Morning Comments – July 22

Soybeans continued to plunge lower overnight giving up nearly 20 cents a bushel on new-crop November. Corn and wheat drifted lower as well.

Weather models continue to show a wet and cooling trend from the recent heat wave. Temperatures should return to seasonal norms by early next week and even dip below normal by late next week.

Yesterday after the close, Argentina’s government bumped up forecasts for the corn and bean crop for the 2015/16 marketing year. They pegged the soybean crop at 58.8 MMT vs 58.0 previously while the corn crop was projected to be 39.8 MMT versus a previous estimate of 37.9 MMT.

Wheat prospects deteriorated sharply in Europe in recent weeks due to worse than expected damage from heavy spring rain, prompting analysts to slash crop estimates with French output seen at its lowest in 13 years. Consultancy ODA Groupe expects the 2016 crop in the largest EU wheat producer and exporter to be less than 30 million tonnes, down from 32 million pegged last week and 35 million estimated on July 6. If realized, that would be the lowest French wheat harvest since 2003 and is far below the record 2015 crop of nearly 41 million tonnes.

Crude futures were on track for weekly losses on Friday as investors reassessed U.S. data on oil stocks and excesses in oil products in Europe and Asia. While many expect global oversupply of oil to ease in the near term, huge amounts of crude remain in vessels at sea and storage tanks on land as the rebalancing takes longer than some had anticipated. While U.S. production has been falling, crude inventories are at 519.5 million barrels, historically high for this time of year according to EIA.

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 – July 21

Grains found modest support overnight trying to recover from the steep losses accumulated over the past three trade sessions. In outside markets, equities were lower as was crude oil and the US dollar.

Current weather models continue to point to a return to normal temperatures after today and Friday’s heat wave thru the Midwest.  The latest model shows heavier precip mid next week versus the model 24 hours ago.

In overnight news, Japan bought 165,048 MT in a regular wheat tender. Most of that or 99,473 MT was with the US, while the remainder was to Canada and Australia. South Korea’s state-run Korea Agro-Fisheries & Food Trade Corp. has purchased 20,000 tonnes of soybeans to be sourced from the United States and Canada in an international tender which took place on Thursday, European traders said.

Oil prices rose as much as 1 percent on Wednesday, lifting U.S. crude from two-month lows, after the U.S. government reported a ninth straight week of crude inventory draws, easing some concerns in a market worried about a glut. U.S. gasoline prices, however, hit four-month lows after the data from the U.S. Energy Information Administration also showed a surprise build in supplies of the motor fuel despite forecasts of American drivers hitting the road in record numbers this summer.

WEEKLY EXPORT SALES

OC-Act

OC-Exp

NC-Act

NC-Exp

Corn

345

400-600

506

500-700

Soybeans

325

300-500

1,001

500-700

Wheat

478

350-550

Morning Comments – July 19

Grains were lower overnight while the US Dollar hit its highest mark in 4 months. Crude oil recovered some of yesterday’s losses while equity futures drifted towards negative territory to start the day.

USDA’s crop progress report on Monday showed no material changes in crop conditions with both corn and soybean crop ratings holding steady at 76% and 71%, respectively from the previous week. Spring wheat dropped 1% to 69%. But the overall trend is still better crops ratings than what traders have been expecting as well as conditions that are generally better than last year.

Precipitation totals were light in the last 24 hours with some rain events hitting W NE and S IN/OH. Intense heat sets up in the Midwest US and northern Plains from Wednesday through Saturday, with high temperatures between 95°F to 105°F and low temperatures near 80°F; temperatures normalize early next week, but warmth returns thereafter. The latest weather models show cooler temps and more precip for the Midwest in the next 3 to 5 day period.

Oil prices erased early losses on Tuesday after falling on concerns over a crude and refined fuel glut outweighed an expected cut in U.S. shale production and a probable further draw in U.S. crude inventories. Prices turned higher as an official said oil production at Libya’s Sarir field had been suspended due to protests at the Hariga terminal. Output at the Messla field was also at risk if ports shut, the official said.

 

Morning Comments – July 18

Grains traded both side of unchanged overnight but came into the morning break with losses, especially for soybeans.  In outside markets, crude oil started the week lower while equity and bond futures posted modest gains.

Weather for the 2nd half of the month looks to be hot and wet which gave the soybean market a reason to head lower. After a cooler than normal first half of July, Corn Belt temperatures will heat up later this week to average 6 to 9 degrees hotter than normal and much of the rest of the nation will also be hot. New GFS maps have the next 16 days with widespread storms east of the Mississippi, limited moisture and some heat across the WCB and N Plains and very limited storminess and excessively hot and dry over the S Plains.

NOPA June crush came in at 145.05 mb compared to trade est. of 155.4 and May’s crush of 152.82. The avg. daily rate of crush was 4.84 mb which is the lowest rate of the year, just below the Jan rate of 4.85 mb. Oil stocks were 1.985 bln lbs vs. 1.994 in May. Meal exports were 594 tst vs. 682 in May.

