Morning Comments – June 30

Grains were higher overnight yet again fueled by wheat which was showing double digit gains heading into the break.

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The trade will look for further direction in the USDA Grain Stocks and Acreage report at 11 am CDT. Acreage numbers are expected to be mostly on par with the March report, but there is a slight lean for higher soybean acres and lower corn acres thanks to planting issues in the Spring. For quarterly stocks, the trade expects a corn number of 5.1 billion bushels and soybeans at 0.98 billion bushels.

The condition of French soft wheat deteriorated last week while harvesting got off to an early start, data from farming agency FranceAgriMer showed on Friday, reflecting the impact of a heatwave. In a weekly report published on Friday, FranceAgriMer estimated that 65 percent of soft wheat crops were in good or excellent condition by June 26, down from 68 percent a week earlier. The latest soft wheat rating was equal to the score seen a year ago, although crop conditions in 2016 subsequently plunged as harvesting showed the worst yields in three decades.

US weather looks to be dry & hot (mid 90s/low 100s NW Plains) starting early next week which could add to the stress in U.S./Canada wheat. The area could expand to two-thirds or more of N. Plains wheat and at least half of Canadian Prairies wheat/canola by mid-July.

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Morning Commentary – June 29

Grains were higher overnight as spring wheat continued its vertical ascendent to new 3-year highs.

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This morning, Stats Canada released their acreage report showing only 22.4 million acres of wheat vs 23.2 million acres in 2016. The 22.4 million acre number is slightly below trade estimates of 22.7. Also fueling spring wheat this morning was the Drought Monitor which shows 25% of ND is in extreme drought, which is up from 7.7% last week.

Meanwhile, weekly export sales continued to show pathetic new-crop deals for corn and soybeans. Weekly new-crop soybean sales netted only 2,000 MT for the week. Year-to-date export sales for new-crop soybeans are a meager 3.4 MMT well below last year’s total of 7.0 MMT for this time of year. You have to go back to 2006 when new-crop soy sales were this low, but the real concern is USDA has factored in an all-time high for exports in their 2017 balance sheet which could cause soy stocks to balloon in future reports.

WEEKLY EXPORT SALES (in thousand MT)

Actual

Expected

Wheat

492

350-550

Corn-OC

316

350-550

Corn-NC

68

100-300

Soy-OC

312

200-400

Soy-NC

2

100-300

Today will be the last trade date before First Notice Day for the July grain contracts while tomorrow brings two potentially big reports from USDA on Grain Stocks and Acreage.

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 – June 28

Grains were muted overnight in listless trade except in spring wheat which continued to march higher to its own drumbeat.

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Corn was holding solid gains mid-day on Tuesday but new data from the weather model showed much cooler temps in the Plains and Western Cornbelt than had been previously forecast. That information sent corn prices retreating and they have been unable to muster a rally since.

In Russia, the wheat harvest is underway with yields coming in lower than last year. According to the Ag Ministry as of June 27, farmers had harvested 229,000 tonnes of grain by bunker weight from 54,000 hectares with an average yield of 4.24 tonnes per hectare. This compares to 2.1 million tonnes reaped from 486,000 hectares with an average yield of 4.36 tonnes per hectare at the same date in 2016.

Over the next two weeks weather continues to look fairly favorable for major corn producing states. Nebraska has the most heat in the top 3 states, but even there high temps are expected to only briefly see above 90 degrees. However, rainfall for the two week forecast has been lowered from yesterday’s model in NE showing only 1.5” of rain vs 2.5” yesterday.

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Morning Comments – June 27

Grains were higher overnight buoyed by lower than expected crop ratings from USDA.

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Monday’s crop progress report from USDA showed crop conditions that were below expectations yet again. Corn conditions came in unchanged at 67% but below analysts estimates which looked for a bump up to 68%. For soybeans, conditions slipped to 66% off of last week’s rating of 67% and below the 68% mark expected. Spring wheat continued to see eroding scores hitting 40%, below expectations of 41% which was the reading last week.

Weather in the US should remain favorable for the rest of the week. But as the calendar turns to July, heat is expected to intensify, especially in the Upper Plains and parts of the Western Cornbelt. Mid next week should bring some 90 degree readings to the heart of the grain belt and the Plains are expected to soar into the 100s for 3 days running.

South Korea’s KOCOPIA purchased about 60,000 MT of corn expected to be sourced from South America in a tender which closed on Tuesday, European traders said. Consultancy Strategie Grains cut its forecast for the 2017 French soft wheat crop by 1.6 MMT from its mid-June estimate to factor in damage from a recent hot spell. Laurine Simon said the consultancy now expects France, the EU largest producer of the grain, to harvest 35.6 MMT of soft wheat, against a 37.2 MMT forecast in its monthly report released on June 15.

