Morning Comments – February 28

Headlines

  • Wheat market sharply higher on dry HRW region and excess moisture in SRW regions.

  • Grassley says “No Deal” following White House meeting.

  • Weather outlook mostly unchanged in SA

  • Exporters sell 250,000 metric tons of soybeans for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

HRW Wheat

  • Kansas City Wheat is trading sharply higher this morning due to yesterday’s lower crop condition ratings and forecast for continued dryness in the Plains.

  • Kansas City Wheat will be VERY vulnerable to continued dryness as it breaks dormancy.

  • March precipitation outlook shows continued dryness in the Plains states.

Argentina

  • Yesterday evening GFS weather model run suggested little change from previous forecast.

  • Potential band of showers could move from south to north this weekend. However, widespread precipitation is not likely and any meaningful rain is expected to be localized.

  • Significant rain is expected in the far northwestern part of Argentina. This region has not been the area most affected by the drought.

Brazil

  • Unchanged weather outlook.

  • Continued showers across the country into next week causing some fieldwork delays for soybean harvest and second crop corn planting.

No Deal on Biofuels Yet

  • Meeting on Tuesday was at the White House between Senator Ted Cruz of Texas, Pat Toomey of Pennsylvania and Charles Grassley and Joni Ernst.

  • Ted Cruz said the meeting was “positive and productive” while Grassley tweeted “No Deal Made” and said the proposals were not a “win win”

  • President Trump has called for more talks between the representatives.

CME Declares Force Majeure

  • Significant rainfall over the last week eastern corn-belt has raised water levels and caused moderate and major river and stream flooding.

  • Yesterday the CME declared a conditional Force Majeure at all wheat shipping locations on the Ohio river due to “load-out impossibility at a majority of Wheat regular shipping stations”.

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 – February 27

Headlines

  • KCBT wheat breaks through Feb 20th highs on poor US crop ratings and expectations are for continued dry weather.

  • Significant rainfall has led to reported flooding along the river systems.

  • Exporters sell 130,000 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

Wheat Conditions Deteriorate Further

  • Kansas HRW wheat rated 12 percent good-to-excellent down 2 percent from Jan. Wheat rated poor-to-very poor throughout Kansas increased 5 points to 49.

  • Oklahoma HRW wheat rated 4 percent good-to-excellent was unchanged from Jan. Wheat rated poor-to-very poor in the state declined by 1 point to 78 percent.

  • Drought conditions are expected to worsen this week across Kansas.

  • Temperatures should drop sharply mid-week in the central and Volga regions of Russia. Good snow cover should protect the crop from any damage.

More U.S. Rain in Delta and Midwest

  • Significant rain over the last month in the eastern Midwest and Delta regions has saturated the soil and caused flooding along the Illinois, Ohio, Tennessee and Lower Mississippi.

  • Last week the CME declared a Force Majeure along the Illinois river as flooding halted barge loading activity.

  • More precipitation is expected through Thursday which will increase flood conditions on the Tennessee and lower Mississippi.

  • Drier conditions from Friday through the weekend will help, but cooler temperatures next week which will slow drying.

Argentina

  • Central production areas will remain dry through the weekend.

  • Latest weather model suggests increased rain during second weekend of March.

  • Significant rainfall is expected in the far northern part of Argentina for the remainder of the week.

  • Driest areas are expected to remain dry over the next week.

  • Temperatures are expected to cool next week.

Brazil

  • Frequent showers will benefit crop development but slow fieldwork.

Export Inspections

  • Wheat export inspections disappointed while corn inspections beat analyst expectations.

  • Soybean export inspections met expectations

Actual Inspections

Analyst Estimate

Wheat

280

325-525

Corn

1,305

800-1,100

Soybeans

761

600-900

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 – February 26

Headlines

  • Argentina remains dry

  • Brazil fieldwork continues to be slowed by rains

  • May Soybeans breaks through highs set on July 12th 2017.

  • China customs data shows U.S. loses market share to Brazil in January

  • KCBT wheat finds support on 20 day moving average.

Argentina

  • Dry weather was persistent over the weekend in the majority of the growing regions. However, some precipitation fell in northeastern La Pampa, Western Cordoba and northwest Santiago del Estero.

  • The weather forecast expects some erratic and light precipitation from Tuesday through Sunday. Rains are not expected to provide the precipitation needed to stop crop stress.

  • Temperatures should stay mild with highs of 80’s and 90’s this week.

  • Longer term forecast is for more precipitation in March, but may be too late to turn around production.

Exporters sell 132,000 metric tons of soybeans for delivery to China during 2017/2018 marketing year. Exporters sell 125,000 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

Brazil

  • Recent rain continues to delay soybean harvest and second crop corn planting.

