Sep 18, 2014
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August 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.

 

Wheat Creeps Higher in the Overnight

Aug 29, 2014

 This morning soybeans and wheat are trading higher up 2 ¼ penny and 5 cents respectively. Corn is trading down 1 ¼ cents this morning. The U.S dollar index is in a consolidation pattern after making a sharp move higher between the 18th and the 26th.  

The white house spoke last night and mentioned that "We are not taking military action to solve the Ukrainian problem" and that the "ongoing incursion into Ukraine by Russia will only lead to additional costs for Moscow." With that being said, we can expect further sanctions by the west to be levied onto Russia. Over the last four days wheat has been able to rise to the top side of the range it has been trading in since early July. However, without a major disruption in the physical movement of grain out of Ukraine it is unlikely that wheat will be able to make any sort of meaningful rally.  

Next week’s weather forecast will provide ample moisture to finish off crops in the fill stage of development with precipitation amounts of 2-6 inches covering eastern Nebraska, Iowa, Southeast Minnesota and Wisconsin. The 16-30 day forecast did trend cooler for the northwest Midwest and needs to be watched for frost risk in late developing fields. For now frost risk is still very low, and there is no freeze expected in the Midwest next week.

This year excess precipitation during wheat harvest has been the global theme with the latest reports of this out of Bueno Aires. The precipitation in central and southeast Buenos Aires province, an area that makes up 18% of the planted area, is likely to suffer substantial losses due to excessive rains. Last week the exchange cut its estimated wheat acreage by 247,000 acres due to excessive rain in the region.   

 

New Crop Soybean Sales Beat Expectations

Aug 28, 2014

 Grains are slightly higher in the overnight session with corn up ¾ of a penny, soybeans up 3 cents and wheat up 6 ¾ cents as we move into the pause in trade. The tensions in Ukraine continue to escalate as reports out of Kiev accuse Russia of playing a major role in a counter offensive by the separatists. Concerns are that Russian boots and armored vehicles are on the ground in Ukraine, which if confirmed would be a significant escalation of the Ukrainian conflict. 

Wheat export sales were reported at 403,600 metric tons for delivery in 14/15 which was up 98 percent from the previous week. Brazil was highlighted as a major purchaser of U.S wheat buying 94,000 metric tons. Old crop corn sales had net reductions of 32,700 metric tons which was within analyst expectations. According to our model this puts corn on pace to meet the USDA expectations with only one week left in the marketing year. New crop corn sales were reported at 695,600 metric tons which was within expectations.

Old crop soybean sales recorded net reductions of 62,800 metric tons which puts soybean export sales at 35 million bushels ahead of pace to meet USDA expectations. It is likely we see the USDA revise their forecast in the September 11th WASDE report. New crop soybean sales were reported at 1,290,800 metric tons which was well above expectations. The majority of sales primarily went to China which booked 50 percent of this week’s new crop soybean sales.

Yesterday the EIA announced that ethanol production had fallen 24,000 barrels per day to 913,000 barrels per day. Ethanol stocks declined this week 934,000 barrels, bringing total stocks to 17.32 million barrels.

 

SDS Spotted In Some IL Fields

Aug 27, 2014

 We have a mixed morning in the grains with corn trading down 2 ½ cents, soybeans increasing 3 ¾ cents and wheat trading up a penny as we go into the morning pause in trading.

This morning the Taiwan Flour Millers Association rejected all offers for U.S wheat for a 99,410 metric ton tender which closed on Wednesday. The rejection came on the basis that prices were too high. Yesterday, the Russian Agriculture Ministry stated that they expect the 2014/15 grains exports to be at a record-high 27.5-30 million metric tons, up around 3 million metric tons from their previous forecast. GASC awarded the 175,000 metric ton wheat tender to Russia and Romania.

On Tuesday China’s state soybean auction sold 34% of the state reserves that were made available for sale, which was better than last week’s 24% sold when a similar volume of soybeans was offered by the state. This week’s Soybeans sold for an average of 24 yuan per metric ton more than last week.