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 – June 20

Grains sunk lower overnight with soybeans and wheat leading the complex lower.

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On Monday after the close USDA released their crop condition report showing corn ratings unchanged on the week at 67% good-to-excellent. Traders had expected the ratings to improve to 68%. For soybeans, the ratings improved slightly to 67% from last week’s ratings of 66%. For spring wheat, another surprising drop as ratings hit 41% off from 45% last week and expectations going into the report which looked for an improvement to 47%.

Egypt announced the close of its local wheat harvest on Tuesday, having bought 3.4 MMT of wheat from farmers, Supply Minister Ali Moselhy said, just short of the government’s target of 3.5-4 million. Egypt this year scrapped the subsidy it traditionally pays farmers and instead pegged the local buying price to world market prices for the grain, a measure that traders have said removed the incentive for smuggling but left the country with a lower procurement figure.

Grain cargo ships in Argentina’s main shipping hub of Rosario were halted late on Monday when replacement workers filling in for striking unions walked off the job after receiving threats, the country’s export chamber said. Regular port workers were on the fifth day of a wage strike on Monday when replacement workers were brought in early in the day, allowing for the resumption of some loading of freshly harvested corn and soy.

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

 

Morning Commentary – June 19

Grains were mixed to start the week with corn trading lower, soybeans trading higher and wheat showing only modest gains going into the break.

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Private forecaster Planalytics sees US corn yield at 166.9, off from their last forecast of 167.4 two weeks ago and well below USDA trend yield of 170.7. Most areas of the country are doing on par with normal, except for the Northern Plains of SD & ND where hot and dry conditions are taking a toll. Yields there are expected to be 10 or more bushels below trend based on current conditions.

For soybeans, Planalytics sees a 46.8 bushel yield for the US average. This is off 0.2 bushels from their previous forecast and below USDA’s yield of 48 bushels per acre. As in the case of corn, the Dakota’s are seeing the most downside in soybean yield based on current conditions.

Weather in Western Europe is expected to get turned up this week with intense heat stress expected. Areas of France, England and Germany are expected to see highs in the mid 90s to near 100s for much of this week. Next week should see a return to Normal. In the US, two storm systems will track thru the Midwest this week bringing rain to the Ohio River Valley and Southeast. The second system will bring rains of 0.5 inches to 2 inches from Iowa and Minnesota and up thru Michigan. The Northern Plains will continue to see limited rain potential.

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

 

Weekly Commentary

Cash Commentary-

Grain basis was mostly stable this week for corn and soybeans with neither commodity showing any strong trends on the week. On average, US corn basis was up 0.9 cents a bushel while soy basis was up 0.7 cents.

In corn, basis levels were firmer across the Southern Plains and river terminals this week. The Gulf market inched higher by 1 cent a bushel but river terminals as a group were consistently 2 to 4 higher on the week. Meanwhile, ethanol plants as a group were mostly flat, but there was some higher bids at some plants in the WCB that ranged from 3 to 5 above last week.

For soybeans, basis levels at river terminals were a drag on the broader market as river terminals as a group sinking 3.5 cents on the week while the Gulf basis actually was bolstered by 2 cents on the week. For soy crush facilities, the basis was up 2.7 cents a bushel with 5 to 8 cent gains fairly typical across the plants in the WCB.

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

Futures Commentary-

Grains saw renewed volatility this week with spring wheat futures hitting two-year highs. On the week, however, it was more mixed for the broader complex with corn down 6, soybeans down 3 and Chicago wheat up 5.

Weather in the Northern Plains continues to be a region of concern as persistent drought and heat start to weigh on spring wheat production. USDA’s crop progress report on Monday showed a deep slide in spring wheat conditions to 45% good-to-excellent off from 55% last week and 65% the previous week. For corn, the conditions did slip to 67% as compared to 68% last week. For soybeans the first reading of the year came in at 66%, off of the 70% expected.

Heading into the weekend, the latest US model runs continue to show good precipitation coverage from IL to the East for the next two week period while the Central Plains, Northern Plains and WCB will see limited rainfall. Temperature patterns should follow the rain development with the same areas expected to be dry should see above normal temp readings in this two-week period.

Export business continues to be mostly light especially for new-crop corn and soybeans. Year-to-date totals for new-crop soybean sales are running nearly 40% off the pace last year, but USDA has penciled in a 5% growth factor in exports for the new-crop 2017 marketing year.  Likewise, corn forward sales are off 31% from last year but for new-crop corn USDA is already factoring in a shortfall of 16%.

