Weekly Cash Comments

Cash Commentary-

Grain basis levels continued to stagnate this week with both corn and beans each posting less than a 1-cent improvement on the week.

In corn, the biggest movement occurred at the Gulf where export bids were up 3 cents a bushel on nearby basis, but river terminals as a group posted only a 2-cent improvement. Strength was more prominent along the Ohio River areas were many terminals were up a nickel on basis. For the ethanol sector, production levels continue to slip along normal seasonal lines but plants as a group managed a modest 1-cent advance. In eastern Nebraska the two big plants continued to jockey for corn, raising nearby basis by 7 cents a bushel and currently stand at +10K, which exceeded the recent high of +8K in mid-March.

For soybeans, crushing plants were up a modest 1 cent a bushel but several plants in the Western Cornbelt boosted basis by 5 to 10 cents a bushel.  In Minnesota, key crushing plants have been steadily ramping up basis with gains of 25 cents a bushel since the first of March. At river terminals, basis levels were up modestly with a 1-cent gain on average, but like corn, bean basis along the Ohio River should greater strengthen the rest of the country.

Futures Commentary-

This week wheat declined the most falling 24 1/4 cents for the week ending Thursday, April 16th. Corn fell 1 3/4 cents while soybeans actually gained 12 1/2 cents this week. Wheat prices declined as a result of crop saving precipitation throughout the plains last weekend. Between .5-1.5 inches of rain fell in the Texas panhandle and western third of Kansas and between .25-.75 inches of rain was seen across most of Iowa, southern Minnesota and northern part of Missouri. Precipitation should expand into the central plains over this weekend bringing an expected .5-2 inches of rain to 80 percent of the wheat belt. The improvement in the weather, coupled with yesterday’s disappointing export sales provides little fundamental support for the grain going into the weekend.

On Monday, the Crop Progress report showed winter wheat conditions slipped to 42 percent rated good to excellent, down 2 percentage points from last week but still well over last year’s 34 percent good to excellent rating. However, conditions are expected to improve next week after a week of meaningful precipitation throughout the drought stricken plains.

Export sales were slow for wheat this week booking 47,900 metric tons of old crop sales, down 85 percent from last week’s sales. This week’s wheat sales were a marketing year low, missing analyst expectations which ranged between 100,000-300,000 metric tons. Old crop corn sales were reported at 588,200 metric tons which was down from 639,000 metric tons reported last week. Corn sales were on the high side of the analyst expectations which ranged from 400,000-600,000 metric tons. China purchased 62,000 metric tons of old crop corn which was unusual activity for the week. Cumulative corn export sales total to 38.6 million metric tons, which is behind last year’s pace but ahead of the seasonally adjusted pace expected to meet USDA expectations. Soybeans beat analyst expectations by booking 312,000 metric tons this week. This week’s soybean sales were a large improvement from last week which saw 176,000 metric tons of cancellations. Notable sales were reported to Germany, Netherlands, unknown destinations and South Korea. Soybeans now totals to 48.5 million metric tons of cumulative export sales compared to an expected pace of 45.1 million metric tons needed to meet the USDA expectations.

NOPA soybean crush came in well over analyst expectations with 162.822 million bushels of soybeans crushed in the month of March. Analyst expectations ranged from 150.5 to 159.5 million bushels with the average analyst guess expecting 155.261 MBU. The latest NOPA report marks the largest March soybean crush on record. Soyoil stocks were reported at 1.420 billion pounds well over analysts’ expectations of 1.383 billion pounds, but below last year’s levels of 2.023 billion pounds.

Ethanol production declined for the second week in a row bringing weekly ethanol production to 924,000 barrels per day. This week’s 12,000 barrel per day decline in ethanol production marks the first time since October that weekly 2014-15 production has fallen below 2013-14 levels.  Despite falling below last year’s weekly production level, cumulative ethanol production this year has increased 5.4 percent compared to a USDA expected increase of 1.3 percent. This year’s ethanol stocks increased 162,000 barrels to 20.65 million barrels this week.