There has been increased observation of SDS (Sudden Death Syndrome) spotted in fields throughout Illinois, South East Iowa, Northern Missouri and North East Kansas. In the Indiana crop progress report it was mentioned that "While soybeans setting pods received much needed moisture, excess water and humidity in the fields contributed increased SDS and foliar lesions in certain counties." SDS seems to be appearing rather quickly and will likely be mentioned in next week’s crop progress report. This will be an issue to monitor closely going forward.

Soybean Harvest Kicks Off in TX and MO

Aug 26, 2014

 The grains are slightly lower to unchanged this morning with corn down ½ of a cent, soybeans down 4 ¼ and wheat down ¼ a cent this morning. On Monday Egypt’s GASC announced a tender to buy an unspecified amount of soft wheat or milling wheat for delivery Sept 21 to 30. Traders are looking for Russia, Ukraine and Romanian wheat are likely to win the tender since Black Sea wheat is nearly $4 a metric ton more competitive than Chicago Wheat. GASC tender results are expected later today.

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Crop progress was released on Monday at 2 PM CST and showed that corn rated good-to-excellent has improved by 1% while soybeans have fallen 1% over the last week. Spring wheat conditions have also declined, falling to 66% good-to-excellent from 68% a week ago. Soybean harvest is now starting in the south with Missouri 2% complete and 8% complete in Texas. Early harvested soybeans have a strong cash market to sell into, with the spread between Sep/Nov at 79 ¾ cents this morning. The spread has been wildly volatile in the last week trading as high as 151 yesterday morning before seeing the gains evaporate by the end of the day. The start of southern soybean harvest will be putting pressure the old crop, new crop spread and has already started to affect Gulf bids which moved 10-17 cents lower yesterday.

This week’s weather is showing a wet pattern over the next 10 days with the majority of the grain belt receiving meaningful precipitation. The precipitation should cover the remaining dry spots which had developed over most of July and had been cause for concern for late planted soybean development. Currently, there are no early frost threats over the next 30 days.  

On Friday, Pro Farmer announced the aggregate U.S corn yield estimate at 169.3 bushels per acre which is 1.9 bushels per acre higher than the August USDA forecast and .9 bushels higher than the latest Planalytics yield forecast. 

Sept/Nov Bull Spreading

Aug 25, 2014

 This morning the grains are trading slightly lower with corn down 3 ½ cents, soybeans down 7 cents and wheat down 1 cent as we go into the morning pause in trading. The spread between the September soybean contract and the November contract has taken another giant leap higher, up 15 cents just in the overnight. The spread is now trading at 139 3/4, up from 15 cents on August 6th.

There should be more moisture this week throughout the Midwest as a storm tracks from Nebraska to the Great Lakes region from Tuesday to Friday. The storm should help the later planted corn and soybeans giving eastern Nebraska, Iowa, Southern Minnesota, and Wisconsin between ½ -1 inch of precipitation.

Heavy rains fell this weekend in Montana and the Western Dakotas which halted harvest and gave cause for concern about crop quality. In Montana, the higher elevations received snow which is still sticking on the peaks this morning. The wet growing season has caused concern about the emergence of Vomitoxin as harvest progresses. Vomitoxin has already been present in some of the early harvested crop.

France was able to wrap up wheat harvest over the weekend. Germany however, who has been struggling with wet weather during harvest, is still looking for a break in the forecast to cut the remaining acres.

Trading opened at 8:30 PM Sunday night, which was 1.5 hours later than expected after the CME ran into unspecified technical problems. Those problems have since been resolved.

Spot Soybean Basis Soars

Aug 22, 2014

 The grains moved slightly higher in the overnight session with corn increasing ½ a cent, soybeans up 3 ¼ cents and wheat up 4 1/4.

Yesterday, the Pro Farmer crop tour released their yield estimates for Iowa at 178 ¾ bushels per acre which is below the USDA’s August forecast of 185 bushels per acre and well below the latest Planalytics yield forecast of 187.4 bushels per acre. In Minnesota the crop tour projected 170.76 bushels per acre which was down from last year but still higher than the 168 bushels per acre forecast by the USDA.  

Yesterday, we continued to see end users increase their basis for spot soybeans. The tight old crop stocks have the September/November soybean spread rocketing higher. The spread is now trading at 106 ½ cents, up from 11 cents on August 4th. End users have supported the bullish spreading with the Gulf CIF basis now trading +325 off the November contract and a processor out of Claypool, IN bidding +400 over the November contract for soybeans delivered by September 3rd.

