Weekly Cash Comments
Cash Commentary for week of March 27th
Corn grain basis was unchanged for the week, while soybeans posted a 2-cent advance.
In corn, basis levels were up one-cent a bushel at the Gulf export market, but river terminals were on average unchanged for the week. Barge rates dipped slightly on the week but did little to stimulate the river basis levels. For ethanol plants, basis levels were off 1-cent a bushel on average as strength in the corn futures market in the past week has helped keep pipeline supplies adequate.
For soybeans, basis levels improved for the first time in nearly 6 weeks. River terminals were up 6 cents a bushel with the Gulf export market posting a 7-cent advance. For soybean crushing plants, basis levels were up 4 cents a bushel in the past week.
Grains Mixed on Friday with Traders Eyeing Tuesday’s Reports
The grains are mixed this morning with most traders eyeing the next Tuesday's reports.
In the overnight session the grains were mixed with corn down 3/4 of a cent, soybeans down 2 3/4 of a cent and wheat up 4 cents going into this morning’s pause. Traders are eyeing two market moving reports that will be released next Tuesday the 31st which include the planting intentions report and the quarterly grain stocks report. Be prepared to monitor grain prices during the release of this report. Click here for a 14 day free trial of the Grain Hedge trading platform which delivers live quotes to your mobile phone, iPad or tablet.
Ukraine had planted 744,000 hectares of spring grain by the 24th this year which was behind last year’s pace of 1.4 million hectares. Analysts have already warned that production could fall from last year’s record due to decreased yields as a result of unfavorable weather during last fall’s planting season. UkrAgroConsult stated that 85 percent of the winter wheat is rated good to satisfactory compared to 93.4 percent last year. They also estimated that total grain production could decrease to 53 million metric tons from 59.2 million metric tons harvested in 2014.
A poll of analysts conducted by Reuters expects quarterly grain stocks to show 7.609 billion bushels of corn with a range of estimates from 7.459 to 7.8 billion bushels. Wheat stocks are expected to be showing 1.140 billion bushels with a range of analyst guesses from 1.083 to 1.2 billion bushels. Soybean stocks are expected to be around 1.346 billion bushels with a range of guesses from 1.273 to 1.404 billion bushels.
Missed Export Sales Expectations
Analyst expectations for wheat and soybeans were off by 70 and 40%. Cody looks at the current and long term effects of these miscalculated numbers.
Will this week’s soybean sales lift the market?
Soybean sales beat expectations in a big way this morning with a reportable new crop sale on top of the strong weekly sales report. Can it lift the market in the day session?
In the overnight session corn fell 3/4 of a cent, soybeans dropped 2 3/4 cents and wheat increased 1 1/2 cents. The dollar pulled back one third of a percent and crude oil is trading up a dollar this morning. This morning there was a reportable sale of 280,000 metric tons of soybeans to unknown destinations for the 15/16 marketing year.
Weekly export sales were strong for soybeans which booked 505,808 metric tons, up 48 percent week over week. This beat analyst expectations which ranged from 100,000-300,000 metric tons. The market has been looking for soybean export sales to taper as Brazil harvest is over halfway complete. Major buyers this week included Indonesia, China, Germany and the Netherlands. Corn sales were on the low side of expectations this week booking 435,000 metric tons compared to expectations of 400,000-600,000 metric tons. This week’s sales were down 13 percent from the previous week and did little to help along the overall pace of exports this year. China was one of the corn buyers this week purchasing 60,800 metric tons, the most in quite some time. Wheat sales were reported at 102,000 metric tons this week down 74 percent from last week and a marketing year low for the grain. Expectations were for sales between 200,000-400,000 metric tons.
Yesterday, the EIA’s weekly ethanol production report showed an increase in output by 6,000 barrels per day bringing weekly production to 953,000 barrels per day. This is the 3rd straight week of ethanol production increases despite the lagging energy sector. Seasonally, it is normal to see an increase in ethanol production from March through June. Ethanol ending stocks were also increased this week by 497,000 barrels per day to 21.32 million barrels.
Brazil’s Agroconsult increased their soybean crop estimate to 95.8 million metric tons from 94.7 million in their previous forecast. Brazil soybean harvest is 61 percent complete which is about 4 percent behind last year. Dry conditions recently has helped move along harvest, but light precipitation over the next few days may slow the pace temporarily. Precipitation should clear by early next week to provide more opportunity for harvest.
