Sep 23, 2014
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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

Kevin McNew is President of Grain Hedge and Geograin. McNew was raised on a farm in central Oklahoma and received his bachelor’s degree from Oklahoma State University, and master’s and Ph.D. degrees in Economics from North Carolina State University. For over a decade, he was a Professor of Economics at the University of Maryland and Montana State University, focusing on commodity markets. He has received numerous academic awards for his research and outreach work, and was (and still is) widely regarded for boiling down complex economic issues into easy-to-understand concepts for applied life.

 

Soybeans Fall in the Overnight

Sep 22, 2014

 This morning corn and soybeans are trading lower as wheat shows some relative strength for the first time in a while. Corn is down 2 ¾ soybeans is down 15 cents and wheat traded 4 ¼ cents higher into the morning pause in trading.

November soybeans gapped lower to start the overnight session and are currently trading 15 cents lower in Chicago. Trade chatter has been surrounding strong yield reports over the weekend but nothing firm has been announced. No new fundamental stories are pressuring things lower this morning so it looks like a continuation of the large bear move we have seen since June 30th. Our bias continues to be that there is more downside risk in the soybean market than corn even at current prices.

This week’s weather looks to be relatively dry with only one widespread rain forecast over the next two weeks. The 8-14 day forecast looks to be wetter than normal throughout the western part of the grain belt encompassing a large area from North Dakota to Texas. Temperatures during that same time period are expected to be 60-70% warmer than normal throughout the majority of the grain belt.

The wheat market is taking a bounce this morning after an Egyptian purchase over the weekend. Egypt bought 55,000 tonnes of U.S. soft red winter wheat for delivery during October. The U.S. wheat market has struggled to find interest from Egypt over the last several months and this sale will signal that prices have moved low enough to compete with Black Sea exporters.

The USDA crop report will be released at 3 PM CST and will be the first week the USDA reports soybean harvest. 

Grains Grind Lower

Sep 19, 2014

 Grain markets are trading lower again this morning with corn down 2, soybeans off 7, and Chicago wheat down 5 cents.

Huge export sales were reported this morning at 8 AM CST showing 1,236,000 tons of soybeans to be delivered to China for the 14/15 marketing year. Large new crop corn sales were also reported with 375,936 metric tons to be delivered to Mexico. The large sale will have a relatively modest effect on the market this morning as a Chinese delegation is touring the Midwest this week and with many traders expecting large purchases from them during their trip.

Informa Economics is scheduled to release its U.S. wheat production estimates on Friday at 10:30 am (1530 GMT) and their 2015 acreage report on Friday afternoon. 

Weather over the next 10 days turn drier in the forecast with the 11-15 day forecast looking to provide a little bit more moisture. Texas should receive some rain in the next 1-5 days which should continue to help improve the moisture profile in the winter wheat seeding areas.  

Scottish citizens voted down a referendum to leave the United Kingdom on Thursday. The final vote was close with 55% voting to remain in the United Kingdom and 45% favoring separation. British and European markets are rallying as a result after results were announced and the dollar index is bouncing back from Thursday’s sell off.

 

Strong Sales for Corn and Soybeans

Sep 18, 2014

U.S. grain futures slipped lower over night with corn trading down 2 cents, soybeans off 2 cents, and Chicago wheat down 5 cents.

 

This morning’s export sales report showed strong sales for U.S. corn and soybeans while wheat missed expectations. Soybean sales were reported at 1.466 million tonnes, just above the high end of expectations. China was the largest buying accounting for a third of reported sales while 1/3 went to "unknown destinations". Corn sales were reported at 659,000 tonnes which was in-line with strong expectations for the week. Wheat sales came in below expectations at just 314,000 tonnes for the week. This was down 15% from the previous four week average.

 

Outside markets and currencies will be watching the Scottish independence vote today. Scotts will vote whether to separate from the United Kingdom and establish a sovereign state. Results will be tallied late this evening so any volatility will most likely be seen during Friday’s trade session. Most analysts agree that a strong knee-jerk reaction from equities and currencies is likely but the long term impacts should be minimum – regardless of the votes outcome.