Wheat quality problems continue to be a concern in Europe with more rain in the forecast for Germany as it looks to harvest the remaining 25% of its crop. Quality specifications for the delivery locations of the European wheat contract have been changed weeks ago to ensure that foreign buyers are not delivered feed wheat. Recently across the newswires there is talk that Lithuanian wheat and English wheat are being imported to mix with French wheat to get quality up to spec.  

Corn and Soybeans Post Strong New Crop Sales

Aug 21, 2014

Grains are mostly unchanged this morning with corn trading 3/4 of a cent higher, soybeans up 1 1/4 cents and wheat trading 1 1/2 cent higher going into the morning pause.  

Weekly export sales were released this morning, with very strong new crop corn and soybean sales reported. Corn sales beat out expectations coming into this morning’s report, with FAS reporting 719,300 MT of 2014/15 corn sold. Major buyers were Colombia, Mexico, and unknown destinations. Soybean export sales were a mixed bag, with net cancellations of 89,600 MT reported for 2013/14 and large sales of 1,420,000 MT reported for the new crop. Wheat saw relatively poor sales, with just 209,200 MT reported sold. This was below expectations and down 62% from the 4 week average. 

The Pro Farmer Crop Tour enters day 4, with scouts moving from Coralville and Spencer Iowa to Rochester, MN. This will be the final day of the crop tour, and as shown by the map below has the potential to see some very good stands of corn. Follow #PFtour14 on twitter for live photos and comments from the crop tour.

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NOAA will be releasing their September and 90 day weather outlooks this morning. A major focus of this report will be the potential for an early frost/freeze event. Monday’s crop progress report showed just 22% of U.S. corn dented compared to a 5 year average of 27% for this week in the growing season. In Iowa just 16% of corn is dented compared to a 5 year average of 25%. Soybeans remain less of a concern in terms of progress as 83% of the crop is setting pods compared to a 5 year average of 79%. Numerous reports have been made from the Pro Farmer Crop Tour that the soybean crop will need more growing degree days to maintain yield potential.

 

Big Yield Potential On Day 3

Aug 20, 2014

 Grains are mixed this morning with corn off 3 cents, soybeans down 4 cents, and Chicago wheat up 2. Exporters sold 110,000 metric tons of soybeans to Vietnam for 2014/15 delivery.

Day 3 of the Pro Farmer crop tour is now underway with the eastern leg moving from Bloomington IL to Coralville, IA. Western crop scouts will be moving from Nebraska City, NE to Spencer, IA. This should show crop scouts some of the best corn of the entire trip, with our models projecting yields 10-30 bushels per acre better than last year along much of today’s route. In western Iowa we are projecting yield at 188 bushels per acre. Follow #PFTour14 and @GrainTV on twitter for live updates from the trip and to see crop photos as they are released.

 

With today’s crop tour is taking scouts through prime growing regions, strong yield potential is likely to cause some social media buzz. Expectations are for the market to trade lower as it is pressured from images of high yielding counties.  However, the corn market has been able to find its footing after a steep sell off starting early May. Price action will be critical to monitor over the next few days. If we can’t trade lower as scout’s survey some of the top fields in America, corn may have some more upside yet.  

Pro Farmer Crop Tour Expectations

Aug 19, 2014

 Grains are trading lower this morning in Chicago with corn down 3 cents, soybeans of 6 cents, and Chicago wheat down 3 cents.

The Pro Farmer crop tour is entering day 2 this morning with the western leg moving from Grand Island to Nebraska City, Nebraska. The eastern leg will go from Fishers, Indiana to Bloomington, Illinois. The map below shows Crop Reporting District yield forecasts for corn with the Pro Farmer Crop Tour route highlighted in blue. Tour stops are shown as blue dots. As you can see from the map, day 1 and day 2 should produce the "worst" yield forecasts, relative to 2013, of the entire trip. Day 3 and Day 4 of the tour will be in Iowa and Illinois where we are projecting yields up sharply from 2013. Expect the corn market to be pressured by reports of exceptional crops on Wednesday and Thursday of this week.

