July 24 – Morning Comments

Grains are moving higher across the board in Chicago with corn up 5 cents, soybeans up 22 cents, and Chicago wheat up 7 cents.

Export sales this morning were very positive for soybeans which had sales of 291,500 MT for old crop which was on the high side of expectations and new crop sales of 2,451,100 MT which beat the high side of analyst expectations by about one million bushels. China was a large buyer this week, accounting for 70% of old crop sales and 52% of new crop sales. Unknown destinations made up another 37% of new crop soybean sales. Old crop sales are now 63 million bushels ahead of pace to meet USDA expectations and if no sales were reported from now until the end of the marketing year would finish out 44 million bushels above USDA forecasts.

Corn export sales came in below analyst expectations at 291,500 MT compared to 300,000-500,000 expected. Sales for old crop corn were down 49 percent from the week before. New crop sales met analyst expectations at 1,143,400 MT. Old crop corn is now 63 million bushels ahead of pace to meet USDA expectations.

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Wheat sales this morning met expectations reporting 443,200 MT of sales compared to expectations of 350,000-550,000 MT.

Even before this morning’s export sales report, November soybean futures were trading 21 cents higher on some concerns about final yield. Concerns are starting to circulate through the trade that a cooler / dryer August leaves questions about final yield as we enter the pod setting stage for much of the crop. Non-commercial traders held a near record short soybean position – making the market ripe for a short covering rally.

July 23 – Morning Comments

This morning the grain markets are mostly unchanged to slightly higher here with September corn up ½ a cent, September wheat up 2 cents and august soybeans up 2 ¾ cents.

The weather forecast has turned drier in the western half of the grain belt with the next 10 days looking to bring more dry weather to that region.  Today should bring some showers to southeastern Minnesota, northeastern Iowa, Illinois and southern Ohio. Rains will be needed during August to maintain the crop quality in the western half of the grain belt. Right now, soybeans and corn in Minnesota, North Dakota, South Dakota and Wisconsin which received significant precipitation during the earliest parts of the season will be most susceptible to moisture stress due to their shallow rooting. Despite the drier weather outlook, we continued to see selling pressure yesterday as soybeans broke through key support of $10.65 and impulse lower.

Two military jets were shot down in Eastern Ukraine this morning, but at the moment wheat futures are not showing any buying interest as a result. The USDA’s attache in Ukraine released a report yesterday after the market close stating that harvest in Eastern Ukraine had been slowed by the military conflict but “Grain exports for the new marketing year are starting off well.” U.S. wheat futures are showing very little interest in the Ukraine story following one day of buying last week. We will continue to monitor the situation for any changes in the export outlook.

Weekly ethanol production will be released at 9:30 central time and is expected to show another strong week of U.S. ethanol production. A collapsing corn market has helped to offset lower DDG prices and a sideways ethanol market. Ethanol facilities remain aggressive bidders of old crop corn. Anyone with remaining old crop bushels may find premium at ethanol facilities for late season sales.

July 21 – Morning Comments

The grain markets moved a couple cents higher in the overnight after trading down for the better part of yesterday. September corn is up 1 ¼ cents September wheat is up 4 ½ cents and august soybeans is up 14 cents on the day.

Crop conditions were released yesterday after the market close, showing small changes week over week. Corn conditions were left unchanged at 76% good-to-excellent while soybean conditions improved a percent, now rated 73% good to excellent. Progress is moving along nicely, with 56% of corn now silking and 19% of soybeans setting pods. The next several weeks will be critical for final yield and the forecast for pollination is looking very favorable. The 6-10 day forecast from Planalytics shows above average precipitation and below average temperatures for the U.S. grain belt.

A string of export sales were reported this morning with exporters selling 225,000 metric tons of U.S new crop soymeal to unknown destinations, 180,000 metric tons of U.S new crop soymeal to Vietnam and 20,000 metric tons of U.S. new crop Soyoil to unknown destinations.

Also on the demand front, Taiwain flour millers association has released a tender overnight to purchase 80,900 tonnes of milling wheat from the United States. The tender will close on Friday, July 25th, and will give a better idea of demand following a three month price decline. Japan’s Ministry of Agriculture also issued a tender to buy 94,586 metric tons of food quality wheat from the United States, Canada and Australia. The tender should close Thursday.

