Morning Comments – March 29

Headlines

  • Prospective Plantings and Quarterly Stocks out @ 11 AM CST.

  • Soybean export sales disappoint.

  • Ethanol production & stocks decline.

  • Exporters sell 266,500 metric tons of Soybeans for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

Weather

  • Precipitation (.25”-1.5”) fell in east central CO, eastern OK and eastern TX yesterday. More precip in northeastern CO and eastern OK today.

  • Dry weather in Argentina through Friday. Some showers (.25”-1.5”)  forecast for northern Santa Fe, La Pampa, southern Cordoba and western Buenos Aires late this weekend into Monday.

  • Rains in Brazil favor Safrinha corn crop.

Ethanol Production

  • Ethanol production declined to 1.039 million barrels per day from 1.049 MBPD LW. Production was 1.4% below last years same week production.

  • Ethanol needs to run 2.8 percent above LY production levels to meet USDA corn used for ethanol estimates.

  • 2016 and 2017 both saw ethanol production decline slightly between late March and May. Ethanol production cannot afford to dip during that time period this year, in order to stay on track with USDA’s corn used for ethanol projections.

  • Ethanol stocks declined last week to 957 million gallons from 998 million gallons. The sharp decline in stocks was the largest single week drop since 2013.

Export Sales

  • Soybean sales missed expectations,and were down 58 percent from LW.

  • Corn sales met expectations, but declined 8 percent from LW.

  • Wheat sales met expectations and was up 33 percent from LW.

Actual

Estimated

Wheat

353

200-400

Corn

1,353

1,200-1,500

Soybeans

317

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 – March 28

Headlines

  • Traders prepare for March 29th Prospective Plantings & Quarterly Stocks.

  • Avg trade estimate expects record soybean acres planted in U.S.

  • Chinese importers are paying record premiums for Brazil soybeans.

  • Agroconsult boosted 17/18 Brazil soybean production estimate.

HRW Wheat Weather

  • Precipitation today is expected to bring moisture into Texas with the most likely chances of rain in southeastern OK, eastern TX and northern CO. Precipitation is expected continue into Thursday.

  • Cumulative precipitation amounts are expected to be between .25” and 1.5”.

  • Recent rains have underperformed in western OK and northwestern TX.

  • HRW wheat belt has improved moisture in south central region.

Argentina

  • Recent model shows slightly wetter conditions are possible in northern Buenos Aires and southern Santa Fe in the 6-10 day forecast.

  • Dryness throughout the growing region this week has favored drydown.

  • Any additional moisture is unlikely to impact yield significantly at this point.

Brazil

  • Agroconsult announced 2017/18 soybean crop is estimated at 118.9 MMT up from the 117.5 MMT estimate in February.

  • Agroconsult estimated 2017/18 corn production at 88 MMT, with second crop corn accounting for 63 MMT. Last year second crop corn production was 70 MMT in Brazil.

  • Chinese importers are paying record premiums for Brazilian soybeans during harvest. Premiums have been driven higher as Chinese buyers aggressively secure soybeans amid heightened trade tensions between U.S. and China.

  • Premiums paid over the benchmark daily prices on Brazilian soybeans for export have risen from $.65 per bushel on March 1st to $1.00 over.

Planted Acreage Estimates

  • Corn acres expected to be lower than last year due to strong soy-to-corn ratio and strong spring wheat-to-corn ratio in February.

  • The average trade guess expects soybean acres to be a record high 91.06 million acres.

Corn

Soybeans

Wheat

FBN Est.

88.6

92.2

Avg Est.

89.42

91.06

46.29

Range of Est.

87.6-91.0

89.9-92.6

43.9-47.2

2017 Acres

90.16

90.14

46.0

*Million Acres

USDA Quarterly Stock Estimates

Corn

Soybeans

Avg Est.

8,703

2,030

Range of Est.

8,550-8,881

1,810-2,110

USDA 2017

8,622

1,739

*Million Bushels

Argentina Labor Union Begins Strike

  • On Tuesday, a labor union representing employees of Argentina’s soy crushing plants announced that they will strike.

  • The labor union is seeking better salaries as consumer prices rise in Argentina.

Looking for $7 a trade commissions with streaming real-time quotes for only $1/month; try a Demo of the Grain Hedge Platform!

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 – March 27

Headlines

  • Lighthizer and Mnuchin are in talks with Chinese on trade.

