Morning Comments – November 30

In the overnight session the grains traded lower with March corn down 1 ¼ cents, January Soybeans down 4 ¾ cents and March wheat at 3 ¾ cents. Corn had nice bounce yesterday after prices approached previous lows set back in the middle of November. The Dec17-Mar18 corn spread widened out to -14 ½ cents, the most we have seen this year.

EXPORTERS SELL 525,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 132,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO UNKNOWN DESTINATIONS DURING THE 2017/2018 MARKETING YEAR- USDA

EXPORTERS SELL 110,000 METRIC TONS OF GRAIN SORGHUM FOR DELIVERY TO CHINA DURING THE 2017/2018 MARKETING YEAR- USDA

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Ethanol production declined slightly over the last week to 1.066 million barrels per day. Despite the decline this week’s production was 5.3 percent above last year and was the 2nd highest weekly production on record. Ethanol production is 3.7 percent ahead of last years pace in the first few months of the marketing year which is well above the pace needed to meet USDA demand estimates. Ethanol stocks increased sharply to 22.044 million barrels, up 147,000 barrels from the previous week. Stocks have been seasonally very strong as we head into a time of the year when stocks continue to get bigger. Ethanol stocks this week are now 20 percent over last year’s levels.

Export sales were disappointing for both corn and wheat this morning. Old crop corn only posted 599,200 metric tons of sales which was down 45 percent from the previous week. Wheat sales also disappointed, missing estimates by a substantial margin and declining 8 percent from the previous week. Soybean sales met expectations and increase 9 percent from last week.

Weekly Export Sales-

Actual

Estimated

Wheat – NC

184

250-450

Corn – OC

599

700-1,100

Soybeans – OC

942

800-1,200

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Morning Comments – November 29

In the overnight session the grains traded mixed with December corn down ¾ of a cents, January soybeans down 1 ¾ cents and December Chicago wheat up 2 ¾ cents. First notice day for December corn and wheat contracts is Thursday the 30th. Most basis contracts that you may have with a grain buyer will need to be priced by noon today and any long futures contracts will need to be rolled by the end of today’s trading session.

Exporters sell 263,000 metric tons of soybeans for delivery to China during the 2017/2018 marketing year. Exporters sell 101,600 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

March wheat traded at a low yesterday of $4.24 ¼ cents before turning around and closing near the high side of its trading range. The next overhead resistance appears to be around $4.33 ¾ which was supported in late October but was broken last Friday.

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In the past month China has purchased 10 to 12 cargoes of corn. The corn was sourced primarily from the U.S and it would appear that more purchases may be yet to come. Corn prices in China have been relatively high recently after the government encouraged farmers to plant less of the crop this year to help deplete the country’s sizeable reserves. In the latest report from the Agricultural Ministry, China is expected to produce 210.1 million metric tons of corn this year which was lower than previous forecasts. With the country’s demand for corn revised higher to 215.62 million metric tons there is a need to import corn to meet demand. China corn demand was revised higher after the government announced plans to roll out ethanol blending into fuel across the country’s gasoline supply.

Yesterday, the USDA released their latest estimates on the planting acreage for the 2018/19 crop year. They pegged soybean acreage at 91 million acres, up from 90.2 in 2017. The USDA also estimated an increase in corn acreage by 600,000 acres to 91 million acres. These forecasts and are not survey based.

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Morning Comments – November 28

In the overnight session the grains traded mostly lower with December corn down 1 ¼ cents, January soybeans down 4 ¼ cents and December Chicago wheat down ¼ cent. The corn chart shows prices cupping back over toward the lows that were set in the middle of the month. January soybeans was able to trade at $10 briefly yesterday before selling pressure pushed it back under the strong psychological resistance level.

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In the latest Crop Progress report released out yesterday afternoon corn harvest progress has progressed to 95 percent complete from 90 percent last week. The states that still lag behind in harvest pace are Ohio at 87 percent complete, Wisconsin at 81 percent complete and Michigan at 84 percent complete. Soybean harvest pace was not reported on this week.

Winter Wheat conditions were downgraded this week to 50 percent of the crop rated good-to-excellent from 52 percent last week. Despite the slight decline in the winter wheat crop prices continue to be pressured lower by ample global stocks and strong export competition.

Argentina is expected to get some precipitation starting on Friday and continuing into Sunday, but below average rainfall in the first few weeks of December could cause trouble for late planted corn and soybeans.

The latest GASC tender on November 15th resulted in the purchase of 240,000 metric tons of Russian wheat.

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Morning Comments – November 27

In the overnight session December Corn is down ¾ of a cent, January Soybeans is down 1 cent and December wheat is down 3 cents this morning. Both December Wheat and December Corn contracts will go into first notice day on Thursday November 30th.

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Wheat trades at new lows this morning after Friday’s export sales disappointed traders. Russian wheat prices in the Black Sea also fell last week to $190.5 a metric ton as prices in the U.S and Europe become more competitive. Russian wheat sales will continue to weigh heavily on U.S. wheat prices. Russia has exported 20.2 million metric tons of grain this marketing year as of November 22nd which is up 27.6 percent from the previous year with wheat exports up 25.4 percent year over year.

