Apr 25, 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.

 

Bean Export Sales Slump

Apr 24, 2014

 Grains were fairly subdued overnight. Wheat was the leader to the upside gaining 3 cents while corn was 1 cent higher. Soybeans slipped 2 cents in the night trade.

Soybeans continue to trade well below $15 for front month May futures as traders expect more cancellations of soybean exports and talks of Brazil bean cargoes coming to the US markets. Basis levels continue to hold up relatively well, but deferred delivery beyond June is starting to fade pretty quickly. Export sales were disappointing this week with only 800 MT of old-crop sales, but even more bearish was the lack of significant business for new-crop with only 118,000 MT of sales versus trade expectations of 350,000 to 550,000 MT.

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In corn, EIA weekly ethanol production showed a drop from the previous week with output off 29,000 barrels per day for a weekly average of 910,000 barrels per day. The weather is expected to be wet over much of Iowa and Illinois today and tomorrow which could hamper corn plantings. However, the longer term outlook is for dry weather to return to the Midwest and with it still being April, it is probably too early to be overly concerned about planting delays. On Wednesday, USDA reported China bought 120,000 MT of US sorghum for old-crop delivery, signifying they are still in the market for feed grain even if they aren’t buying US corn.

For wheat, markets have remained downwardly biased after rain helped give some modest relief to the Southern Plains. Over the past week, 1 to 2 inches of rain were observed in Southern Oklahoma and Western Kansas. However, dry conditions are expected over the next 10-day forecast period for much of the Southern Plains, so it seems drought conditions will likely persist. In international deals, Morocco bought 30,000 MT of wheat overnight from Poland. This morning Stats Canada released their wheat plantings estimate for 2014, which they pegged at 24.766 million acres, just a bit more than 24.4 million acres expected, but off from 2013 plantings of 26.1 million.

WEEKLY EXPORT SALES (in thousand metric tons)

 

OC Actual

OC Expected

NC Actual

NC Expected

Corn

618.9

500-800

382.9

150-250

Soybeans

0.8

-200 - +100

118.2

350-550

Wheat

339.1

200-400

271.7

250-500

 

 

Soybean Selloff Continues

Apr 23, 2014

 Soybeans continued to move lower in the overnight session giving up 10 cents a bushel. Wheat and corn were mostly quiet in the night trade with fractional changes.

Front month May beans have tumbled 60 cents in the past 4 trading sessions as reports circulate of South American beans heading to the US. A pair of Brazilian soybean vessels initially sold to China by Marubeni are now US-bound. One is headed for Wilmington, NC, and the other to Mobile, AL. In production news, the Rosario Grains Exchange estimated Argentina’s 2013/14 soybean crop at 54.9 MMT versus a previous estimate of 54.7 MMT. USDA has Argentina’s crop at 54.0 MMT in its latest April WASDE report.

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In corn, weather models are beginning to hint at more rain in the Midwest in the coming week which could slow the pace of planting. Rain is expected to be about 1 inch over much of Iowa, Wisconsin and Minnesota in the coming 48 hours, with more rain expected early next week. On Tuesday, private exporters reported the sale of 240,000 MT of U.S. corn to Mexico for delivery in the 2014/15 marketing year.

For wheat, Oklahoma State Agronomist Jeff Edwards found damage from last week’s freeze in field trial plots, although damage was quite variable ranging from 5% to 80% depending on the location. Edwards goes onto to state "The drought has severely limited resilience in our crop and we are entering late April, so I do not anticipate there will be much of a recovery or rebound in fields that were severely damaged. It is important to note that 50% injury does not necessarily mean 50% yield loss. In most cases the actual yield loss will be less than the % injury. So, it is reasonable to expect that 50% injury might only result in a 35 or 40% yield loss." In overnight deals, Japan's Ministry of Agriculture bought a total of 108,789 MT of food quality wheat from the United States, Canada and Australia in a regular tender. In Australia, timely rains will boost wheat plantings by farmers when the seeding window opens later this week, analysts said, but the threat of an El Nino dry weather system may see production fail to capitalize on the good start to the season.

Weather Favors Fast Planting in Coming Weeks

Apr 22, 2014

 Grains found modest support overnight following Monday’s sharp selloff. Soybeans and wheat were up 5 cents in the night session while corn climbed 3 cents.