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Crop Progress was released after the market close Monday, showing soybeans rated 71% good-to-excellent. This was up 1% week over week. 83% of the soybean crop is now setting pods – well above the 5 year average of 79%. Corn conditions slipped a percent, now rated 72% good to excellent. 22% of corn is now in dent stage.

 

This week we should receive wetter than normal precipitation across much of the northern grain belt, with South Dakota, North Dakota, Minnesota, Iowa, Indiana and Ohio all getting a drink this week. The cooler trend across the upper Midwest and the hotter trend in the southern Midwest should collide to provide a number of precipitation opportunities to finish off much of the corn and soybean crop. 

 

This morning an 8,000 gallon diesel spill occurred along the Ohio River. The incident has shut down the river as officials have responded to the situation. The Ohio River is closed to vessel traffic near Cincinnati, OH to Dayton, Kentucky.

Corn Prices Move Higher in the Overnight

Aug 18, 2014

 Corn is trading 3 cents higher this morning, soybeans are up 5 on September and unchanged on November, Chicago wheat is down 6 cents. S&P 500 futures are trading 11 points higher while crude oil is off 80 cents to 96.54 at 8:00 AM central time.
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U.S. grains received spotty precipitation over the weekend, with parts of Iowa, Missouri and Illinois receiving 1-3 inches. The majority of the western grain belt received 0.20 – 0.60 inches of precipitation, which has helped to weaken November soybean futures this morning. China received 0.50 – 1.50 inches of much needed rain over night as most of the country continues to battle a severe drought. Weather over the weekend was generally supportive for growing conditions, and the USDA will receive their updated crop condition report today at 3:00 PM central time. 

Corn has made a strong technical move over the last three trade sessions, moving above the 20 day moving average on the December contract. This has been the first close above the 20 day MA since May 9th and will be viewed as a strong technical indicator for fund and spec traders. This market is ripe for a short covering rally, and we still feel any bounce is a good opportunity to make catch up sales.

Today the Pro Farmer crop tour kicks off with 130 scouts surveying fields throughout Minnesota, South Dakota, Nebraska, Iowa, Illinois, Indiana and Ohio. Half the scouts will head to survey fields toward Columbus, Ohio and the other half of scouts will survey fields west to Sioux Falls, South Dakota.

This morning Jordan's state grain buyer issued a tender to purchase 100,000 metric tons of hard milling wheat. Wheat prices jumped on Friday after a Russian convoy was allegedly attacked in Eastern Ukraine. Details seem very unclear around this event, but the talk of such things marks an escalation of the situation. 

NOPA Expectations For Today's Trade

Aug 15, 2014

 The grain market is moving higher again in the overnight with December corn trading up 4 ½ cents, November soybeans trading up 8 1/2, and December wheat trading 4 cents higher. The dollar index moved lower in the overnight, providing some short covering support for the grains. A reportable sale of 110,000 metric tons of soybeans was reported by FAS to be delivered to China during the 14/15 marketing year.

NOPA crush numbers will be released today at 11:00 AM central time, with traders expecting July’s crush to be just 115 million bushels. This would be well below the 5 year average for July – but not overly surprising considering the very tight old crop soybean cash market. This is largely an "old crop" report and bull spreading has been a theme this week, with the September/November soybean spread increasing 12 cents since Monday. September is now trading at a 42 cent premium over November this morning.

Overnight precipitation was limited across the grain belt, with some rain received in southwest MN and northwest IA. Precipitation over the next 10 days looks to be near average across much of the grain belt. Temperatures will remain cool across the grain belt with highs in the 70’s and 80’s for the next 10 days. China is expected to receive .25 to .75 inches of rain over 85% of their crop over the next 5 days, helping to mitigate drought conditions.

The Buenos Aires Grain Exchange has revised its 14/15 growing season wheat acreage estimates to 4.1 million hectares from 4.2 million hectares due to excessive moisture in some areas. Despite the reduction in planted acreage Argentina is still well above the 3.6 million hectares which it planted last year. Planting in Argentina is now 98 percent complete.

 

 

 

 

 

Soybeans Push Lower in Overnight

Aug 14, 2014

Grains are unchanged in the overnight session, with corn down a quarter cent, soybeans up a penny, and wheat up half a penny.