Crop conditions will be released later today after the market close. Crops should show a deterioration in SD, NE, MI, OH and IN while rains benefited crops in ND, MN, KS, much of MO, and good portions of IL, IN and WI.

Oil prices fell on Monday as traders shrugged off the impact of the attempted coup in Turkey and the market turned its attention to bearish fundamentals, while disruptions to crude exports in Libya lent prices some support. A report by Morgan Stanley raised concerns about the longer-term outlook for oil consumption as demand for petrochemicals rather than fuels such as diesel and gasoline is clouding the outlook for crude demand.

In export news, Egypt is in the market for wheat although the US is likely not to garner the business as last week’s deals to Egypt went to Ukraine and Russia.

Morning Comments – July 15

Grains edged up overnight. Soybeans moved up slightly after a major slide in yesterdays session.Corn gained 0.7 percent while wheat gained more than one percent.

U.S. Soybeans fell 3.8 percent on Thursday, giving up early gains after new weather forecasts boosted expectations of a robust harvest in the U.S. Additionally wheat and corn closed lower.

China’s first soybean auction of the year was off to a flying start with 99.7 percent of what was offered being sold. Additionally, in the second quarter, China’s GDP rose 6.7 percent from a year earlier. Resulting in slightly better number than what economists were expecting.

Exporters sold 320,000 MMT of US soybeans to unknown destinations for a 2016/2017 delivery.

The weather outlook over the weekend and into early next week is calling for rain from the northeast to the southwest across the corn belt. Favored areas include a good portion of the Dakotas, central Nebraska, northeast Iowa,southern Minnesota, southern Wisconsin, northern Illinois, and northern Indiana. The additional showers and lack of notable heat will continue to provide very good pollination conditions through the first half of the week in the corn belt.

Crude futures dipped toward $47 a barrel on Friday on concerns that a persistent global glut of crude oil and refined products will impede any price recovery. While the price collapse over the past two years has led to a sharp drop in global oil production, stored inventories remain at high levels, particularly for refined products, weighing on a recovery in prices.

 

Morning Comments – July 14

Grains traded higher yet again in the overnight session. Corn was up 10 cents, soybeans up 12, and wheat up 5.

In world news, China is scheduled to auction around 300,000 tonnes of soybeans from its temporary reserve on Friday, a move that analysts think may help ease tight domestic supplies of the oilseed. China has not revealed the size of its reserves but it is thought to hold about 5 million tonnes of soybeans in its temporary reserve, said Liang Yong, an analyst at Galaxy Futures.

Crude prices recovered more than a dollar a barrel  from sharp losses that took place this Thursday. Brokers said the downtrend could be expected to resume given a worry over slowing economic growth along with record highs in stocks.

Exceptionally hot (10°F to 15°F above normal) and dry weather begins early next week in the Midwest US, continuing through the end of July; some indication that ridge pulls back towards the Rockies in early August, offering potentially cooler/wetter weather for the eastern Soybean Belt but uncertainty remains high.

A U.S. government weather forecaster said the La Nina weather phenomenon will likely develop during August through October of 2016. The climate prediction center, an agency of the national weather service said in its monthly forecast there is a 55% to 60% chance that the La Nina weather phenomenon will develop during the fall and winter of 2016/20/17

Wheat exports came in below expectations with old crop at 318,000 tonnes and new crop at 397,000 tonnes. Corn exports were above expectations with old crop netting 667,800 and new crop at 772,500. Soybeans exports were at the low end of expectations with old crop at 364,200 and new crop at 429,000.

Gold gained for the first  time in five sessions, resulting from a recent rally for U.S. stocks that took a slight pause.

Morning Comments – July 13

Corn, soybeans, and wheat were higher following the overnight. Corn up 11 cents and soybeans up 26 cents, moving off of yesterday’s momentum. Wheat was up 6 cents.

The WASDE report that came out yesterday at 11:00 am CDT reported corn old crop 1,701 and new crop 2,081. Soybeans old crop was reported at 350 and new crop was 290, and wheat new crop was reported at 1,105. Overall fairly consistent numbers with the predicted outcome.Investors continue to follow the weather outlook and remain hesitant. The USDA slashed its outlook for global inventories by the end of the 2016-17 crop year and forecast a spike in U.S. exports to a four-year high.

Reports of a hot and dry forecast have raised fear of damages to crops. NOAA’s 8-14 day temperature outlook shows much of the Midwest at risk for higher temperatures.

Showers expected to continue around the Great Lakes area into tomorrow. Weekend rains are predicted to favor the central Midwest. Looking at the rest of the week, high projections are peaking in the low nineties in the north/eastern Midwest. Along with projected highs of mid-nineties or better central southwest. The 16 to 30 day forecast is forecasting near to above normal temperatures, posing the warmest/driest risk for the northeast and areas in the deep south.

Russia’s head weather forecaster, Hydromet Centre, reported that Russia’s favorable weather could result in the largest grain crop since in post-Soviet history. They are expected to harvest 110 millions tonnes of grain this year, up two million from tonnes from the record crop of 2008 according to the agricultural ministry.

