Sep 21, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


June 2014 Archive for 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.

 

Huge Soybean Acres Surprise the Market

Jun 30, 2014

 U.S. Soybean acres at 84.839 million acres (82.154 Million Acres Expected)

U.S. Corn acres at 91.641 million acres (91.725 Million Acres Expected)

U.S. Wheat acres at 56.474 million acres (55.818 Million Acres Expected)

 

June 1 Soybean stocks 27 million bushels above expectations (405 Million Bushels)

June 1 Corn stocks 132 million bushels above expectations (3,854 Million Bushels)

June 1 Wheat stocks 8 million bushels below expectations (590 Million Bushels)

 

U.S. Soybean acres came out 2.5 million acres higher than trade estimates, pushing new crop prices sharply lower.  Northern states saw the largest acreage additions year over year, with 1.35 million soybean acres added in North Dakota alone. Michigan, Minnesota, and Wisconsin saw a combined 1.42 million soybean acres added as well. Old crop stocks, which has been the backbone of the soybean markets relative strength, did little to support prices as the number came in 27 million bushels above expectations. Overall these are very negative numbers for new crop soybeans, especially considering the large world ending stocks projected for 2014/15

Corn acres came out in line with trade expectations. The June 1st stock number is bearish as the 3.854 million bushels reported was 132 million bushels above trade expectations.

Wheat had an overall neutral report with quarterly stocks tighter than expected by only 8 million bushels and a slightly larger acreage figure. At the moment wheat is following the corn market lower.

 

Report Day- What You Need to Know

Jun 30, 2014

 USDA REPORT AT 11:00 CENTRAL TIME TODAY


The USDA will release the Planted Acreage and June 1st Quarterly stocks today at 11:00 AM Central Time. The planted acreage report will give the new crop contracts direction into the summer months. In general, traders expect large soybean sowings and a corn number down 4 million acres from 2013. Have questions about hedge or speculative positions coming into the report? Our number is 877-472-4607 and we’d be happy to speak with you.

 

2014/15 U.S. Planted Acreage (Million Acres)

 

March 31st
Reported 

June 30th
Expected 

Corn

91.7

91.725

Soybeans

81.5

82.154

Wheat

55.8

55.818

 

Traders expect the USDA to report 2014/15 soybean acres at 82.15 million acres, up nearly 700,000 acres from the record acreage projected in the March 31st Planting report. Assuming yield potential remains favorable, this acreagefigure would push U.S. production to 3.7 billion bushels for 2014/15, up 12% from 2013/14. It is important to keep in mind that this surge in U.S. production is coming at a time when global ending stocks are expected to increase 22% in 2014/15.

 

Corn remains a different beast in the upcoming marketing year, with few acreage revisions expected in Monday's report. On average, analysts only expect the USDA to raise corn acres by 25,000 acres from their projection in the Prospective Planting report. This slight increase would still have overall corn acres down 4 million acres year over year, and leave overall production unchanged from 2013 assuming good current yields. World corn stocks are expected to only increase 8% year over year, well below the surge in global ending stocks expected for soybeans.

 

Quarterly Grain Stocks (Million Bushel)

 

June 1 2013 

Reported

June 1 2014

Expected 

Corn

2,766

3,722

Soybeans

435

378

Wheat

718

598

 

 

Traders expect the USDA to report the smallest June 1 soybean stocks since 1977. Corn stocks are expected to expand by nearly 1 billion bushels from June 1st 2013 following the large 2013 crop. Wheat stocks are expected to be down just over 100 million bushels from 2013 levels. Soybean usage is mostly known between NOPA crush numbers and export sales, but considering the exceptionally tight stocks the old crop soybean market will be very sensitive to any surprises out of today’s stock report.

ACREAGE REPORT & QUARTERLY STOCK EXPECTATIONS

Jun 27, 2014

 June 27th, 2014 Morning Comments

 

USDA Acreage Report on Monday, June 30th, at 11:00 AM central time

 

First notice for July contracts is Monday, June 30th. Please roll into August/September

 

Today’s trade session will mostly be focused on Monday’s reports with market participants building and adjusting positions going into the weekend. Wheat should be affected by the Canadian acreage numbers which came out 7.4% below last year’s seedings. Canada reported 24.1 million acres of wheat planted, while market expectations were for 24.5 million. The lower acreage surprise could act as a supporting factor in today’s trade, but certainly isn’t hugely bullish considering the large global ending stocks this year. Canada also reported that Canola planted 20.2 million acres which was slightly above trade expectations and up from the 19.9 million acres in 2013.

 

Below are trade estimates for Monday’s USDA report and our bias on the numbers. Have questions about hedging or speculative positions coming into the report? We are available between 8AM and 4PM central time each day and would be happy to talk. 

 

2014/15 U.S. Planted Acreage (Million Acres)

 

March 31st
Reported 

June 30th
Expected 

Corn

91.7

91.725

Soybeans

81.5

82.154

Wheat

55.8

55.818

 

Soybeans
Traders expect the USDA to report 2014/15 soybean acres at 82.15 million acres, up nearly 700,000 acres from the record acreage projected in the March 31st
Planting report. Assuming yield potential remains favorable, this acreage figure would push U.S. production to 3.7 billion bushels for 2014/15, up 12% from 2013/14. It is important to keep in mind that this surge in U.S. production is coming at a time when global ending stocks are expected to increase 22% in 2014/15.

