Morning Comments – April 30

Headlines

  • Dec 18 corn pushed to new highs at $4.17 in the overnight session.

  • Nov 18 soybeans traded to $10.57 ¾, just 3 cents away from the April 2nd highs.

  • Planting delays TW in Midwest and dry conditions in S. Brazil lift grains.

Midwest Weather

  • Heavy rains are expected in the Midwest by the middle of the week which will stall planting progress.

  • The Delta is expected to receive little additional rain which should allow for planting progress.

  • Temperatures are expected to be above normal this week across the Midwest which will help with wheat growth and corn germination.

KC Wheat Weather

  • Rains should benefit northern and eastern plains.

  • Dryness is expected to persist this week in W. Kansas, SE Colorado, W. Oklahoma and the Panhandle of Texas. The dryness will continue to stress the already struggling wheat crop.

  • Wheat crop is at jointing stage in KS and at heading stage in OK and TX.

South America

  • Rains were limited in S. Brazil over the weekend.

  • No significant rains are forecast in S. Brazil this week which will stress the crop during pollination.

  • Arg. rains slowed harvest in northern Buenos Aires and Entre Rios this weekend.

  • More rains are expected to bring moisture to central growing region and slow harvest progress.

  • Arg. soybean harvest is 54% complete.

  • Arg. corn harvest is 30.9% complete.

Commitment of Traders Report- Week Ending April 24th

  • In the latest COT report, managed money decreased corn and soybean net long positions while KCBT saw a net increase.

    • Soybean net long position was cut to 170,094 from 192,968 LW.

    • Corn net long position was cut to 122,877 from 138,244 LW.

    • KCBT wheat net long position increased to 40,698 from 35,925 LW.

Since April 24th strong buying has driven corn and soybean prices higher. According to Thomson Reuters trade sources estimate corn has added 23,000 longs, soybeans has added 20,500 longs, and wheat has added 11,500 longs.

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 Comments

Cash Commentary-

Solid gains in cash basis found their way thru much of the Midwest as corn and soy basis levels were up a robust 2 cents a bushel on the week.

Corn got a shot in the arm thanks to falling barge freight and a spike on quick ship premiums out of the Gulf. Upstream river terminals moved the needle higher by 6 cents on basis this week as a result. Corn processors were also higher, although as a group more muted with only a 2-cent advance on the week. Gains of 5 to 10 cents on basis were fairly widespread especially in the WCB and Upper Plains this week.

For beans the Gulf market was mostly unchanged this week and river terminals inched up bids on weaker barge freight, posting a 2-cent advance. Soy plants were up as well by 2 cents. Exceptionally strong crush margins should continue to keep an incentive for plants to keep inching basis up to keep pipeline supplies full.

Active farmer planting should keep basis levels holding firm into mid-May. And with corn shipments expected to be strong to handle the backlog of forward sales, this should keep end users active on basis.

 

Futures Commentary-

It was a mixed week on the board; corn and wheat had modest gains of 4 cents each while beans shed 9 cents on the week.

While Spring planting got off to a cold start slowing planting pace to a 10-year low, the weather in the Midwest has turned decidedly warmer helping fuel planting pace this week. Traders will likely expect the needle on planting pace to reach 20% to 25% planted in next Monday’s report following a dismal 5% pace from last week’s USDA report. The forecast also looks mostly favorable as temperatures hover slightly above normal. However, the first days of May should bring ample rainfall to the Midwest as the 6 to 10-day forecast advertises 1 to 2 inches of rain in key WCB growing areas but then dries out again in the 11 to 15-day time frame. The SW Plains of KS/OK are targeted in the 11 to 15-day model for a 1 to 2-inch moisture event which would aid winter wheat.

Heading into the weekend, limited rains are expected for the next 2 weeks in areas of the Brazil 2nd season corn crop. In the Southern region of Brazil, temps should trend warmer than normal with a chance of limited moisture (0.25 inch) on Wed. If the model verifies, then precipitation since April 1 will be only 1.5 inches vs normal of 7.5 inches during this time period.

On the demand front there was little for traders to get excited about this week. Ethanol production was off sharply at 985,000 barrels per day, off 24,000 from last week and the lowest weekly tally since corn harvest. On the export front it was a disappointing week for corn and bean deals while wheat showed unexpected strength. Corn old-crop sales were 27.4 MB, off from 43.0 MB last week and below the 32-47 MB range expected by the trade. Also concerning was a 3 MB net cancellation for new-crop corn.  For beans both old and new-crop sales were below expectations and yet China was not present in the list of buyers. While this time of year is traditionally slow as China does most of its deals with South America, there is reason for concern as outstanding commitments are at a staggering 20% of the full year’s export forecast. Historically that number is around 9% at this time of year.

