Morning Comments – May 24

Grains moved lower yet again overnight with soybeans continuing their selloff reaching their lowest mark since the May 10 crop report. In outside markets, the US dollar was stronger as was equity futures and crude oil.

After the close on Monday, USDA released their weekly crop progress report showing a big jump in soybean plantings from 36% last week to 56% this week. Corn planting looked to be mostly wrapped up with 86% of the crop planted. And winter wheat conditions held steady at 62% good-to-excellent versus last week. Spring wheat is also faring well at 76% good-to-excellent versus last year of 69%. Indiana and Ohio still lagging on planting.  For corn, Indiana is 62 percent planted (vs 5-year avg of 77 pct) and Ohio reaches 51 pct (vs 5-year avg of 66 pct).

In export news on Monday, weekly inspections from USDA showed sub-par movement for soybeans while corn and wheat were in-line with expectations. With only a few weeks left in the wheat marketing year it seems likely final year exports will come up 20 to 30 MB shy of USDA’s forecast. Corn is also lagging but the pace has been brisk of late and with 3 months left in the marketing year will likely meet USDA’s benchmark.

Overnight, Taiwan’s maize industry procurement association MFIG has purchased 65,000 MT of corn to be sourced from the United States in an international tender which closed on Tuesday, European traders said. The tender had sought corn from either the United States, Brazil, Argentina or South Africa. This morning USDA announced a 140,000 MT of soybeans for new-crop to unknown destinations. That makes two days in a row of new-crop bean deals.

 

Morning Comments – May 23

Grains started the week in negative territory with soybeans facing the biggest brunt of the selling pressure. In outside markets, crude oil fell for a 4th consecutive session and equity futures were steady to weaker in early trade.

Soybeans got pressured overnight on improved crop weather in the U.S. Midwest and a “risk-off” mood in the broader commodity sector. Ahead of USDA’s weekly crop progress report, early trade estimates were for the government to show U.S. soybean planting at 58 to 60 percent complete.

Overnight news saw some export tender activity. Taiwan’s MFIG purchasing group issued a tender to buy 40,000 to 65,000 MT of corn, while a group of Israeli buyers issued a tender to purchase 108,000 MT of corn. This morning USDA announced two export deals. Exporters sold 140,000 MT of new-crop soybeans to unknown destinations and a 20,000 MT deal for old-crop soybean oil.

In outside markets, the US dollar continued to climb higher this morning as the market starts to expect the US Fed to raise interest rates. The US dollar is at 2-month highs and posing problems for commodity prices in general. Crude oil in particular is off from its highs by $2 a barrel.

 

 

Morning Comments – May 20

Grains found strength overnight with soybeans leading the complex higher while corn and wheat followed with more subdued gains. In outside markets, equity futures were higher while crude oil and the US dollar were mostly steady.

Producers in isolated parts of Brazil’s main grain state of Mato Grosso started harvesting the winter corn crop earlier than expected to take advantage of near record prices, as the drought that has curtailed yields also accelerated the crop’s maturation. Reports of winter corn harvesting are still isolated in the center-west state of Mato Grosso, according to agronomists on the Rally da Safra crop tour.

French farmers had sown 91% of their corn crop, up from 78% but lagging the 96% progress seen a year ago, farm office FranceAgriMer said on Friday.  Corn planting has been slowed by wet, cool weather during much of spring so far and FranceAgriMer said the average sowing date was 15 days later than the average of the past five years.

South Korea’s KOCOPIA rejected all offers and made no purchase in a tender for 55,000 MT of corn which closed on Friday, European traders said. Prices were regarded as too high, they said. Lowest offer was $198.60 a tonne c&f including surcharge for additional port unloading, they said.

 

Morning Comments – May 19

Grains were weaker overnight as strength in the US dollar continued to weigh on all commodity markets especially crude oil which was off over a $1 a barrel.

The US dollar continued its rally overnight and into the morning session, gaining 0.4% overnight and reaching its highest mark since March 23. The Federal Reserve will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment, according to minutes from the U.S. central bank’s April policy meeting released on Wednesday. That view, expressed by most Fed policymakers at the last policy meeting, suggests the central bank is much closer to lifting rates again than Wall Street expects.

This morning, USDA’s export sales report had supportive corn numbers with a good showing on both old- and new-crop deliveries, which beat expectations. Wheat and soybeans were less impressive though still within expectations.