 

In light of these bearish fundamentals, the new crop soybean market has remained 
relatively strong in recent weeks. With November 2014 soybeans closing at $12.40 this morning we feel there is more downside, than upside, looking toward harvest prices. With this in mind, it is our opinion that now is a good time to protect a portion of expected production using a futures or option strategy.  

 

Corn
Corn remains a different beast in the upcoming marketing year, with few acreage 
revisions expected in Monday's report. On average, analysts only expect the USDA 
to raise corn acres by 25,000 acres from their projection in the Prospective Planting 
report. This slight increase would still have overall corn acres down 4 million acres year over year, and leave overall production unchanged from 2013. World corn stocks are expected to only increase 8% year over year, well below the surge in global ending stocks expected for soybeans.

Considering a corn market which has traded lower in recent weeks and the questions surrounding new crop acreage, we feel corn has a larger chance of holding a bullish surprise in Monday's report. Call the office to discuss pricing strategies as we come into Monday's USDA report. Our number is 877-472-4607 and can be reached between 8AM and 4PM central time each day.

Are we going to run out of soybeans?

Jun 26, 2014

 Soybean export sales were reported at 317,200 – well above trade expectations for around 150,000 tonnes sold. This morning’s report included the large reportable sale of 140,000 tonnes to unknown destinations from last week . This was a very strong week for U.S. soybean exports, considering the fact that excluding the large reportable sale it would have been the largest week for U.S. soybean sales since March. Keep an eye on the July and August soybean contracts as the market opens this morning.

Corn export sales were reported at 321,000 tonnes, also above trade expectations for this morning’s report. Our models now indicate that U.S. export sales of old crop corn are running 145 million bushels ahead of pace to meet USDA expectations. Wheat export sales were very strong, but in line with trade expectations. 

 

The cash basis at the gulf has increased 20 cents in the last week as moisture during flowering has elevated the levels of Vomitoxin. The quality of SRW wheat does not meet quality standards leaving exporters willing to pay a premium for high quality wheat. The Kansas City wheat market was also supported by confirmation that Brazil has postponed the usual 10% import tariff for up to 1 million tonnes of wheat through August 15th, a terrify that usually applies to U.S. and Canadian wheat. Brazil was forced to take action after concern about supplies from Argentina which is Brazil’s primary source of wheat.

 

For corn and soybeans traders are mostly focusing on the USDA acreage report and quarterly stocks numbers. Soybeans quarterly stocks will be closely watched as analysts expect the smallest stocks since 1977.  This morning soybeans is trading higher, moving up through its 100 day moving average, but still within the consolidation range that we have traded in since the 13th. 

Market Eyes Report Day

Jun 25, 2014

 Grains are pausing today following weakness in Tuesday’s trade. Coming into the morning trade break we see corn down 2, soybeans unchanged, and Chicago wheat off 3. Next week’s USDA reports are a focus of the trade as we move the trough this week. 

 

 

Prospective Planting Reported

(March 31)

Planted Acreage Expected

 (June 30th)

Corn

91.7

91.725

Soybeans

81.5

82.154

Wheat

55.8

55.818

 

The USDA will release updated acreage expectations next Monday, June 30th. Below are USDA figures from the prospective planting report, and trade expectations for Monday’s Planted Acreage report. On average, analysts expect 91.73 million acres of corn, 82.154 million acres of soybeans, and 55.82 million acres of wheat reported planted. The soybean market looks the most vulnerable coming into the report, as prices have remained respectively strong even as traders expect 500,000 or more acres added to the 2014/15 planting estimate. Considering current prices and potential downside, we would be more aggressive pricing soybeans than corn coming into this report.

 

This morning there were a two reportable export sales reported with 217,400 MT of new crop U.S. corn to unknown destination and 58,000 MT of old crop U.S. sorghum also to unknown destinations.

 

The plains wheat areas will be most wet in the next couple days and see moisture again by the middle of next week but the magnitude of the precipitation should not be enough to risk serious damage to the crop. By this weekend it is expected to see moisture return to the northern plains with parts of Minnesota seeing 1-1.5 inches in the northern and south eastern parts of the state.   

Beans Turn Negative in the Overnight

Jun 24, 2014

Yesterday crop progress showed that both corn and soybean conditions had fallen since the week before as hard rains throughout the Midwest flooded some fields and damaged fragile new growth. Corn’s good to excellent rating dropped two percentage points from the week before to 74% while the soybeans good to excellent rating dropped only one percent to 72%.  Despite the drop in crop conditions, this is still far superior to the 65% good to excellent corn and soybean conditions we started out with last year. Despite the heavy rain negatively impacting some fields, the overall benefits to a wet spring are still a bearish factor over the market. 

Soybeans moved lower in the overnight session as traders position themselves for Monday’s planted acreage report. Acreage numbers from the USDA will set the tone for prices moving forward, with some analysts feeling an acreage approaching 82 million acres is possible. Considering current prices, we feel it is a good time to forward price or protect with futures/options a portion of expected production. Considering the large acres and current growing conditions, a weather scare will be required to significantly rally this market. 