Yesterday, new crop soybeans were able to hold the key support level of $10.65 after twice attempting to penetrate that price level. However, November soybeans were able to rally 6 cents off their lows to close out the day, giving hope that we have found a short term bottom. Today it will be important to watch the $10.65 price level again since another test of that level will likely yield lower prices.

This morning there was talk out of Argentina that grain shipments out of the port of Rosario started up again on Monday after several unions’ suspended strikes. The unions will continue to hold talks with the companies, but at least for now it seems that grain will once again be moving out of the country. We have seen these strikes end only to start back up again last week so we will keep a close watch on any further developments out of Argentina. The strikes out of Argentina have been a supporting factor for old crop U.S soybeans.

July 21 – Morning Comments

This morning all the grains are trading lower as ideal weather during pollination weighs heavily on the market. September corn is trading down 6 cents, September wheat is down 3 ¾ cents and August soybeans is trading 4 ¾ cents lower.

This afternoon’s crop progress report should show unchanged conditions ratings and nearly 50% of the corn and soybean crop entering the reproductive phases. Weather looks to remain very favorable for the remainder of the week with NOAA and private analysts both expecting cool temperatures across much of the grain belt. Showers should be light and intermixed, continuing to support soil moisture.

The longer term outlook remains favorable, with the 8-14 day forecast from Planalytics projecting below average temperatures and above average precipitation for the majority of the grain belt. This is confirmation of NOAA’s projections from last week for a cool, wet, August for the U.S. grain belt.

New crop soybeans are now 6 cents away from the low printed at $10.65 per bushel following the last USDA supply and demand report. Since then new crop soybeans rallied to $11.18 ¾ last Thursday, helped to its high on Thursday by the Malaysian airlines incident over eastern Ukraine. The geopolitical event was used as a selling opportunity after the initial reaction sent soybean prices higher. Keep a close watch on new crop soybeans around $10.65 which should act as a strong support level during today’s trade.

Over the weekend France and Germany both received precipitation that stopped fieldwork during harvest. The moisture throughout Europe during harvest has caused quality concerns for the wheat in that region. This is has been an ongoing problem this year for European wheat and the U.S markets are unlikely to respond to the situation in a meaningful way.

On the demand side this morning we have a few wheat tenders across the news wires that shouldn’t affect the overall direction of the trade here this morning. Turkey’s state grain agency issued an international tender to import 165,000 metric tons of milling wheat and 65,000 metric tons of animal feed barley. Also, private Egyptian buyers were in the market purchasing 60,000 metric tons of wheat from the Black Sea region.

July 18 – Morning Comments

Grains traded a quiet overnight session following yesterday’s volatile trade day. Corn is down a penny, soybeans up 3 cents, and Chicago wheat is of a penny. The situation in Ukraine has done very little to move the grains or outside markets in the overnight session as we see crude oil and the S&P 500 trading unchanged. Facts are still being sorted out as to who fired the missile that downed the Malaysian Airline flight yesterday morning and, for the moment, this story is not greatly impacting U.S. grain prices. Escalation in the conflict would support U.S. grain futures, especially wheat which traded up nearly 3% yesterday.

This week’s AMS grain transportation report showed that all locks north of St Louis are open along the Mississippi river following the temporary closures caused by flooding from this springs heavy precipitation.  The reopening of the locks in the northern Mississippi has increased the demand for barge traffic which has lifted the rates from Minneapolis-St. Paul to the Gulf 18% higher than rates before the flooding disrupted grain transportation three weeks ago.

The Ukrainian situation and weather will be the major driver into next week’s trade. We now have a sizeable portion of the US corn crop silking and, for the moment, weather conditions look near ideal entering August. NOAA released their updated weather projection and their models indicate average precipitation with slightly below average temperatures through August. The next major weather event for this market could be towards the end of September as an early freeze becomes a concern. We continue to feel that producers who find themselves under-sold on the new crop should price grain on any rallies and use a call strategy if they are still bullish the longer term outlook. If you would like to discuss your specific marketing situation please feel free to call our office. Our number is 877-472-4607 and we are available between 8AM and 4PM central time.