Brazil soybean planting has increased to 84 percent complete this week, up 11 percent from last week. This is ahead of the five year average pace of 79 percent with the majority of the key growing regions now seeded. In Argentina planting made little progress last week. Soybean seeding now stands at 11.7 percent complete and corn planting is 34.5 percent complete up 5.9 percent from last year. Weather in Brazil continues to bring precipitation in the north but the far south is beginning to see dry areas. Argentina continues to see precipitation in the far North and east central parts of the growing region, but 1/3rd of the crop still needs precipitation. The regions 6-10 day outlook shows improved chances for moisture.

Saudi Arabia’s state grain buyer purchased 723,000 metric tons of feed barley sourced from Australia, North and South America, the EU and the Black Sea.

On Friday China announced that it will cut import taxes on 187 imported products including meats in an effort to stimulate consumer spending. The cuts will take place on December 1st and help U.S products become more competitive.

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Morning Comments – November 22

In the overnight session the December corn is unchanged, January Soybeans is up 5 ¼ cents and December wheat is down ¾ of a cent. December corn continues to trade around resistance at $3.44 ¾ per bushel after breaking below that support level last week. Weather in Brazil looks beneficial to the corn and soybean crop with an active rain pattern across most all of the grain growing regions. Argentina continues to have areas of dryness for their corn and soybean crop, but the 11-15 day weather outlook points to some precipitation.

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The grain markets will be closed for the Thanksgiving holiday, but will reopen Friday morning at 8:30 AM CST. Friday’s trade session will close early at 12:05 PM CST.  

Weather this fall has been challenging for harvest. The cooler weather and rain delays made it hard for later planted crops to dry down naturally in the field. Corn has been delivered wet from the field and has experienced moisture deductions and the size of the crop has put pressure on infrastructure.  Some elevators have shortened dump hours for high moisture grain as they try to work through their inventory. We have seen a 3 to 4 cent premium for 14.5 percent moisture corn at the Gulf.

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Morning Comments – November 21

The latest crop progress report showed that soybean harvest is 96 percent complete compared to 93 percent last week. Corn harvest was reported at 90 percent complete, up from 83 percent last week. Both corn and soybean harvest pace was in line with trade expectations. Weather is expected to be drier than average in the 6-10 day forecast with cooler than normal temperatures east of Indiana and warmer than normal temperatures in the western part of the U.S. The weather is favorable toward wrapping harvest up without any additional delays.

 

Exporters sell 130,000 MT of Soybeans for delivery to China during the 2017/2018 marketing year-USDA

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The crop progress report showed that the winter wheat crop was rated 52 percent good-to-excellent compared to 54 percent a week ago. Analysts were expecting the crop ratings to hold steady this week.

Export inspections met expectations with the USDA reporting 2,131,354 metric tons of soybeans, 259,264 metric tons of wheat and 632,793 metric tons of corn inspected of export last week. Soybean inspections have been very strong in recent weeks.

Russia announced that it will be placing temporary restrictions on Brazilian beef and pork products after reportedly finding the feed additive ractopamine in some shipments. Brazil denies the allegations, but this story is another setback for the Brazilian meat industry which experienced a temporary shutdown in China earlier this year following a federal investigation into Brazilian meat processing companies.

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 – November 20

In the Sunday night session the grains traded lower with December corn down ¼ cent, January soybeans down 2 ½ cents and Chicago Wheat down 4 cents. The sharp rally on Friday brought corn prices back from the lows of the week, but will likely lead to upward resistance around $3.42 ½ early in the trade this week. Resistance at this level is from a level of previous support which was broken, often causing a role reversal where previous support turns into price resistance.

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Last week the cash market firmed as basis moves out of harvest lows. Corn improved 2 cents and soybeans rallied 4 cents on average across the country. Soybean basis was driven by a sharp rise in the export markets. The PNW increased their soybean basis by 22 cents and the Gulf lifted theirs by 14 cents on average this week. Basis along the river system reacted to the strength out of the Gulf by improving 8 cents on average this week. Soybean plants increased an average of 3 cents this week. Corn basis also improved this week, but only by an average of 4 cents along the river and 4 cents at Ethanol facilities.

The latest commitment of traders report showed that money managers extended their net short positions to 230,556 contracts from 205,625 short last week. This is a record net short position that surpases the previous record of 229,176 net short positions on March 8, 2016. The managed money net position in soybeans fell 24,187 contracts last week to a net positive 22,550 contracts.

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

 

Weekly Cash Commentary

Cash Commentary-

Basis levels were bolstered this week by improving export basis and a surge in end-user bidding out of harvest lows. On the week, corn was up 2 cents while soybeans climbed 4 cents.