  • Export inspections within expectations.

  • KC Wheat ratings improve.

HRW Wheat Weather

  • Today and Wednesday showers are expected in south eastern KS, OK and TX with precip ranging from .25” to 1.5”. Dry weather is expected to follow through the end of the week.

  • The 11-15 day forecast is wetter in the southern areas and is expected to bring moisture to southeastern KS, central OK and central Texas.

  • Western KS, western OK, southeastern CO and the panhandle of Texas are all expected to stay dry.

  • Hard red winter wheat ratings showed improvement after rains last week, but are still the worst on record for this time of the year.

  • KS wheat rated poor/very poor declined to 49% from 55%. Wheat rated good to excellent increased to 13% from 11%.

  • OK wheat rated poor/very poor declined to 54% from 66%. Wheat rated good to excellent increased to 9% from 5% LW.

  • TX wheat rated poor/very poor increased to 63% from 60%. Wheat rated good to excellent increased to 12% from 10%.

Argentina

  • The 1-5 day weather outlook remains dry for the remainder of the week with a few showers in northern Santa Fe into the weekend and missing the majority of the crop production region and driest areas.

  • The recent weather model increased moisture in Cordoba, western Buenos Aires and la Pampa in the 6-10 day outlook.

  • Crop analyst from Rosario grains exchange Sofia Corina said on Monday “No matter how much it rains now, it won’t help. Yields are fixed”.

Brazil

  • Showers throughout Brazil continue to benefit second crop corn.

U.S. in Negotiations with China

  • White House trade adviser Peter Navarro confirms that U.S. trade representative Robert Lighthizer and treasury secretary Steven Mnuchin are in talks with the Chinese in hope of avoiding a trade war.

  • In an interview on Fox news Sunday, Mnuchin said he is seeking an agreement “for them to open up their markets, reduce their tariffs, stop forced technology transfer. These are all the things we want to do.”

  • U.S. stocks traded higher following the news of trade talks.

Weekly Export Inspections

  • Export inspections were on the low end of estimates for both wheat and corn.

  • Soybean inspections were strong this week.

Actual

Estimated

Wheat

278

250-500

Corn

1,153

1,250-1,500

Soybeans

584

450-650

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 – March 26

Headlines

  • The grains are higher in the overnight.

  • Heavy rains over the weekend missed the main growing regions in Arg.

  • Chinese Ethanol imports were up noticeably in February.

  • Market focused on Prospective Plantings report on March 29th.

  • Exporters sell 132,000 metric tons of Soybeans for delivery to unknown destinations during the 2017/2018 marketing year.

  • Exporters sell 120,000 metric tons of Soybean Meal for delivery to Spain during the 2017/2018 marketing year.

Argentina Weekend Update

  • Although rains fell in Argentina over the weekend, significant rains missed the most important grain producing regions.

  • Santiago Del Estero, Córdoba, southern Santa Fe and La Pampa all remained mostly dry over the weekend and continue to have very dry topsoil.

  • Heavy rains fell over the weekend in northeastern Santa Fe, Corrientes and Rio Grande Do Sul with rain totals between 2” to 5” inches. Some rains also fell in Buenos Aires with central and northeastern Buenos Aires reporting only 1.1 inch.

  • Rains are expected toward the end of this week in the northeastern part of the country, but meaningful precipitation is expected to miss the main growing regions again.

  • Majority of crops entering late grain fill and full maturation stages.

Last Friday’s Trade Action was Supportive

  • Trade action on Friday seemed bullish after selling pressure in the first half of the day, which was triggered by trade tensions between the U.S. and China, was erased by the close of the session.

  • On Friday, May corn traded a low of $3.69 ¼ but closed the day at $3.77. May soybeans traded as low as $10.09 ¼ but closed at $10.27 ¾.

  • The days trading range was large and the fact that early and hard selling pressure could be turned around by the end of the day is a strong vote of confidence in the fundamentals of this market.

Commitments of Traders- (Week Ending March 20th)

  • The latest commitments of traders marks the end of an eight week long trend of buying corn and soybeans. This should not come as too much of a surprise as the chart clearly showed technical selling during that time window.

  • Money Managers (MM) cut their net long position in corn to 213,231 from 233,063 LW.

  • MM cut their net long position in soybeans to 195,522 from 208,200 LW.