During a quite trade day, Cody looks to acreage projections, ethanol production, and the daily charts as an indication of where grain prices might be headed.
How many acres will be planted to Soybeans?
The grain markets are awaiting the quarterly grain stocks and the prospective plantings report due out on Tuesday next week. Here's what the market is expecting.
The overnight was a quiet trade with corn unchanged, soybeans up 1/4 cent and wheat down 3 1/4 cents. The dollar is trading lower by nearly 3/4 of a percent and crude oil is up 34 cents. This morning there were a couple reportable sales that were announced by FAS for 108,863 metric tons of soymeal to Canada for 2015/16 delivery and 114,000 metric tons of old crop corn to Mexico. The markets will be focusing on the 2015 prospective plantings report and the quarterly grain stocks report which will both be released at 11 AM CST.
The expectations for the quarterly grain stocks as of March 1st are as follows. For corn the average analyst guess pegs quarterly grain stocks at 7.609 billion bushels with the highest estimate at 7.8 billion and the lowest estimate at 7.459 billion bushels. Wheat stocks are expected to be around 1.140 billion bushels with a range of analyst guesses from 1.2 billion bushels to 1.083 billion bushels. Soybean stocks are expected to be around 1.346 billion bushels with a range of guesses from 1.404 - 1.273 billion bushels.
Lanworth released their latest planted acreage forecasts this morning raising its U.S. soybean seedings estimates to 85.5 million acres and its U.S. corn planting estimate to 88.2 million acres. This compares to Informa Economics estimates of 88.5 million acres of corn planted and 87.5 million acres of soybeans planted in the 2015 growing season.
Wheat Rally Breaks
Cody and Kevin talk about wheat's move lower and what they expect soybeans to do during the second half of the week.
Grains find resistance after two day rally
The grains ran into some selling pressure in the overnight as each commodity tests resistance levels on the daily chart.
In the overnight session the grains found some selling pressure near resistance levels. Corn is down 1/2 cents, soybeans are down 3 cents and wheat is down 8 1/4 cents on the day. The Dollar index is trading slightly higher this morning and crude oil is lower by a percent.
Corn is currently trading at its 50 day moving average and is now at a price level scared by consolidation throughout most of February and March. Be aware that selling pressure at these levels is likely following the strong two day rally that lifted us off the short term lows of $3.67. Soybeans are also near a resistance level where the 20 day simple moving average and 50 day simple moving average converge.
State level crop conditions reported yesterday that Kansas winter wheat good to excellent ratings were unchanged from the previous week at 41 percent, Oklahoma increased 4 percent to 44 percent good to excellent and Texas improved 4 percent to 55 percent good to excellent. Despite this week’s improvement in crop conditions, traders see a drier pattern developing over the next 10 days with only a chance of patchy showers in the 11-15 day forecast. Russia’s weather stressed crop looks to receive more moisture over the next week as rains expand across Europe, Ukraine and into Russia.
Export inspections were mostly positive this week with corn beating analyst expectations with 994,666 metric tons of corn booked this week compared to 750,000-950,000 metric tons expected. Soybeans and wheat both met analyst expectations with 519,464 metric tons and 511,069 metric tons respectively.
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Weekly Cash Comments
Grain basis levels continued to stagnate this week with both corn and beans each posting less than a 1-cent improvement on the week.
In corn, the biggest movement occurred at the Gulf where export bids were up 3 cents a bushel on nearby basis, but river terminals as a group posted only...[Read More]
Wheat Prices under Pressure
In the overnight session corn is down 3/4 of a penny, soybeans are up a cent and wheat is up 3 1/4 cents. The dollar is trading slightly higher this morning, now hovering at 97.640 while crude oil is trading down nearly a percent after news that OPEC’s production in March added to the...[Read More]
Grains to Trade Higher?
Soybean Sales Beat Expectations
In the overnight session corn and soybeans traded a relatively wide range but went into the morning pause mostly unchanged. Wheat increased 3 1/4 cents in the overnight and the U.S. dollar index continued its slide for the third straight day. Crude oil is also trading lower this morning off...[Read More]
NOPA Crush and Ethanol Reports
Soy Market Focused on NOPA Crush
In the overnight session the grains were mixed again with corn down 2 cents, soybeans up 1 3/4 cents and wheat in Chicago up 3 cents. The NOPA crush numbers will be released at 11 AM CST this morning which is expected to show a record amount of soybeans crushed for the month of March....[Read More]