Morning Comments – November 24

Grains were modestly lower overnight following Monday’s strong turnaround in prices. S&P futures were lower while crude oil was higher after Turkey shot down a Russian warplane overnight, increasing global tensions.

Wheat had the biggest losses overnight as USDA reported another uptick in US winter wheat conditions on Monday. Winter wheat is rated at 53% good-to-excellent versus 52% last week, but still off from last year’s reading of 58%. India’s wheat planting has been delayed by at least a week due to high temperatures, threatening its output of the grain yet again after hailstorms during harvest earlier this year dragged down annual production levels for the first time since 2007.  Lower wheat acreage, down around 26% so far this season, in the world’s No. 2 wheat producer.

In Brazil, the northern region has seen less rainfall than normal as the region is running 30% below normal. While there was a spurt of rain in the past week that helped seeding activities, rainfall of late has been irregular and the forecast for rain is somewhat limited. Predicted totals range between 70-110mm, below the norm of 133mm for this time of year.

Ukraine’s corn harvest is likely to increase by 12% to 25.76 MMT next year due to a larger sowing area, analyst UkrAgroConsult said on Tuesday. Ukrainian farmers are likely to increase the area sown for the 2016 spring crops, including corn and oilseeds, after a severe drought forced them to cut the area sown for winter grains, UkrAgroConsult said in a statement.

Overnight, a Russian warplane was shot down by Turkey, which claimed the plane ignored the country’s airspace and repeated warnings. S&P futures (ESZ5) were lower on the news, while crude oil (GCLF6 / QMF6) was sharply higher on increased tensions.

Morning Comments – November 23

Grains started the week on a down note, with soybeans leading the sell-off to the downside while wheat and corn were slightly lower in quiet trade. In outside markets, S&P futures and crude oil were off slightly from Friday’s close.

Soybeans came under pressure as Argentina’s presidential election results. Conservative challenger Mauricio Macri turned Argentine politics on its head on Sunday, kicking the ruling Peronist movement out of power with a promise to liberalize the ailing economy and end a culture of divisive politics. For grains, this would mean an elimination of stiff export taxes and quotas that have restrained the country’s ability to ship to world markets.

In wheat news, France is set to export wheat to Indonesia for the first time since the 2008/09 marketing season after private animal-feed companies were attracted by unusually competitive French prices. Exporters have turned to French wheat to cover optional-origin deals after Ukrainian supply became less readily available and in view of relatively expensive prices for Australian wheat. French shipments have become cheaper due to a weaker euro and a slide in ocean freight rates, while exporters are keen to find overseas outlets for a record-large French wheat harvest after a slow start to the export season.

In crude oil (GCLF6 / QMF6), prices were off sharply on Sunday’s open, but recovered this morning as Saudi Arabia’s cabinet said on Monday it was ready to cooperate with OPEC and non-OPEC countries to achieve market stability. The council (of ministers) … stressed the kingdom’s role in (achieving) the stability of the oil market and its continuous readiness and efforts to cooperate with all OPEC and non-OPEC countries to maintain the stability of the market and prices,” the cabinet said in a statement following its weekly meeting.

S&P index futures (ESZ5) were little changed on Monday, coming off strong gains last week, with the S&P 500 posting its biggest gains in almost a year and the Dow Jones industrial average turning positive for the year.  The U.S. Federal Reserve is widely expected to raise interest rates next month as labor conditions continue to improve and inflation stabilizes. Geopolitical security issues also weighed on investors’ minds with a lockdown in Brussels continuing for a third day as police hunt for a suspected Islamist militant on the run since the Nov. 13 attacks in Paris.

Morning Comments – November 20

Grains were mostly lower overnight with soybeans leading the losses to the downside.  In outside markets, S&P futures were higher while crude oil was under pressure.

Thursday brought a round of unexpectedly good news for grain with USDA reporting that corn, soybeans and wheat posting better than expected export sales for the week.  Corn sales were 779,000 MT versus trade expectations of 500-700,000 MT while wheat was 722,000 MT as compared to expectations ranging from 200-400,000 MT. Soybeans were also well above expectations which were 700-1,100,000 MT, coming in at 1,797,000 MT.

In overnight news, the International Grains Council (IGC) trimmed its forecast for world corn production in 2015/16 by 3 MMT to 967 MMT, reflecting drought-related cuts to production in China, Ethiopia and South Africa. In world wheat production, IGC pegged 2015/16 at 726 MMT, unchanged from last month’s forecast, with an upward revision from Ukraine (to 27.5 million from 26.0 million) offset by cuts for Egypt (to 8.5 million from 9.2 million) and Brazil (to 6.2 million from 6.6 million). The IGC also said that wheat’s global harvested area for the 2016/17 season was forecast to fall by almost 1 percent to 221.8 million hectares. World soybean production in 2015/16 was projected to equal the previous season’s record high of 321 MMT.