In international markets, France and much of Western Europe continue to face drought-like conditions. This week private consultant Strategie Grains cut its forecast for the EU wheat crop to 141.6 MMT, down 1.1 MMT from last month, but still 4% above the 136.1 MMT in 2016, when output was curbed by a poor French crop. For corn, they noted a slight cutback of 0.1 MMT to 60 MMT which would be unchanged from last year. But they noted the weather is set to remain dry in most of the primary corn growing countries and the condition of the crop could deteriorate rapidly.

Morning Comments – June 16

Grains continued to advance overnight led by the wheat complex which saw July wheat reach its highest mark in 6 weeks.

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The corn market took a wild ride yesterday with Dec corn trading down to $3.88 in the morning opening bell where underlying support is just below at $3.85 but posted a 12-cent rally back to $4. Yield forecasts from private analysts continue to suggest below-trend yield potential and yesterday’s mid-afternoon weather model run produced more warmth and drier weather than previous models.

The condition of French soft wheat declined slightly in the week to June 12, with 74% of crops rated good or excellent compared with 75% the previous week, farm office FranceAgriMer said on Friday. The corn crop was rated 86% good-to-excellent down 1% from last week.

The latest US model runs continue to show good precip coverage from IL to the East for the next two week period while the Central Plains, Northern Plains and WCB will see limited rainfall. Temperature patterns should follow the rain development with the same areas expected to be dry should see above normal temp readings in this two-week period.

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 – June 15

Grains were lower heading into the morning break with spring wheat continuing its leader role with nearly double-digit losses. Crude oil was also down following yesterday’s sharp sell-off.

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Private consultant Strategie Grains cut its forecast for the EU wheat crop to 141.6 MMT, down 1.1 MMT from last month, but still 4% above the 136.1 MMT in 2016, when output was curbed by a poor French crop. For corn, they noted a slight cutback of 0.1 MMT to 60 MMT which would be unchanged from last year. But they noted the weather is set to remain dry in most of the primary corn growing countries and the condition of the crop could deteriorate rapidly.

In international deals, the Korea Feed Association (KFA) purchased about 65,000 MT of corn to be sourced from optional origins in a tender that closed on Thursday. South Korea’s Korea Corn Processing Industry Association (KOCOPIA) also purchased about 60,000 MT of corn to be sourced from optional origins in a tender that closed on Thursday. Meanwhile, Japan bought 162,000 MT of wheat, of which 98,500 MT was from the US.

Weekly Export Sales-

Actual

Estimated

Wheat – NC

373

350-550

Corn – OC

600

500-700

Corn – NC

13

100-300

Soybeans-OC

340

250-450

Soybeans-NC

314

100-300

Crude futures edged lower again Thursday, following sharp declines in the prior session, but investor sentiment continued to be battered by data showing that the market remains awash in surplus oil. On Thursday, oil prices tanked by nearly 4% to their lowest level since November, following U.S. Energy Information Administration data that showed the decrease in crude stockpiles last week was smaller than anticipated. Compounding the woes was the unexpected increase in gasoline stocks, surprising many traders and analysts who expected much of the excess gasoline to be mopped up during the U.S. summer driving season. Data show gasoline demand has fallen for three weeks straight.

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 – June 14

Grains continued to move higher overnight with Minneapolis wheat adding 12 cents to yesterday’s 25-cent advance.

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Spring wheat prices hit a 2 year high as the market braces for cutbacks from key growing areas in the High Plains. Weather forecasts for ND show no real relief in the 14-day period. Minor storms bringing limited rain are expected this coming weekend and again in another 10 days.

For the US, weather looks to be hot for the Central Plains and Midwest with temps 3 to 5C above normal for the next several days. Rainfall is expected in most key growing areas but the WCB rains are expected to be somewhat limited.

In China, the government there approved two new GMO varieties – Dow’s Enlist Corn and Monsanto’s Vistive Gold soybeans. China has dragged its feet on permitting new GMO varieties, generally taking 6 years to approve while other countries are more on par with 3 years. In May, Beijing promised to speed up the evaluations of eight US varieties of GMO crops by the end of the month under a trade deal with the US.

The Fed will make an announcement today on interest rates, with a widely expected quarter-point interest rate hike. This would push the Fed funds target rate above 1% for the first time since 2008. Market participants’ focus will be on signals on the frequency of further hikes and how the Fed plans to unwind its huge Treasury bond stockpile over the years ahead.

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