Morning Commentary – January 31

In the overnight session the grains are trading lower with corn down ¾ of a cent, soybeans down 5 cents, Chicago wheat down 4 ¾ of a cent and Kansas City wheat down 5 cents. Chicago wheat futures turned lower on Wednesday as a short-covering rally linked to concerns over poor winter crop conditions in the US ran out of steam.

US winter wheat is not in good shape according to new data from the US department of Agriculture. Although drawing final conclusions based on midwinter crop conditions is premature, the chance that the US harvest will achieve even average levels is dwindling, especially since weather models have not yet indicated a reliable shift to a widespread wet pattern in the Southern Plains.

Late on Monday, many of the USDA’s state statistics offices released monthly crop progress reports that include the condition of winter wheat. The status in top producers, Kansas and Oklahoma, was nothing short of alarming and implied that at least 30 percent of the national winter wheat crop is in the worst condition in well over a decade.

Exporters sell 145,000 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

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Argentina’s corn crop will suffer yield losses due to drought this year and the estimated planting area may drop further because dry weather in the northern part of the country has blocked late-season planting. Regarding the country’s main cash crop, soybeans, no more planting area losses are expected for the 2017/2018 season and the size of the harvest hinges on February rains, which will be crucial after three consecutive months of near constant sun.

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Morning Comments – January 30

Grains were up in the overnight session with March corn up 1 ¼ of a cent and March soybeans up 1 cent. KC March wheat gapping higher for a second straight session, early trade wires putting the spotlight on yesterday’s USDA state crop ratings.

Chicago wheat rose for a fifth session on Tuesday to touch a four-month high on concern that dry conditions in parts of the US Plains are damaging crops. Condition ratings of US winter wheat declined in January in several southern US Plains states hit by drought including top US producer Kansas, the US Department of Agriculture said on Monday.

Exporters sell 132,000 metric tons of corn for delivery to Spain during the 2017/2018 marketing year. -USDA

The USDA rated 14 percent of the Kansas winter wheat crop in good to excellent condition, sharply down from 37 percent at the end of December. There is close market attention on the state of US winter wheat, with concern about dryness and cool temperatures in parts of the US Plains in the past few weeks. The market seems to expect the dryness in the US Plains to cause further deterioration of winter wheat crop ratings and this is reflected in firm prices today; however the actual impact will not be visible for some time yet.

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US Export Inspections numbers; 1,104 for soybeans, 579 for wheat and 993 for corn. Wheat came in above estimations of 250-450; corn was in line with expectations as were soybeans.

The dollar reversed earlier gains on Tuesday and turned lower as US Treasury yields pulled back from their recent move higher while the euro strengthened after economic data confirmed the euro zone economy is growing at a healthy clip. The greenback is set for its biggest monthly decline since July 2017 against the euro as the combination of strong global growth and slow inflation encouraged investors to add bearish bets.

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Morning Comments – January 29

In the overnight session the grains traded higher with corn up 2 1/2 cents, soybeans up 12 cents, Chicago wheat up 6 1/2 cents and Kansas City wheat up 7 cents. Grains are moving higher on crop stress concerns in Argentina and dryness in the US Plains.

Exporters sell 115,000 metric tons of corn for delivery to Egypt during the 2017/2018 marketing year. -USDA

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The latest forecast for Argentina weather has many traders worried that the minimal subsoil moisture in the central and southern parts of Argentina combined with the hot dry weather will damage yield potential. A high pressure ridge will move into Argentina this week and temperatures are expected to rise into the 90’s and low 100’s. Crops will see stress over the next 8 to 10 days and it is likely that production potential will be damaged.

Brazil weather is expected to be wetter and possibly slow soybean harvest and corn planting. Rains are expected to continue in the southern part of the country throughout the week.

The average corn basis across the US slipped by a penny last week while soybeans fell by 1/2 a cent. The rally in the futures market has brought more willing sellers to the table which has helped originators book more grain without becoming more competitive with basis. In fact, many western corn belt soybean plants dropped their basis by 5-10 cents. Basis along the river terminals also saw pressure as barge rates increased with soybean basis down 4 cents and corn basis unchanged.

The commitment of traders report for the week ending January 23rd showed that wheat speculators increased their net short position by 2,480 contracts to 166,064. Both corn and soybeans had a decrease in the net short position during the same period. The net short position in corn shrunk by 10,043 contracts to 248,041 and soybeans net position shrunk by 19,629 to 117,023.

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Weekly Cash Comments

Cash Commentary-

Grain basis was mostly stagnant this week as average US values were unchanged from last week.

A rally in the futures market helped increase pipeline supplies this week as end users found dump lines backing up. Corn plants were down as a group this week by 1-cent a bushel with only one small plant in NE IA boosting basis by a dime, but most of the action at ethanol plants was on the downside.  For soy plants they were down 0.5 cents a bushel on average. There were some modest gains in IN/OH plants but plants in the Western Corn-belt were off 5 to 10 cents in some case, helping erase much of the positive gains in the board.