Export sales were slightly weaker than analyst expectations for wheat this morning with only 338,700 metric tons sold compared to the 450,000-650,000 MT expected. Wheat sales were down 43 percent from the previous week. Corn sales were also light on the old crop with only 117,100 metric tons sold but performed well for new crop, booking 787,800 metric tons for delivery in 14/15. Soybean sales continue to be positive, with 61,400 metric tons in the old crop and 1,050,000 metric tons in the new crop. Old crop soybean sales continue to show strength, posting positive sales without cancelations. Soymeal however did post net reductions of 31,700 metric tons of old crop, which was a marketing year low.

November soybean futures traded lower in the overnight session before rebounding into the morning trade break.Yesterday marked an important technical move for the contract as prices closed below $10.55 for the first time. This was a price level that acted as support on both July 22nd and August 4th, and bearish signal opens the door to another move lower. Considering the 15 million bushel surprise on Tuesday, it is our opinion that undersold producers should put on some downside protection on any bounce we can find.

Looking at the weather forecast, the western corn belt remains the area of concern. Friday into Saturday there is a good chance to see between 0.5 and 2.0 inches of rain across South Dakota, Nebraska, and Iowa. The 6-10 day forecast projects above average precipitation for the grain belt and slightly above average temperatures for the central and eastern grain belt.

Corn Exports Bought After USDA Report

Aug 13, 2014

Grains are drifting higher following yesterday’s USDA report. Corn is up a penny, November soybeans is up 3 cents and Chicago wheat is up 4. Bull spreading continues to be a theme in the soybean market, with September soybean trading up 6 cents.

Two sales of U.S. corn were reported this morning, with Mexico purchasing 107,600 and unknown destinations purchasing 130,000 tonnes. Both sales were for the 2014/15 marketing year and we could be seeing some end users trying to price grain after the USDA came up short (relative to expectations) on their yield number yesterday.

Drought in the central Chinese province of Henan is one of the worst in forty years with the region only getting half its typical rain supply. Despite the losses in yield, it is unlikely that this drought will result a substantial need to increase corn imports into China because the yield declines are largely offset by the increases in planted acreage. China is also sitting on a massive supply of corn after a number of good producing years. Yesterday, the USDA left China’s corn production number unchanged at 222 MT.

NOPA crush numbers will be out Friday, detailing soybeans going to crush during the month of July. Spot crush margins remained favorable for much of the month, averaging 60 cents per bushel on the board. NOPA numbers will be out at 11:00 AM central time.

Report Day Expectations

Aug 12, 2014

 Grains are sliding lower into this morning’s USDA report. Corn is down 2, soybeans off 4 and Chicago wheat is down 6 cents. Today’s USDA report will be released at 11:00 AM central time.

This morning’s USDA report will be the first survey based yield estimate of the year. Yield figures will be the focus of the report following a July that saw ample moisture in the eastern grain belt but a return of drought conditions in Nebraska and the Dakotas. Below are trade expectations for the report and our take on the numbers. Please call our office if you have questions about speculative or hedge positions coming into the report. Our number is 877-472-4607and we are available between 8AM and 5PM central time.

 

2014/15 Corn

July Reported

August Expected

Production (MB) 

13,860

14,253  

Yield (BPA) 

165.3

170.098 

Ending Stocks (MB) 

1,801

2,005  

 

2014/15 Soybeans

July Reported

August Expected

Production (MB) 

3,800

3,823

Yield (MB) 

45.2

45.583

Ending Stocks (MB) 

415

414 

 

Crop conditions were released yesterday at 3 PM CST and showed that the soybean good-to-excellent rating had slipped by one percent to 70%.  The expectation for both corn and soybeans was to leave conditions unchanged.   Corn’s good-to-excellent rating met those expectations by maintaining 73% of the crop rated good-to-excellent. Spring wheat conditions were also left unchanged at 70% good-to-excellent. Spring wheat harvest has officially kicked off with 6% of the crop harvested about on pace with the five year average.  