S&P futures (ESZ5) are heading for its biggest weekly gain since October. Traders will be watching  Federal Reserve Bank of St. Louis President James Bullard and Fed Bank of New York President William C. Dudley comments today for insight into the state of the US  economy.  Recent data has bolstered the case for raising borrowing costs for the first time since 2006, with the latest payroll report — released after the Fed’s October meeting — showing the biggest increase in hiring this year.

Crude oil (GCLF6 / QMF6) continued to drift lower overnight as oversupply continues to be the driving theme of the market. Market data suggests oil traders are preparing for another downturn in prices by March 2016, as forecasts for an unusually warm winter dent demand and Iran prepares for post-sanctions crude oil exports.

Morning Comments – November 19

Grains were mixed overnight with soybeans drifting lower while wheat and corn tried to hold on to modest gains. In outside markets, S&P futures were trying to take another run at the 2,100 mark while crude oil was trading lower.

In wheat, prices have been battered down in the past 4 trade sessions on improved weather in key wheat growing regions around the globe. Overnight, the Ukrainian agriculture ministry and traders’ unions have agreed to limit wheat exports from Ukraine to 16.6 MMT in the 2015/16 season. The figure could be reviewed depending on the outlook for next year’s winter wheat harvest, which may fall sharply due to unfavorable weather this fall. The 16.6 MMT figure is still above USDA’s export projection for Ukraine of 15 MMT.  Farmers in the European Union have sown 23.9 million hectares with soft wheat ahead of the 2016 harvest, an estimate reduced by 100,000 hectares from last month, and now down 1 percent on 2015/16, consultancy Strategie Grains said on Thursday.

Japan’s Ministry of Agriculture bought a total of 114,941 MT of food quality wheat from the United States and Canada in a regular tender that closed late on Thursday. Of the total, 80,000 MT was sold by the US.

In Brazil, expansive coverage in the next two weeks remains likely to further limit any near-term dryness concern and will recharge topsoil moisture, although rains may be very heavy (6 to 10” or more) in parts of Parana over the next ten days. This will threaten some pockets of excess moisture for corn/soy and will slow port loading, but the pattern otherwise aids corn and soybean development elsewhere. The Center-West soy will see showers peak Friday/Saturday, with additional chances at the middle of next week and in the 11 to 15 day.

S&P futures (ESZ5) were higher on Thursday, a day after minutes from the Federal Reserve’s October meeting flagged a December interest rate hike and pointed to a cautious approach after that. The minutes showed that central bankers are grappling with longer-term issues that may be relevant to the pace of subsequent rate hikes. U.S. interest rates futures implied a 72 percent chance of a liftoff next month, up from 64 percent on Tuesday.

On Wednesday, crude oil (GCLZ5 / QMZ5) fell below $40 a barrel for the first time since August as an EIA report showed higher crude stocks. Crude inventories rose by 252,000 barrels to 487.3 million barrels in the last week, compared with analysts’ expectations for an increase of 1.9 million barrels. Eight straight weekly increases have boosted stockpiles to close to their modern-day record 490.9 million barrels in April.


Actual Expected
Corn 779.8 500-700
Soybeans 1,797.6 700-1,100
Wheat 721.9 200-400


Morning Comments – November 18

Grains were modestly higher overnight with soybeans trying to lead a feeble recovery on a 2 cent advance. In outside markets, S&P futures and crude oil put up slight advances in the night session.

In grain markets, there was little fresh news on Tuesday to change the course of trading. Grain prices continued to be weighed down by ample supplies not only in the US, but in global warehouses as well. Also, the US dollar continues to show signs of moving higher after a month of nearly vertical increases. The US dollar index is up 6% in the past month, which weighs heavily on US grain prices which depend on export business to foreign countries.

In weather, areas of the world where weather was of concern have since given way to an improved growing condition. The Former Soviet Union is expected to see warm and wet weather in the next week should aid the winter wheat crop there, while precipitation expected across the US Plains this week should also be beneficial for US wheat development.  Likewise, in Brazil an increasingly wet pattern should continue to bolster the summer crop prospects of our biggest competitor in the global soybean market.

