Aug 23, 2014
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Cash Grain Insights

RSS By: Kevin McNew, AgWeb.com

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

 

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.

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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. 

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