June 18, 2015 | Grain Hedge Insights | Cody Bills | Views: 233

Grains Lower in the Overnight

Wet weather continues to be a concern for the markets.

Grains Lower in the Overnight

Grains dipped lower in the night trade after taking a breather from the two-day rally that pushed soybean prices to their highest level in a month. Going into the morning break, soybeans were down 5, corn was down 1 and wheat was fractionally higher.


Wet weather continues to be a concern for the markets as soybean planting still needs to be completed in some areas where excessive moisture is present.  Also, soggy fields are taking a bit of a toll on the crop health with the condition of the US corn crop slipping 1 percent last week and soybean condition dipped 2 percent. The remnants of Tropical Storm Bill are expected to push through southern Missouri, Illinois and Indiana over the next few days bringing as much as 3 to 5 inches of precipitation to already soaked fields. However, once this system blows through temperatures are expected to rise and precipitation should be limited.


On the river systems, high water is causing issues with barge traffic and the result has been a sharp increase in barge costs.  In ethanol news, output for the week was off 12,000 barrels per day to 980,000 barrels per day but the big change was a large jump in ethanol stocks, which were up 472,000 barrels to 20.72 million barrels, the highest point since May 1.


Export sales this morning were mostly on par with expectations. Wheat sales for the new-crop marketing year came in at 315,700 MT versus trade estimates of 200,000 to 400,000 MT.  Old-crop corn totaled 627,000 MT as compared to the trade estimate range of 400,000 to 600,000 and new-crop sales were 200,400 MT versus trade estimates of 50,000 to 200,000 MT. New-crop soybeans were well above expectations with 532,000 MT while analysts expected only 150,000 to 350,000 MT but old-crop sales came in at the low end of expectations at 132,900 MT versus trade estimates of 100,000 to 250,000 MT. 

June 17, 2015 | Grain Hedge Insights | Cody Bills | Views: 249

Continued Recovery in the Overnight

Declining crop conditions have markets moving higher.

Continued Recovery in the Overnight

Grain futures continued their recovery in the night session as heavy rains and declining crop conditions have the markets moving higher. Corn was up 3 cents a bushel while wheat and corn are up 6 cents a bushel.


In wheat, heavy rains from Tropical Storm Bill will push through Eastern OK/TX over the next few days. While this is not in the path of the major HRW wheat belt, the rains should eventually find their way to SRW wheat territory of IL/IN/MO. In export news, Taiwan bought 97,420 MT of US wheat and the market is waiting to see the outcome of the Japanese wheat tender expected to be announced in the next day.


For soybeans, new-crop November futures posted its largest daily gain since February closing up 23 cents. It continued higher in the overnight session but met some selling pressure going into the break. Although planting delays are a moderate concern, excess moisture at this time of year may not be a catalyst for a sustained rally. This year is still expected to be another year of record production and acreage so any slip in acres would likely be muted by the beneficial soil moisture for much of the country.


In corn, prices moved higher on Tuesday and in the overnight session but the gains are rather tepid. The one bright spot of late has been two large purchases announced by USDA on Monday and Tuesday morning which showed over 100,000 MT booked for new-crop delivery by Japan and over 100,000 MT booked for old-crop delivery by unknown destinations. 

June 16, 2015 | Grain Hedge Insights | Cody Bills | Views: 250

Grains Up in the Overnight

Monday brought a new week of selling pressure.

Grains Up in the Overnight

Monday brought a new week of intense selling pressure in the grains and Tuesday’s overnight trade found only a modest recovery from the lows established the day before. In night trade, wheat was up 4, corn was up 2, and nearby soybeans posted a 5 cent advance.


On Monday, NOPA’s crush forecast for May came in at 148.4 MB, well above analyst estimates of 147.3 MB. However, substantially higher soy oil stocks kept a lid on soybean prices with inventories of soy oil pegged at 1.58 billion pounds versus estimates of 1.40 billion pounds. With ample soyoil stocks and concerns about Chinese defaults on soymeal purchases, there was little need for the soybean market to rally on this news. After the close, USDA estimated that 67 percent of the crop was in good to excellent condition, below the 69 percent level that had been expected. The pace of plantings has stalled as wet weather continues to hamper the last of the crop. As of Sunday, 87 percent of the crop had been planted versus a 90 percent  5-year average for this time of year.


In corn, crop conditions also slipped a bit in USDA’s latest report going to 73 percent this week versus 74 percent last week and 76 percent this time last year. Overly wet conditions in the Southern Midwest is causing modest concerns but with ample stocks and sluggish demand it may prove difficult to see a big rally on overly wet conditions at this time of year.


For wheat, harvest pace continues to drag in the Southern Plains as rain-soaked fields hamper the progress. As of Sunday, 11 percent of the winter wheat crop has been harvested versus 4 percent last week and a 5-year average of 20 percent. Crop conditions for winter wheat were unchanged from last week at 43 percent good to excellent, while spring wheat increased one percent to 70 percent. In export news, Japan's Ministry of Agriculture is seeking to buy a total of 113,117 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.

June 15, 2015 | Cody Bills | Views: 446

Rains Pressure Grain Futures

Rains Pressure Grain Futures

Grains started the week with a continuation of last week’s selling. Going into the morning break, wheat was down 7 cents a bushel, soybeans were off 6 cents and corn gave up 2 cents a bushel.