 

 

Export inspections were reported yesterday, with wheat beating analyst expectations, corn meeting expectations and soybean inspections coming in well below expectations. This week wheat inspections were reported at 581,453 MT, Corn inspections were reported at 987,936 MT and soybeans were 61,847 MT. 

Barge rates have held mostly steady this spring, even as the Mississippi River remains closed between St. Paul and Savage, Minnesota. So far this closure has done little to impact barge freight along the lower portions of the river but will be a situation to be monitored by basis traders. Declining futures and light farmer selling have worked to firm basis in recent weeks.

Beans Bounce Sharply In the Overnight

Jun 23, 2014

 Grains are moving higher this morning, with old crop soybeans leading the charge. At the moment we see corn unchanged, soybeans up 16 cents and Chicago wheat up 2.

July soybeans surged 16 cents higher in the overnight, spurred on by improving Chinese economic data. The survey, conducted by HSBC, showed that factory activity increased during the month of June. This was the first expansion of factory orders in six months and has helped support domestic Chinese prices in the overnight. Dalian exchange soy products are up across the board in the overnight session with soy oil leading things higher – up 2%. Positioning ahead of next Monday’s USDA report will be a theme this week. With new crop soybean prices approaching $12.50, and the potential for a bearish acreage surprise, we still feel that now is a good time to protect the downside.

Wheat demand seemed was a prevalent theme over the weekend with Egypt’s state grain buyer GASC buying 180,000 metric tons of Russian and Romanian wheat, Saudi Arabia purchasing 780,000 metric tons of hard and soft wheat and private importers in Pakistan purchased 55,000 metric tons of Black Sea wheat. Unfortunately, the sales were won almost entirely by European and Black Sea region sellers, giving little support to the U.S. wheat contract.

This week’s forecast looks to bring more moisture to the hard wheat regions of the U.S with the most significant moisture expected today, Wednesday and Thursday. The moisture, though welcome to replenish the parched soil, comes during a time that complicates harvest and causes increased concern of sprouting and decreased protein levels in this year’s crop.   

Crop progress and conditions will be out at 3:00 pm central this afternoon. Corn and soybean ratings have the potential to drift lower after last week’s heavy rain across the grain belt. We do not feel last week’s rain will have a meaningful impact on final production, and we continue to hear from the majority of producers that this year’s crop is one of the best in years.

Meal Prices Pressured by Ample DDG's

Jun 20, 2014

Soybeans seemed to find resistance in the overnight at the 100 day moving average after closing below the level on Tuesday. Soybeans could continue to be pressured as domestic feeders have access to ample DDG’s after China banned U.S imports of the feed due to the non-approved GMO seed variety MIR 162. With ample supplies of DDG’s domestically, feeders are turning using them instead of Soymeal which has weighed on meal prices recently.

Soymeal exports have stayed relatively strong with old crop exports reported at 54,800 metric tons on Thursday which was in line with expectations. It was also reported that an animal feed maker in the Philippines bought 160,000 metric tons of U.S. soymeal in a tender that closed on Tuesday. Traders viewed that tender as an indication that South American are still relatively expensive on the global market. 

Corn futures are moving lower in the overnight session, helped out by negative demand side news from China. A senior government official indicated that China may work to further reduce corn stocks following several weeks of state grain auctions. Chinese corn stocks are estimated at 150 million tonnes and the government has struggled to liquidate stocks at the current floor price of around $360 per tonne. If China is getting aggressive about liquidating stocks this floor price will need to be lowered and U.S. prices may need to follow suit if they are to remain competitive from an export perspective.

 

Wheat futures are drifting lower this morning but we are starting to get indications that demand is returning to this market. Overnight it was reported that Brazil had booked 6-8 cargoes of U.S. HRW wheat in the last 48 hours. Also in the overnight it was reported that the Taiwan Flour Millers association made a purchase of 100,000 tonnes of U.S. milling wheat. Demand side numbers will be important to finding a bottom a world wheat ending stocks remain very large.

 

 

Export Sales Mixed

Jun 19, 2014

 The grain markets are moving higher this morning with corn up 2 ¾ cents, wheat up 6 cents and soybeans trading up 2 ¾ cents.

Ethanol production was released yesterday and showed the largest weekly production on record. Ethanol crush margins remain very strong historically, despite Chinese DDG cancellations pressuring the domestic DDG market. Ethanol production should remain a supportive story for corn moving through the summer months.

Areas of South Dakota, Iowa, Minnesota, Wisconsin and Illinois are under flash flood warnings this morning following heavy rain. Social media has been filled with photos of flooded corn/soybean stands, bringing some support into the market. We wouldn’t expect this week’s flooding to have major impacts on harvested acreage.