S&P futures (ESZ5) were little changed on Wednesday as investors remained cautious after a shootout between French police and militants in Paris and a bomb scare at a German soccer match. Investors are also awaiting the minutes of the Federal Reserve’s policy meeting last month. The minutes will be analyzed for clues on the central bank’s reading of the economy. The Fed is widely expected to raise interest rates at its December meeting. U.S. stocks forfeited gains on Tuesday after a soccer match between Germany and the Netherlands, which German Chancellor Angela Merkel was due to attend, was called off over fears of a bombing.

Crude oil futures (GCLZ5 / QMZ5) rose on Wednesday on reports of falling stockpiles and rising refinery activity in the United States. The American Petroleum Institute (API), an industry group, said on Tuesday that U.S. crude stockpiles fell last week by 482,000 barrels due partly to higher refinery runs. Official inventory data is due from the U.S. government’s Energy Information Administration (EIA) today, with a poll of eight analysts predicting a crude stock build of 1.9 million barrels on average in the week ended Nov. 13.

Morning Comments – November 17

Corn and soybeans posted small gains in the overnight session while wheat continued to dip for a third consecutive day. In outside markets, S&P futures extended Monday’s gains while crude oil was lower.

Corn found some support on Monday as a large export deal was announced by USDA that saw Mexico buying over 900,000 MT of US corn for 2015/16 and 487,000 MT of corn for 2016/17 delivery.  This helped offset the poor export inspections data also released on Monday that showed only 373,000 MT of corn for the week, versus trade expectations of 650- to 850,000.

Soybeans also were helped by another deal by China which saw the number one soybean buyer purchasing 180,000 MT of US soybeans. The deal was announced on Monday from the USDA’s export sales program. Weekly export inspections for soybeans of 2,169,000 MT also topped analyst expectations which ranged from 1,900,000 to 2,100,000 MT. Also on Monday, NOPA’s October crush estimate was released showing 158.9 MB of soybeans crushed for October. This compared to a 161 MB expectation by the trade, with the range of analyst estimates varying from 58.5 to 164.8 MB.

In wheat, USDA reported a slight bump in the condition of the US winter wheat crop as it went from 51% good-to-excellent last week to 52% this week. This still remains off from last year’s reading of 60%. Export inspections for the week were also disappointing coming in at 279,000 MT versus a trade expectation ranging from 300- to 450,000 MT.

S&P futures (ESZ5) were higher Tuesday as investors anticipated data on consumer inflation, earnings from retailers, and a number of speeches from Federal Reserve officials. The Consumer Price Index, after declining for two months because of lower energy and import costs, is forecast to increase by 0.2% in October. CPI will be released at 8:30 a.m. EST. Industrial production for October will be released at 9:15 a.m. and is expected to show a slight gain of 0.1% after two months of declines.

Morning Comments – November 16

Grains started the week drifting lower, with all three grain markets posting losses in Sunday’s overnight session. In outside markets, S&P futures were higher while crude oil found positive gains as well.

In Ukraine, independent analyst UkraConsult cut the 2016 wheat crop forecast to 17.5 MMT from 19 MMT due to poor crop conditions.  If realized this would be a substantial shortfall from Ukraine’s 2015 production of 27 MMT.  Domestically, rains in the U.S. Midwest and the Plains are expected next week that should help winter wheat ahead of dormancy.

Meanwhile, in Brazil, a negative came late on Friday from Mato Grosso, the top soybean-producing date, where farmers have now nearly caught up with last year on plantings, getting 83.7% in the ground compared with 84.1% a year ago, according to research institute Imea. A week before, farmers had planted just 61.0%, compared with 66.9% a year before.

On Friday, Informa released their latest 2016 acreage forecasts, with the private firm forecasting 90.1 million acres of corn, off from their previous estimate of 90.8 while they pegged soybeans at 85.3 million acres, up from 83.9 previously.

In outside markets, the events in France over the weekend had little impact on global stocks. S&P futures posted modest gains overnight, trying to recover from last week’s losses.  In crude oil, prices were higher in response to the geopolitical tension that surfaced over the weekend, putting a slight risk premium back into crude, which had been on its way down to $40 a barrel.

Morning Comments – November 13

Grains were mixed with little movement overnight as wheat finished the overnight session fractionally higher while soybeans gave up 3 cents and corn was unchanged. Outside markets continued to move lower with the S&P futures and crude oil futures lower.

This morning’s export sales report showed corn and wheat in line with trade expectations while soybeans came in above expectations. In other export news, USDA announced a sale of 116,000 MT of milo to unknown destination in their flash reporting system.

Today, Informa is expected to release updated 2016 planting forecasts at 10:30 AM CDT while next Monday the monthly NOPA crush estimate for October will be released with traders looking for a 161 MB crush of soybeans.