Stat’s Canada on Friday pegged all wheat acreage intentions at 23.7 million acres. Last year was 22.4 and expectations were around 23.0. Like the US, most of the increase came in spring wheat acreage intentions which came in at 18.2 vs 15.8 last year. One positive number was the canola plantings which came in at 21.4 million acres vs trade expectations of 23.7.

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 – April 27th

Export Deals

  • Iranian feed buyer SLAL bought 200,000 MT of Brazilian corn believed to be at $230 to $240/MT CIF as well as some barley from the Black Sea and Soymeal from South America.

  • Algeria bought 420,000 MT of French wheat

Weather Ahead

  • Forecasts point to a dry bias over the next 10-12 days. Temperatures should also be above normal.

  • The warm-up should start this weekend as the Plains hit the 80s and the Midwest sees temperatures in the 70s.

  • First days of May should bring ample rainfall to the Midwest U.S. as well as parts of the southern Plains. The 6 to 10 day forecast advertises 1 to 2 inches of rain in key WCB growing areas but then drys out again in the 11 to 15 day time frame. The SW Plains of KS/OK are targeted in the 11 to 15 day model for a 1 to 2 inch moisture event.

Argentina Port Damage Assessment

  • On Wednesday an ocean vessel crashed into a key grain port in Argentina causing severe damage. Now, assessments coming in say it could take up to a year to repair, according to market sources.

  • The port “T6” in Sante Fe has two berths so one will remain open. The expectation is this will limit shipping capacity out of that port. The facility exports up to 21% of Argentina’s soybean meal production, as well as handling corn and soybean exports.

Brazil Dryness to Continue

  • Limited rain is expected for Brazilian crop areas for the next 2 weeks. The dryness is adversely impact winter corn production in Parana and Mato Grosso Do Sul.

  • A dominant high pressure Ridge aloft is featured across Central Brazil – common in winter. Once a winter type of weather pattern is established during April, its unlikely to change very much during May. This means that the Brazilian winter corn crop is likely to suffer from heat/dryness which will take yield below the historical trend.

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 – April 26

Port Crash in Argentina Supports Beans

  • A cargo ship collided with a dock on the Parana River in Argentina’s grains hub of Rosario on Wednesday, causing a slowdown of activity at terminal 6 in the port of General San Martín and raising soymeal prices.

  • The southern pier of terminal 6 is operational, with difficulties on the barge docks due to the blockage caused by the ship that generated the accident.

  • Reports vary on what impact it will have and export movements and how long the repairs will take.

Soy Markets Encouraged by China/US Meetup

  • Soy is reacting to the hope that the US and China can reach a trade deal as Sec Treasury Mnuchin and USTR Lighthizer head to Beijing early next week.

  • Mnuchin said that he was “cautiously optimistic” that the US government can broker a trade deal with Beijing. The Chinese government said Sunday that it welcomes Washington’s “willingness to hold bilateral trade talks.”

  • The real progress may be difficult around thorny issues like China’s acquisition of US technology which could make broad-based compromises challenging.

US Weather Favors Planting

  • The Central US weather forecast features mostly favorable planting conditions with dry/warming weather conditions across the N Plains and the Upper Midwest for the next 10 days, with favorable spring planting weather for the Midwest and Central Plains for the next 5 days.

  • Rain (along with severe weather) will return late Monday into Wednesday, before another spate of warm/ dry weather is expected.

  • The 11-15 day forecast is less uncertain, but there is no indication of any extreme temps with near normal rainfall. At least into mid-May, the forecast is favorable which will act to cap rallies.

Global Weather

  • No rain forecast for the Brazilian winter corn areas over the next 10 days with a hint of better rain chances in the 11-15 day period.

  • European and Black Sea winter grains will enjoy warm/dry weather for the next week with improved rain chances in the 8-15 day period.

  • The Australian weather forecast is dry for the next 2 weeks with warm to hot temperatures. However, wheat producers have until late June to plant wheat.

Flash Sales

  • Private exporters reported to the U.S. Department of Agriculture export sales of 107,600 metric tons of corn for delivery to unknown destinations during the 2017/2018 marketing year.

