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Grains Recovered some losses in the Overnight

Grain markets are looking for a slight drop in corn and soybean production from USDA this morning

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Grains recovered some of their losses overnight as traders await the latest USDA crop supply and demand forecasts released later this morning at 11 am CDT. In outside markets, crude oil rallied above the pivotal $50 a barrel mark for the first time since July, while S&P futures were up slightly in the night session.

Grain markets are looking for a slight drop in corn and soybean production from USDA this morning with average analyst estimates coming in at 13.504 BB versus USDA in September of 13.585, and soybeans at 3.908 BB versus USDA in September of 3.935 BB. Ending stocks are also expected to fall slightly in this morning’s report.

2015/16 U.S. Crop Production

Oct Expectation Oct Range USDA Sept

Corn 13.504 13.28 – 13.79 13.585

Soybeans 3.908 3.83 - 3.98 3.935

*Billion Bushels

2015/16 U.S. Ending Stocks

Oct Expectation USDA Sept

Corn 1,534 1,592

Soybeans 414 450

Wheat 819 875

*Million Bushels

In overnight news, Ukraine may reduce winter grain sowing acres for the 2016 crop by up to 30 percent due to excessively dry weather across most of the country, a senior weather forecaster said on Friday. For this year’s 2015 corn crop, Ukraine output may decline to 23 MMT versus 25.9 MMT in 2014.

In export news, Algeria bought 675,000 MT of optional origin wheat for prices ranging from $202 to $202 a MT, while Egypt was also expected to announce a purchase of wheat later on Friday.

S&P Futures (ESZ5) were higher on Friday closing out a solid week as minutes to the U.S. Federal Reserve's last policymaking meeting raised expectations that the central bank will keep interest rates at record lows for longer than anticipated. Those minutes from the Fed's September policy meeting are the main driver in markets as they showed officials worrying over low inflation amid weak commodity prices. Though they expressed confidence in the underlying state of the U.S. economy, traders think policymakers may be getting cool on the idea of raising interest rates for the first time in more than nine years in December and may opt to keep the main Fed funds rate at near zero percent until next year.

In oil (GCLX5 / QMX5), crude extended its gains on Friday and was set for its biggest weekly rise in over six years, on the heels of the Fed news and a private forecaster suggesting higher prices. Forecaster PIRA Energy Group issued a bullish oil price prediction on Thursday, saying oil would hit $70 a barrel by the end of next year and to trade at $75 in 2017. However, overhanging the market is a significant oversupply issue that should make it difficult for a rally to be sustained.

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