Soybeans big lift came from a completing harvest and a sharp climb in export basis with the PNW up 22 and the Gulf basis up 14 on the week.  This helped push river terminals to an 8-cent advance on the week.  On the Upper Mississippi the shipping season winds down as winter freeze stops barge traffic and basis levels are starting to soften. For crush plants, they were up a solid 3-cent on the week but gains were not universal as some plants continue to hold steady.

For corn, export locations were more subdued but river terminals still managed to climb 4 cents on the week. Ethanol plants as a group were also up 4 on the week but gains were clearly less prominent in the Upper Midwest where fresh supplies continue to flow into the pipeline.

Carry in the futures market continues to widen on the market slump as ample supplies force wide spreads to encourage storage. For corn, the Dec-Jul spread stands at 29-cents, well above the 20-year average of 23 cents for this time of year. Meanwhile soybeans face an exceptionally large carry as Jan-Jul holds at 28-cents a 4x multiple of the 7-cent norm for this time of year.

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-

Bears continued to exert their dominance over the grain markets, pushing soybeans down 13, wheat 8 cents lower and sending corn to fresh lows with a 5-cent loss.

Little on the horizon seems to suggest we will see a quick turnaround in the market. As harvest wraps up for corn and beans, the size of the crops are well known and corn faces a second year running of record yields. This week Informa painted a pessimistic picture for 2018 as they expect farmers to expand corn acres by 1 million to 91.4, while beans would decline 0.6 million to 89.6. All wheat acres are expected to be off 0.4 million acres to 45.6.

On the demand front it was a mediocre week for export deals with total sales at best meeting expectations and in the case of corn coming in below 1 MMT vs expectations of 1.2 to 1.7 MMT. The alarming trend is soybeans, where outstanding sales stand at 573 MB compared to 713 MB last year. The USDA is projecting soybean exports this year at 2,250 MB on the year versus 2,174 MB last year so an export reduction on the balance sheets is likely unless our trade picks up significantly. NOPA soy crush was also released this week but was in line with expectations so that provided no stimulus to the trade.

In the wheat market, even as futures erode, there is a strong undercurrent of strong basis moves especially for protein. HRW wheat basis is up as much as a $1 a bushel since harvest with some areas of the country seeing premiums of 40-cents above where they have been in recent years. If futures begin to turn higher the basis bubble will likely pop.

Morning Comments – November 17

In the overnight session the grain moved higher with December corn up 1 ¼ cents, January Soybeans up 3 ¼ cents and December Chicago Wheat up 3 cents. Brazil rains will be scattered for the remainder of the week and provide widespread coverage for the rest of the month benefiting the corn and soybean crops. Argentina weather is more of a concern, with some isolated light showers expected today and Monday but the overall moisture profile declining over the rest of the month. Some crop stress may start to develop in North East Cordoba, Southern Santa Fe and Northern Buenos Aires.

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Informa Economics announced their latest 2018 corn planting estimates at 91.415 million acres, revised higher compared to 90.460 million. They also estimated that soybean plantings in the same year at 89.627 million acres compared to 90.347 in their previous estimates. Informa also sees all wheat plantings at 45.625 million acres compared to 45.875 million acres.  In the latest WASDE report the USDA estimated that planted acres for the 17/18 crop was 90.4 million acres for corn, 90.2 million acres for soybeans and 46 million acres planted to wheat.

The latest harvest report from France showed that 99 percent of the corn harvest is complete for crops that were rated good-to-excellent. It also showed that SRW crop is 95 percent planted with 97 percent of the crops in good-to-excellent condition.

It was announced that Iraq purchased direct from the U.S 90,000 metric tons of Rice outside of the tender process. Also in the news was Egypt’s GASC bought 240,000 metric tons of Russian wheat in a purchase tender.

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 – November 16

In the overnight session the grains traded mixed with Corn up ¼ of a cent, January Soybeans up ½ a cent and December wheat up 2 ¼ cents. Weather in South America is mixed with mostly favorable weather in Brazil, but dryness starting to become noticeable in parts of Argentina which is slowing planting pace.

The NOPA crush report showed that processors crushed 164.242 million bushels in the month of October, which was below analyst expectations of 164.641 million bushels. The report also showed that Soymeal exports increased to 643,199 metric tons, up from 562,180 metric tons a year ago. The biggest surprise was the fact that soyoil stocks slipped to 1.224 billion pounds from 1.302 billion pounds last month. NOPA reported that 11.54 pounds of oil was produced per bushel which was below the 11.61 pounds per bushel produced last year. This has some analysts questioning the quality of this years soybean crop and triggered a rally in soyoil yesterday.

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Export sales this week were moderate for wheat, but soybeans was on the lower end of expectations and corn missed expectations altogether. Wheat sales were on the high side of analyst expectations but still declined 37 percent from the previous week. Corn sales were down 60 percent from last week and soybean sales slipped 5 percent.

Weekly Export Sales-

Actual

Estimated

Wheat

489

350-550

Corn – OC

949

1,200-1,700

Corn – NC

5

0-200

Soybeans – OC

1,104

1,100-1,500

Soybeans – NC

72

0-50

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