 

Morning Comments – April 17

In the overnight session corn is down 3/4 of a penny, soybeans are up a cent and wheat is up 3 1/4 cents. The dollar is trading slightly higher this morning, now hovering at 97.640 while crude oil is trading down nearly a percent after news that OPEC’s production in March added to the burgeoning global supply.

Wheat prices have suffered this week from beneficial rains to the plains region. Precipitation should expand into the central plains over the weekend bringing an expected .5-2 inches of rain to 80 percent of the wheat belt. The improvement in the weather, coupled with yesterday’s disappointing export sales provides little fundamental support for the grain going into the weekend.

The Russian Agricultural Ministry recently proposed to end the export tax on Russian wheat after July 1st. The decision will be voted on in either May or June after this year’s crop yield becomes clearer. Also on the international front, the Ethiopian government has issued an international tender to purchase 400,000 metric tons of milling wheat to be sourced from optional origins. Traders are waiting on the results of that tender.

 

Morning Comments – April 16

In the overnight session corn and soybeans traded a relatively wide range but went into the morning pause mostly unchanged. Wheat increased 3 1/4 cents in the overnight and the U.S. dollar index continued its slide for the third straight day. Crude oil is also trading lower this morning off nearly 1/4 of a percent.

Export sales were slow for wheat this week booking 47,900 metric tons of old crop sales, down 85 percent from last week’s sales. This week’s wheat sales were a marketing year low, missing analyst expectations which ranged between 100,000-300,000 metric tons. Old crop corn sales were reported at 588,200 metric tons which was down from 639,000 metric tons reported last week. Corn sales were on the high side of the analyst expectations which ranged from 400,000-600,000 metric tons. Soybeans beat analyst expectations by booking 312,000 metric tons this week. This week’s soybean sales were a large improvement from last week which saw 176,000 metric tons of cancellations. Notable sales were reported to Germany, Netherlands, unknown destinations and South Korea.

NOPA soybean crush came in well over analyst expectations with 162.822 million bushels of soybeans crushed in the month of March. Analyst expectations ranged from 150.5 to 159.5 million bushels with the average analyst guess expecting 155.261 MBU. The latest NOPA report marks the largest March soybean crush on record. Soyoil stocks were reported at 1.420 billion pounds well over analysts’ expectations of 1.383 billion pounds, but below last year’s levels of 2.023 billion pounds.

Ethanol production declined for the second week in a row bringing weekly ethanol production to 924,000 barrels per day. This week’s 12,000 barrel per day decline in ethanol production marks the first time since October that weekly 2014-15 production has fallen below 2013-14 levels.  Despite falling below last year’s weekly production level, cumulative ethanol production this year has increased 5.4 percent compared to a USDA expected increase of 1.3 percent. This year’s ethanol stocks increased 162,000 barrels to 20.65 million barrels this week.

Morning Comments – April 15

In the overnight session the grains were mixed again with corn down 2 cents, soybeans up 1 3/4 cents and wheat in Chicago up 3 cents. The NOPA crush numbers will be released at 11 AM CST this morning which is expected to show a record amount of soybeans crushed for the month of March. Analysts are expecting March soybean crush to be reported at 155.261 million bushels with a range of estimates from 150.5 to 159.5 million bushels. In the same poll conducted by Reuters the average guess for soyoil stocks was 1.383 billion pounds. Estimates for soyoil stocks ranged from 1.275 to 1.463 billion pounds of oil on hand.

A few wheat tenders were reported in the overnight session which helped to support wheat prices after two days of selling. In a tender that closed Wednesday, the Taiwan Flour Millers Association purchased 85,710 metric tons of hard milling wheat sourced from the United States. Jordan’s state grain buyer issued a tender to purchase 100,000 metric tons of optional origin hard milling wheat.

An announcement out of Russia also helped support wheat prices this morning with Russian Agriculture Minister announcing that there is no reason to cancel the wheat export tax ahead of schedule. The tax is set to expire on June 30th and the ministry has made no decision yet on whether or not to extend the tax.