Weekly export sales showed slightly weaker wheat and corn bookings but continued to show strength for soybeans. Wheat sales came in at 372,600 MT for 14/15 delivery which was just about the low side of trade expectations this week. Corn booked only 109,000 MT of 13/14 which was well shy of expectations that ranged from 300,000 to 500,000 MT and Soybeans posted another strong week of export sales booking 97,900 MT for old crop. Soybeans continue to book export sales late in the marketing season and we expect even better sales in next weeks report triggered by the price declines in the last couple weeks. Yesterday, a single day sale of 140,000 MT was reported by FAS showing there is demand to meet the falling prices. According to our models soybeans is now 101 million bushels ahead of pace to meet the USDA expectations. 

 

Precipitation Complicates the Wheat Harvest

Jun 18, 2014

Soybeans are leading the grain market higher this morning on a technical bounce following yesterday’s sharp selling. Unwinding of the July/November bull spread has been a contributor to weakness on the old crop, and this morning we are finally finding footing in the July/November spread. This morning it was reported that exporters sold 140,000 metric tons of U.S soybeans for old crop delivery. Traders have been keeping a close for signs of increased export activity after prices turned lower in the last week of trade. 

Corn is up a penny on very light news in the overnight. Good to excellent ratings continue to weigh on December futures.

 

Wheat is trading a bit higher here this morning as weather favors growing conditions for corn and soybeans but complicates the situation for wheat. Moisture that could have been much more helpful a couple months ago is slowing the harvest for the winter wheat and causing quality concerns for the already suffering crop. Kansas, Western Oklahoma and the Texas Panhandle should receive more rain on Thursday and Friday and the 6-10 day forecast looks to bring the region above normal precipitation. The wheat market went into this morning’s trade pause at $5.96 after having erased 86% of the bullish move that occurred between February and the May 9th WASDE report.  

 

Planalytics will be hosting a special Webcast on Thursday, June 26th as Jeff Doran, Planalytics Sr. Business Meteorlogist, and will provide an update on the latest status of El Nino, a major weather system currently developing in the Pacific. Temperatures in equatorial waters extending from east Africa to the shores of Ecuador in South America are trending above normal. While this warming of sea surface temperatures in the Pacific is an indicator that an El Niño event may well be on the horizon – NOAA gives it a 70% probability – it hasn't arrived yet. There are a number of factors at play that may impact the intensity of this cycle and its impact on North America's agriculture in the coming months.

 

To learn how you can register for the webcast contact Grain Hedge 877-472-4607

Crop Progress Feeds the Bears

Jun 17, 2014

Corn and soybean futures moved lower in the overnight session. Coming into the morning trade break corn is down a penny, soybeans off 9 cents, and Chicago wheat up a penny. Yesterday’s crop progress and condition ratings confirmed what clients across the grain belt have been saying about the condition of this crop.

Crop progress showed us corn conditions improved last week by a percent, now sitting at 76% good to excellent which is the best crop condition we have seen in the last 20 years during this stage of the growing season. It was also reported that 97% of corn has emerged up from 92% a week ago. For soybeans, planting is mostly wrapped up at 92% planted and 83% emerged. Conditions are also off to an equally good start at 73% good to excellent. 

 

On Tuesday, China had another state soybean auction which only sold 20.3% of soybeans offered. Weeks of state soybean sales caused state sales to book 72,852 metric tons of the 358,558 metric tons offered, only half of the amount sold last week. The average price was recorded at $650 per metric ton.

 

Rains and quality concerns are helping Chicago wheat futures find footing. The 6-16 day forecast looks for more rain, right as harvest is starting in the southern plains and Mississippi river delta. Some concerns about head scab and vomitoxin are also circulating the trade. Overnight tenders were released from the Philippines and Japan from the United States and elsewhere. After a $1.55 decline in future prices we may finally be seeing some meaningful demand return to this market.

Will NOPA Numbers Lift the Market?

Jun 16, 2014

Grain saw generally positive price action in the overnight session with corn, soybeans, and wheat all moving higher. Fundamental news for the grain market was light in the overnight session while the developing situation in Iraq drove outside markets, specifically energies.

July soybean futures move 5 cents higher in the overnight session as traders prepare for today’s NOPA crush report at 11:00 AM central time. The market expects today’s report to show 126.984 million bushels of soybeans crushed during May, nearly 10 million bushels fewer than the April report. Crush figures have been strong during the last part of the marketing year, prompting the USDA to raise their marketing year projection by 5 million bushels on Wednesday.

 

Technically, July soybean futures are ripe for a rebound. The 100 day moving average held Thursday and Friday of last week as this market reached severely oversold territory. Continue to watch the July/November spread for indications that July is ready to make another move lower .Coming into the morning trade break we see July gaining 6 cents on the November contract, the largest daily gain since June 6th

 

The weather over the weekend was generally favorable for crops with moisture spread across the grain belt. Areas in southwest Minnesota, Eastern South Dakota, North West Iowa and northeast Nebraska got as much as 4-6 inches of precipitation and saturating the soil in those regions. This week should usher in even more rain throughout the upper Midwest continuing to help this year’s crop which is already off to a fantastic start.  

 

Over the weekend there was international tender activity with Jordan’s state grain buyer looking to buy 100,000 metric tons of milling wheat sourced from optional origins. Lebanon also purchased 15,000 metric tons of Ukrainian wheat and Taiwan Flour Millers Association issued a tender to purchase 96,180 metric tons of milling wheat to be sourced from the United States. 