  • MM increased their net short position in CBOT wheat to -56,207 from -35,684 LW.

  • MM increased their net long position in KCBT wheat to 29,586 from 28,947 LW.

  • MM decreased their MGEX wheat position to net short 653 from a long position of 1,239 LW.

China Ethanol Imports Surge

  • China purchased the most ethanol since May 2016. Chinese demand for U.S. ethanol slowed last year following a tariff increase.

  • China bought 197,652 cubic metres of ethanol in Feb. sourced almost entirely from the U.S. which was up 64% from January.

  • The recent demand for U.S. ethanol is a sign that China will need to rely on trade to achieve the government mandate to mix biofuel into the nations fuel supply by 2020.

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 – March 23

Cash Commentary-

Cash markets continue to feel the sting of higher barge freight with river terminals weakening basis by 4 cents on average for corn and soybeans by 2 cents. River water levels continued to rise this week and look to continue higher in the coming week which should add more pressure to barge rates.

Conversely, end users showed more strength this week. Corn ethanol plants were up 1 cent on average while bean crush facilities bolstered their basis by 2 cents.

Futures Commentary-

Grains were lower on the week with corn and beans off 11 while wheat slumped by 23 cents.

The trade war heated up this week with the US taking direct aim at China by announcing new tariffs on $60 billion of Chinese goods sold into the US. China immediately responded by announcing its own round of tariffs on US goods with pork being the biggest ag export on the list; while top contender soybeans was not on the list. Chinese soy buyers are said to be drawing up contingency plans if US soybeans do get caught up in the trade spat.

In Argentina, the Buenos Aires exchange slashed their soy forecast to 39.5 MMT from 42 previously and USDA’s estimate of 47 MMT. For corn, they pegged it at 32 MMT, off from their prior estimate of 34 and USDA at 36 MMT. Light rains are expected this weekend across Argentina except far Northern stretches of the country. But beyond that out to day 10 of the forecast it looks dry. Steady rains are expected in Brazil, aiding their 2nd season corn crop.

On the demand front, ethanol production was up this week to 1.049 million barrels a day vs 1.025 last week. Year-to-date ethanol numbers are on par with normal seasonal pace line (in green) to hit USDA’s annual forecasted corn use of 5,575 MB. Export sales for corn and beans were good but on the low side of expectations. On the week, corn sales were 1.4 MMT still above the normal pace of 900,000 MT to reach USDA’s target on the year. Meanwhile soy sales of 747,000 MT were light compared to expectations but continue to be seasonally strong. Current YTD sales are only 1% off the normal pace to reach USDA’s annual forecast.

Next week, March 29th, will bring the first insight on new-crop supplies as USDA releases its Planting Intentions reports. No polls are available yet but are expected to show a slight uptick in soy plantings and a modest cut in corn intentions. Also, to be released are Quarterly Stocks with corn closely watched for an indication on feed use.

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 – March 23

Headlines

  • Grains lower in the overnight

  • Trump signs $60 Billion tariff memorandum.

  • China threatens 25 percent duty on pork products

  • Congress passes omnibus spending bill.

  • Export sales on the lower side of expectations.

U.S. Import Tariffs

  • On Thursday, Trump signed a Memorandum that could impose tariffs on $60 billion of imports from China.

  • There will be a 30 day consultation period once the list of Chinese goods are published.

  • US Grains council expresses concern that the tariffs will trigger a “painful retaliation against U.S. agriculture.”

  • On Friday China declared plans to levy additional duties on U.S. imports valued at around $3 billion including a 25 percent duty on pork products.

  • Soybeans were not included in the list of U.S. products.

Omnibus Spending Bill

  • Congress passes $1.3 trillion omnibus spending bill.

  • Omnibus spending bill included changes to Section 199A of the President’s Tax Cuts and Jobs Act which was better known as the “Grain Glitch”.

  • Omnibus spending bill reduced the deduction by the lesser of either 9% of farmers income from sales to a coop or 50% of wages attributed to those sales.

Argentina

  • Showers over the weekend concentrated in northeastern and southern regions.

  • Dryness is expected to continue in central and western crop region.

  • The 6-10 day forecast turns dry again.

  • Buenos Aires exchange cut its forecast for 2017/18 soybean production to 39.5 MMT from 42 MMT. (USDA @ 47 MMT).