July 17 – Morning Comments

The grains shed a couple pennies in the overnight session with old crop corn down 2 cents, Chicago wheat down 1 cent, and august soybeans down ¾ of a cent. Expectations at the office here are for a continuation of yesterday’s bounce, but we are concerned that the upside potential will be limited as strong selling pressure will likely meet any sharp rally. A strong new crop soybean sale to china should also help support the market this morning.

Corn had great export sales this week beating expectations for both old and new crop. Old crop sales came in at 573,700 MT which was well over expectations of 250,000 to 350,000. Old crop corn still ahead of pace to meet USDA expectations by about 43 million bushels.

Soybeans met analyst expectations for both old and new crop. Old crop sales were small, but at least they were positive which kept soybean sales well ahead of pace to meet analyst expectations. This weeks 37,700 MT pushed old crop sales now 38.7 million bushels ahead of existing export projections which indicates that net cancellations must occur between now and August 31st to meet USDA projections. New crop sales were slightly lower than expected with only 495,000 MT booked, compared to expectations between 500,000-700,000 MT. However, a reportable sale announced this morning of 708,000 MT of U.S soybeans to China should help lift the market. Wheat sales missed expectations to the low side only booking 320,700 MT compared to expectations of 400,000-550,000 MT.

The European Union will begin taxing corn imports at a rate of $7.2 per metric ton. This was announced following U.S. export prices at the gulf moving below levels required by the European commission. Imports of corn have not been taxed since August 2010 and this is viewed as negative news for U.S. corn prices.

Port worker strikes in Argentina have continued on Thursday. The key export facility of Rosario has come to a stand-still as port workers and grain inspectors are demanding higher wages. Argentina is a major exporter of soymeal and soyoil, and the strike has worked to underpin the soy complex in the last two days.

July 16 – Morning Comments

Grains are moving higher in Chicago, with corn up 6 cents, soybeans up 9 cents and Chicago wheat up 5. The corn and soybean market are very oversold technically and this could be the start of the “bounce back” traders have been waiting for. Considering the long run fundamentals we feel any bounce should be used as a pricing opportunity as many producers are still very “long” this market considering their cash position.

Argentinian port workers will begin an indefinite strike on Wednesday, demanding higher salaries to compensate for inflation nearing 30%. This comes at the peak of Argentina’s corn and soybean harvest and is expected to impact ports across the country. Argentina is the world’s largest soyoil and soymeal exporter and this morning we are seeing September soymeal futures trade up 1.3% in Chicago.

For wheat, the market is ticking higher here this morning but is relatively weak within the grain complex. Large global ending stocks triggered the decline that started following the May 9th USDA supply and demand report. Harvest pressure has also been weighing on the market with the USDA reporting that U.S winter wheat harvest was 69 percent complete, up 1% from the five year average. The spring wheat crop condition rating held steady as well with a 70% good to excellent rating which is just 2 points lower than last year’s spring wheat rating at this time.

In a recent tender from the Iraqi State, U.S wheat was still priced to high at $362.96 per metric ton compared to the Russian wheat offered at $308.58 and the Ukrainian wheat offered at $311.15 per metric ton.

July 15 – Morning Comments

Alert: NOPA soybean crush numbers out at 11:00 AM central time

Grain futures are trading lower in Chicago this morning following yesterday’s bounce. Corn is off 3 cent, soybeans down 5 cents and Chicago wheat is down 2. Crop condition numbers released yesterday after the close have weighed on new crop futures.

The USDA reported 76% of the corn crop rated good-to-excellent, up a percent from last week. 34% of the crop is now silking which is slightly ahead of the five year average. Cooler temperatures across the grain belt during pollination will be a concern for some southern producers, but this should not be a long term bullish story. Growing degree days may be an issue as we approach harvest. Soybean conditions are still rated 72% good-to-excellent but we saw one percentage point moved from the good to the excellent category. 41% of the crop is now blooming which is four percentage points ahead of the five years average.