This morning the U.S dollar is continuing higher, up nearly 1/2 a percent which should put some pressure on commodities. Oil is trading higher as well, but currently trades near the 100 day moving average which may act as a resistance level to any attempt at a rally.

Morning Comments – April 14

In the overnight session the grains were mixed with corn up a penny, soybeans up 7 cents and wheat in Chicago down 2 1/4 cents. The June U.S dollar index is trading down slightly after trading over 100 during yesterday’s session. Crude oil is trading up 3/4 of a percent.  In the overnight there were a couple tenders including a tender from the Japanese Ministry of Agriculture looking for 109,005 metric tons of food quality wheat from the United States, Canada or Australia and an Iraqi tender for 50,000 metric tons of wheat.

Yesterday the Crop Progress report was released showing winter wheat conditions slipped to 42 percent rated good to excellent, down 2 percentage points from last week but still well over last year’s 34 percent good to excellent rating. However, prices continue to fall for the second straight day after the plains received much needed precipitation over the weekend. This week’s forecast shows continued precipitation in the southern half of the U.S and has eased the fears of significant crop damage as a result of dryness.

Yesterday wheat export inspections came out on the high side of expectations with 445,674 metric tons inspected for export compared to expectations of between 325,000-450,000 metric tons. Soybeans and corn both reported export inspections that fell within expectations with 450,317 metric tons and 855,766 metric tons inspected respectively.

As a reminder, tomorrow the March NOPA crush values will be released. Analysts are expecting 155.261 million bushels of soybeans to have been crushed for the month of March, the largest on record since last year’s record of 153.840 million bushels.

Morning Comments – April 13

In the overnight session corn traded down 2 cents, soybeans traded up 1 1/4 cent and wheat traded down 14 3/4 cents this morning on timely rains over the weekend that lowered concerns of serious crop damage from the dry conditions developing across the panhandle, western Oklahoma and western Kansas. Between .5-1.5 inches of rain fell in the Texas panhandle and western third of Kansas over the weekend and between .25-.75 inches of rain was seen across most of Iowa, southern Minnesota and northern part of Missouri.

Crop progress will be released at 3 PM CST later today and will provide an update on the winter wheat conditions as well as planting progress for corn. Last week the USDA reported that there was 44 percent of winter wheat in good to excellent condition, up from last year’s level of 35 percent good to excellent.

On Wednesday April 15th the March NOPA crush numbers will be released. Analysts are expecting 155.261 million bushels of soybeans to have been crushed for the month of March, the largest on record since last year’s record of 153.840 million bushels. Analysts are also expecting soyoil stocks to come in at 1.383 billion pounds, up from 1.322 billion pounds last month.

Weekly Cash Comments

Cash Commentary-

Grain basis levels were only modestly stronger this week across the country with US average corn and soybean basis up about a half a cent from last week.

In corn, strength in the Gulf export market helped push bids higher along river terminals. Average bids were up 2 cents a bushel this week at key river markets, although the Gulf was up nearly 6 cents a bushel. Barge rates were also higher this week with the biggest jump occurring along the IL River where barge costs increased 6 cents a bushel on the week. In ethanol, weekly production was lower this week falling 16,000 barrels per day and ethanol plants as a group were mostly unchanged on basis.  Some Western Cornbelt plants in NE/IA/MN were up 3 to 5 cents, but most other plants saw little movement.

For soybeans, it was a week that saw mixed results across end user groups. River terminals were lower by 2 cents a bushel thanks to a 1 cent decline at the Gulf and rising barge freight. However, soybean crushing plants were up 2.5 cents on average. Eastern Seaboard plants and plants in Ohio saw some gains of 5 cents or better. As field work and planting starts to pick up pace we should start to see a bit more strength in spot grain basis as pipeline supplies begin to dwindle and farmer movement slows.

Futures Commentary-

For the week ending Thursday the 9th, the grains turned lower. Corn finished the week down 8 1/2 cents, soybeans fell 32 1/2 cents and wheat fell 17 1/2 cents. On Thursday, the USDA released their April Supply and Demand report which reflected the adjustments due to the quarterly grain stocks reported on March 31st.