  • The exchange cut its corn production forecast for 2017/18 to 32 MMT from 34 MMT previously. (USDA @ 36 MMT)

Brazil

  • Rains in the west central and northwestern crop regions in the 1-5 day outlook helping the second corn crop.

  • The 6-10 day forecast continues to bring beneficial showers, but will slow soybean harvest in the far south.

  • Brazil soybean harvest is 58% complete, ahead of the five year average of 55%.

  • Second corn crop planting has reached 92% complete ahead of five year average of 90%.

Export Sales

  • Wheat sales were down 63 percent from LW

  • Corn sales were on the low side of expectations and down 41 percent from LW. New optional origin sales were reported for South Korea totaling 278,000 MT.

  • Soybean sales were also on the low side of expectations, down 40 percent from LW.

Actual

Estimated

Wheat

265

100-300

Corn

1,470

1,400-2,100

Soybeans

759

700-1,400

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 – March 22

Headlines

  • Grains higher in the overnight.

  • Export sales delayed until Friday.

  • Ethanol production increased from LW.

U.S Weather

  • Rain is likely across much of the midwest on Friday and into the weekend.

  • Precipitation should help ease dryness and provide beneficial soil moisture for spring planting.

  • The southern third of the U.S. plains is expected to see moisture next week.

Argentina

  • Weekend rains in Argentina are expected to favor the northern growing region.

  • Argentina crop stress continues in two-thirds of the corn and soybean regions.

  • Temperatures are expected to cool in Argentina next week.

USDA Export Sales Report Delayed

  • USDA export sales are delayed until Friday at 7:30  AM CST due to a snowstorm in the Washington area.

  • Corn export sales estimates range from 1,400,000 to 2,100,000 MT.

  • Wheat export sales estimates range between 100,000 and 300,000 MT.

  • Soybean export sales estimates range between 700,000 and 1,400,000 MT.

Ethanol Production Rebounds

  • Ethanol production increased to 1.049 million barrels per day from 1.025 mbpd last week. Weekly production was only .5% over last year during the same week.

  • Based on EIA ethanol production number so far this marketing year, we will need to see an average of 2.7% higher ethanol production than last year to meet USDA expectations.

  • Last year’s March through April ethanol production slowed which will give an opportunity to make up ground and meet the current 5.575 billion bushel corn for ethanol usage estimates by the USDA.

  • U.S. ethanol stocks declined slightly to 998 million gallons from 1.020 million gallons LW. Stocks are up 5.1% over LY at this time of the month.

Trump Tariff Announcement Expected Today

  • The White House is expected to announce a retaliation package in response to alleged intellectual property violations that is expected to be anywhere from $30 to $60 billion worth of value.

  • The announcement may be delayed by the Washington DC snowstorm on Thursday.

  • It is expected that China will take countermeasures in response to the announcement and agricultural products are vulnerable.

Morning Comments – March 21

Headlines

  • CME group increased May soybean margins from $1,400 to $1,550

  • CME group increased May wheat margins from $1,150 to $1,250

  • Corn holds steady in overnight around support levels

  • Exporters sell 138,000 metric tons of Corn for delivery to South Korea during the 2017/2018 marketing year.

Corn Pullback

  • Rains in Argentina triggered additional selling pressure on Monday.

  • Prices found support on Tuesday at 50 percent retracement level from mid-January lows to mid-March highs.

  • The 50 day moving average is also bolstering support for Dec ‘18 corn at $3.955

  • Strong export demand should help support corn prices going forward.

White House Could Announce Chinese Tariffs on Thursday

  • The White House is planning on releasing its measures which are targeted at China on Thursday.

  • The proposed plan would not go into effect immediately and there would most likely be a period of time for U.S. industry to comment on the plan.

RFS Update

  • Sonny Perdue and Scott Pruitt presented the White House with a list of options but it was unclear whether Trump would implement changes on RFS at an executive level.

  • Sonny Perdue said “The White House is trying to determine whether they need to make a call on a decision, or allow Congress to do it,”

  • RIN prices have traded higher after indications that the White House is backing off its plans to change RFS at an executive level.

KC Wheat Weather

  • Latest weather models show increased chances for precipitation in West Texas and the southern HRW wheat region for the second half of next week.

Argentina

  • Precipitation still in the forecast for this weekend and is expected to favor the central and northern production regions.

  • Dry conditions through the middle of next week are expected to follow weekend rains.