NOPA crush numbers will be out at 11:00 AM central time this morning. Traders expect NOPA to report 119.486 million bushels crushed during June. This would be down roughly 8 million bushels from May’s crush. Now the question is if near term demand has been met or will we find stronger crush in July following an old crop sell off following the June 30th reports. On the international demand front, Chinese officials held another state auction of soybeans on Tuesday. Buying interest in main land China is starting to fade with just 59,000 of the 352,000 tonnes offered sold. This was down from nearly 100,000 sold the week before and much larger sales earlier in the summer.

Moisture across Europe has the wheat harvest on hold and some analysts are beginning to get concerned about quality problems of this years crop. At the moment there is still time to correct the issue, but the recent rains in Germany and France has merchandisers concerned.

July 14 – Morning Comments

The grain markets appear to have a little overnight strength carrying them into this morning with soybeans trading up 9 ¼ cents, wheat trading 1 ¾ cents higher and corn down 2 ¼ cents.

Fridays USDA supply and demand report left many traders scratching their heads last week as old crop soybean ending stocks was lifted 15 million bushels primarily due to negative residual use, which surprised analysts, while new crop ending stocks came in a couple million bushels shy of analyst expectations. The result was a sharply lower trade, and a rapid unwinding of the bullish calendar spread between the August and November contract. On Friday morning that spread opened at 139 ¼ cents and printed a low of 94 ¼ cents before rebounding back close at 120 3/4. This morning that spread has gained another 6 cents and now hovers around its 200 day moving average.

Corn futures have continued lower in the overnight session following Friday’s negative report. 2014/15 ending stocks were reported 25 million bushels higher than expected and we saw global ending stocks raised 3% for the upcoming marketing year. Demand side numbers will indicate the bottom on this market and over the weekend we have Israeli tendering for 108,000 metric tons of optional origin corn. Considering the recent price slide U.S. corn will be very competitive in any tenders moving forward. $3.80 is the next area of technical support looking at the weekly chart. This is from trend line support looking back to September 2012.

If you’d like help adding this trend-line to your trading software just call the office, 877-472-4607

July 11 – Morning Comments

Alert: USDA Report out at 11:00 AM Central Time today

Markets are trading sideways coming into today’s USDA report. At the moment we see corn up a penny, soybeans up a penny and wheat unchanged.

With the crop good-to-excellent ratings on soybeans at a 20 year highs, yield will likely be left alone from the June report. This means 14/15 soybean supply is likely to come out 169 million bushels over last month’s WASDE report and up 425 million bushels from last year. The average analyst expects ending stocks to be reported at 418 million bushels which would imply that demand would increase nearly 76 million bushels from June’s report, less than half the expected supply increase. Looking back over the last 14 years we would expect the majority of the demand gains to come from exports which responds more readily to large changes in supply and price. In 2006/07 when supply increased 10% year-over-year, export sales made up nearly 3⁄4 of the demand response to the increased production. In 2009/10, another year with a 10% increase in supply, we saw export sales account for 70% of the demand response year-over-year.

Trade estimates for 14/15 U.S. soybean ending stocks do not factor in a robust response from the demand side as seen in 2009/10 or 2006/07. This sets up the soybean market for a potentially positive report today following weeks of sharp selling. We feel any bounce should be used as a pricing opportunity as the long term fundamentals still look undoubtedly bearish. During the 2006/07 marketing year prices approached $9.00 per bushel and looking back to 1975 soybean prices have found support around the $9.00 per bushel level. These historical benchmarks are important as we enter a very different marketing year from what traders have become accustomed to in recent growing seasons.

Traders expect the USDA to add 48 million bushels to new crop corn ending stocks, bringing the total for 2014/15 to 1.774 billion bushels. This would be the largest carryout since the 2005/06 growing season as yield is expected to make up for a relatively small acreage figure. 75% of the crop remains good-to-excellent and with each passing week of near ideal weather the “pollination weather premium” is leaving the market. Trend-line supports sits at $3.80 looking at the daily December 14 corn chart. Looking longer-term we would expect support around $3.25 on December futures based on price action from 1975 to present. This market has already sold off substantially but it is important to look at the big picture when pricing grain coming into today’s USDA report. This month’s sell-off has been dramatic on the daily corn chart but is a relatively small move when looking over a longer time frame.