 

China sold 23% of soybeans offered a state auction overnight. In total, 82,489 tonnes were sold compared to 69,243 in last week’s sale. This was a good signal for mainland Chinese demand, although it is important to note that most of the sales went to food companies who use non-GMO varieties exlusivle. Because of this, Chinese imports should not show a major impact from recent state auctions.

Grains Steady with USDA Reports on Horizon

Aug 11, 2014

ALERT: USDA report out tomorrow at 11:00 AM central time (expectations below)


Grains are trading sideways to lower this morning in Chicago. Corn is down a penny, November soybeans down a penny, and Chicago wheat off 4 cents. Bull spreading is once again a theme in the soybean market, with September trading up 5 cents.

 

The wheat market is trading a bit lower this morning after a strong short covering rally which started at the end of July after tensions mounted at the boarder of Ukraine and Russia. The building of Russian troops at the boarder had some analysts worried that a Russian intervention was looming. However, as time passes without any further escalation we start to see wheat turn back over and move toward its lows.  


The U.S Army Corps of Engineers completed temporary 200-foot wide channels in the Mississippi river yesterday allowing them to reopen the channel to commercial traffic. Emergency dredging operations were being conducted between Wabasha, Minnesota and Alma, Wisconsin after flood damage had restricted commercial passage.  

 

Weather outlook this week continues to show a drying pattern over the northwest grain belt, one area in particular that could use the precipitation. The 6-10 day forecast is showing a fair possibility of precipitation in the western grain belt and this could drive trade action later this week. Temperatures are expected to increase at mid-week, but only to the mid 80’s to low 90’s. 

 

A reminder of USDA report expectations:

This report will be released at 11:00 AM Central Time and be the first survey based yield estimate of the year. Yield figures will be the focus of the report following a July that saw ample moisture in the eastern grain belt but a return of drought conditions in Nebraska and the Dakotas. Below are trade expectations for the report and our take on the numbers. Please call our office if you have questions about speculative or hedge positions coming into the report. Our number is 877-472-4607 and we are available between 8AM and 5PM central time.

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2014/15 Corn

July Reported

August Expected

Production (MB) 

13,860

14,253  

Yield (BPA) 

165.3

170.098 

Ending Stocks (MB) 

1,801

2,005  

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2014/15 Soybeans

July Reported

August Expected

Production (MB) 

3,800

3,823

Yield (MB) 

45.2

45.583

Ending Stocks (MB) 

415

414 

 
 
 
 

Markets Eyeing Key USDA Reports

Aug 08, 2014

 Grains are sliding lower overnight, with corn down 2, soybeans unchanged, and wheat down 4 in a very quiet overnight session.

China imported 7.47 million tonnes of soybeans in July, outstripping an official government forecast from June. Imports are expected to fall to 3.84 million tonnes in August, as we reach the end of the old crop marketing year. 

 

As a reminder, the USDA will be releasing updated production and usage numbers next Tuesday. Below are the key points coming into the report and trade estimates. Call the office to discuss hedge or speculative positions coming into the report.

 

2014/15 Production and Ending Stock Estimates:

Corn

July Reported

August Expected

Production (MB) 

13,860

14,253  

Yield (BPA) 

165.3

170.098 

Ending Stocks (MB) 

1,801

2,005

 

Soybeans

July Reported

August Expected

Production (MB) 

3,800

3,823

Yield (MB) 

45.2

45.583

Ending Stocks (MB) 

415

414 

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Transportation costs for the rail market have been rising lately with bids in the secondary market for guaranteed grain car placement in October ranging between $2500-3,300 above tariff per car. This is very non-typical for this time of year where railcars infrequently trade over $700. Although this is not a new development, this will be a big influencing factor as we move throughout the marketing year. States like North Dakota, South Dakota and Minnesota have all experienced rail delays over the last year on the BNSF and UP lines, and continue to experience a large list of railcar backlogs. A recent article in Agweek highlighted a merchandiser in South Dakota, who has received 25%-50% of his normal rail supply at this time of the year. He is unable to move the grain in his facility fast enough and is currently closing his facility doors to any more grain from producers until his inventory can be loaded out. Without increased velocity in the rail system, we are likely to see another difficult year for basis in the northern plains. 