Brazil

  • Showers in west-central Brazil. Conditions remain very positive for corn and soybean development.

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 – March 20

Headlines

  • Strong corn export inspections.

  • Grains hold steady in overnight

  • EXPORTERS SELL 110,000 METRIC TONS OF CORN FOR DELIVERY TO PERU DURING THE 2017/2018 MARKETING YEAR

Ag Exports at Risk

  • U.S Secretary of Ag Sonny Perdue said on Monday that Ag exports could be at risk in retaliation over the latest tariffs.

  • Steel and aluminum tariffs go into effect this week.

  • In response to U.S metal tariffs the EU has prepared a 10 page list of U.S. products valued at roughly $3.45 billion dollars that may be subject to tariffs.

  • Trump administration is preparing tariffs against Chinese information technology, telecommunications and consumer products.

Argentina

  • Dry weather continues to stress corn and soybean crop this week.

  • The latest weather model still suggests another rain event this weekend.

  • Rain event should favor northern production regions of Argentina.

  • Confidence remains low that the event will produce meaningful precipitation across the most drought stricken growing areas.

Brazil

  • Showers in west-central Brazil. Conditions remain very positive for corn and soybean development.

Winter Wheat Conditions

  • State winter wheat conditions released on Monday did not factor in the rains over the weekend in Kansas.

  • Precipitation over the last 18 hours brought .12” to .16” inches to much of central Kansas with the heaviest accumulation in eastern Kansas (.42” to 1.28”).

  • Forecast expects dry weather across plains for remainder of the week, but rains to benefit south eastern third of the wheat belt next week.

  • KS winter wheat conditions rated good to excellent was 11 percent. The report showed an increase in poor to very poor to 55 percent from 53 percent last week.

  • Oklahoma wheat rated good to excellent lowered to 5 percent from 7 percent last week. Oklahoma’s poor to very poor wheat rating declined to 66 percent from 72 percent LW.

  • Texas winter wheat conditions report lowered good to excellent ratings to 10 percent from 13 percent LW. The report also increased wheat rated poor to very poor to 60 percent from 53 percent last week.

Weekly Export Inspections

Actual

Estimated

Wheat

443

275-450

Corn

1,409

1,200-1,500

Soybeans

490

700-1,050

  • Export inspections were strong for wheat and corn but missed expectations for soybeans.

  • With the pace of export sales it will become increasingly important for corn inspections to maintain a strong volume each week to meet the rapid pace of bookings.

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 – March 19

Headlines

  • Wheat sharply lower after KS precipitation

  • Corn lower after rains fall in Argentina

  • EXPORTERS SELL 206,000 METRIC TONS OF CORN FOR DELIVERY TO JAPAN DURING THE 2018/2019 MARKETING YEAR- USDA

  • EXPORTERS SELL 115,000 METRIC TONS OF CORN FOR DELIVERY TO UNKNOWN DESTINATIONS DURING 2017/2018 MARKETING YEAR

KC Wheat Region

  • A narrow band of rain fell from northwestern Kansas toward south central Kansas late this weekend bringing between .5 and 1 inch of precipitation.

  • Rain and snow is still falling in Western Kansas.

  • The latest weather forecast shows chances of additional weather systems into the plains in late March and early April.

Argentina

  • Rains fell in Argentina over the weekend, but topsoil moisture improvements were limited to a small region from southern Cordoba to Northern Buenos Aires.

  • Other areas throughout the Pampas and Northern Argentina were left relatively dry. Some area received light rain, but was unable to bring meaningful increases to the topsoil moisture.

  • There is a chance for more rains this weekend but confidence remains low that it will produce a drought reducing rain event.

Brazil

  • AgRural reported that 58 percent of soybeans have been harvested in Brazil which is ahead of the five year average (55% harvested) but behind last year (62% harvested).

  • AgRural reported that 92 percent of second crop corn has been planted which is above the five year average (90% planted), but behind last years planting pace (96% planted).

Commitments of Traders- Week ending March 13th

  • Managed money (MM) increased their net long position in Corn by 69,529 to 233,063.

  • MM increased their net long soybean position by 24,489 to 208,200.

  • MM increased their net short SRW wheat position to -35,584 from -32,531.

  • MM increased their net long KC wheat position to 28,946 from 20,759.

  • MM increased their net long HRS position to 1,240 from 1,187.

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