Morning Comments – October 21

Chicago soybeans were set to post a third week of gains today after strong demand underpinned prices of the oilseed and offset pressure from a record US harvest and a rising dollar.

Corn and wheat are on track to fall slightly over the week as abundant global grain supplies continue to keep a lid on the cereal markets. The USDA reported export sales of US soybeans in the latest week at just over 2 million tonnes, well above the range of trade expectations for the 1.0 million to 1.3 million tonnes. The agency also said private exporters sold 192,000 tonnes of US soybeans to unknown destinations.

Private analytics firm, Informa Economics, projected a 5.7 percent increase in US soybean plantings for 2017 and a 3.7 percent decline in corn plantings. Informa forecast 2017 soybean plantings at 88.487 million acres, an all-time high if realized. The firm projected US corn plantings at 90.971 million acres.

Global stocks were set for their first weekly gain in four weeks on Friday and the dollar rose to its highest since March. Oil edged higher as Russia reiterated its commitment to joining a producer’s’ output freeze to stem a 2-year slide in prices.


Morning Comments – October 20

Chicago corn and soybean futures rose for a second straight session on Thursday as favorable demand news helped curb supply pressure from an advancing US harvest that is tipped to bring in record crops.

China, the world’s top soybean importer, has been snapping up US soybean cargoes in recent weeks. Soybeans drew additional support after the USDA confirmed that private exporters sold 185,000 tonnes of US soybeans to unknown destinations for delivery in the 2016/17 marketing year.

The world faces plentiful wheat supplies in coming months and this is coming into attention again. After its recent rises, US wheat needs a price pullback for export competitiveness, said Stefan Vogel, head of agricultural commodity markets research at Rabobank.

Corn drew support from weekly data on ethanol. US Energy information Administration said on Wednesday that ethanol production last week increased by 36,000 barrels per day while stocks of the biofuel fell by 351,000 barrels.

Crude oil prices rose to a 15-month high on Wednesday after a US inventory draw-down, which boosted energy shares. Energy stocks led the way up on Wall Street, boosted by the higher oil prices.


Morning Comments – October 19

Grains were mixed overnight with limited action in the trade.

Yesterday saw a big rally in soybeans with prices reaching their highest mark in 3 weeks before prices lost ground, closing lower on the day. Yesterday saw some big hits to spot bean basis with losses at 5 to 10 cents at some key river terminals and processors.  Basis levels at interior crushing plants are running about 25 cents below normal for this time of year while river terminals are only off about 15 from the historical norm thanks to surging exports and lower barge freight.

In climate news, there is a growing consensus that La Nina may be developing as indicators are showing a shift . The Climate Prediction Center says there is a 70 percent chance that La Niña will develop during the Northern Hemisphere autumn 2016 and there a 55 percent chance it will persist during winter 2016-17. This is up from last month’s forecast of a 40 to 45 percent chance of development. The growing season for corn and soybeans in Argentina and southern Brazil can become unfavorably dry during a La Niña phase, and the US is prone to hotter than normal temperatures in the Midwest.

Crude oil was up sharply eclipsing $51 a barrel for the first time in 3 days. Yesterday, private firm API reported U.S. crude stockpiles fell 3.8 million barrels in the week to Oct. 14, to 467.1 million barrels. EIA official government will be released later this morning.

Morning Comments – October 18

Grains were in negative territory to start the day.  In outside markets, equity futures were sharply higher going into the morning trade session while crude oil also was holding onto positive gains.

On Monday, USDA’s attache to Argentina forecast the soybean crop there to be 55 MMT, below USDA’s official forecast of 57 MMT.  2016/2017 expected area harvested is revised down to 19.3 million hectares due to greater competition from alternative crops – corn and sunflower – and lower than expected wheat plantings resulting in lower 2nd crop soybean area. Adverse weather conditions, crop damage, and harvest delays forced a number of producers to abandon their plans to plant wheat for the 2016/2017 winter crop season.

Yesterday’s USDA crop progress report showed 62 percent of the soybean crop harvested versus 44 percent last week and on track with the 5-year average of 63 percent. Corn harvest grew to 46 percent this week versus 35 percent last week and 49 percent 5-yr avg.