Old Crop Sales Slowing

Aug 07, 2014

 Grains are sliding lower in the overnight session with corn down 3 cents, soybeans unchanged, and Chicago wheat off 5 cents. A reportable sale just came across the wire, showing 13,000 MT of soybeans going to unknown destinations. 

Old crop corn, soybeans and wheat export sales were all reported on the low side of expectations this week. Wheat only booked 590,900 metric tons and down 26 percent from the previous week. Corn booked 120,900 metric tons which was down 30 percent from last week. Old crop soybean reported 94,900 metric tons which was down nearly 50% from last week’s sales. Old crop soymeal sales were very positive beating expectations with 252,100 metric tons with analyst expectations ranging from 50,000-150,000 metric tons. New crop export sales for corn was also lacking, only booking 758,700 metric tons. New crop soybean sales were within analyst expectations, booking 1,008,000 metric tons which was mostly made up of sales to China.   

The western grain belt received wide spread precipitation overnight, with areas of South Dakota, Nebraska, and Iowa receiving 1 to 2 inches of rain. These are timely rains for the soybean crop in particular as we enter pod fill in many places. The western corn belt remains the focus for the trade as drought conditions have re-emerged in the area.

Ethanol production figures were reported on Wednesday, showing a sharp week-over-week decline in production. For the week 902,000 BPD were produced – down from 952 during the previous reporting period. Corn going to ethanol still remains 10-20 million bushels ahead of pace to meet USDA expectations for the 2013/14 marketing year.

Vladimir Putin signed orders yesterday banning agricultural products from the United States and some E.U. countries, following sanctions brought against Russia last week.  This is not expected to have a major impact on U.S. grain prices as Russia has been a very infrequent export customer. For the current marketing year the U.S. has shipped 8 cargos of soybeans and no corn or wheat to the Russian Federation.

This morning it was confirmed that the wheat quality requirements have been tightened at the delivery locations for the EURONEXT wheat contract. These steps were taken to ensure that this year’s rain damaged wheat will not be used for contract deliveries, and to help ensure importers that the EURONEXT contract can be used to hedge more than feed wheat. Chicago and Kansas wheat moved higher yesterday on rumors and talks that European wheat standards were tightening at delivery locations. Chicago wheat is trading 5 ¼ cents lower at this morning’s pause.  

 

Paris Wheat Futures Surge

Aug 06, 2014

 Wheat is leading the grain complex higher overnight while corn and soybeans traded lower to unchanged. At the moment Chicago wheat is up 6 cents, corn us unchanged, and soybeans are down 4 cents.

French milling wheat futures are surging higher overnight as delivery houses have considered increased standards for wheat coming out of the fields. Quality issues have been a concern following a very wet summer, and many bushels are not meeting milling wheat quality standards for export. U.S. wheat futures may find export business as a result if France is unable to provide milling quality wheat to end users within Europe and abroad. This morning $5.74 per bushel is the next area of resistance when looking at the September Chicago wheat contract. 

 

Precipitation is expected today across Iowa and Nebraska with the most intense rains expected in the northwestern part of Iowa. Expected precipitation across most of the region is around .5 inches with northwestern Iowa expected to receive as much as 1.5 inches. They system is expected to track south east into Missouri and Illinois on Thursday. This rain event has been anticipated since last week and affecting soybeans trade action. The precipitation will be enough to help pod filling in soybean during this critical development period. 

Soybeans Slips Lower in the Overnight

Aug 05, 2014

 This morning the grain market is retracing the gains seen yesterday with corn down 3 ¾ cents wheat down 2 ¾ cents and soybeans dropping 17 cents on the September contract.

Crop progress was released yesterday after the market close and look to be weighing on soybean futures in the overnight session. Soybean ratings were left unchanged at 71% good/excellent, even as most traders expected a one to two percent decline in condition ratings. Considering the near perfect state of the crop this is viewed as a bearish number at this point in the growing season. 57% of soybeans are now setting pods and the next couple of weeks will be critical for final yield. Corn condition declined by 2%, now rated 73% good/excellent. This was in line with trade expectations and should be viewed as a neutral number for the corn market. 36% of U.S. corn is now in the dough phase.