Soybean Basis Jumps

Jun 13, 2014

Grains are finding technical strength following two days of hard selling. Corn is up 3 cents, soybeans up 7 cents, and Chicago wheat is up 2 ½ cents coming into the morning trade break.

NOPA crush numbers will be out on Monday and are expected to show 126.984 million bushels of soybeans crushed during May. This would be down roughly 5 million bushels from the 132.6 million bushels crushed during April. The USDA raised their 2013/14 soybean crush estimate in the June USDA report by 5 million bushels following several months of stronger than expected crushings.

The results of Egypt’s wheat tender were announced yesterday following the market close. In that sale Egypt purchased 180,000 tonnes of wheat for July delivery from Romanian and Russian traders. No signs yet of international interest in US what even after a month of declining U.S. futures.

 

US dried distiller grain prices have continued to move lower following China’s plan to suspend new US DDG imports. Prices in Iowa are now around $155 per ton, well off the $200 - $215 prices seen before the Chinese announcements. Most concerning for US DDG exporters is China’s decision to re-export any shipments containing MIR-162 corn. This situation is still developing, but will continue to be a negative factor for old crop corn demand.

 

July soybeans sold off 37 cents in the last two days following the June WASDE report. The cash market has responded to the sharp drop in prices by lifting basis to attract any remaining grain out of the farmer’s bins. The U.S FOB gulf soybean basis climbed 6 cents on Thursday alone, but the Gulf wasn’t the only place basis has jumped. In the last two days we have seen the National soybean basis average jump 7 cents, with the largest gains focused on Nebraska, Iowa, North East Kansas and Eastern South Dakota.  Soy crushing plants have increased their bid 10 ¾ cents in the same time period.

Export Sales Strength

Jun 12, 2014

Grains are trading unchanged to higher following yesterday’s USDA report. Old crop soybeans are leading the grain complex, up 6 cents on the July contract. Yesterday’s 17 cent decline may have been overdone, considering the 5 million bushel revision lower to 2013/14 carryout projected by the USDA. Corn and wheat are both trading near unchanged after receiving negative reports yesterday for old and new crop ending stocks.

 

Export sales reported that wheat had a good start to the 2014/15 marketing year which began June 1st, selling 570,000 MT for the above 450,000 MT which was the high side of analyst expectations.  Old crop corn also had a good week, posting 409,000 MT up sharply from the previous week and on the high side of analyst expectations. New crop corn was reported at 150,000 MT which was around the average analyst guess. Soybeans posted another week of old crop export sales totaling to 86,700 MT which pushes soybean exports 103 million bushels ahead of pace to meet the current USDA forecasts. Traders continue to monitor for cancellations but have seen only one week where sales were in the negative in the last 10 weeks of sales.


Wheat traders will be watching the result of an Egyptian tender today. The tender is for July delivery and will be another test of US export prices on the global front. US wheat at the gulf is now being offered at a 13$ per tonne discount to Ukranian wheat – indicating that export business may return to US shores in the coming weeks. 


From a production standpoint, wheat may be pressured in the weeks to come following revisions higher to Chinese, European, and Russian production estimates in yesterday’s USDA report. This was partially offset by decreases for US production, but global wheat supplies have remained a negative factor on US and international prices over the last month. 

WASDE Report Reaction

Jun 11, 2014

USDA REPORT REACTION

 

Grains are trading lower in Chicago following this morning’s USDA report. Ending stocks came out larger than expected for new crop corn, soybeans and wheat. Old crop ending stocks came in below expectations for corn and soybeans while wheat was reported larger than trade expectations.

2014/15 U.S. Ending Stocks (Million Bushels)

 

May
Reported

June
Expected

June

Reported

Corn

1,726

1,716

1,726

Soybeans

330

319

325

Wheat

540

552

574

 

New crop corn ending stocks were left unchanged from the May report. Not surprisingly given crop conditions, yield was left unchanged at 165.3 bushels per acre for corn. This report will do little to support sagging corn futures, with key technical support being tested at $4.40. This market has traded steadily lower since the May 9th WASDE report so be cautious around these support levels. Despite the fact that we missed the average analyst expectation for this June report, the market has already been baking ideal growing conditions into price over the last month. As we get closer to major support at $4.34, be cautious of a sharp bounce or short covering rally. If however, we do close below $4.34 chances are good this corn market is ready to move another leg lower.

New crop soybean ending stocks were lowered by 5 million bushels to a projected carryout of 325 million bushels for the new crop. Yield and planted acreage were left unchanged, and the lower carryout number was a result of 5 million bushels being taken from old crop carryout. This morning’s report provided little direction for soybean traders and the next major report will be the June 30th acreage numbers.

2013/14 U.S. Ending Stocks (Million Bushels)

 

May Reported

June Expected

June Difference

Corn

1,146

1,170

1,146

Soybeans

130

127

125

Wheat

583

590

593

 

For the old crop balance sheet, crushings were raised 5 million bushels for old crop soybeans, the only balance sheet item changed from the May report. This lowered projected ending stocks by 5 million bushels to 125 million for the 2013/14 marketing year. This was slightly below trade expectations and is working to strengthen the July contract compared to November. At the moment we see the July/November soybean spread widening by 6 cents to $2.37 per bushel.