 

Our weather models continue to show temperatures above normal through the end of September. Frost/freeze threat remains very low and will not be a supportive story in the grains for a couple more weeks.

Frost/Freeze Threat Does Little To Rally Grains Overnight

Sep 12, 2014

 Grains had a quiet trade in the overnight session on very light news following yesterday’s selling pressure. Corn was up a quarter of a center, soybeans moved 3 cents higher, and Chicago wheat continued lower – off 3 cents.

The national weather service has issued a frost advisory for parts of the Dakotas, Minnesota, Nebraska, and Wisconsin tonight. Commodity Weather group is still reporting that there is a "very low risk of freeze damage" as a result of this frost warning and the low temperatures projected over the weekend. The corn crop is roughly 10% behind in terms of maturity for this week in September. At the moment, the freeze concern remains in the back of trader’s minds but has been unable to help grains find a bottom. 

 

Thursday’s USDA report weighed heavily on futures as yield estimates for corn and soybeans came in above market expectations. The USDA projected U.S. corn yield at 171.7 bushels per acre, 4.1 bushels per acre above their conservative August estimate. Production is now expected at 14.395 billion bushels for 2014/15. Soybeans saw a similar report, with the USDA projecting yield at 46.6 bushels per acre – 0.3 bushels per acre higher than trade estimates. Soybean production is expected at 3.913 billion bushels for the 2014/15 marketing year pushing stocks to use over 13% for the first time since 06/07.

 

Bears remain in firm control of the U.S. grain market after several technical levels were broken this week. The last hurdle for this crop remains the threat of an early frost/freeze which could creep into the market as early as next week. We continue to feel that downside risk remains in these markets and prices could slip another 10% without much difficulty if yield potential can hold through harvest.

Supply and Demand Report - 11 AM CST

Sep 11, 2014

 ALERT: USDA REPORT OUT AT 11:00 AM CENTRAL TIME TODAY

In the overnight session corn traded 2 ¼ cents lower to 343 ½ cents sitting right on support that has held over the last week. Soybeans slipped another 3 ¼ cents last night to 990 ¼ cents and wheat fell another 3 cents to 516 ¾ as we enter the morning pause in trade activity. 

 

 

Export sales were released this morning which seemed to be positive overall, meeting expectations for corn and soybeans and beating expectations for wheat. Last week the marketing year concluded for the 13/14 season and this week marks the first export sales report for the 14/15 marketing year. Wheat export sales were reported at 690,000 metric tons which was well over analyst expectations of between 250,000-450,000 metric tons. Corn sales were recorded at 563,200 metric tons which was within the 450,000-650,000 metric tons expected. Corn also carried over 1,341,400 metric tons of old crop sales into the new marketing year. Soybeans recorded strong export sales of 984,300 MT with china making up 69% of volume sold. Soybeans carried over 1,340,500 metric tons of soybeans from old crop to the 14/15 marketing year.   

 

Big reportable sales come across the news wires this morning. With a combined 450,000 metric tonnes of soybeans being sold to China and Unknown Destinations. 360,000 tonnes of optional-origin soybeans were sold to China.

USDA Report Expectations

 

·        USDA Report Today at 11:00 AM Central Time.

·        Corn yield expected at 170.74 BPA, soybean yield expected at 46.29 BPA

·        Corn production expected up 250 MB, soybeans up 65 MB

Corn yield will be a focus of today’s report, following a very conservative 167.4 bushel per acre estimate in August. The average analyst is projecting corn yield north of 170 BPA, with many respected analyst looking for even a 173 or 174 figure from the USDA. Early harvest reports have shown exceptional yields across the southern plains and delta, but harvest has not yet reached the key growing states of Iowa, Illinois, and Indiana. Our weather intelligence company, Planalytics, is projecting corn yields to average 168.9 bushel per acre - at the low end of trade estimates.

 

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