Alert: USDA report out at 11:00 central time tomorrow
Grains markets are finding some strength in the overnight session. Corn is up a penny, soybeans up 6 cents, and Chicago wheat moving 4 cents higher. This move higher looks largely technical, as this morning’s export sales report largely met trade expectations.
Yesterday’s ethanol production report showed that production was down week-over-week at 927,000 barrels per day. Stocks continued to grow and are once again at levels seen in early 2013. Seasonally we would expect ethanol crush to slow from July moving forward, but crush margins remain very strong relative to the last 5 years. Basis opportunities continue to exist at ethanol facilities across the grain belt, even as corn basis has sagged in recent days.
September corn has now been trading below four dollars for two full sessions. Bearish sentiments continue to weigh on the market in recent weeks as open interest continues expanded in Tuesdays down day, indicating that new short positions are being added. Forecasts continue to show ideal weather looking out two weeks as the crop enters a critical yield determining phase of pollination. Also weighing on corn was the announcement out of Brazil yesterday that it’s better than expected corn yields are expected to produce 78.2 million metric tons compared to last month’s estimates of 77.89 million metric tons.
Fridays report is will be focused on soybean demand revisions for the 2014/15 crop after the June 30th report showed acreage 3.6 million acres higher than last year. With the crop conditions for soybeans at a 20 year high it is expected that 169 million bushels could be added to total supply since just last month’s WASDE report and up 425 million bushels from last year. Traders will be watching how the demand numbers are adjusted with surge of supply hitting the market this fall. The average analyst expects ending stocks to be reported at 418 million bushels which would imply a demand increase of nearly 76 million bushels from June’s report. Much of the demand increase is expected to be seen in the export column which seems to be more responsive to large supply increases.
Export sales this morning came in slightly below trade expectations for wheat only booking 338,100 compared to expectations of 400-635 thousand metric tons. Corn met expectations booking 363,000 metric tons of old crop corn and soybeans met expectations adding 56,300 metric tons of soybeans to old crop sales. This morning the USDA announced that 60,000 metric tons of old crop soybeans was sold to unknown destinations which was part of a larger 126,000 metric ton reportable sale which also included new crop soybeans. China also purchased 118,000 metric tons of new crop soybeans in the same announcement this morning. Prices for old crop soybeans have fallen nearly $1.33 in the last week and a half which should start to trigger some buying interest from importers.