In wheat, US prices continue to be uncompetitive in generating global trade deals. Last week’s tenders by Egypt went to Romania and Russia, and over the weekend it was announced that Russia was the lowest offer in an Iraqi tender. While US prices and stockpiles are both bearish, international weather has not been cooperating for ideal crops abroad. Rain of less 0.2 inch has fallen across the entirety of agricultural regions of Ukraine. The same can be said for the entirety of Russian winter wheat areas (Southern, Central, and Volga districts). With winter wheat undergoing grain fill, the crop would greatly benefit from additional moisture and will likely not reach full yield potential should dryness continue.


For corn, good weather in the US has kept prices on the defensive. Crop ratings released after the close today are expected to be around 74% good to excellent. In China, government policies are being implemented to force domestic users to utilize more government-owned corn in their stockpiles, and rely less on imported cheaper substitutes like milo & barley. U.S milo exports have surged in the past 18 months thanks to new found Chinese business so this new bushel by leaders in Beijing would out a big damper on US milo premiums that have been trading well above corn in the past year.

In soybeans, rains in the Southern Midwest continue to be a mixed bag. On the one hand it is slowing farmer planting but on the other hand it is providing beneficial moisture to benefit the crop long term. Traders are currently betting on the benefits of moisture and are less worried about the crop getting in the ground. Today at 11 am CDT NOPA is going to announce its May crush estimate which is projected to be 147.299 MB. If realized this would be a record for May crushing.

June 12, 2015 | Grain Hedge Insights | Cody Bills | Views: 325
June 12, 2015 | Grain Hedge Insights | Cody Bills | Views: 354

Wheat Harvest Underway

In the overnight session the grains were mostly unchanged with corn down 1 ½ cents, soybeans down ¼ cents and wheat up 1 ¼ cents going into this morning’s pause. The U.S. dollar is up .3 percent and crude oil is trading lower by 73 cents. The U.S. dollar finds some strength this morning after the Greek debt negotiations have begun to take a turn for the worse. The international monetary fund announced their delegation has flown home due to major differences with Athens.  


Wheat harvest has kicked off in Texas with 23 percent harvested and Oklahoma 17 percent complete. Harvest has started in southern Kansas but little harvest progress has been made in the largest winter wheat producing state.


On the demand side of the equation, there is market talk about government plans to support new crop corn prices by lowering the volume of cheap imports into their country. This should help encourage domestic grain demand and lower stocks which have accumulated during their buying program intended to lift rural incomes.


The weather next week is expected to bring precipitation to the eastern and northwestern U.S. as temperatures remain cooler than normal throughout most of the grain belt. 

June 11, 2015 | Grain Hedge Insights | Cody Bills | Views: 376

Export Sales Update

Tune in to hear how the grains have been moving worldwide and an update of ethanol production.

June 11, 2015 | Grain Hedge Insights | Cody Bills | Views: 250

WASDE Sinks Wheat

In the overnight session the grains are continuing lower with corn down a penny, soybeans down 3 ¾ cents and wheat trading down 5 ½ cents. Crude oil is trading lower and the U.S. dollar is higher by over ¾ of a percent this morning.


The trade reacted to the WASDE report with some selling on Wednesday after the USDA raised ending stocks for wheat and corn.  Old crop corn ending stocks were increased 25 million bushels after corn used for ethanol was revised lower. Old crop wheat ending stocks increased by 3 million bushels after exports were revised 5 million bushels lower and imports fell by 2 million bushels as well. Soybean ending stocks had the largest revision, getting cut 20 million bushels to 330 million bushels carryout. Soybean ending stocks were cut below the average trade guess which was looking for ending stocks of 339 million bushels. However, a 10 million bushel increase in crushing and a 10 million bushel increase in exports helped surprise the market, making soybeans the relative strength in yesterday’s trade session.


Wheat provided the biggest surprise for new crop ending stocks. New crop wheat production was lifted 34 million bushels which was partially offset by a rise in feed and residual by 15 million bushels. This lifted new crop wheat ending stocks from 793 million bushels in May to 814 million bushels of ending stocks in June. Soybean ending stocks fell 25 million bushels to 475 which was primarily a result of smaller beginning stocks, and new crop corn ending stocks increased 25 million bushels which was also a result of smaller beginning stocks.  


More bearish news was released this morning from Conab, Brazil’s government supply agency. The organization lifted their 2014/15 corn and soybean production forecast for Brazil. Corn production is expected to jump from 78.59 million metric tons to 80.21 million metric tons and soybean production is now forecast at 96.04 million metric tons.


Export sales were released this morning with corn reporting 495,600 metric tons of old crop sales which was on the low side of analyst expectations. Soybeans booked 164,000 metric tons of old crop sales which was another strong week for the oilseed. 

June 11, 2015 | Views on the News | Scott Irwin and Darrel Good | Views: 255

Does It Matter Whether the EPA Targets Volumetric Or Fractional RFS Standards?

Analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel

In a farmdoc daily article last week, we analyzed whether the ethanol mandates recently proposed by the EPA for 2015 and 2016 were high enough to provide a "push" for biofuels use beyond the E10 blend wall. The analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel, but this depends on assumptions about growth in gasoline use and ethanol inclusion rates. Relatively modest increases in the rate of growth in gasoline use and slightly higher ethanol inclusion rates largely eliminated the push above the blend wall. Our analysis assumed that the EPA targeted fixed volumes of ethanol when proposing RFS standards. There is some uncertainty on this point given that the standards are actually enforced in a fractional manner. The purpose of today's article is to examine how estimates of the push above the blend wall implied by the 2015 and 2016 ethanol mandates change depending on whether the EPA targets a fixed volumetric or fixed fractional standard.

Continue reading here

June 10, 2015 | Grain Hedge Insights | Cody Bills | Views: 260

June WASDE Breakdown

Cody looks at the effects of the WASDE report and discusses where he thinks prices may be headed.

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