Corn ending stocks were left unchanged from the May report, coming in below trade expectations for ending stocks to be raised by 30 million bushels. Similarly to soybeans, today’s numbers are supporting the July corn contract with respect to the new crop, December, contract.

Wheat ending were raised 10 million bushels on net, 3 million bushels ahead of trade expectations. Imports were down 5 million bushels, food usage down 10 million bushels, and exports lowered 5 million bushels in this morning report. Wheat futures are trading lower in Chicago, Kansas City, and Minneapolis following the report.

Game Day- WASDE to be released at 11 CST

Jun 11, 2014

 USDA REPORT OUT AT 11:00 AM CENTRAL TIME

 

Traders are looking for the USDA to make slight revisions to 2014/15 ending stocks in today’s USDA report. On average the trade is expecting a 10 million bushel cut in corn ending stocks and an 11 million bushes cut soybean ending stocks for the new crop marketing year. Considering the pace of planting and emergence, few acreage changes are expected from the May report. Yield is a similar situation, with nearly ideal growing conditions supporting the 165.3 BPA for corn and 45.2 BPA for soybeans projected in the last report.

 

2014/15 U.S. Ending Stocks (Million Bushels)

 

May 
Reported

June 
Expected

Difference 

Corn

1,726

1,716

-10

Soybeans

330

319

-11

Wheat

540

552

+12

 

Old crop soybean futures have found support this week on trade expectations for lower ending stocks in today’s numbers. On average, analysts expect the USDA to shave old crop ending stocks by 3 million bushels to 127 million bushels. Soybeans will be the old crop story to watch following strong export and crush demand over the last month. With stocks to use currently at just 3.8% soybean traders will be very sensitive to any major revisions to ending stocks. 

 

2013/14 U.S. Ending Stocks (Million Bushels)

 

May Reported

June Expected

Difference

Corn

1,146

1,170

+24

Soybeans

130

127

-3

Wheat

583

590

+7

 

The latest forecast out of Sydney Australia lowered 2014/15 wheat production to 24.59 million tons down less than a percent from the 24.80 million tons it forecast in March. Dry weather has stressed yields and the move to an El Nino weather pattern could further cut yields.

 

Russian prices have fallen over the last week to $253 per metric ton, down from $258 per metric ton the week before. Prices have come under pressure in the Black Sea region as expectations for bumper harvest weigh on the market.

 

In South America the Rosario Grains Exchange adjusted its latest corn and soybean projections. The latest round of forecasts has only a mild revision in soybean production at 55.6 MMT compared to 55.7 MMT reported last month. The corn forecast was increased substantially in that area, jumping to 24.5 MMT compared to 23.9MMT last month. Recently, South American corn has been eating into U.S export sales with Argentinian corn $208 per ton cheaper. U.S sales may be supported by the current port worker strike in Argentina, but may come back under pressure once the strike is resolved. 

 

Next week’s weather forecast has favorable rains for the corn and soybean growing areas throughout the U.S.  The plains should clear up by this Friday and then go another week before more rains hit the drought stricken region.  

 

WASDE Pre-Report Expectations

Jun 10, 2014

 JUNE USDA REPORT TOMORROW AT 11:00 AM CENTRAL TIME


Grains traded sideways in the overnight session with corn up a penny, wheat down a penny, and soybeans trading six cents higher on the July contract. New crop beans were off a penny. The overnight session was very light in terms of news and trades continue to eye tomorrow’s USDA numbers. Below is a table detailing trade expectations for the new crop.

 

2014/15 Ending Stock Estimates

 

June Expected

May Reported

Change

Corn

1,716

1,726

-10

Soybeans

319

330

-11

Wheat

552

540

+12

 *Million Bushels


Crop Progress was released yesterday afternoon, but did little to move markets in the overnight session. Emergence is in good shape across the grain belt with 92% of corn, 71% of soybeans, and 80% of spring wheat now emerged. Corn condition ratings were down 1% on the week to 75% good-to-excellent. The first soybean good-to-excellent rating was released showing 74% of the crop rated either good or excellent. Yesterday’s report was not new information for the trade, just further confirmation that planting has wrapped up in good time and crop conditions remain very good over the first several weeks of the growing season. 

 

Yesterday corn was blindsided by news that China has stopped issuing permits of DDGs from the United States on concerns they might contain an unapproved GMO. This had immediate impact on the cash market here in the U.S. where export barge bids dropped by about 10 percent on Monday to the lowest levels since January.  

 

This appears to be a replay of the same events that occurred at the end of last year when China rejected nearly 250,000 metric tons of U.S DDG’s due to presence of Syngenta’s MIR 162. Following the rejections at the end of the year DDG imports rebounded sharply in China surging to a near record high in April at 613,678 metric tons. The latest move out of China will continue to negatively impact corn especially as the market was digesting a great start to this year’s crop.

Trade Eyes WASDE Report on Wednesday

Jun 09, 2014

This morning July corn is trading down 5 ½ cents, soybeans down 2 ½ cents and wheat is down 1 ¼ cents.