WEEKLY EXPORT SALES

OC-Act OC-Exp NC-Act NC-Exp
Corn 1,473 900-1,300 541 100-300
Soybeans 556 300-500 158 50-250
Wheat 175 0-250 573 200-400

 

 

 

Morning Comments – May 18

Grains were weaker overnight, led by soybeans. In outside markets, the US dollar was higher while equity futures came under pressure.

The dollar rose to a three-week high against the euro and a basket of currencies on Wednesday on renewed expectations that the Federal Reserve could raise interest rates soon.  Stock markets in Europe and Asia weakened on Wednesday in the wake of accelerating U.S. inflation and comments from Federal Reserve officials that rekindled prospects of an interest rate rise within months.

Showers are exiting the far eastern Corn Belt currently, and a system later this week has shifted farther to the south. This will allow most of the eastern Corn Belt to remain dry until the latter 1/2 of the 6 to 10 day, with intermittent showers during the balance of the 15-day period resulting in brief interruptions. However, the seeding pace should improve, particularly as warmer weather develops early next week.”

Showers will still move through the Delta/Southeast on Friday/Saturday, but drier weather will then also aid late fieldwork in these areas until the 11 to 15 day. The wettest 6 to 15 day conditions are expected from the Plains into the southwest Midwest, with extensive rain also occurring in the far S. Plains in the next two days. While the moisture is aiding winter wheat yields during late growth, the active pattern will also hinder maturing wheat in Texas/Oklahoma.

 

Morning Comments – May 17

Grains were mixed overnight with soybeans higher and corn lower. Wheat was nearly unchanged. In outside markets, crude oil was higher but off of its highs at $48.40 while equities and the US dollar were mostly directionless.

On Monday, private analyst Informa pegged US corn acres at 93.4 million versus USDA’s forecast of 93.6, while soybean acres were pegged at 83.0 versus 82.2 by USDA. Analysts have been suggesting as much as 2 million more acres of soybeans, so Informa’s number of only 800,000 more acres would be substantially below that.

In other news on Monday, USDA’s crop progress report showed a strong pace for corn and soybean plantings.  Corn plantings were 75% completed while soybeans were at 36% completed. The US winter wheat crop was rated at 62% good-to-excellent, on par with last week’s score.

Overnight, South Korea’s largest feed-maker NOFI issued an international tender to purchase about 65,000 tonnes of corn, an unspecified volume of feed wheat and 7,000 tonnes of soymeal. UkrAgroConsult raised its forecast for Ukraine’s 2016 wheat harvest to 21.5 million tonnes from 19.8 million. The consultancy’s Yelizaveta Malyshko told Reuters that favourable weather this spring and “ideal” moisture content in soil were the main reason for the improved outlook.

Morning Comments – May 16

Grains were lower overnight while crude oil continued to reach fresh highs since its low in January.

Rains were fairly common over the US grain belt over the weekend as a quarter to a half inch of rain hit most of the key growing regions. After a cold start to the week (record cold for some) temperatures will warm across the Plains, Corn Belt and East and moisture will remain plentiful.  Temperatures are expected to surge to above normal later this week and continue “warm” next week too across the Plains and Corn Belt.

A one-day strike at the Rosario grains export hub in Argentina ended on Friday after the government compelled union and company officials to enter into wage negotiations for 15 days, a union leader said. The strike began at midnight local time and ended around noon after the union agreed to the government mandate for a “reconciliation” period to settle the dispute.

Soybean prices have floundered in recent sessions as expectations that farmers are switching planting intentions to beans and away from corn. There are expectations the USDA’s June 30 acreage report could show a shift of 1-2 million acres from corn into soybeans, compared with the government’s March 31 planting intentions report.

Crude oil prices are on the upswing to start the trading week as markets shrug off initial negativity in the wake of soft data from China reported over the weekend. China’s domestic oil production dropped 5.6 percent from a year ago to 16.59 million metric tons in April, the steepest slide since November 2011, according to government data released Saturday. The trend is likely to worsen in the months ahead and, along with U.S. production declines, will help re-balance the global oil market later this year.

Morning Comments – May 12

Grains were higher overnight with soybeans leading the complex. Oil also continued to climb hitting fresh 6-month highs.