S&P futures (ESZ5) continue to be pressured by weak commodity markets and the potential for a Fed interest rate hike in December. Comments by Fed Chair Yeltsen and other Fed directors yesterday seemed to confirm to traders that an interest rate hike is likely in the December meeting.

In crude futures (GCLZ5 / QMZ5), prices continued to move lower following yesterday’s unexpectedly high inventory build of crude stocks. EIA reported that stockpiles increased by 4.2 million barrels last week, compared with expectations for a 1.0 million-barrel build.  Gasoline stocks, which have been hovering at seasonal record highs since early October, fell by 2.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 807,000 barrels drop. Distillate stockpiles, which include diesel and heating oil, rose by 352,000 barrels, versus expectations for a 931,000 barrels drop, the EIA data showed. Inventories now stand at their highest for this time of year since 2010.

Morning Comments – November 12

Corn and soybean prices drifted lower in overnight trade, while wheat posted modest gains. In outside markets, S&P futures and crude oil continued to extend their recent losses.

Farm office FranceAgriMer on Thursday raised its monthly estimate of French total soft wheat stocks this season to 5.2 MMT, up from 4.8 million forecast last month. FranceAgriMer left unchanged its forecast of French soft wheat exports outside the European Union in 2015/16 to 11.5 MMT, above the 11.4 million shipped last season.

In Ukraine, rains have been somewhat beneficial, but analysts there are still pointing to significant shortfalls in the winter wheat crop. Just on planted area alone, acres are expected to be lower and as of Nov 9 only 59% of the crop has been planted versus 88% this time last year. UkrAgroConsult pegs the 2016 wheat harvest at 19 MMT while Thomson Reuters’ Lanworth group predicts 24.3 MMT. Ukraine’s state weather agency implies a harvest around 21 to 22 MMT. This compares to a 27 MMT crop in 2015.

In China, USDA’s attaché says lower corn usage there is the culprit for higher stocks in China. China has had a massive surge of imported sorghum, barley, and DDGS. Combined imports of these three commodities reached 25.6 million tons in MY2014/15 as feed mills searched for alternatives to high priced domestic corn. The attaché raised the MY2015/16 forecast for ending stocks by over 26 MMT to 117 MMT.

S&P futures (ESZ5) were lower trading at 2060, off of recent highs at the 2,100 mark. Today Fed Chairwoman Janet Yellen as well as Vice Chairman Stanley Fischer and regional Fed presidents William Dudley, Charles Evans and Jeffrey Lacker will all be giving speeches as traders look for clues on an interest rate hike in December.

In crude oil (GCLZ5 / QMZ5), traders will look to EIA’s latest report today for guidance. Market surveys project that crude oil stocks could rise by 1.3 million barrels for the week. In contrast, gasoline and distillates stocks are expected to fall by 0.81 and 0.91 million barrels, respectively. The tug of war between rising crude oil stocks and the falling refined products inventory could swing crude oil prices in either direction.

Morning Comments – November 11

Grains recovered overnight, trying to recoup some of their losses from Tuesday’s selloff in the face of fresh supply and demand news. In outside markets, S&P futures were posting gains, while crude oil and the dollar were lower.

Tuesday’s USDA report gave traders more bearish news to digest and US production and enduring stocks came in higher than expected. Corn saw the biggest jump in stocks as carryout went to 1,760 MB versus trade expectations of 1,597 MB. Soybeans and wheat were also above expectations with soybeans at 465 MB carryout versus 436 expected and wheat at 911 MB versus 877 expected.

In international news, Egypt’s GASC is holding a tender for the second day in a row, after buying 115,000 MT of wheat from Russia and Ukraine yesterday. In weather, heavy rainfall of 5 to 8 inches returns to southern Brazil over the next 10 days (Rio Grande do Sul & Santa Catarina), while rains finally begin across eastern Brazil (Minas Gerais, Rio do Janeiro, Espírito Santo, and Bahia). Likewise, needed rains of 1 to 3 inches will fall across Ukraine and southern Russia over the next two weeks, aiding the winter wheat crop there.

Crude oil prices (GCLZ5 / QMZ5) fell on Wednesday after industry data showed an increase in U.S. stockpiles, and as U.S. output had been surprisingly resilient in the face of lower prices. U.S. crude stocks jumped by 6.3 million barrels in the week to Nov. 6 to 486.1 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday, compared with analyst expectations for an increase of 1 million barrels. Traders and investors were looking ahead to data from the U.S. Energy Information Administration on Thursday, delayed by a day due to a holiday.