The weather outlook shows more rain this week for the HRW regions which should receive more precipitation today and again on Thursday. Over the weekend there were broad rains throughout the HRW regions but not quite as hard as anticipated. For a crop that has experienced relative dryness this year, heavy rains this late in the season could negatively affect the quality of the wheat. More precipitation now could rob the grain of higher protein levels and cause higher amounts of sprouting.

"Position evening" could be a theme for the start of this week, with the Goldman Sachs commodity fund roll in progress and the June USDA report scheduled for release on Wednesday. In the report traders expect relatively few changes to the 2013/14 balance sheet. On average traders expect corn ending stocks up 18 million bushels, soybean ending stocks off 3 million, and wheat up 7 million. The major report for the old crop will be June 30th when quarterly grain stocks are released.

Ending stocks for the 2014/15 crop are expected to be lowered 17 million bushels for corn, off 11 million bushels for soybeans, and up 7 million bushels for wheat. If new crop corn and soybean futures can get a bounce in Wednesdays report, it may be a good selling opportunity for new crop bushels as we enter the summer months. Current crop conditions are looking very good across and the long-range forecast which sees a 70% chance for an El Nino pattern developing this summer.

Grains Look to Find Footing on Friday

Jun 06, 2014

 Corn, soybeans, and wheat are all trying to stabilize this morning after a week of hard selling. Coming into the morning trade break we see corn up a penny, soybeans up a penny, and Chicago wheat up four cents.

The wheat market is trading higher by a slight margin this morning despite the forecast for heavier rains in the Southern Plains over the next five days. This is key moisture for the drought stricken area that suffered significant HRW losses this year. The precipitation should be spread across eastern Colorado, the Texas panhandle, Kansas and Oklahoma over until Tuesday next week. Oklahoma where there is some flood risk, should receive a significant amount of the moisture from this event. Also, more wheat demand that has been won by Russia said two trade sources, announcing that Indonesia flour millers bought 200,000 metric tons of 12.5% protein Russian wheat for between $290-300 per metric ton. 

The Chinese government saw lighter than expected corn sales at today’s state grain auction. Of the 3.5 million tonnes offered only 30% was sold. This is down considerably from last week’s sale when 53% of the 3.5 million tonnes offered were sold. This week’s sale was offered at a slightly higher price, but the lack of sales is concerning from a demand perspective.

On Thursday, the Climate Prediction Center released their updated long-range forecast. In this report they projected a 70% chance of El Nino developing this summer and an 80% of El Nino developing by mid-winter. El Nino growing seasons typically produce mild temperatures and above average precipitation for much of the U.S. grain belt, although can be negative for world crop production. This pressured new crop grain futures in Thursday’s trade and is one indication that the great start to the growing season we have seen may continue through harvest.

 

"Position evening" could be a theme in today’s trade as the Goldman Sachs fund roll begins and traders look toward next Wednesday’s USDA Report. Traders expect few changes to the new crop balance sheet, with most of the focus on old crop demand. Soybean export sales is one area to watch on Wednesday as our models show sales-to-date roughly 100 million bushels ahead of the pace needed to meet 2013/14 USDA expectations.

 

Mixed Export Sales Numbers

Jun 05, 2014

The grain market is mixed to lower this morning with the corn market down ¼ cents, wheat trading 1 ¼ cents lower and soybeans down 6 ¼ cents going into the morning pause in trading.  

At 7:30 AM the export sales were released which did not provide the evidence suggesting that wheat was competitively priced last week on the global market. Old crop export sales showed only two thousand metric tons sold which was on the low side of expectations of between -50,000  and 150,000 MT. New crop sales fared a little better booking 341,400 with expectations between 325,000 and 475,000. Next week’s export sales could be better as Chicago wheat prices have continued to trend lower, shedding another 14 cents this week.

Corn sales for this marketing year came in at 550,700 metric tons beating analyst expectations while new crop corn sales were reported below expectations with only 19,600 MT.

Soybeans reported another week of positive old crop sales on the high side of expectations, booking 41,300 MT compared to expectations of between -100,000 and +100,000 MT of old crop sales. New crop sales missed expectations to the low side, only booking 230,000 MT for the 14/15 marketing year.

The 6-10 day weather outlook predicts below normal temperatures for the majority of the corn belt and rain events likely in the eastern corn belt. Central Illinois remains one spot that needs precipitation, and today’s models show rain likely in the next 2 weeks. Looking abroad, Black Sea wheat is expected to see rain over the next 2 weeks following several weeks of dryness.

Grains Rebound in the Overnight

Jun 04, 2014

This morning we are seeing some recovery in the grains after selling off yesterday. July corn is up 1 ¼ cents, July wheat is trading 5 ¼ cents higher and July soybeans are up 9 ½ cents.

Wheat futures are trading higher across the board this morning as fundamental and technical factors have combined to support prices. With yesterday’s decline, U.S. export prices for Chicago (SRW) wheat are now nearly in-line with Black Sea exporters for the first time in months. This will open the door to export business in the weeks to come from buyers who have remained on the sidelines. Technically, the July 2014 Chicago wheat contract is now resting on the 61.8% retracement when looking at the lows on January 31st and the highs printed May 6th.