  • Temperatures remain seasonable over the next couple weeks.

  • Rains and scattered showers are expected to continue over the next week.

Commitments of Traders

  • Managed money (MM) is no longer net short in the corn and soybean market.

    • MM net corn position is 18,674 from -10,615 last week.

    • MM net soybean position is 99,111 from 56,242 last week.

    • MM net Chicago wheat position is -67,039 from -56,830 last week.

    • MM net KCBT wheat position is 13,141 down from 14,726 last week.

Soybean Exports to China

  • China soybean imports from the U.S. in Jan fell 14 percent from last year.

  • China soybean imports from Brazil in Jan increased dramatically to 2.07 MMT.

  • Customs data showed China imported 5.82 MMT of US soybeans which accounted for 67 percent of all soybean imports in Jan. Last year U.S. soybeans accounted for 88.5 percent of soybean imports during January.

  • Brazil’s large soybean crop last year and preferred protein levels seems to be the main cause of the move.

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 – February 23rd

Cash Commentary-

Basis continued to stagnate this week as the board continues to keep pipeline supplies well stocked for the near-term. On the week, US average corn basis nudged higher by 0.5 cents a bushel while soy basis softened by 0.3 cents a bushel.

The only major action this week occurred along export sensitive routes as corn basis caught a bid. The Gulf and PNW markets each were up, gaining 5 and 7 cents respectively on the week. River markets followed suit with a 4.5 cent basis improvement. However, heavy rains and melting snow-pack are likely going to cause barge problems in the coming week. Barge lines suspended operations on northern sections of the Illinois River on Thursday and several grain elevators along the lower Ohio River stopped loading barges because the rising river made it impossible for the vessels to get beneath grain spouts. For beans, basis levels were mostly flat at export origins and river terminals. Gulf basis continues to be soft as values trade at their lowest February levels since 2008.

For end users, there was little noticeable movement for corn or bean plants, although beans plants had a slight negative bias. Crush margin for soy plants have catapulted high, with values trading around $1.50 a bushel vs $0.85 a bushel last fall. With Argentina’s #1 position for soymeal exporting in jeopardy there should be considerable interest in the latter half of the marketing year for US meal supplies.

Basis levels for corn should start to perk up as we get closer to spring. The board rally in the last month has helped end users meet their needs but as flat prices stall out this should put the onerous on buyers to bid up basis to keep their needs met.

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-

The grain market rally let out some steam this week with wheat falling 10 cents, corn down 1 and soybeans inching higher by 7 cents.

After rallying 90 cents in the last 5 weeks soybeans seemed to run into resistance around the $10.38 mark on March beans. Competing bull and bear forces left soybeans unable to break further to the upside. On the bull side Argentina’s drought that is showing no real signs of improving and with the crop in the critical phase of the growing season time is running out to reverse the damage. Some modest rains of 1 inch are expected in fringe areas of the grain belt next week, but wide coverage is not expected. Crop losses there could be steep. This week the two grain exchanges there pegged soybean production at 46.5-47.0 MMT off from USDA’s Feb forecast of 54 MMT and corn at 35-37 MMT vs USDA at 39 MMT. But on the bear side, US export deals continue to be uninspiring. This week saw net cancellations for old-crop sales, and cumulative bookings are about 9% off the normal pace of sales to meet USDA expectations. Current bookings are 13.7 MMT away from the final year-end estimate, and while we did see an export surge in previous Argentina drought years of 2009 and 2012, that new business amounted to only 9.5 and 11.5 MMT. So, it could be a stretch to reach USDA’s total.

For corn the demand side is much more promising. Exports are rock solid with another strong week of 1.5 MMT marking the 6th consecutive week of better than 1 MMT. In fact, you must go all the way back to 2007 when corn sales for a 6-week period have been this brisk, totaling 10 MMT in that time window. For ethanol, output this week showed a strong uptick as well to 1.068 million barrels vs 1.016 million barrels last week.

On Friday, USDA’s Outlook Forum gave traders a first glance of expected 2018 S&D numbers. On acreage, USDA pegged corn and bean plantings at 90 million acres both a fraction below 2017 plantings. But carry-out numbers projected for the end of 2018 were quite different than some pundits have been suggesting. USDA looks for a contraction in soybean carry-out from 530 MB this year to 460 MB next year thanks to really strong exports. Meanwhile in corn they expect a modest downtick in carry-out to 2,272 MB from this year’s 2,352 MB due to only 1,900 MB of exports, which would be a deep cut from 2,050 MB expected this year and 2,293 MB two years ago.