This morning, USDA announced a deal for 706,500 MT of soybeans to China for the 2016/17 marketing year. Japan’s Ministry of Agriculture is seeking to buy a total of 132,015 tonnes of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.

Corn and soybean futures rose for a third consecutive session on Monday, with prices underpinned by short-covering and strong demand. Malaysian palm oil surged to its highest level in about six months Monday, gaining on forecasts of weaker production growth for the month of October. In the last two sessions, palm oil prices have rallied 5.7 percent which has helped the soy complex as well.

Oil prices rose on Tuesday, helped by a weaker dollar and the notion that global markets oversupply may be moderating, ahead of a November meeting of OPEC producers that could decide to cut production. A proposal by the Organization of the Petroleum Exporting Countries to cut or cap output helped lift crude prices above $50, but not much more because market participants doubt the cartel’s ability to strike and implement a concrete deal. But several analysts say a two-year global supply glut could be receding if the latest oil inventories are taken into account. They say that stocks are not as high as usual ahead of the winter fuels season.

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 – October 17

Grains started the week higher trying to make 3 days in a row of advancing prices. In outside markets, crude oil was modestly higher while the US dollar index was holding solid gains going into the morning trade session.

Corn and soybean futures rose for a third consecutive session on Monday, with prices underpinned by short-covering and strong demand. Malaysian palm oil surged to its highest level in about six months Monday, gaining on forecasts of weaker production growth for the month of October. In the last two sessions, palm oil prices have rallied 5.7 percent which has helped the soy complex as well.

Saudi Arabia’s main state wheat buying agency, the Saudi Grains Organization (SAGO), said on Monday it purchased 610,000 MT of hard wheat in a tender. The accepted origins in the tender were the European Union, North and South America and Australia, at the seller’s option.

Baker Hughes showed U.S. drillers added four rigs in the week to Oct. 14. It was the 16th week in a row that oil drillers had gone without making cuts, indicating more production to come. A firmer dollar also weighed on prices, as an expected hike in U.S. interest rates later this year drove the U.S. currency to a seven-month high against a basket of currencies.


Morning Comments – October 14

Grains were stronger overnight adding to yesterday’s double-digit gains. In outside markets, equity futures, the US dollar and crude oil were also higher

Grains were benefiting from a short-covering rally, fueled in part by a pick-up in wheat trade as well as stronger than expected corn basis as farmers are slow to sell in the cash market. Yesterday’s deal for 1 MMT of wheat between Syria and Russia helped ignite a 20-cent move in the wheat market and this morning Dec wheat closes in on resistance at $4.25, a price level not seen since late August.

Overnight, Algeria’s state grains agency bought 450,000 to 500,000 MT of milling wheat from optional origins in a tender which closed on Thursday.It has been widening its sources of wheat in recent months after its traditional supplier France suffered weather damage to its harvest this year.

This morning’s USDA export sales report showed better than expected soybean sales of 1.4 MMT, topping expectations which ranged from 0.9 to 1.2 MMT. Corn came in at the low end of expectations while wheat was at the upper end of expectations.

Global stocks and the dollar edged up on Friday, erasing some losses from the previous day, as stronger-than-expected Chinese inflation data eased some concerns about the health of the world’s second-biggest economy. The US dollar index rose 0.3% but is off slightly from a seven month high touched on Thursday.   Retail sales data and remarks from Federal Reserve Chair Janet Yellen and Boston Federal Reserve President Eric Rosengren were due later in the day. The Fed’s minutes from its September meeting prompted investors to raise their bets on a December rate rise, and fueled the rally in the greenback this week.













Morning Comments – October 13

Grains were mixed overnight following yesterday’s selloff. In outside markets equity futures were pressing lower as was the US dollar while crude oil was holding on to small gains.

Yesterday’s USDA crop report did little to change the bearish stance in the grain market as USDA mostly hit expectations for US corn and soybean production. Ending stocks were cut thanks to USDA ratcheting up their forecast for both corn and soybean exports, but meeting the now 2.025 billion bushel soybean export number may prove challenging if Brazil ramps up soybean production as USDA expects.