Beneficial weather was a key driver in Monday’s selloff as wet weather was in the forecast for the Southern Plains, which has been engulfed in a massive drought. By the weekend, a low pressure system will be approaching the Plains another opportunity for thunderstorms in the Central-Southern Plains for the weekend. Monday’s crop progress report showed no change in the overall condition of the winter wheat crop, which held steady at 34% good to excellent. In overnight deals, Iraq's state grain board has rejected all offers and made no purchase in a tender for at least 50,000 MT as prices were said to be too high. Meanwhile, Japan's Ministry of Agriculture is seeking to buy a total of 108,789 MT of food quality wheat from the United States, Canada and Australia in a tender that will close late on Wednesday.

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In corn, a dramatic warm-up in the Midwest is helping give farmers a chance to catchup on planting. All though this week’s planting pace was at 6%, below expectations of 9% by analysts, the weather outlook for the remainder of the week looks very favorable for farmer planting. Monday’s export inspections report showed another strong week with total exports hitting 1.6 MMT, above trade expectations which ranged from 1.05 to 1.55 MMT. Overnight a South Korea feed group bought 60,000 MT of corn with optional origin from the US or South America.

For soybeans, Chinese customs data released on Monday showed the country has kept up its strong appetite for beans, with total imports up 33% year to date, and most of the volume coming from the US so far. Weekly US export inspections were slim with 138,777 MT of shipments for the week, at the low end of expectations which ranged from 135,000 to 350,000 MT. In the cash market, slow farmer selling is being largely offset by limited exporter and processor demand. Bids for soybeans were weaker in Davenport along mid-Mississippi River after dealers there felt there were a touch too aggressive in hiking their bids last week. A firmer tone in barge freight costs amid lock delays on that stretch of the river also weighed on basis.

 

Favorable weather on the horizon

Apr 21, 2014

The grains are trading lower this morning on improving weather outlook for the next 10 days. This morning May corn is down 3 3/4, May soybeans is down 8 ½ and May wheat is down 12 ½ cents.

The central plains saw temperatures in the 70’s over the weekend, with Chicago recording temperatures at 79F degrees on Easter Sunday. The weather outlook favors a dramatic warm-up throughout the U.S and parts of Canada over the next 10 days which will have speeding effect on planting. Planalytics is expecting temperatures average 3 to 6 degrees F above normal in the major corn producing areas which will improve soil temperature throughout the grain belt. Two low pressure systems are expected over the Central Plains this week which are expected to move eastward. This first low pressure system is expected on the 23rd and the second is expected on the 24th and 25th. These events will interrupt planting slightly but not impact progress for more than a day.

The crop progress report will be released later today at 3 PM CST. Analysts are expecting corn plantings to be 15 percent complete which would be only 3 percent behind the average by late April.   

China’s customs data was released overnight which showed that soybean imports through March were up 33.5 percent year over year with the U.S supplying the vast majority. Corn imports were up 14.7 percent year over year with the imports largely sourced from Argentina, while U.S corn imports to China fell 16.1 percent.   

Bean Sales Still Not Being Canceled

Apr 17, 2014

 Grains climbed higher overnight with soybeans once again leading the charge for its 4th consecutive day of gains. In the night trade, front month May soybean futures were up 7 cents a bushel while wheat posted a 3 cent advance. Corn followed with a 1 cent gain.

Soybeans continue to be fueled by tight supplies in the US where strong exports and crush have cut into available supplies. This week’s sales showed only 19,000 MT of old-crop for the week, but the total commitments for the year still far exceed USDA’s projections. Total export commitments for old-crop stand at 44.6 MMT versus USDA’s projection of 43.0 MMT to be shipped for the entire year.

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In corn, weather conditions look fairly good for planting. The next few days look fairly dry across the Midwest, although a system is expected from Sunday into Monday. After that, the southern half of the Midwest through the Delta should be fairly dry in the 6-10 period. The 11-15 day, the last five days of April, looks dry across most of the central U.S. as well. Weekly ethanol production released on Wednesday by EIA showed strong levels at 939,000 barrels per day, up 45,000 from last week and the highest weekly total since December.

For wheat, weather continues to be a factor in the southern Plains. There might be some rain tomorrow, and then a better chance this weekend. But most areas are expected to see at most 0.5 inch of moisture, not enough to dramatically improve the situation. Looking ahead in the 6-10 and 11-15 outlook the region looks fairly dry across those areas

 WEEKLY EXPORT SALES (in thousand metric tons)

 

OC Actual

OC Expected

NC Actual

NC Expected

Corn

601.9

550-850

192.6

0-150

Soybeans

19.2

-100-100

400.7

175-350

Wheat

438

50-250

359.9

225-375

 

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