May 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 162

Weekly Cash Market Update

Tune in to watch Cody discuss the weekly export sales and talk about the basis changes throughout the country.

 

Tune into the weekly summary to hear about this week's export sales report and listen to Cody discuss the weekly basis changes. 

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May 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 93

Weekly Cash Comments

Cash commentary for week ending May 29

It was another week lower in the grain futures markets as the prospects of another bumper crop this fall keep prices on the defensive. In the cash market, basis levels only showed modest improvement for soybeans, which gained 1-cent a bushel while corn basis was unchanged for the week.

 

For corn, basis levels were mostly flat with ethanol plants showing no real movement as a group. However, in Iowa there was some noticeable weakness in spot basis with numerous plants in the region posting 2 to 5 cent losses on the week. For river terminals, basis was higher by nearly 3 cents a bushel this week. In Saint Louis, spot basis moved up to +23N this week cents and is up 18 cents in the last two months.

 

For soybeans, there was a bit more strength overall this week as compared to corn thanks to sharp gains at crushing facilities. Soybean plants as a group were up 3 cents a bushel, but gains of 5 cents a bushel were fairly typical especially at Western Cornbelt facilities. At the Gulf, export basis was up 2 cents a bushel on the week, but river terminals as a group were only up 1 cent. With ample pipeline supplies and slowing export demand it will be difficult for basis levels to post any significant gains at this time of year.

May 29, 2015 | | Views: 109

Chart of Note: Colombia On Track To Again Fill Duty-Free Quota Before Year’s End

The large increase in the past two years was made possible by both greater availability and the U.S.-Colombia free trade agreement

Chart of Note: Colombia On Track To Again Fill Duty-Free Quota Before Year’s End
This chart illustrates that Colombia is importing a similar amount of U.S. corn in the first four months of this calendar year as compared to last year and will likely exhaust its duty-free quota soon. Courtesy of the U.S. Grains Council

This week’s U.S. Grains Council’s Chart of Note illustrates that Colombia is importing a similar amount of U.S. corn in the first four months of this calendar year as compared to last year and will likely exhaust its duty-free quota soon. This is in stark contrast to just two years before when only 18,500 metric tons (728,000 bushels) of U.S. corn were imported by Colombia from January to April 30. This large increase in the past two years was made possible by both greater availability and the U.S.-Colombia free trade agreement (FTA).

The FTA gives U.S. corn imports up to 2.43 million tons (95.6 million bushels) duty-free treatment, which has been advantageous so far this year. U.S. corn will likely continue to see a price advantage over other competitors even when the country is forced to import outside the duty-free treatment. The quota increases 5 percent every year until 2024 when U.S. corn will not have a duty to enter Colombia.

“The Colombian industry estimates importers are planning to purchase an additional 2.6 million tons (102 million bushels) this calendar year,” said USGC Regional Director of the Western Hemisphere Marri Carrow. “Out of quota U.S. corn will have a 16.5 percent duty applied, which is the same for Argentina and Brazil. Capturing these final year sales will really depend on the basis, but current market dynamics are favorable for the United States to maintain its current market dominance.”

All of this is good news for both U.S. corn producers and Colombian end-users. Colombian importers are reaping the benefit of competitively priced U.S. corn while the United States continues to regain dominance in this market.   

May 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 47

Can exports lift soybeans?

Export sales continue to outperform for soybeans late in the marketing year.

In the overnight session the grains were mixed with corn up 2 1/2 cents soybeans down 1/2 a cent and wheat down 1 1/2 cents. The U.S. dollar is mostly unchanged with crude oil 74 cents higher. Rains are likely to continue in the southern plains over the next few days and then a drying trend is likely to take hold for the first part of June.

 

Yesterday, the weekly ethanol production numbers showed an increase in production by 11,000 barrels per day to 969,000 barrels per day. Stocks declined this week by 337,000 barrels to 20.1 million barrels. Ethanol production has picked up sharply in the late part of May which is typical going into the driving season. Ethanol production is up 4.8 percent over last year compared to the USDA’s corn used for ethanol balance sheet item which suggests only a 1.3 percent increase.

 

Export sales were mostly in line with expectations for old crop sales, but new crop corn and soybean sales disappointed. Old crop soybean sales beat analyst expectations at 322,400 metric tons which was up sharply from last week’s sales of 98,909 metric tons. The buyers this week included China, the Netherlands, Germany, Japan and others. Soybean sales continue to show above average export demand late in the marketing year. However, this morning the Argentine soy crushers union stated that he expects a salary agreement which would end the strike that has negatively affected the local market and slowed exports form the Rosario Region.  

 

Old crop corn and wheat sales met expectations with corn showing sales of 654,600 metric tons of old crop and wheat recording 42,500 metric tons. Sales were down 19 percent and 43 percent respectively but managed to fall within the range of expectations.

 

On Thursday GASC purchased 240,000 metric tons of which 75 percent was sourced from Russia and 25 percent was sourced from Romania.

 

Russia has taken measures to limit exports in the event of a sharp decline in the Rouble by setting a wheat export tax at 50 percent minus 5,500 Roubles per metric ton. The government set a minimum tax at 50 Roubles per ton. The export tax was designed to limit wheat exports in the event wheat prices reached 13,000 Roubles.  

May 28, 2015 | Cody Bills | Views: 367
May 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 118

Will Wheat Bounce?

After a hard two days of selling is the bounce off of yesterday’s lows sustainable?