Overnight there was a fair amount of tender interest. First, Egypt’s GASC was tendering for an unspecified amount of soft and milling wheat. Saudi Arabia’s main state grain buyer SAGO said on Thursday it was seeking to purchase 595,000 tonnes of hard wheat from global suppliers in an international tender. And two different South Korean feed manufacturers are in the market for corn, totaling 195,000 MT.

On Wednesday, the minutes from the Fed’s September meeting were released and policymakers judged a rate hike would be warranted “relatively soon” if the U.S. economy continued to strengthen. In oil, American Petroleum Institute on Wednesday reported that U.S. crude inventories rose by 2.7 million barrels to 470.9 million barrels in the week to Oct. 7. This would be the first rise in oil stocks following five straight weeks of declines. Official government EIA data will be out later this morning.


Morning Comments – October 12

Grains continued to mark time with limited movements, awaiting USDA’s latest supply and demand forecasts out later this morning. In outside markets the US dollar continued to strengthen hitting its highest point in 7 months.

This morning USDA announced a 115,000 MT sale of soybeans to China. Traders will look for guidance from USDA’s crop report out at 11 am this morning. The trade is looking for a dip in corn yield from 174.4 last month to 173.5 this month, while soybean yields are expected to be higher hitting 51.5 versus 50.6 last month.

Australia is expected to harvest a near-record wheat crop in 2016/17, but recent heavy rains may lead to quality downgrades and curb exports. Analysts expect a crop of 28.35 MMT just above  Australia’s most recent official estimate of 28.1 MMT made in September. The bumper crop, which would be the second highest on record behind a near-30 million tonnes in 2010/11, follows good growing weather early in the season, but faces risks from soaking east-coast rains and unseasonably cold weather in Western Australia.

OPEC reported an increase in oil production in September to the highest in at least eight years and raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group’s deal to cut output. OPEC pumped 33.39 million barrels per day last month, up 220,000 bpd from August. The figures underline OPEC’s challenge in seeking to restrain supplies for the first time since 2008 to curb a persistent supply glut and prop up prices.


Morning Comments – October 11

Grains were lethargic overnight with listless two-sided trade. In outside markets, equity futures and crude oil were weaker following Monday’s rally.

This morning USDA announced a 161,544 MT sale of corn to unknown destinations. Export inspections will be released later this morning after the Columbus Holiday on Monday pushed government reports forward a day. Traders look for wheat 400,000-600,000 tonnes, corn 1.1-1.4 million tonnes, soybeans 1.0-1.2 million tonnes.

Torrential rains across most Ukrainian regions after a severe drought could leave around 500,000 hectares of winter grain area unsown a senior state weather forecaster said on Tuesday. Ukraine’s winter wheat harvest is highly dependent on moisture content in the soil during the autumn sowing, air temperatures in winter and favorable weather in spring.”The outlook is very gloomy,” said Tetyana Adamenko, the head of the agriculture department for the state weather.

Rains early next week slow harvest in all but far W. Midwest, but drier 11-15 day aids recovery until end of period. Rains remain limited in Plains hard red wheat next 10 days, but rain chances improve late in 11-15 day for dry spots.


Morning Comments – October 10th

Grains were mixed in quiet trade to start the week while crude oil continued to march higher. Equity futures and the US dollar were up as well in early morning trade action.

Wheat came into the week in a buying mood following Friday’s CFTC report which showed a record large short spec position. Also, overnight French Farm Ministry cut their forecast for wheat production to 28.0 MMT versus a previous estimate of 28.2 MMT. However, they did bump up their corn forecast to 12.6 MMT from 12.5 previously.

Export deals were active in wheat overnight.. A group of South Korean mills bought a couple of loads of wheat totaling 100,000 MT from Australia while a flour mill in Bahrain bought 25,000 MT of wheat from Baltic Sea markets

In the US weekend weather was mostly dry across the Midwest which helped move corn/soy harvest along. This week there are a few minor showers in the Central and SW Midwest; longer term, the 6-15 day forecast shows some rain potential could slow C. & E. Midwest corn/soy harvest progress briefly, but overall progress near normal.

Crude oil sold off on Friday after the Russian energy ministers said “he was not expecting to sign a production deal with OPEC at the World Energy Conference, which starts this week in Istanbul.” In addition, the Baker Hughes weekly report on U.S. oil rig counts increased for the 7th straight week to 428 rigs.