Brazil’s Senate voted on Thursday to put President Dilma Rousseff on trial in a historic decision brought on by a deep recession and a corruption scandal that will now confront her successor, Vice President Michel Temer.   With Rousseff to be suspended during the Senate trial for allegedly breaking budget rules, the centrist Temer will take the helm of a country. The Brazilian Real is up 12% against the US dollar since March 1 on the potential removal of Rousseff from office.

This morning’s export sales from USDA was a real disappointment for soybeans. Combined old- and new-crop sales were 219K MT versus expectations at the low end of 675K. So far for 2016 new-crop soybean sales are at 3.26 MMT versus the same time last year of over 4.4 MMT. This week’s wheat sales were strong, with bold old- and new-crop deliveries besting expectations. At 8 AM CDT USDA announced a flash sales of 210,000 MT of corn to Saudi Arabia for old-crop delivery.

WEEKLY EXPORT SALES-

OC-Act OC-Exp NC-Act NC-Exp
Corn 1,105 900-1,200 150.4 175-325
Soybeans 212.4 350-500 6.9 325-450
Wheat 294.9 50-175 387.9 200-350

 

In crude oil. EIA data on Wednesday pointed to a significant draw-down in US crude stocks. Inventories were off 3.4 million barrels versus expectations of a 0.7 million barrel build.

 

 

Morning Comments – May 11th

Grains continued to move higher overnight as soybeans led the complex following Tuesday’s surprise USDA report. Meanwhile, in outside markets the US dollar and equity futures were weaker while crude oil posted modest gains.

Yesterday bought a bullish surprise to the soybean market as USDA’s first glance at the new-crop 2016 supply and demand situation showed only 300 MB of carryout versus 400 MB that had been expected by most of the trade. This lower than expected inventory number was driven largely by a 140 MB increase in exports over this year, representing an 8% year-on-year increase.

For corn, carryout was lower than expected for new-crop 2016 at 2.1 billion bushels versus 2.3 expected. But it still represents a sizable increase over 1.8 billion bushels of stocks at the end of the current year. In wheat, the news was mostly bearish with bigger yields offsetting lower in acres for 2016. Overall USDA sees production only off about 50 MB from last year and ending stocks to increase to 1,029 MV versus this year’s carryout of 978 MB.

In other news, Farm office FranceAgriMer on Wednesday cut sharply its forecast for French soft wheat stocks at the end of the 2015/16 season as it revised downwards supply from last year’s harvest and raised exports outside the European Union. The office put soft wheat stocks available to the market at 3.9 million tonnes against 5.45 million seen last month.

Crude oil was up slightly this morning but looking for direction from today’s EIA inventory data. Traders look for a 0.7 million barrel increase in stocks as compared to last week’s 2.7 million barrel build. API crude data on Tuesday was up 3.45 versus a trade estimate of only 0.3.

 

 

Morning Comments – May 10

Grains were mixed overnight with soybeans posting solid gains, while corn and wheat hovered around the unchanged mark. Crude oil and equities were slightly firmer as was the US dollar.

On Monday, USDA’s crop progress report showed continued strength in potential US crop conditions. Winter wheat conditions improved 1% on the week to reach 62% good-to-excellent. Meanwhile corn and soybean plantings continued to move along with 64% of the US corn crop planted and 23% of the US soybean crop planted. Expectations going into the report were for 62% and 22% respectively so farmers managed to boost plantings quicker than expected.

This morning, Brazil’s official government forecaster Conab pegged the corn crop there at 79.96 MMTY, off from a previous forecast of 84.66. Meanwhile, the soybean crop projection also slipped to 96.91 MMT as compared to 98.98 MMT previously. In Brazil, the lower house was considering a new impeachment vote against the current President after the leader of the lower house had thrown out the impeachment on Monday. News of a new impeachment vote helped support the Brazilian Real this morning after yesterday’s sharp selloff.

This morning at 11 am CDT USDA will release their monthly supply and demand estimates report. Traders look for a drop in old-crop stocks for corn and soybeans, underpinned by better exports, while old-crop wheat stocks are expected to be higher. USDA will also release their first forecast of the new-crop 2016-17 year with corn stocks expected to balloon to 2.3 billion bushels and wheat stocks expected to come in at 1 billion bushels. Soybeans are expected to see a drop in stocks with traders expecting about a 400 million bushel carryout.