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 – February 23

 Drought Monitor

  • Latest U.S Drought Monitor shows Kansas increased moderate drought.

  • Oklahoma is unchanged with 37.8 percent of the state in extreme drought. (Rains in eastern Oklahoma after Tuesday were not included in latest run)

  • Texas drought lessened with rains in the east, but panhandle still in mostly extreme drought.

South America

  • Argentina expected to remain dry through Wednesday. Showers late next week are likely but may not be widespread.

  • Buenos Aires grain exchange revised Argentina 17/18 corn and soybean harvest lower.

    • Soybean production estimated at 47 MMT from 50 MMT.

    • Corn production estimated at 37 MMT from 39 MMT.

  • Brazil harvest will make its largest progress in the southern part of the state. However, precipitation is expected through most other production areas from Friday through next Thursday.

Ethanol

  • Ethanol production jumped to 1.068 million barrels/day this week from 1.016 million barrels per day.

  • Weekly ethanol stocks decreased to 956 million gallons from 961 million gallons.

  • Stocks are at the lowest level in five weeks despite production jump. Large stocks have been a concern this year with stocks earlier this marketing year running as much as 20 percent above last year.

Export Sales

  • Soybeans missed expectations sharply by recording net reductions of 109,100 MT

  • Corn export sales beat expectations but were down 21 percent from last week.

  • Wheat sales were up 6 percent week over week and met expectations.

Weekly Export Sales-

Actual

Estimated

Wheat

328

250-500

Corn

1,555

1,000-1,500

Soybeans

-109

600-900

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 – February 22

In the overnight session the grains traded slightly lower with March corn down ½ a cent to 3.65 1/4, March soybeans down 3 1/4 cents, March wheat down 3/4 of cent and Kansas City Wheat down 1 1/2 cents. Due to the holiday shortened week the USDA will release export sales on Friday.

Exporters Sell 130,000 metric tons of Corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

Exporters Sell 110,000 metric tons of Soybeans for delivery to unknown destinations of which 55,000 MT is for 2017/2018 delivery and 55,000 MT is for 2018/2019 delivery. -USDA

On Wednesday, the Rosario Exchange lowered its corn and soybean production forecast for the current growing season. Argentina soybean production was lowered to 46.5 million metric tons from 52 million metric tons (WASDE @ 54 MMT). Argentina corn production was revised to 35 million metric tons from 40 million metric tons in its previous forecast (WASDE @39 MMT). The latest forecast in Argentina is for net drying to persist in Argentina until Tuesday at which time there is a likely chance for precipitation. However, the confidence that the precipitation event will provide widespread meaningful rain is low.

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More rain fell last night in Northern and Eastern Texas with as much as 1 to 2 inches accumulated. Any significant rain missed Oklahoma and Kansas over the last 18 hours. Temperatures this morning were in the low to mid 20’s across much of Kansas, Oklahoma and the Texas Panhandle.

Russian Grain Consultancy IKAR announced today that it has increased its forecast for Russian 17/18 grain exports to 48.6 million metric tons, up from 47.7 MMT. The company also increased its wheat export estimate to 37.5 MMT from 36.6 MMT in its previous forecast.

The FOMC minutes released yesterday indicated to traders that more rate hikes are on the table. Although three rate hikes this year is fully priced into the market, the comments by the committee that “a gradual upward trajectory of the federal funds rate would be appropriate” could suggest that a fourth rate hike is not off the table.

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 – February 21

In the overnight session the grains are mixed with corn up 1 1/2 cents, March soybeans down 1 cent, March Chicago wheat down 3/4 of a cent and March Kansas City Wheat down 3 1/4 cents. Traders are focused on recent rains in some US HRW growing regions and continued drought in Argentina.

The eastern half of Oklahoma and Northern Texas received precipitation over the last day providing some much needed moisture to some regions of the winter wheat crop. Kansas has only received precipitation in the very southeast corner of the state. The 6-10 day forecast and 8-14 day forecast both show better than normal probability for precipitation in the eastern half of Kansas, Oklahoma and Texas.

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The latest weather models show little change in the forecast for Argentina. Models show dryness throughout this week with the possibility of some rain next week but confidence in the event remains low.

Export inspections were within expectations yesterday for corn, soybeans and wheat. Total corn inspected for export for last week was 938,099 metric tons. Soybean inspections totaled to 960,066 metric tons and wheat totaled to 422,298 metric tons.

The FOMC minutes from the January meeting will be released today and will be the focus of many traders. Traders are watching for any indication of faster than expected rate increases. The market is currently anticipating three rate increases this year but the FOMC release could indicate a possible fourth.