For river terminals, they fell under the same pressure but had the added back draft of higher barge freight. Rates along river terminals were generally higher this week which put more pressure on basis levels. Soybeans basis at river terminals gave up nearly 4 cents a bushel while corn basis was unchanged on average.

Futures Commentary-

Grains managed to rally this week as corn was up 4, soybeans up 19 and wheat posting a 9-cent advance.

Dryness in Argentina is certainly the headline grabber for the trade but broader macro events are helping lift the complex out of its lows. Escalating crude oil prices and a weakening dollar is helping lift the broader commodity complex. With fund traders so bearish in their short positions in grains, these smaller economic drivers are helping give the market a boost.

On Thursday, the Argentinian Agricultural Ministry revised their corn plantings estimate from 8.8 million hectares to 8.7 million hectares in their latest crop report. Soybean plantings were also revised to 16.75 million hectares, down from 16.8 million last month. The revisions were made after dryness throughout Argentina delayed plantings and in some cases prevented planting altogether. Concerns are now that the dryness in central and southern Argentina will damage yield potential.

Ethanol production was mostly unchanged week over week at 1.062 million barrels per day. This was another strong week following the freezing temperatures that strained logistics in the first half of January. The ethanol production for this week was 1% over last year during the same week. Ethanol stocks increased sharply this week to 1 billion gallons from 955 million last week.

Wheat sales were reported at 427,200 metric tons which was an improvement from the previous week and meeting trade expectations. Corn sales were reported at 1,445,900 metric tons which was down 22 percent from the previous week but above the trade expectations. Soybean sales only reported 616,300 metric tons which was below expectations and down 50 percent from the previous week.

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 26

In the overnight session the grains are trading unchanged to higher with corn up 3/4 of a cent, soybeans up 3/4 of a cent, Chicago wheat up 2 3/4 cents and KC Wheat up 3 1/4 cents this morning. Chicago wheat was able to break through both the 20 and 50 day moving average and is now at the recent high January 3rd. Soybeans trade action during yesterday’s session could be seen as concerning after it was unable to hold onto it intra-day gains and closed near the days open. The March soybean contract briefly traded above $10.00 before closing at 9.91 1/4.

Exporters sell 125,000 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

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Yesterday the Argentinian Agricultural Ministry revised their corn plantings estimate from 8.8 million hectares to 8.7 million hectares in their latest crop report. Soybean plantings were also revised to 16.75 million hectares, down from 16.8 million last month. The revisions were made after dryness throughout Argentina delayed plantings and in some cases prevented planting altogether. Concerns are now that the dryness in central and southern Argentina will damage yield potential.

South Africa is also expecting to see plantings lowered due to hot and dry conditions in the western part of its growing region. The country’s Crop Estimates Committee is expected to revise its corn acreage forecast from 2.629 million hectares to 2.159 million acres. The western part of South Africa’s growing region produces a large amount of white corn.

Wheat sales were reported at 427,200 metric tons which was an improvement from the previous week and meeting trade expectations. Corn sales were reported at 1,445,900 metric tons which was down 22 percent from the previous week but above the trade expectations. Soybean sales only reported 616,300 metric tons which was below expectations and down 50 percent from the previous week.

Weekly Export Sales-

Actual

Estimated

Wheat – NC

427

200-500

Corn – OC

1,445

900-1,250

Soybeans – OC

616

850-1,200

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

In the overnight session the grains trade higher with corn up 1/4 cent, soybeans up 3 1/4 cents, wheat up 2 1/4 cents and KC Wheat up 2 1/2 cents. Corn rallied sharply yesterday and is well above the 20 and 50 day moving average as short covering powered most of the days action. Export sales will be released on Friday the 26th due to the temporary closure of the Federal Government.

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The weather forecast in Argentina is still looking for more precipitation in the northern part of the crop growing region with only minor shower and thunderstorms in the central and southern regions. Next week is expected to be dry which will increase stress on the crops in the central and southern growing regions.

Ethanol production was mostly unchanged week over week at 1.062 million barrels per day. This was another strong week following the freezing temperatures that strained logistics in the first half of January. The ethanol production for this week was 1% over last year during the same week. Ethanol stocks increased sharply this week to 1 billion gallons from 955 million last week.

Chinese customs data released on Thursday showed that China imported 60 percent of its soybean from Brazil in 2017 with the U.S. accounting for only 34.4 percent of imports. Unfortunately, that was the U.S’s lowest percentage share of China’s total soybean imports since 2006. Brazil surpassed the U.S. as the primary supplier to China in 2012 and currently has an edge over the U.S due to its longer growing seasons, higher protein content and cheaper prices. Although Brazil is slightly behind normal harvest pace at this time of the year the growing season has been very favorable and the country is gearing up for another very large harvest.