In the overnight session the grains traded higher with corn up 3/4 of a penny, soybeans up 3 cents and wheat in Chicago up 3 3/4 cents. Yesterday wheat continued trading lower throughout the better part of a day but bounced off support and closed 6 1/2 cents off its intraday lows. Both $4.84 and $4.85 were previous lows from March 6th and April 16th respectively and provided some buying support during yesterday’s session.  During today’s trade session we might see continuation of the bounce seen yesterday, but it is important to remember that wheat is still firmly stuck in a downtrend and that selling pressure is likely to be the more dominant force in the long run.

 

The International Grains Council raised its forecast for global 2015/16 corn and wheat output on Thursday. The council raised wheat production to 715 million metric tons up from a previous projection of 705 million metric tons. Although this is a substantial jump from previous forecasts, it is still below last year’s production levels of 721 million metric tons. The world corn crop was revised higher by 10 million metric tons to 961, below last year’s production levels of 997 million metric tons.

 

Purchasing activity seems to be picking up as the state grain buyer for Egypt set a tender on Wednesday for an unspecified amount of wheat from global suppliers this morning. Japan bought 100,262 metric tons of U.S. wheat in a tender that closed on Thursday and Algeria purchased 540,000 metric tons of grain last week from optional-origin which was more than the 450,000 reported.  The dollar is trading only slightly higher this morning after jobless claims rose to 282,000 metric tons from 275,000 a week earlier. 

May 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 114
May 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 90

Can wheat find some support today?

The wheat market continued lower this morning with continued pressure from the rising dollar.

In the overnight session corn is trading down 1 3/4 cents, soybeans are up 3 cents and wheat is down 8 cents going into this morning’s pause. The U.S. dollar is higher again this morning by .35 percent on continued worries out of Greece and the Euro zone. Crude oil is trading down 9 cents.

 

Crop progress was released after the close of trade yesterday and showed that 92 percent of corn was planted as of May 24th which is ahead of the four year average of 88 percent. Soybeans are also ahead of pace with 61 percent of soybeans planted compared to the four year average of 55 percent. Spring wheat is now 96 percent planted. The USDA released their first crop condition ratings for corn in yesterday’s report which showed 74 percent of the crop was rated good to excellent just two percentage points behind the first crop conditions report of 2014 on June 1st.  

 

The wheat market is trading lower again today after breaking out of the consolidation pattern printed last week on the 100 day moving average. Wheat is pressured by the stronger dollar, the declining Russian ruble and an announcement by the Russian agricultural minister today that Russia expects grain harvest to exceed the most recent forecasts and reach 2014 levels which totaled to 105 million metric tons of grain. 

May 26, 2015 | Grain Hedge Insights | | Views: 212
May 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 99

US dollar up sharply

The US dollar is trading sharply higher this morning putting pressure on the grain complex.

In the overnight session the grains are trading lower with corn down 2 1/4 cents, soybeans down 1 cent and wheat down 4 3/4 cents. The U.S Dollar is trading up over a percent this morning and crude oil has slipped 68 cents.  Japan is seeking to buy 100,262 metric tons of food quality wheat from the U.S or Canada in a regular tender closing tomorrow.  

 

Heavy rains which ranged from 1-4 inches fell across Texas, Oklahoma and parts of Kansas causing localized flooding and adding to the concern of winter wheat crop quality. This is the 5th week in a row that significant rains have fallen throughout the southern plains. The southern plains are expected to receive more precipitation later on this week before the outlook turns drier once again.

 

Between 1/4 inch and 1 1/2 inch of rain fell throughout the majority of the Midwest this weekend providing excellent growing conditions for the newly seeded crop. Crop progress will be released at 3 PM CST today and will show the first crop condition ratings for corn. Last week the crop progress showed 85 percent planted with soybeans 45 percent complete.  

 

UkrAgroConsult announced that it has raised its 2015 forecast for grain harvest to 54.9 million metric tons from 52.3 million in its previous estimate. The increased grain outlook was primarily due to revision higher in wheat production. Ukrainian farmers have planted 95 percent of acreage as of May 25th. SovEcon announced it expects Russia to harvest 95 million metric tons of grain this year down significantly from the 105 million metric tons last year. 

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Weekly Cash Comments

May 29, 2015 | Grain Hedge Insights | Cody Bills

It was another week lower in the grain futures markets as the prospects of another bumper crop this fall keep prices on the defensive. In the cash market, basis levels only showed modest improvement for soybeans, which gained 1-cent a bushel while corn basis was unchanged for the week.

For...

[Read More]
Chart of Note: Colombia On Track To Again Fill Duty-Free Quota Before Year’s End
This chart illustrates that Colombia is importing a similar amount of U.S. corn in the first four months of this calendar year as compared to last year and will likely exhaust its duty-free quota soon. Courtesy of the U.S. Grains Council

Chart of Note: Colombia On Track To Again Fill Duty-Free Quota Before Year’s End

May 29, 2015 |

This week’s U.S. Grains Council’s Chart of Note illustrates that Colombia is importing a similar amount of U.S. corn in the first four months of this calendar year as compared to last year and will likely exhaust its duty-free quota soon.

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Can exports lift soybeans?

May 29, 2015 | Grain Hedge Insights | Cody Bills

In the overnight session the grains were mixed with corn up 2 1/2 cents soybeans down 1/2 a cent and wheat down 1 1/2 cents. The U.S. dollar is mostly unchanged with crude oil 74 cents higher. Rains are likely to continue in the southern plains over the next few days and then a drying trend...

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Will Wheat Bounce?

May 28, 2015 | Grain Hedge Insights | Cody Bills

In the overnight session the grains traded higher with corn up 3/4 of a penny, soybeans up 3 cents and wheat in Chicago up 3 3/4 cents. Yesterday wheat continued trading lower throughout the better part of a day but bounced off support and closed 6 1/2 cents off its intraday lows. Both...

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