Weekly Export Sales-

Actual

Estimated

Last Week

Wheat-OC

297.2

-100 – +200

66.9

Wheat-NC

280.7

150-350

240.4

Corn-OC

697.1

800-1,200

1,091.7

Corn-NC

-76.6

200-400

112.2

Soybeans-OC

371.3

400-700

1,040.7

Soybeans-NC

166.5

400-700

1,090.7

Soymeal-OC

223.7

100-300

164.9

Soymeal-NC

40.8

0

6.8

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 – April 25th

Chinese Buyers Snub US Beans

  • China’s purchases of U.S. soybeans have come to a grinding halt, trade and industry sources say, as fears of further action by Beijing to curb imports of U.S. crops following last week’s anti-dumping move on sorghum rattles the agriculture industry.

  • At stake are 3 MMT of soybeans for which deals have been signed but cargos have yet to leave U.S. ports.

  • One Chinese crusher said they wouldn’t “dare” buy US beans as a state-run plant. They are  now buying Brazilian, Canadian and some Argentina beans.

  • Talks expected to be held next week between the Chinese and U.S. governments may decide whether tariffs will be imposed or not.

Weather Models Mixed

  • The latest run shows a drier pattern for US HRW wheat belt. The Wheat Quality Council Tour begins next week, which covers KS/CO/NE.

  • The 6 to 10 day shows wet coming into the corn areas which could stall planting just as it starts to take off.

  • Wetness was also showing up in the 6 to 10 day for Brazil’s safrinha corn region.

 

IGC Lowers Argentina Bean Crop

  • Argentina’s soybean crop is expected to decline to 38 MMT following hot and dry weather this year, International Grains Council senior economist Darren Cooper said on Wednesday.

  • That’s on par with Argentina’s agriculture ministry last week of 37.6 MMT and below USDA at 40 MMT.

China Corn Acres to Dip

  • China’s 2018 corn acres are expected to slip by 333,000 hectares, an agriculture ministry official said in a briefing on Wednesday. The production decline represents less than 1% of China’s estimated corn acreage last year, or around 35.4 million hectares.
    But, many expect corn output will still increase in the coming year, as supportive prices encourage farmers to plant more. Last week experts forecast a 1 percent increase in output to 218 MMT.

  • Even so, estimated demand of 245-250 MT a year will far outstrip production there next year drawing down stocks from 80 MMT to 48 to 53 MMT which would be their lowest point since 2010.

Export Deals

  • South Korea’s Feed Leaders Committee (FLC) rejected all offers and made no purchase in an international tender for about 69,000 tonnes of corn. The lowest offer was said to be $220.97/MT CIF, with origins being offered up at US PNW, US Gulf, Black Sea, South America and South Africa.

  • South Korea’s largest feedmaker Nonghyup Feed Inc (NOFI) has issued an international tender to purchase 60,000 MT to 65,000 MT of feed wheat to be sourced from optional origins.

  • The Taiwan Flour Millers’ Association purchased 92,975 MT of milling wheat to be sourced from the United States. It was a variety of DNS, HRW and W White shipments. This same group last bought a similar sized deal of US wheat March 13.

USDA Sales Announcements

  • April 24th-Export Sales of 130,000 metric tons of Soybeans for delivery to Argentina; of which 60,000 MT is for delivery during the 2017/2018 marketing year and 70,000 MT is for delivery during the 2018/2019 marketing 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 – April 24

US Planting Behind Pace, But Warm Weather Takes Hold

USDA pegs US corn planting at 5% complete vs normal of 13% for this time of year. While it was below the 7% expected by the trade, there is still a lot of ground the US farmer can make up before mid-May when slow planting could be a problem.

Highs on Monday reached into the low 70s as far north as SD/MN with some planting noted by FBN farmers in NE & IA. Temps in the 6 to 10 day forecast are pushing 10 degrees warmer than normal with a dry trend expected for waterlogged fields in the ECB. Soybean planting is at 2% complete.

Brazil Weather Maintains Dry Bias

  • The EU & GFS models maintain complete dryness across Central Brazil into the first week of May, with accumulation since April 1st rivaling that of 2016, when safrinha corn production was slashed by drought.

  • Longer term moisture deficits aren’t quite as wide as they were during the 15/16 crop year, but no doubt much more rainfall is needed in the next 3-4 weeks to validate USDA/CONAB production forecasts.

  • Assuming the models verify April 1-May 7 precip will reach just 2.2” vs. 4.5” on average.

  • Hotter weather is on the way, with temperatures expected to range from 4-8°F above normal over the next two weeks across the southern 30-40% of the safrinha corn belt. The hottest weather is expected in the 6-15 day period, when temperatures should top 90°F.