Soybean ending stocks were revised lower by 15 million bushels to 370 MBU which was in line with analyst expectations. The decrease in ending stocks was a result of a 5 MBU increase in imports that was more than offset by a 6 MBU increase in seed use and a 14 MBU increase in residual use.  Global ending stocks stayed mostly steady with world carryout at 89.55 million metric tons up only .02 from March’s report. Argentina production increased 1 MMT to 57 MMT while Brazil’s production was unchanged.

Wheat ending stocks were reduced by 7 million bushels to 684 MBU which was below analyst expectations of around 692 MBU. Wheat saw exports revised lower by 20 million bushels which was offset by a reduction in imports of 15 million bushels, an increase in seed use by 2 MBU and a 10 MBU increase in feed and residual.

Corn ending stocks were increased by 50 million bushels to 1,827 MBU which was below the average analyst guess of 1,854 MBU. This was a result of the decrease in feed and residual use which was revealed in the March 31st quarterly grain stocks report. However, despite the better than expected domestic stocks, global carryout was lifted 3 MBU to 188.46 million metric tons primarily from increased production out of major corn importers.

Export sales this week showed corn and wheat beat analyst expectations for old crop sales. Corn booked 639,000 metric tons, up 57 percent week over week and well over expectations of which ranged between 350,000-450,000 metric tons. Corn has booked 38 million metric tons this marketing year which is ahead of the pace needed to meet USDA projections. Wheat booked 319,900 metric tons up 97 percent compared to last week’s sales and also well above the expectations of between 50,000-150,000 metric tons. Soybeans underperformed this week with cancellations reported of 176,700 metric tons which was disappointing to traders that expected sales between -50,000-150,000. China switched 355,000 metric tons from old crop to new crop delivery causing the majority of the “net cancellations” recorded this week. Soybeans recorded new crop sales of 502,400 metric tons this week with China making up over 80 percent of new crop sales. Traders have been looking for cancellations in the soybean market for the last month as South American exports have been ramping up. Early Friday morning a reportable sale was announced for 140,000 metric tons of old crop soybeans to unknown destinations and 60,000 metric tons of new crop soybeans to unknown destinations.

On Monday, at 3 PM CST the USDA released their crop progress report with country level winter wheat conditions. Until now analysts have been using state level crop conditions which are typically released on a monthly basis. In yesterday’s report, 44 percent of the winter wheat crop was rated good to excellent, compared to last year at the same time when only 35 percent of the crop held a good to excellent rating. Analysts were expecting winter wheat rated good to excellent to be around 42 percent.

Dry conditions continue to threaten winter wheat throughout the plains. For some regions in Kansas, this March has been the second driest March on record dating back to 1963. No significant precipitation appears to be in the forecast for the Colorado, Nebraska, Kansas and Western Oklahoma region in either the 6-10 day or 8-14 day outlook. The weather outlook does seem to offer some chances for precipitation throughout Texas and parts of eastern Oklahoma over the next 6-14 days.

Morning Comments – April 10

The grains were steady and mostly unchanged in the overnight with corn up 1/4 cent, soybeans up 1/2 a cent and wheat down 3/4 of a penny. The dollar is trading higher and crude oil is mostly unchanged this morning. Yesterday the April USDA supply and demand report was released which seemed to affect soybeans primarily.

Soybean ending stocks were revised lower by 15 million bushels to 370 MBU which was in line with analyst expectations. The decrease in ending stocks was a result of a 5 MBU increase in imports that was more than offset by a 6 MBU increase in seed use and a 14 MBU increase in residual use.  Global ending stocks stayed mostly steady with world carryout at 89.55 million metric tons up only .02 from March’s report. Argentina production increased 1 MMT to 57 MMT while Brazil’s production was unchanged.

