Morning Comments – October 31

In the overnight session the grains were mixed with November soybeans up 2 ½ cents. December corn is trading down ½ a cent and December Chicago wheat was down ½  of a cent. November soybeans started the day out strong yesterday, but early gains evaporated by the close. Uptrend support is still intact for November Soybeans at $9.70, but yesterday’s trade action was not a ringing endorsement for the resumption of soybeans uptrend.

Exporters sell 100,000 metric tons of Hard Red Winter Wheat for delivery to Iraq during the 2017/2018 marketing year. USDA

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The crop progress report showed that harvest pace advanced in line with market expectations. U.S. corn harvest advanced to 54 percent complete, up from 38 percent complete a week ago. Soybean harvest is now 83 percent complete, up from 70 percent last week. Soybean harvest is right on pace with the average of the last five years, but corn harvest is behind the average pace of 72 percent complete. Next week’s harvest pace should progress rapidly across the western part of the Midwest but could experience some delays with more precipitation expected across the eastern grain belt.

 

Winter wheat planting progress advanced to 84 percent complete, up from 75 percent the previous week. Traders are concerned that the difficult planting weather combined with the low wheat prices is encouraging farmers to switch acres out of wheat. Currently, December Chicago wheat is trading lower and looks like it will test a support level set on August 29th at 4.22 ½.

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Morning Comments – October 30

In the overnight session the grains were mixed with soybeans trading higher. December corn was up ¼ of a cent, November Soybeans were up 4 ¾ cents and December Chicago wheat was down ¾ of a cent. Soybeans finished last week pulling all the way back to the uptrend support around $9.70 before closing Friday in the green. A strong close today would signal the possible resumption of the uptrend that started after Soybeans put in a low on August 16th.

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Rains were scattered across all of the corn and soybean growing regions of Brazil and the southern half of Argentina this weekend. The Brazilian rains are beneficial for the crop and are helping to keep planting pace at average levels. On Thursday, Brazil announced that soybeans are 30 percent planted which on pace with the 5 year average, but slightly behind last year. The Argentina rains, which are delaying soybean planting are expected to return on Thursday followed by five days of clear weather.

The Commitments of Traders report showed that the speculators net short position for corn increased again this week by only 10,659 contracts to -213,806. Chicago Wheat also saw an increase in the speculators net short position by 1,645 to -101,110. This week soybean speculators reduced their net long positions by 28,390 to 2,065.

Reuters reported over the weekend that newly harvested soybean have had less protein than in years past which has forced processors like Bunge to cut the amount of nutrients they can guarantee in soymeal.

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Morning Comments – October 27

In the overnight session the grains traded lower with December corn down 1 ¼ cents, November Soybeans up 1 and December Chicago wheat down 1 ½ cents. Corn has been trading in a sideways pattern since the end of August and is currently trading in the middle of the range. November Soybeans will likely test its trend line support today or early next week which will be a key event to observe.

EXPORTERS SELL 238,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR

EXPORTERS SELL 132,000 METRIC TONS OF CORN FOR DELIVERY TO SPAIN DURING THE 2017/2018 MARKETING YEAR

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The weather forecast in Argentina continues to bring moisture which has slowed planting this season. Although Eastern Argentina will see a brief pause in the precipitation today, additional rain is expected late this weekend with even more moisture is in the forecast for next Wednesday through Friday. Soybean planting started over two weeks ago and was reported at 1.8 percent complete in the latest agricultural report.

China has announced that it has cut its minimum purchase price for wheat to $346 per metric ton, which is down 2.5 percent. The move was announced by the National Development and Reform Commission and was intended to help lower the country’s massive wheat stockpiles. The cut was widely anticipated and is not expected to impact winter wheat planting decisions for the next season.

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Morning Comments – October 26

In the overnight session the grains were mixed with December corn up ½ a cent, November soybeans up 3 cents and December Chicago wheat up ¾ cent. The strong export sales for soybeans this week should help lift prices in the early trade this morning.

U.S. Ethanol production rose for a second week in a row to 1.039 million barrels per day. Ethanol production rose 5 million gallons a week and was the strongest production numbers in six weeks. Despite the sharp rise in production we did see ethanol stocks slip by .446 million barrels last week to 21.034 million barrels. Ethanol stocks typically experience a seasonal drawdown starting in the beginning of September, but this year they have held steady. Ethanol stocks are 5.6% above last year’s levels and are a record for this time of the year.

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This morning the International Grains Council announced that it has raised its forecast for the World Wheat crop in 2017-18 to 748.5 million metric tons, up from 747.6 million metric tons. The group’s corn production estimate increased by 5.2 million metric tons to 1.034 billion metric tons.

Export sales were strong for both corn and soybeans last week. Soybean sales were up 67 percent from the previous week and significantly outpaced expectations with an increase in sales to China. Corn sales were on the high side of expectations, but were up by a marginal three percent from last week. Wheat sales softened from last week to 360,600 metric tons, down 41 percent from last week and on the lower end of expectations.