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Morning Comments – January 24

In the overnight session the grains were up with March corn up 2 ¼ cents and soybeans unchanged, Chicago wheat up 2 ¾ cents and Kansas City Wheat up 2 ¼ cents. Corn showed traction yesterday in the market after experiencing selling pressure throughout the majority of the day and pushing as low as $3.495 but finishing close to the high of the day at $3.515. The inability for the selling in corn to hold into the close was a positive sign which was trading around its 50 day moving average and its 20 day moving average.

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Kansas City Wheat is also trading higher this morning, but technically the complex is setup for strong overhead resistance at around $4.30. Both the 20 and 50 day moving averages are overhead and provided strong resistance on January 19th when prices tested those levels.

Informa economics revised its 2018 soybean planting forecast lower to 91.197 million acres from its previous forecast of 91.387 million acres. Informa also revised their U.S. corn expected 2018 corn acreage lower to 89.179 million acres from 89.675 in its previous estimates. The company also sees spring wheat seedings at 11.255 million acres and durum wheat acreage at 2.254 million acres.

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

 

January 23 – Morning Comments

In the overnight session the grains were mixed with corn down ½ a cent, soybeans up 3 ½ cents, Chicago wheat down 2 cents and Kansas City Wheat down 1 ¼ cents.

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Heavy snow over the weekend in Northwestern Kansas, Nebraska, Western Iowa and into Minnesota dropped between 6-14 inches, stressing livestock and disrupting transportation. The snow provided welcome moisture in Kansas and Nebraska but missed the driest areas of Southern Kansas, Oklahoma and the Texas Panhandle.

Argentina weather is expected to bring more precipitation to the north for the rest of the week, as the central and southern parts of the growing region stay mostly dry with scattered thunderstorms. The weather models are showing that continued dryness is expected next week into the beginning of February. Weather in Brazil is expected to continue bringing favorable growing conditions to the country.

Export inspections were reported on Monday despite the government shutdown over the weekend. This week 668,946 metric tons of corn was inspected for export which was well below analyst estimates which ranged from 800,000-1,050,000 metric tons. Soybean inspections were reported at 1.419 million metric tons which was on the high side of analyst expectations and wheat inspections were reported at 337,980 metric tons which met expectations this week.

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Morning Comments – January 22

In the overnight session the grains traded higher. Concerns about dryness in central and southern Argentina, a weaker U.S. Dollar and strong weekly export sales are all helping to support grain prices at the start of the week. The U.S. government is still shutdown which will impact the timing of reports this week starting with the export inspections on Monday.

Heavy rains fell over the weekend in the northern crop growing regions of Argentina including Chaco, North West Corrientes, eastern Santiago Del Estero and Northern Santa Fe. As much as 12.44 inches of rain fell in parts of Chaco with 5-8 inches falling in other parts of the region. Despite the heavy rains in the northern part of the growing region the forecast looks to bring more dry weather in the central and southern parts. The next two weeks look to bring more hot dry weather to areas that already has marginal subsoil moisture.

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Brazil harvest is off to a slow start this year due to delayed planting at the beginning of the season. Analysts estimate Mato Grasso’s soybean harvest is  between 2.8 and 3.29 percent complete compared to 11.49 percent last year during the same period. Mato Grosso is usually the first state to begin harvesting in Brazil. This slight harvest delay may be helpful for U.S exports in the short run, but reports of strong yields may have a more negative effect on U.S. soybean prices once harvest is fully ramped up.

Basis for both corn and soybeans increased last week across the U.S. The national average soybeans basis advanced .7 cents and corn basis increased 1.5 cents. Soybean crush plants increased basis by an average of 2 cents, while river terminals lowered soybean basis by 2 cents. Ethanol plants were steady this week with river terminals corn basis edging up a penny.

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Morning Comments – January 19

In the overnight session the grains traded higher with corn up 1 ½ cents, soybeans up 3 ¾ cents, Chicago wheat up ¾ cent and Kansas City wheat up 1 ¾ cents.

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Ethanol production rebounded sharply this week with production increasing to 1.061 million bushels per day, up from 996 bpd recorded last week. The warmer temperatures across the US helped lower the stress on the supply and distribution logistics. The rebound brought production back above last years pace during the same week. Ethanol stocks were mostly steady at 955 million gallons compared to 954 million gallons last week. Ethanol stocks are still seasonally very strong at about 7.7 percent above last years levels.

Yesterday it was announced by the Buenos Aires Grain Exchange that 2017-18 soybean plantings estimates may be revised lower again due to the dryness in the northwestern parts of Argentina. This region represents roughly 30 percent of soybean plantings and they are behind schedule getting the crop into the ground.

Export sales were strong this morning for corn and soybeans but wheat missed analyst expectations. Corn sales booked 1.888 million metric tons this week which was up significantly from the previous week and well over analyst expectations. Soybean export sales increased by 31 percent over last week, beating expectations and booking 1.240 million metric tons. Wheat sales were disappointing compared to expectations but was higher than last weeks totals.

Weekly Export Sales-

Actual

Estimated

Wheat – NC

153

200-500

Corn – OC

1,888

500-800

Soybeans – OC

1,240

600-1,000

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