Egypt’s FAO report show that ergot is not a threat to the wheat crop. “Because the fungus is not able to settle in Egypt, it’s not possible for it to spread and therefore it cannot cause economic losses, which makes it unnecessary to take preventative measures,” part of the FAO report sent by the ministry said.

 

Morning Comments – July 12

Grains were steady overnight as hesitant investors await the monthly crop production report which will be released at 11:00 AM CDT today. Soybeans gave up gains over concerns of hot weather forecasts and expectations that the U.S. Department of Agriculture will decrease the U.S. soy stocks number.

Overnight, the Ukrainian agriculture ministry claimed that it expects Ukraine to export 35.33 million tonnes of grain in the 2016/17 season. A much larger number than the previously reported 11.64 million tonnes. The ministry and traders are expected to sign a memorandum on grain export volumes for the next season soon.

Rain is expected in much of corn the corn belt through next week. The 16-30 day forecast is showing a return of showers to the western part of the Midwest. Temperature high’s are expected to start creeping back into the 90’s across the corn belt. Low 100’s possible in Nebraska, Kansas, and southern South Dakota. Rainfall is expected ahead of the heat which should help limit the stress on in the far western area along with the great lakes area.

Crop conditions were released yesterday afternoon. Corn being reported to be up 1% at 76% good to excellent compared to 69% last year. The crop is 32% silking versus the 26% average. Soybeans also saw an increase of 1% at 71% good to excellent. At this time last year soybeans were 62% good-to-excellent. Crop is 7% setting pods versus the 5% average. Spring wheat is down 2% at 70% good-to-excellent. Last year spring wheat was 71% good-to-excellent. Winter wheat is 66% harvested versus the 65% average.

Yesterday, oil prices fell to a two-month low on reduced fears of oversupply. However, in the overnight, prices were seen to bounce back. Saudi Energy Minister Khalid al-Falih said there is still an excess of stocks in the market and it might take a long time to reduce the inventory overhang.

 

Morning Comments – July 11

Grains started the week in positive territory as weather forecasts show more heat and dryness for the 2nd half of July. In outside markets, equities continue to move higher following Friday’s sharp advances while crude oil is modestly lower.

Weekend rains were about as expected with the northern plains getting rains that missed much of the Dakotas and left Minn with a good drink. Rains across the south were less general and scattered.The GFS model has been predicting heat for the last half of July—more extreme than other models with the ridge of heat moving east over the corn belt. NOAA does not have much above temps but it is hot enough that night time temps do not cool off enough to allow the corn plant to rest and regain strength.

Export business was active to start the week. A South Korea feed mill purchased 25,000 MT of US wheat while Jordan and Algeria were tendering for 100,000 and 50,000 MT of wheat overnight. South Korea feed buyers were also active late last week on deals to secure more corn.

On Friday, industry group Baker Hughes Inc. reported that the number rigs looking for oil in the U.S. rose by 10, the fifth increase in the past six weeks, bringing the total rig count to 351. After peaking at 1,609 in October 2014, low oil prices put a downward pressure and the rig count fell sharply.

 

Morning Comments – July 08

Grains were higher overnight with soybeans adding nearly 17 cents to yesterday’s 50 cent loss, while corn was firmer by 7. Wheat was higher by 3. In outside markets, crude oil also tried to recover some of Thursday’s sharp selloff as did US equities ahead of the US June jobs report.

The condition of wheat crops in France worsened again last week just as harvesting was getting under way, data from farm office FranceAgriMer showed on Friday, suggesting crops were continuing to suffer from the heavy spring rain. Some 59 percent of soft wheat was rated good or excellent as of July 4, down from 65 percent a week earlier and the lowest rating for the period in the past five years, FranceAgriMer said in a weekly crop progress report. It estimated that 1 percent of the soft wheat area had been harvested by Monday, compared with 11 percent a year earlier.

Showers will stretch from the S. Plains into the northern Delta this weekend, with scattered activity returning Monday/Tuesday to a few spots in the northwest Midwest. 6 to 15 day rains favor the central/southeast Midwest, with a slightly drier trend around the Great Lakes and wetter in the Ohio Valley since yesterday. Given recent rains and the outlook, the best chances for building moisture stress will likely focus on eastern South Dakota, southeast North Dakota, far northwest Iowa, far southwest Minnesota, southern Michigan, and far northern Ohio (15% of Midwest) during the next two weeks, although yesterday’s rain did bring temporary relief to spots around the Great Lakes

The US jobs report was bullish for the economy as US employers added 287,000 jobs in June while the jobless rate rose to 4.9%. The US dollar shot higher on this news as traders looked for strength in the US economy to stimulate investment demand and push the value of the dollar higher.

WEEKLY EXPORT SALES

Act-OC

Exp-OC

Act-NC

Exp-NC

Corn

369

500-700

443

400-600

Soybeans

637

400-600

585

500-700

Wheat

825

400-600