Weekly Export Sales-

Actual

Estimated

Wheat

360

300-500

Corn

1,288

800-1,200

Soybeans

2,129

1,200-1,600

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Morning Comments – October 25

In the overnight session the grains traded higher with soybeans leading the way. December Corn was up ¾ of a cent, November soybeans were up 6 ¾ cents and December Chicago wheat was up 1 cent. March soybeans are now trading back above $10 dollars. There is some light snow forecast in Minnesota by Thursday as cooler than normal temperatures become widespread throughout the Midwest by this weekend. The 11-15 day forecast expects heavier snow, but confidence on that event is still quite low.

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Soybeans this morning has continued its push higher since the low established on August 16th this year. Since that time we have seen a relatively orderly uptrend with trend line support dates of August 30th, September 12th and October 12th. This week, trade action approached trendline support but has not tested it.

Rains in southern Brazil corn and soybean producing region are helping to improve the moisture as farmers continue planting. The rains are expected to spread across the major growing regions over the next two weeks, which is favorable for the Brazilian corn and soybean crop. Argentina which has been getting excessive moisture is expected to see a break in precipitation late next week but the 11-15 day forecast shows a return of rain again.

This morning Taiwan’s purchasing group MFIG issued an international tender to buy 40,000 to 65,000 metric tons of corn that can be sourced from the United States, South Africa or South America.

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Morning Comments – October 24

In the overnight session the grains pulled back slightly after recording nice gains in yesterday’s session. December Corn is trading down 1 cent, November soybeans is down 2 ¾ cents and December Chicago wheat is down 2 ¼ cents this morning.

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The crop progress report released yesterday after the market closed showed that soybeans were 70 percent harvested above analyst expectations which were expecting 64 percent complete. Soybean harvest is now only 3 percentage points away from the five year average harvest pace for this time of year. Corn harvest was reported at 38 percent complete, well below the five year average of 59 percent and behind expectations which was expecting the report to show 44 percent of corn harvested.

Winter wheat planted increased to 75 percent complete, up from 60 percent a week ago. This was slightly above analyst expectations which were looking for winter wheat to be 73 percent planted.

On Monday the U.S. Commerce Department set their preliminary anti-dumping duties in a range from 54.36 to 70.05 percent on soy-based bio-diesel from Argentina. Indonesia’s palm oil bio-diesel duties were set to 50.71 percent. Indonesia plans on contesting the anti-dumping duty said a senior trade ministry official in Jakarta. He went on to say “We will fight to counter the U.S. dumping allegation.”

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Morning Comments – October 23

In the overnight session the grains were mixed with December corn up ¼ cent, November soybeans down ¾ of a cent and December Chicago wheat unchanged. Rains over the weekend slowed harvest throughout the Central Midwest with precipitation in Eastern Kansas, Iowa, Missouri and Illinois. Precipitation is expected to continue east into eastern Illinois and Indiana. The forecast over the next five days is for precipitation to continue delaying field work over the eastern grain belt.

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The market is waiting for the USDA to release its latest crop progress report after the market closes Monday afternoon. Analysts are expecting soybean harvest to be around 70 percent complete and corn harvest to move to 42-43 percent complete. Corn and Soybean basis was unchanged on the week, but the delays in harvest have some feedlots and ethanol facilities increasing their basis in Nebraska and South Dakota by as much as 10 cents.

The Cattle on Feed report that was released on Friday bearish for the most part. All cattle on feed as of October 1st was 105 percent of last year which was above the 104.6 percent that the trade was expecting. Cattle placed on feed in September was 113 percent, compared to the 108 percent expected by the market. Marketings continue to be strong however, with 103 percent marketed, beating the average analyst guess of 102.6 percent.

In the latest Commitments of Traders report the total net short positions held by managed money increased by 7,747 positions from last week. The net position held by managed money for soybeans increased its length by 37,176 last week to 68,168.

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Weekly Commentary – October 20

Cash Commentary-

Grain basis took a break from last week’s sell-off to mostly stabilize as slow harvesting keeps pipeline supplies relatively limited, especially for corn. On the week, there was no change in corn and soybean basis on average across the US.

Basis for corn continues to hold up with current basis levels running on par with the same time last year, but soybeans are about 10 cents a bushel weaker than this time last year.

This week saw some strength from corn buyers as end-users in the Western Cornbelt continue to see tight pipeline supplies. Double-digit gains in basis were showing up by feedlots and ethanol plants in NE and SD. River terminals saw some modest weakness along the lower MS River and the OH River region as harvest there picked up pace.

For soybeans, buyers were mostly steady to slightly weaker as harvest hits the mid-point for the year. Some soy crush facilities showed 10 to 15 cent losses this week across IA/IL/IN.

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Futures Commentary-

Another week of listless trade in the corn market as futures hold tight to the $3.50 mark. For the week, corn was unchanged while soybeans drifted 5 lower. Wheat managed to buck the trend with a modest 2-cent advance.