In the cash market we are starting to see grain merchandisers roll their spot bids from the July soybean contract to August. This morning July holds a 67 cent premium to the August contract forcing grain merchandisers to compensate for that inverse by raising basis significantly after they roll. The elevators that have rolled to the new contract however, did not fully compensate for the discount only raising basis by 50 to 60 cents. This means that producers still looking to sell old crop soybeans, this roll period will most likely hurt the cash prices in your area. The roll period has just begun and many elevators are still bidding off July so there are still opportunities to price off the July contract. For tools to help you keep track of basis changes in your area give the office a call at 877-472-4607 or take a demo at grainhedge.com.

Corn traded sideways in the overnight session on very light news. The December 2014 corn contact is also due for a snap-back following the move from $5.10 to $4.55. The Relative Strength Index (RSI) is now at 28.5, which is the most oversold market condition we have seen (using the RSI) since October 2013. The excellent condition of this crop has trumped any technical buy signals in recent weeks but this may be a good area to take a "wait and see" approach on pricing new crop corn.

In the overnight parts of Parana, Southern Brazil recorded zero degree temperatures which could have an effect on their corn crop. The Parana region is the number two state for growing a second crop following the main soybean harvest. It is still too early to speculate on the damage that these temperatures may have had on production.

 

Can Wheat Snap Back?

Jun 03, 2014

Yesterday at 3 PM CST crop progress was released showing corn planted across the U.S at 95% complete, just one percent over the five year average and up 7 percent from last week. In the same report 80% of the corn crop has emerged which is right in line with the five year average. Attention has switched over to emergence and early season growing weather and it seems that this year’s crop is off to a great start. Also in the report was the first corn conditions ratings of the season which reported 76% of the corn crop was good to excellent, beating analyst expectations by 6% and up from last year’s rating of 63% during the same time period.

Soybeans also showed a strong increase in planted acres with 78% complete compared to the five year average of 70%. Soybeans are 50% emerged which is above the average for this time of year.

Spring wheat planting also made substantial gains and is now in line with a typical planting pace jumping 14 percentage points to 88% complete across the northern states. With less and less concern about getting the spring wheat into the ground another supportive factor in the wheat complex has been immunized.

USDA weekly inspections report was released on Monday which showed strong exports by soybeans and wheat. Corn met analyst expectations reporting 976,061 metric tons about on par with the average analyst guess. The USDA reported 156,364 metric tons of soybeans were inspected for export compared to the highest analyst guess of 125,000 which was supportive of soybeans in yesterday’s trade. Wheat reported 514,667 metric tons compared to expectations of 425,000-525,000.

There are some indications that the wheat market may be ready to find a bottom considering international prices. U.S. wheat for June delivery is now trading at a $10 per tonne discount to French wheat and just a $5 - $7 per tonne premium to Black Sea exporters. In bushel terms, this puts U.S. wheat just 12-15 cents above Black Sea wheat and back in position to earn export business. Overnight the Japanese tenders for 107,239 tonnes of food quality wheat from the U.S., Canada, or Australia.

Technically, this wheat market is due for a snap-back as the RSI is at 8.3 on the July Chicago Wheat contract daily chart. Anything below 30 is "oversold" territory and signals a market that may be due for a correction. Call the office if you’d like help adding this indicator to your desktop computer or mobile trading platform.

Wheat Grinds Lower

Jun 02, 2014

 Selling across the board this morning with corn down 4 cents, Chicago wheat down 5 ¾ cents and soybeans down 5 ½ cents going into the morning pause in trade.  

The wheat complex down again this morning after closing lower for 13 out of the last 15 trading sessions. Kansas City Wheat showing the largest losses down 9 cents as Nebraska, Northern Kansas and Colorado all received a bit of precipitation over the weekend. Further weakening wheat’s position this morning is talk of Ukraine’s 2014 harvest possibly producing a record crop due to favorable weather over the winter and spring. The head of Ukraine’s state weather forecasting center said that winter wheat harvest could produce 22.5 to 23.5 million metric tons this year compared to last year’s harvest of 21.8 million metric tons.  The concern that Ukraine wheat exports would be disrupted due to the political turmoil has not materialized leaving wheat in a particularly vulnerable position as sales have been lost due to the high prices.  

 

Soybean gapped lower to start the overnight session, off 9 cents for November and down 6 cents on the July contract. No specific news event over the weekend has driven prices another leg lower, the move in the overnight session looks like a combination of strong planting pace and growing condition expectations for the emerging crop. The old crop soybean contracts (July and August) continue to show relative strength as a result of very tight old crop ending stocks. Thursday’s export sales report once again showed positive sales for the old crop and many traders are expecting an export sales revision in the June USDA report.

This afternoon’s crop progress report should show another strong week of soybean sowings. Last week’s report showed 59% planted and 25% of the crop emerged. From speaking with Grain Hedge clients last week, it wouldn’t be surprising if we saw 75-80% of the crop now planted in this afternoon’s report.

Log In or Sign Up to comment

COMMENTS

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions