. In outside markets, the US Dollar plunged overnight giving up 0.8% in value as the French election over the weekend caused the Euro to surge against the greenback.

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US Weather looks to be wet over the next week in the WCB. A storm system should bring precip to the Northern Plains, Upper Midwest and stretch into MO/IL by Wednesday. Cold temps in the Northern Plains should bring below freezing in North Dakota. By the weekend, another round of moisture should bring rains again to much of the WCB. Iowa is expected see about 4 inches of rain over the next two weeks.

On Friday after the close, the CFTC report showed funds had extended their bearish position in the grain complex. Speculators are not typically short during the growing season, but the funds’ combined short position was the third-largest on record behind the weeks ended March 1 and March 8 of 2016, with the former at 420,555 contracts. Funds now hold their shortest-ever combined position during the U.S. growing season – despite rarely ever being net bearish at this time – surpassing the 324,226-contract low set on May 26, 2015.

Ukrainian Agriculture Minister Taras Kutovy said on Monday that he saw the 2017 wheat harvest at no less than 24 MMT.  Kutovy added that the area under wheat cultivation is 6.2 million hectares, and that most crops are in good condition.  Earlier in April analyst UkrAgroConsult revised up its forecast for the wheat harvest to 24.2 million tonnes from 23.5 MMT. Last year’s crop was 26.8 MMT.

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Morning Comments – Apr 21

Soybeans pointed higher going into the morning break while corn and wheat were hovering around the unchanged mark. However, the release of Canada’s plantings for 2017 was weighing on the market heading into the break.

USDA reported the sale of 146,000 MT of soybeans to unknown destinations for 2016/17

This morning Stats Canada released their acreage forecasts for wheat and canola. For wheat, they expected Canadian farmers to plant 23.18 million acres, nearly unchanged from 23.21 last year. For Canola they peg plantings at 22.4 million acres vs 20.4 last year. Both numbers were higher than analyst expectations going into the report.

Wheat was coming off its worst one-day loss this year, giving up 13 on Thursday’s trade. Favorable weather in the Plains continues to raise the prospect for higher wheat yields. On the export front, US export commitments of wheat have reached the annual projection of USDA. But, 5.4 MMT of those commitments have yet to be shipped with 7 weeks remaining in the marketing year. That means weekly shipments need to reach 770,000 MT a week but have only averaged 680,000 MT in the past two weeks.

In overnight deals, KFA feed group from South Korea bought 60,000 MT of optional-origin corn.

Morning Comments – April 20

Grain markets were trying to bounce higher going into the morning break with soybeans leading the complex on a 4-cent advance.

News stories were reported yesterday that a shipment of corn from Paraguay was due to arrive next month at the U.S. port of Wilmington, North Carolina. The vessel Nord Bering was moored at the Brazilian port of Paranagua, was scheduled to arrive in Wilmington by May 20. The grain was shipped to Brazil from land-locked Paraguay before being loaded onto the U.S.-bound vessel. If loaded to its 61,000 MT capacity, the shipment would be the biggest-ever U.S. import of Paraguayan corn.

In weather, a storm system will impact central portions of the HRW Wheat area east through northern portions of the Delta which will moves to the East Coast by Sunday. Substantial rain is expected and some localized areas
of flooding. The rain will promote some fieldwork delays. Western Kansas will benefit from the rain due to dry topsoil and subsoil conditions; though, rain amounts will be greater to the east.

Oilseeds industry group Abiove on Thursday raised Brazil’s 2016/17 soybean output forecast to 110.7 million tonnes, a 3.2 rise from an estimate released in March, according to a statement.  Abiove also raised Brazil’s soybean export forecast to 60.3 million tonnes, a slight 0.8 percent increase from the previews estimate, the statement said.

Export Sales-

Actual

Estimated

Wheat – OC

414

250-450

Wheat – NC

137

100-300

Corn – OC

756

700-1,000

Corn – NC

91

100-300

Soybeans-OC

211

300-500

Soybeans-NC

14

100-300

Ukraine’s UkrAgroConsult agriculture consultancy on Wednesday raised its forecast for the 2017 grain harvest to 61.4 MMT from a previous estimate of 60.9 MMT. A stronger harvest would likely raise the 2017/18 grain export forecast to 39.5 MMT from 38.8 MMT. However, reports this morning suggest cold temps and snow in the region could delay corn planting.

In the US, heavy rains continue to be in the forecast over the next 7 days for much of the Plains and Western Cornbelt. At the moment, the heaviest rainfall (widespread 2+ inch totals) is likely across the southern Midwest stretching where plantings could be limited, particularly across portions of southern Illinois/Indiana and Kentucky. With delays already developing across these areas, it’s unlikely plantings will be able to make up for these in the next 1-2 weeks.

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Morning Comments – April 19

Soybeans and corn were trying to stage a modest recovery heading into the morning break while wheat continued to lifelessly drift lower. In outside markets, equity futures and the US Dollar were in positive territory, trying to reverse recent losses.

China will work off its corn stockpile in the next three to five years, said an executive at one of the country’s top corn processing firms on Wednesday, as firms ramp up processing capacity to use up the old stocks of grain. With 250 MMT of corn stocks or roughly a year’s worth of use, processors there are expected to ramp up capacity to 70 MMT a year by the end of 2018, up from more than 50 MMT currently.

Ukraine’s UkrAgroConsult agriculture consultancy on Wednesday raised its forecast for the 2017 grain harvest to 61.4 MMT from a previous estimate of 60.9 MMT. A stronger harvest would likely raise the 2017/18 grain export forecast to 39.5 MMT from 38.8 MMT. However, reports this morning suggest cold temps and snow in the region could delay corn planting.

In the US, heavy rains continue to be in the forecast over the next 7 days for much of the Plains and Western Cornbelt. At the moment, the heaviest rainfall (widespread 2+ inch totals) is likely across the southern Midwest stretching where plantings could be limited, particularly across portions of southern Illinois/Indiana and Kentucky. With delays already developing across these areas, it’s unlikely plantings will be able to make up for these in the next 1-2 weeks.

 

Morning Comments – April 18

Corn and wheat tried to reverse course overnight following Monday’s slide while soybeans moved lower. In outside markets, the US Dollar Index continued to retreat, falling below the psychological 100-mark .

On Monday, NOPA crush figure for March failed to meet expectations for the 2nd month in a row with 153 MB of soybeans processed for the month vs expectations that averaged 156. Year-to-date crushings for the seven months of the marketing year are up 1.8% from the same period last year, while USDA expects a 2.8% bump in annual crush in the balance sheet.

After the close on Monday, USDA’s crop progress report showed only 6% of the corn crop had been planted. Although up from last week’s reading of 3%, it was still below the 8% mark expected by analysts and 12% for the same week last year. For winter wheat, US crop conditions inched higher to 54% good-to-excellent, up from 53% last week but below 57% last year.  Of the winter wheat states, OK was notable in its decline in ratings to 43% from 45% last week.

In international news, Asia saw Palm Oil prices slide as did soy futures in China. Weakening hog margins in China combined with an increase in Chinese soy plantings for 2017 are likely weighing on prices. South Korea feed group MFG bought 137,000 MT of corn.

US weather forecasts point to rains over the next week but looking ahead into the 2nd week shows a dry pattern for much of the US Grain Belt. Two week precip totals favor the Southern Cornbelt, the Plains and parts of IA/MN. Precip is expected to be limited in IN/OH.

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Morning Comments – April 17

Grains were mostly flat heading into the morning break with soybeans holding a narrow, positive gain while corn and wheat were in negative territory. In outside markets, the US Dollar was off 0.5% while equities were trying to start the day on positive ground.

China’s planned corn acreage will fall 4 percent this year, its second straight annual drop, as they try to whittle down their huge corn glut and boost the planting of soybeans. The shrinking corn acreage will be accompanied by an 8.1% jump in land dedicated to soybean crops this year, according to a survey of 110,000 Chinese farmers by the National Bureau of Statistics, released on Monday. The estimates are in line with market expectations, according to analysts.

In the US, the next week should bring significant moisture to the Western Cornbelt and Central Plains.  By Friday, a storm system should bring widespread rains to OK/KS dropping up to 2 inches of rain thru much of the key HRW wheat growing area. Iowa and Illinois should see heavier rain totals on Friday and Saturday of 1 to 2 inches.

Russia is expected to reduce its grain exports to between 3.0 and 3.1 MMT in April from 3.8 MMT in March due to lower supplies to Turkey, SovEcon agriculture consultancy said in a note on Monday. Turkey, the second largest buyer of Russian wheat after Egypt, has effectively put purchases of wheat, corn and sunflower from Russia on hold by imposing high import tariffs from mid-March. The loss of the Turkish market is likely to be temporary because its flour millers depend on supplies from Russia.

The US Dollar Index appears poised to take a run below the 100-mark for the first time in nearly two weeks. U.S. retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year, underscoring the magnitude of the loss of economic growth momentum in the first quarter. Specifically, retail sales dropped 0.2% last month compared to expectations for 0.1% decline. Meanwhile, the consumer price index (CPI) decreased 0.3% from the prior month while annual inflation eased to 2.4%.

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