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 – February 20

In the overnight session the grains traded higher with March corn up 1 3/4 cents, March soybeans up 15 cents, March Chicago Wheat up 4 cents and Kansas City wheat trading up 3 3/4 cents this morning. The market is continuing its move higher on dryness in Argentina and excessive rains in Brazil.

Rains over the weekend were less than expected in Argentina with only 25 percent of the corn and soybean growing regions receiving measurable precipitation. Buenos Aires received 1 to 2 inches and some lighter rains also occurred far to the north. It is estimated that 65 percent of the crop is experiencing moisture stress and that area is only expected to grow by the end of the week. Temperatures are supposed to climb into the lower 90’s by the end of the week and the forecast shows the best chance for rains for the middle of next week.

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The Brazilian Agricultural Consultancy Ag Rural reported that soybean harvest in Brazil is 17 percent complete compared to 26 percent during the same period last year. Mato Grosso soybean harvest is ahead of last year while Parana is well behind last year’s pace.

Rains missed the majority of Kansas this weekend with only some parts of Southeast Kansas receiving moisture. Oklahoma received between around a half an inch with the best accumulation in the northwest part of the state.  Temperatures are expected to be cold in the Northern Plains down into Nebraska and Kansas until the end of the week. Kansas snow cover is thin to gone with temperatures forecast below freezing until Thursday.

The national average spot corn basis increased last week by .4 cents while soybean basis slipped by .9 cents. River markets lowered their soybean basis by an average of 4 cents a bushel while crush facilities backed off 2.3 cents. Ethanol facilities were unchanged on the week and corn basis at the river was off an average of .8 cents.

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 – February 16

In the overnight session the grains traded lower with corn down 1/4 to 3/4 of a cent, Soybeans are down between 1/4 to 1 cent, Chicago wheat is down 3 3/4 cents with Kansas City wheat down 3 1/2 cents.

US soybean futures edge higher on Friday and are poised for its biggest weekly gain in seven months as dry weather threatens production of the oilseed in Argentina. Corn edged higher, while wheat firmed nearly 0.5 percent to be on course for a weekly gain of more than 3 percent.

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The Buenos Aires Grains Exchange announced that 58 percent of its corn crop and 56 percent of its soybean crop has been damaged by the drought. The exchange’s forecast for soybean harvest this season is at 50 million metric tons of soybeans (USDA @ 54 MMT) and 39 million metric tons of corn (in line with USDA). The Argentina weather forecast has not changed much this morning. Erratic showers and thunderstorms are expected today throughout the weekend leaving some areas with meaningful precipitation and other areas dry and under continued crop stress. Brazil weather continues to be favorable to crop development with some dryness in Rio Grande do Sul.

Brazil’s Agricultural minister reported today that Brazil’s crop this year could surpass last years record. Blairo Maggie said “There were no losses whatsoever. The planting of the second corn crop was delayed slightly but everything is going normally. I think there will be a repeat of last seasons super crop.” The latest USDA projection of Brazil’s 2017/18 corn crop estimates a 95 million metric ton harvest which compares to the 98.50 MMT produced last year. The USDA has 2017/18 soybean production projected at 112 million metric tons compared to 114.10 MMT last year.

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 – February 15

In the overnight session the grains were mostly positive with March corn up 3/4 of a cent, March soybeans up 1 cent, March Chicago wheat up 1 3/4 cents and Kansas City wheat up 4 1/4 cents.

Ethanol production dropped this week to 1.016 million barrels per day from 1.057 mbpd the previous week. The decline in this weeks ethanol production was a surprise since ethanol margins have been relatively stable as of late. This weeks drop in production marks the fourth week since mid-December that weekly production fell below year ago levels. Ethanol stocks declined this week to 961 million gallons from 987 million gallons the previous week. Ethanol stocks are still very strong and are the second largest on record for this week of the year.

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Strategie Grains, an agricultural consultancy, reduced their forecast for European Union soft wheat exports to 21.4 million metric tons from 21.7 million metric tons last month. The reduction was made because wheat from the Black Sea region and Argentina are more competitive on the global market.

Export sales this week beat expectations for corn and were on the high side of trade expectations for wheat and soybeans. Wheat sales were down 21 percent this week booking 311,100 metric tons. Soybean sales were within the range of expectations but were down four percent from the previous week. Corn sales were up 12 percent from last week and 14 percent above the four week average with 1,974,500 metric tons sold this week.

Weekly Export Sales-

Actual

Estimated

Wheat

311

200-450

Corn

1,974

1,000-1,500

Soybeans

650

450-750

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