We are seeing more yield reports being released lately as the market turns its attention to the Crop Production Report and USDA Supply and Demand report which will be released at 11:00 AM CST on Monday the 12th. Yesterday, FCStone estimated the U.S. 2014 corn production at 14.455 billion bushels with an average yield of 172.4 bushels an acre. This morning Farm Futures released its U.S Crop forecast, estimating the corn crop to be 14.331 billion bushels with an average yield of 171.06 bushels per acre.   Both of these yield estimates come in above the Reuters poll of 20 analyst’s, which averaged a guess of 170.476 bushels per acre.

FCStone estimated a soybean production of 3.865 billion bushels of soybeans with an average yield of 46 bushels per acre, while Farm Futures estimated 3.857 billion bushels of production with an average yield of 46.07 bushels per acre.

We received an early indication of the next crop out of Brazil yesterday, with AgRural projecting their upcoming acreage figures. They expect soybean acres to grow 4.9% year-over-year to a record 76.6 million acres. Ending stocks out of Brazil (and the world as a whole) are a concern for U.S. prices as we enter the new marketing year. In July the USDA projected world soybean ending stocks to surge 27% in 2014/15 and ending stocks in Brazil alone to increase 36% in 2014/15.

 

 

Strong Export Sales Reported This Morning

Aug 04, 2014

 We are seeing green across the board with September corn trading up 3 ¼ cents, September wheat up 11 ¼ cents and September soybeans up 13 ¼ cents going into the morning pause in trading. It looks like grain markets are trading higher on dryness concerns, as this weekends rain event was mixed and saw very light coverage. Scattered rains fells over the weekend, with 30% of the grain belt receiving light precipitation. The 5 day forecast is looking more promising for rain fall with 60% of the grain belt expected to receive rain. Areas of concern remain western Iowa, Nebraska, Southeast South Dakota. 

 

Strong reportable export sales were reported this morning with 110,000 MT of Soybeans going to China and 102,000 tons going to Taiwan for new crop delivery.

 

US crop conditions and progress will be reported this afternoon at 3:00 PM central time. Expectations are for condition ratings to slide slightly lower from the 75% G/E on corn and 71% G/E on soybeans reported last week. 50% of soybeans should be setting pods and nearly 30% of corn has entered the dough stage. FC Stone will release yield estimates after the market close today and Informa numbers will be out tomorrow morning.

 

Chinese corn was up 9 cents per bushel overnight as drought continues to damage their crop. The Henan province is currently in the worst drought in over 50 years and has prompted the Chinese government to carry out cloud seeding operations. This is a developing story and still has received relatively light attention from the grain market – we will keep an eye on this story over the next several weeks. 

 

IKAR, one of Russia’s leading agricultural consultancies is forecasting a Russian harvest of 58.5 million metric tons of wheat in 2014 up from last month’s expectations of 57.5 million metric tons. Russian harvest is now 43 percent complete. Russian grain exports have been selling at a record pace and are on course to reach 3 million metric tons by July, up .5 million metric tons from the previous record. The fast export pace and the decline of the Russian Ruble exchange rate has spurred on a jump in Russian wheat prices over the last week.  

 

 

Soybeans Lower on Wet Short Term Outlook

Aug 01, 2014

 This morning we have September corn trading down 2 cents, September soybeans trading down 5 ½ cents and September soybeans down 10 ¼ cents.  

The weather forecast has shifted to a slightly wetter outlook for the southwest parts of the grain belt, but there are still areas in North Dakota, southern Nebraska and northern Kansas that could miss out some of the showers. Dryness has been developing throughout Nebraska, Iowa, Minnesota and Illinois has the chance of impacting soy yields until more substantial precipitation is received next week. In the longer term 16-30 day outlook the northwest could experience drier than average weather which could strain the soybean crop which has put down shallow roots due to the wet spring.

Non-farm payrolls were released this morning, coming in slightly below market expectations. The U.S. economy created 209,000 jobs in July, below the 235,000 expected by the market. This was the sixth straight month with job creation above 200,000 – the first time that has happened since 1997. Unemployment increased a percent to 6.2%. In 2014 the economy has created 230,000 jobs per month on average, up 19% from the pace seen in 2013. S&P 500 futures are trading up a percent following the report. To add the September S&P 500 futures to your trading platform, add the symbol ZSU4.

 

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