Sep 15, 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.

 

Frost/Freeze Threat Does Little To Rally Grains Overnight

Sep 12, 2014

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

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

 

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

 

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

Supply and Demand Report - 11 AM CST

Sep 11, 2014

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

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

 

 

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

 

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

USDA Report Expectations

 

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

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

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

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

 

USDA Report Expectations

Sep 10, 2014

 Going into the morning pause in trade corn was unchanged, soybean was up a penny and wheat fell 3 ¼ cents. Soybeans broke the $10 dollar support level yesterday as early harvest results report strong yields and as the risk of a damaging frost event remains very low. The technically weak soybeans could see more selling pressure today as traders position themselves for the WASDE report on Thursday. Corn is still consolidating near support of $3.43 which held as support last Thursday and which held as support through yesterday’s trade session. Breaking through this price level today could trigger stops and cause a sharp impulse lower in prices.  


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USDA Report Expectations

  • USDA Report Tomorrow at 11:00 AM Central Time.
  • Corn yield expected at 170.74 BPA, soybean yield expected at 46.29 BPA
  • Corn production expected up 250 MB, soybeans up 65 MB

 

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

Crop Conditions Weigh On Grains

Sep 09, 2014

 Corn, wheat and soybeans are trading lower in the overnight with corn down 2 ¾ soybeans down 5 ½ and wheat down 4 ¼ cents as we go into the morning pause. Corn is now cupping back over on the $3.43 ¾ which was the low printed last Thursday.  Keep a close watch on that level to see if it holds as it was a previous low back in June 2010 just before the historic corn rally. Soybeans is also cupping back over toward $10 as selling pressure increases as traders expect higher yield forecasts to be released in the September 11th WASDE report.

Crop Conditions were released yesterday after the market close, further pressuring prices as conditions hold steady at 20 year highs. Corn and soybean conditions were unchanged from last week, with 74% of corn and 72% of soybeans rated good to excellent. 1% of the soybean crop was moved from rated good to excellent. Spring wheat conditions were down 3% on the week, now rated 60% good to excellent. 12% of soybeans are dropping leaves verse a 5 year average of 17%. Corn maturity is also lagging, with just 15% of the corn crop mature. Over the last five years the first week in September has seen 26% of the corn crop mature.

 

Midwest will be receiving a good amount of precipitation over the next couple days, with some showers interrupting harvest in the Delta over Thursday and Friday. The frost risk for the later part of the week continues to show a chance of light frost in northern Iowa and near the Minnesota/Wisconsin border. The risk for yield damage is very low.   

 

Russia and Iran have entered talks to begin trading grain for oil in the coming months. Russia sits on large wheat stocks and has seen domestic prices fall sharply over the last year. In recent weeks prices have begun to trend higher as exports and domestic usage have been strong. In August the USDA raised their Russian ending stock projection for 2014/15 wheat by 18% from their July estimates.

 

More Precipitation Expected Mid-Week

Sep 08, 2014

 Grains gave back most of Friday’s gains in the overnight session. Currently corn is down 6, soybeans off 8 and Chicago wheat is down 7 cents. Technical support on December corn sits at 3.46 ¾ while looking at the soybean daily chart, support would not be expected until 10.02.

Russian what prices have rose for the last two weeks following record exports during the month of august. Strong domestic demand and a weakening Russian Rouble have also contributed to prices strengthening. This will be a supportive story moving forward if Russian domestic prices can find a bottom. The U.S. market has been pressured throughout harvest by the price and demand for Black Sea wheat.

By mid-week, some heavy precipitation of about 1-2 inches should develop primarily over Iowa, Southern Minnesota and Wisconsin. Other Midwest states like Michigan, Indiana, Illinois and Missouri should also receive some rain although to a lesser degree expecting between .25-1 inches of rain. The risk of frost damage is still very low this week although the best chance for a frost will be Saturday morning.

Informa Economics released its latest expectations of the USDA crop report forecast last Friday. Their corn expectations are for a yield of 170.3 bushels per acre which compares to their August estimate of 168. Informa’s soybean yield estimate was for 46.1 bushels per acre compared to 44.5 bushels per acre estimated in August. 

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