Weekly Cash Comments
Cash Commentary for week ending April 10
Grain basis levels were only modestly stronger this week across the country with US average corn and soybean basis up about a half a cent from last week.
In corn, strength in the Gulf export market helped push bids higher along river terminals. Average bids were up 2 cents a bushel this week at key river markets, although the Gulf was up nearly 6 cents a bushel. Barge rates were also higher this week with the biggest jump occurring along the IL River where barge costs increased 6 cents a bushel on the week. In ethanol, weekly production was lower this week falling 16,000 barrels per day and ethanol plants as a group were mostly unchanged on basis. Some Western Cornbelt plants in NE/IA/MN were up 3 to 5 cents, but most other plants saw little movement.
For soybeans, it was a week that saw mixed results across end user groups. River terminals were lower by 2 cents a bushel thanks to a 1 cent decline at the Gulf and rising barge freight. However, soybean crushing plants were up 2.5 cents on average. Eastern Seaboard plants and plants in Ohio saw some gains of 5 cents or better. As field work and planting starts to pick up pace we should start to see a bit more strength in spot grain basis as pipeline supplies begin to dwindle and farmer movement slows.
Can Grains Rebound on Friday?
Grains hold steady in the overnight session after the market experienced some selling in the wake of the April WASDE report released out yesterday at 11 AM CST.
The grains were steady and mostly unchanged in the overnight with corn up 1/4 cent, soybeans up 1/2 a cent and wheat down 3/4 of a penny. The dollar is trading higher and crude oil is mostly unchanged this morning. Yesterday the April USDA supply and demand report was released which seemed to affect soybeans primarily.
Soybean ending stocks were revised lower by 15 million bushels to 370 MBU which was in line with analyst expectations. The decrease in ending stocks was a result of a 5 MBU increase in imports that was more than offset by a 6 MBU increase in seed use and a 14 MBU increase in residual use. Global ending stocks stayed mostly steady with world carryout at 89.55 million metric tons up only .02 from March’s report. Argentina production increased 1 MMT to 57 MMT while Brazil’s production was unchanged.
Wheat ending stocks were reduced by 7 million bushels to 684 MBU which was below analyst expectations of around 692 MBU. Wheat saw exports revised lower by 20 million bushels which was offset by a reduction in imports of 15 million bushels, an increase in seed use by 2 MBU and a 10 MBU increase in feed and residual.
Corn ending stocks were increased by 50 million bushels to 1,827 MBU which was below the average analyst guess of 1,854 MBU. This was a result of the decrease in feed and residual use which was revealed in the March 31st quarterly grain stocks report. However, despite the better than expected domestic stocks, global carryout was lifted 3 MBU to 188.46 million metric tons primarily from increased production out of major corn importers.
This morning Brazil’s Conab increased its forecast for the 14/15 soybean crop to 94.28 million metric tons from 93.26 in March. The corn forecast was also increased to 78.99 million metric tons compared to 78.21 million metric tons a month earlier.
Mixed Export Sales Report
Cody takes an extended look at today's export sales report at how it effected the market.
Soybean Export Sales Disappoint
Soybean export sales saw larger than expected net cancellations this week as china switches some old crop sales to new crop.
In the overnight session the grains traded lower with corn down 1 1/2 cents, soybeans down 5 1/2 cents and wheat down 4 cents going into this morning’s pause in trade. Keep a close watch on the WASDE report which will be released at 11 CST.
Export sales were released this morning which showed corn and wheat beat analyst expectations for old crop sales. Corn booked 639,000 metric tons, up 57 percent week over week and well over expectations of which ranged between 350,000-450,000 metric tons. Wheat booked 319,900 metric tons up 97 percent compared to last week’s sales and also well above the expectations of between 50,000-150,000 metric tons. Soybeans underperformed this week with cancellations reported of 176,700 metric tons which was disappointing to traders that expected sales between -50,000-150,000. China switched 355,000 metric tons from old crop to new crop delivery causing the majority of the “net cancellations” recorded this week. Soybeans recorded new crop sales of 502,400 metric tons this week with China making up over 80 percent of it. Traders have been looking for cancellations in the soybean market for the last month as South American exports have been ramping up.
Here’s what to watch for in the WASDE report scheduled for release this morning. According to a Reuters poll of 20 analysts, the average guess for wheat ending stocks is 692 million bushels, up one million bushels from the March report. Corn ending stocks are expected to be reported at 1.854 billion bushels up from 1.777 billion bushels reported in the March WASDE report. This would reflect the higher than expected quarterly stocks number reported on March 31st. Quarterly grain stocks showed 7.745 billion bushels on hand compared to 7.609 billion expected by the market which suggests either lower than expected feed usage or larger than previously stated 14/15 production. Soybean ending stocks are expected to come in around 370 million bushels which would be a decline of 15 million bushels from the March report. Quarterly grain stocks showed fewer soybeans as of March 1st, with 1.334 billion bushels compared to expectations of 1.346 billion bushels.