Harvest progress continues to be stymied especially for corn as wet weather and poor market conditions keep farmers from making significant progress. The latest Crop Progress report showed that only 28 percent of corn has been harvested as of October 15th compared to 47 percent normally. Soybean harvest is moving along a bit faster than corn with 49 percent harvested but is still behind the normal pace of 60 percent. Rains expected in the eastern Midwest will likely delay harvest over the weekend and into Monday. Further precipitation in the eastern Midwest is expected to delay harvest even more late next week.

On the demand side, there has been solid export business to help support prices. Weekly sales were stronger than expected for corn and wheat. Wheat sales of 615,000 MT were up sharply this week and were 75 percent over the four-week average. Corn export sales beat expectations but declined 21 percent from last week. Soybeans sales missed expectations, down 27 percent from last week. Flash sales also featured prominently this week with 584,000 MT of soy deals and 250,000 MT of corn in the last two days of the week.

In international news, Argentinean farmers are expected to plant 8.92 million hectares (22 million acres) with corn, up from 8.48 million hectares (21 million acres) in the 2016/17 crop year, the agricultural ministry said in its monthly crop report. For Brazil, weather continues to be an issue for planting. Welcome rain fell on many areas from southern Mato Grosso into Mato Grosso do Sul, northern Parana, and portions of western Sao Paulo Thursday. Meanwhile, hot and dry weather continued to stress crops and delay planting from central and northern Mato Grosso into much of Goias and northern Minas Gerais. Crops from Mato Grosso and northern Mato Grosso do Sul to Sao Paulo that missed out on rain Thursday will continue to suffer from hot and mostly dry conditions for at least the next two days while many farmers wait for rain before planting and replanting before shower activity increases Sunday.

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Morning Comments – October 20

In the overnight session soybeans pushed a bit higher with November up 4 cents. December corn traded up ¾ of a penny and Chicago Wheat was up 2 ¼ cents. Rains expected in the eastern Midwest will likely delay harvest over the weekend and into Monday. Further precipitation in the eastern Midwest is expected to delay harvest even more late next week.

EXPORTERS SELL 198,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 120,000 METRIC TONS OF CORN FOR DELIVERY TO SPAIN DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 125,000 METRIC TONS OF CORN FOR DELIVERY TO UNKNOWN DESTINATIONS DURING THE 2017/2018 MARKETING YEAR- USDA

Today the Ukrainian Agricultural Ministry announced that Ukraine has planted 90 percent of the expected winter wheat area. The report showed 5.5 million hectares of winter wheat compared to the 6.15 million hectares that are expected. Harvest pace in France has progressed this week with the latest report from FranceAgriMer reporting that 56 percent of the crop has been harvested, up from 28 percent last week. Soft wheat planting progressed to 47 percent complete up from 20 percent last week.

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Informa released their latest 2018 planting estimates yesterday. Their forecast is for corn plantings next year to be at 90.460 million acres and soybeans at 90.347 planted acres. This compares to the latest WASDE report that shows planted acreage for the 2017 crop at 90.4 million acres for corn and 90.2 million planted acres for soybeans. Informa also estimates  that all wheat acreage planted for the 2018 harvest will be at 45.875.

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Morning Comments – October 19

In the overnight session the grains traded slightly higher with December corn up 1 cent, November soybeans up 1 cent and December Chicago Wheat up 1 cent. The U.S. forecast shows some chance for precipitation in the eastern Midwest early next week which could slow an already lagging harvest.

EXPORTERS SELL 384,000 METRIC TONNES OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR.-USDA

Yesterday’s rains favored southern Brazil and more precipitation is expected in the 6-15 day forecast which should ease concerns about dryness in that region. In Argentina however, it was wetter than expected and continues to put pressure on planting which has been delayed due to excessive moisture this season.

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Ethanol production over the last week increased sharply to 1.019 million barrels per day from 967 BPD. This was a strong increase from last week and was 2.1 percent above last year during the same time. Ethanol stocks were recorded at 902 million gallons which was down 2 million gallons from last week’s level. However, the drawdown in ethanol stocks which typically starts in September and continues into November hasn’t really happened yet this year. Ethanol stocks have actually increased since the first of September and are now 12.9 percent higher than last year. This is a development that needs to be monitored and brings into question how robust demand is for Ethanol as year-over-year production increases.

Export sales for wheat and corn were strong this morning with both grains beating trade expectations. Wheat sales were up sharply this week and were 75 percent over the four week moving average. The majority of wheat sales were to Mexico, China, Unknown Destinations and Japan. Corn export sales beat expectations but declined 21 percent from last week. Soybeans sales missed expectations, down 27 percent from last week with reductions reported from Unknown Destinations and Costa Rica.

Weekly Export Sales-

Actual

Estimated

Wheat

615

250-450

Corn

1,254

800-1,100

Soybeans

1,275

1,300-1,700

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