Wheat ending stocks were reduced by 7 million bushels to 684 MBU which was below analyst expectations of around 692 MBU. Wheat saw exports revised lower by 20 million bushels which was offset by a reduction in imports of 15 million bushels, an increase in seed use by 2 MBU and a 10 MBU increase in feed and residual.

Corn ending stocks were increased by 50 million bushels to 1,827 MBU which was below the average analyst guess of 1,854 MBU. This was a result of the decrease in feed and residual use which was revealed in the March 31st quarterly grain stocks report. However, despite the better than expected domestic stocks, global carryout was lifted 3 MBU to 188.46 million metric tons primarily from increased production out of major corn importers.

This morning Brazil’s Conab increased its forecast for the 14/15 soybean crop to 94.28 million metric tons from 93.26 in March. The corn forecast was also increased to 78.99 million metric tons compared to 78.21 million metric tons a month earlier.

Morning Comments – April 09

In the overnight session the grains traded lower with corn down 1 1/2 cents, soybeans down 5 1/2 cents and wheat down 4 cents going into this morning’s pause in trade. Keep a close watch on the WASDE report which will be released at 11 CST.

Export sales were released this morning which showed corn and wheat beat analyst expectations for old crop sales. Corn booked 639,000 metric tons, up 57 percent week over week and well over expectations of which ranged between 350,000-450,000 metric tons. Wheat booked 319,900 metric tons up 97 percent compared to last week’s sales and also well above the expectations of between 50,000-150,000 metric tons. Soybeans under-performed this week with cancellations reported of 176,700 metric tons which was disappointing to traders that expected sales between -50,000-150,000. China switched 355,000 metric tons from old crop to new crop delivery causing the majority of the “net cancellations” recorded this week. Soybeans recorded new crop sales of 502,400 metric tons this week with China making up over 80 percent of it. Traders have been looking for cancellations in the soybean market for the last month as South American exports have been ramping up.

Here’s what to watch for in the WASDE report scheduled for release this morning. According to a Reuters poll of 20 analysts, the average guess for wheat ending stocks is 692 million bushels, up one million bushels from the March report. Corn ending stocks are expected to be reported at 1.854 billion bushels up from 1.777 billion bushels reported in the March WASDE report. This would reflect the higher than expected quarterly stocks number reported on March 31st. Quarterly grain stocks showed 7.745 billion bushels on hand compared to 7.609 billion expected by the market which suggests either lower than expected feed usage or larger than previously stated 14/15 production.  Soybean ending stocks are expected to come in around 370 million bushels which would be a decline of 15 million bushels from the March report. Quarterly grain stocks showed fewer soybeans as of March 1st, with 1.334 billion bushels compared to expectations of 1.346 billion bushels.

Morning Comments – April 08

In the overnight session the grains traded slightly higher with corn up 1/2 a cent, wheat up 1 3/4 of a cent and wheat up 1/2 a penny. The market will be receiving the EIA ethanol production numbers today and the monthly WASDE report will be released on April 9th at 11 AM CST.

The average analyst expectations for the WASDE report according to a Reuters poll of 20 analysts is as follows. The average guess among the analysts polled for wheat ending stocks is 692 million bushels, up one million bushels from the March report. Corn ending stocks are expected to be reported at 1.854 billion bushels up from 1.777 billion bushels reported in the March WASDE report. Soybean ending stocks are expected to come in around 370 million bushels which would be a decline of 15 million bushels from the March report.

Traders will also be following South American production which is wrapping up harvest in many areas. Argentina corn production is expected to be revised slightly higher than in March to 23.90 million metric tons from 23.50. Argentina soybean production is also expected to increase to 57.23 million metric tons from 56 last month. Brazil production is expected to be revised slightly lower than March with corn production expected to decline to 74.82 million metric tons from 75.00 in March. Soybean production is also expected to decline to 94.18 million metric tons from 94.5 in March.

Across the Midwest rains will be keeping producers out of the fields through the end of the week. Precipitation will be focused on the northwestern part of the Midwest early on and shift to the central and southeastern part by weeks end. Rains will continue to halt planting along the Mississippi river delta.