Grain TV: Ethanol Production and WASDE Report
With increased uncertainty in the energy market Cody discusses the possibility of a decline in ethanol prices. Cody also breaks down today's WASDE report.
What You Need to Know for Thursday’s WASDE Report
Analysts are expecting some adjustments in ending stocks in this month’s WASDE report following the quarterly grain stocks report released late last month.
In the overnight session the grains traded slightly higher with corn up 1/2 a cent, wheat up 1 3/4 of a cent and wheat up 1/2 a penny. The market will be receiving the EIA ethanol production numbers today and the monthly WASDE report will be released on April 9th at 11 AM CST.
The average analyst expectations for the WASDE report according to a Reuters poll of 20 analysts is as follows. The average guess among the analysts polled for wheat ending stocks is 692 million bushels, up one million bushels from the March report. Corn ending stocks are expected to be reported at 1.854 billion bushels up from 1.777 billion bushels reported in the March WASDE report. Soybean ending stocks are expected to come in around 370 million bushels which would be a decline of 15 million bushels from the March report.
Traders will also be following South American production which is wrapping up harvest in many areas. Argentina corn production is expected to be revised slightly higher than in March to 23.90 million metric tons from 23.50. Argentina soybean production is also expected to increase to 57.23 million metric tons from 56 last month. Brazil production is expected to be revised slightly lower than March with corn production expected to decline to 74.82 million metric tons from 75.00 in March. Soybean production is also expected to decline to 94.18 million metric tons from 94.5 in March.
Across the Midwest rains will be keeping producers out of the fields through the end of the week. Precipitation will be focused on the northwestern part of the Midwest early on and shift to the central and southeastern part by weeks end. Rains will continue to halt planting along the Mississippi river delta.
Cody discusses the future of wheat prices, tariffs, and gives and overview of Thursday's WASDE expectations.
Grains Slip Lower in the Overnight
The grains slip lower in the overnight with increased prospects for precipitation in the southern plains
In the overnight session, the grains traded lower with corn down 1/2a cent, soybeans down 3 cents and wheat down 5 1/4 cents. Exporters reported a new crop sale of 165,000 metric tons to China early this morning. In a tender closing on Thursday, Japan’s Ministry of Agriculture is seeking 122,429 metric tons of food quality wheat from the U.S, Canada and Australia.
Wheat continues to pull back this morning after forecasts show chances of rain in the southern plains in the 6-15 day outlook. Temperatures will remain unseasonably hot with highs in the 80’s and 90’s over the next couple days throughout the southern plains which will continue to stress the wheat crop.
Yesterday, corn inspections outperformed by recording 1,027,876 metric tons inspected for export compared to expectations of between 700,000-850,000 metric tons. Both wheat and soybeans recorded export inspections within the range of expectations. Wheat recorded 370,086 metric tons, while soybeans recording 564,823 metric tons inspected for export this week.
After the market close on Monday, the USDA released their crop progress report with country level winter wheat conditions. Until now analysts have been using state level crop conditions which are typically released on a monthly basis. In yesterday’s report, 44 percent of the winter wheat crop was rated good to excellent, compared to last year at the same time when only 35 percent of the crop was rated good to excellent. Analysts were expecting winter wheat rated good to excellent to be around 42 percent.
Grain TV: April 6 2015
Monday Morning Sell-Off
In the overnight session the grains traded sharply lower with corn down 10 1/2 cents this morning, soybeans down 13 cents this morning and wheat down 5 1/2 cents this morning for the December contracts. The U.S. Dollar is trading over 1/2 a percent lower and crude oil is also lower, losing...[Read More]
Disappointing Price Action for the Week
Grains Continue Lower on Friday Morning
In the overnight session the grains traded lower with corn down 5 cents, soybeans down 7 cents and wheat down 5 cents. The U.S. dollar is higher by nearly ½ a percent and crude oil is 33 cents higher this morning. For Soybeans, the 50 percent retracement of the sharp rally in November...[Read More]
Will the U.S. Meet the Export Sales Forecast
Can Export Sales Lift Wheat?
In the overnight session the grains moved slightly higher with wheat showing the largest rebound, up 5 ¾ cents. Corn is trading unchanged this morning and soybeans is up ¾ of a cent. The U.S. dollar is moving nearly 1/3 of a percent lower and crude oil is up 12 cents per barrel. Export...[Read More]