Corn Shipments Sizzle

  • Weekly export inspections included 68 Mil Bu of corn, up 6 Mil on the week; 17 Mil Bu of beans, up 1 Mil; and 23 Mil Bu of wheat, up 4 Mil.

  • For their respective crop years to date, the US has shipped 1,172 Mil Bu of
    corn, 20% below last year; 1,573 Mil Bu of beans, down 13%; and 790 Mil Bu of
    wheat, down 10%. This week’s boost in wheat shipments makes the USDA’s forecast look a bit more valid, while Gulf corn basis continues to rally as the need for physical supply ramps up.

Interior Basis Bids Firm

  • Monday saw broad-based increases in corn basis with 1 to 3 cents fairly common at key buyers. Soy basis was also firmer but with slightly less upside than corn.

  • Farmers likely to throttle back selling as they turn to planting and with limited appetite for selling more grain at diminished price levels.

  • Basis levels should continue to firm with end-user margins for ethanol and soy crush running strong and export volumes needed to satisfy commitments.

US dollar Hits 4-Month High

  • The US Dollar Index eclipsed its highest mark since December, and rallying 5% since its recent lows back in early February.

  • The weakness in the US Dollar for much of 2018 helped fuel corn exports as the soft greenback gave the US a competitive advantage in global markets.

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 – April 23

Headlines

  • Wheat trades higher on less than expected rains in KCBT region.

  • Parts of S. Brazil corn are dry.

  • U.S. Secretary Treasury considers trip to China.

  • Weather expected to turn favorable to planting in Midwest.

Weather

  • Rain is expected in the southern and eastern part of Midwest today and tomorrow, but outlook is mostly dry and warmer the remainder of the week.

  • The 6-10 day weather outlook shows dry and warmer weather which will allow for rapid fieldwork.

  • KCBT wheat is trading higher this morning after precipitation this weekend was not as widespread and heavy as forecasted.

  • Precipitation fell across KS, OK and Northern and Eastern TX over the last 48 hours with the heaviest precipitation (1”-2”) falling in S. Central KS and N. Central OK.

  • The driest areas of the KCBT wheat received only light rain over the weekend and will need follow up precipitation.

South American Weather

  • Some parts of southern Brazil haven’t received rain for two weeks.

  • Driest areas in Parana and parts of Mato Grosso do Sul and Sao Paulo.

  • No damage has been reported yet, but crop is in a vulnerable period with 40% in the reproductive phase.

  • No rains are in the forecast until the end of April.

Commitment of Traders- Week ending April 17th

  • Long corn positions held by speculators declined by 45,013 to 161,932 contracts.

  • Long soybean positions held by speculators increased 14,213 to 156,510 contracts.

  • Short wheat positions held by speculators increased by 5,063 to 63,277 contracts.

U.S. Treasury Secretary Considers Trip to China

  • On Saturday, U.S. Treasury Secretary Steve Mnuchin said he is having discussions with China to resolve the differences of opinion in trade policy and that he is considering a trip there to continue discussions.

  • Mnuchin declined to comment on the trips timing, but it would be seen as an effort to calm tensions that have been building recently.

  • On Sunday, China’s commerce ministry said they welcome U.S officials to discuss trade and economic issues.

Cattle on Feed Within Trade Expectations

  • All Cattle on Feed was within trade expectations at 107 percent of LY.

  • March placements were 91 percent of LY compared to a trade est. of 90.3%.

  • Marketed cattle was 96 percent of LY compared to a trade est. of 95.9%.

  • Reaction to the report should be minimal on Monday. Traders will focus on growing fat cattle supplies as we move into seasonally strong spring demand as weather warms.

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 Comments

Cash Commentary-

Cash markets saw modest advances of 1-cent a bushel on the week for both corn and beans. River terminals were the big winner thanks to declining barge freight. On the week corn buyers along rivers were up 6 cents while soy markets were up 4 cents. However, barge rates fell much more sharply than the cash market improved with barge rates falling about 20 cents a bushel, but lower Gulf bids kept upstream river terminals less aggressive at bidding up basis.

As for end users, soy crush plants were up 1.6 cents on the week, but ethanol facilities were up 1.8 cents on the week. Soy crush facilities should continue to bid aggressively in coming months with spot crush margins trading at all time highs for this time of year. Basis levels should also be supported as weather begins to turn more favorable in early May which should limit farmer selling.

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-

Grains were lower on the week with soybeans leading the complex lower giving up 23 cents while corn and wheat followed with 6 and 4-cent losses respectively.

Cold weather has been hampering planting so far in April. USDA’s corn planting number was at 3% last week vs 5% normal for this time of year. However, weather is expected to shift to more warmth in the next few weeks which could aid planting. In the near term, the overall pattern will remain near or slightly colder than normal during the 6-10 day time frame. Despite some chances for rainfall, the broader pattern does appear slightly drier than normal, leaning favorable for additional corn plantings in the Deep South and southern Midwest in between periods of wet weather. Recent model guidance indicates a pattern change could be underway as the calendar flips to May. Current projections are for widespread high pressure enabling warmer than normal temperatures during the 11-15 day time frame. This will most notably warm ground temperatures, eliminate any remaining snow cover at the time across the Upper Midwest and Great Lakes, and potentially promote spring plantings. Iowa temps are expected to reach into the 70s and 80s. Furthermore, much of the broader corn and soybean belt should see warming into the first week of May which should aid planting if the forecasts hold up.

It was a respectable week for both corn and soybean exports as weekly deals for old-crop both topped 1 MMT. In the case of beans, there was also another 1 MMT sold for new-crop 2018 with Argentina again being a featured buyer. Year-to-date deals are topping the pace to reach USDA’s annual export projections with corn coveting a 6% lead while soybeans pushed up to a 3% margin to cover the USDA annual forecast.

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 – April 20

Headlines

Grains trade lower in the overnight. Wheat lower on precip expectations this weekend. Sorghum ships redirect after China’s tariff announcement

Weather

Temperatures are expected to stay below average throughout the midwest through next week. Rains are expected today and Saturday through the Plains and is expected to bring moisture to KCBT wheat regions that have suffered from extreme and exceptional drought.

China 2018 Corn & Soybean Production

The Ministry of Agriculture and Rural Affairs announced this morning that China’s 2018 Chinese soybean production is expected to increase to 1.9 percent over LY to 15.18 MMT. The increase is a result of farmers responding to government policy to increase soybean production. Soybean acreage is expected to increase 1.1 percent. The Ministry also announced that China corn production is expected to increase 1 percent over LY to 218 MMT.

 

Argentina Production

Buenos Aires Grains Exchange released their Weekly Agricultural Report on Thurs. The organization estimates corn harvest at 32 MMT (USDA 33 MMT) and soybean harvest at 38MMT (USDA 40 MMT).  Temperatures are expected to be above normal with precipitation affecting most of the grain growing region into mid next week. The western and northeast are both expected to stay mostly dry.  Soybean harvest is now 39.6% complete. First crop soybeans are 50% harvested while second crop soybeans are now 10% harvested. Corn is 29.5% harvested as of Thursday.

Sorghum Ships Change Course

Five ships loaded with sorghum and destined for China changed course within hours of China’s announcement of tariffs on U.S. sorghum imports. China’s announced on Tuesday that grain handlers would have to put up a deposit of 178% of the value of the shipments.

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-April 19

Headlines

  • Wheat sales disappoint.

  • Corn and soybean sales within trade expectations.

  • Barge rates continue to spike due to high water.

  • Ethanol production declines week over week.

Weekly Ethanol Production Drops

  • Weekly ethanol production declined 25,000 barrels per day to 1.01 million bpd.

  • TW ethanol production was 1.6% above LY production during the same week.

  • Weekly ethanol stocks were also lower by 502,000 barrels to 21.34 million bbls.

  • Ethanol stocks are 7.3% below LY during the same week and have dropped 123 million gallons in the last five weeks which is the largest 5-week decline on record.

  • Ethanol margins are still positive and driving season is nearing which bodes well for steady production in the coming weeks.

  • Assistant Administrator to the EPA said that the EPA is working on a rule waiver for gasoline blended with 15% ethanol. However, the agency has not decided on next steps.

Weekly Export Sales

  • Wheat recorded a net reduction of 66,900 metric tons which was a marketing year low for the grain.

  • Corn and soybean sales were within trade expectations.

  • Corn sales were just 4% below the 4-week avg while soybean sales was 12% over the 4-week avg.

Actual

Estimated

Wheat

-66,900

100-350

Corn

1,091

700-1,200

Soybeans

1,040

900-1,400

Logistical Slowdowns Continue Along The Rivers

  • Barge rates along the Illinois, Mississippi and Ohio river continue to climb to unseasonably high levels. Barge rates have spiked due to high water safety protocols causing a lack of turnaround time.

  • The Ohio River and Lower Miss. River have been at flood stage since March.

  • Transit times between St. Louis to New Orleans have increased 5 to 7 days.

  • With weather forecasts calling for above average precip in the Ohio river valley, the river may stay at flood levels until mid May.

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