February 09, 2015 | Grain Hedge Insights | Cody Bills | Views: 250

USDA Report Expectations

Will tomorrow’s USDA Supply and Demand report move the market? Here are the expectations.

In the overnight session corn soybeans and wheat are all trading slightly lower with corn down 1 ½ cents, soybeans down 1 ¼ cents and wheat down 3 ¼ cents. The U.S. Dollar index and crude oil are both trading higher this morning. Today the market will be positioning for the release of the February 10th USDA Supply and Demand report.


The average analyst guess anticipates an increase in corn and wheat ending stocks. In a Reuters poll of 20 analysts, corn ending stocks was seen increasing two million bushels from the January forecast to 1.879 billion bushels. Wheat ending stocks were seen increasing two million bushels as well to 689 million bushels of carryout. Analysts are expecting a decline in soybean ending stocks by around 12 million bushels to 398 million bushels.


Traders will be focusing on any South American revisions to corn and soybean forecasts as harvest begins to pick up pace in the southern hemisphere. Analysts are expecting both Argentina corn and soybean production to increase by a half million metric tons, while Brazil production is expected to decline. The average analyst guess expects Brazilian soybean production to shed .8 million metric tons from the January forecast due to the dry conditions in the northern part of the growing region. Brazil corn production is also expected to decline .5 MMT to 74.56 million metric tons.


Wheat prices bounced from a low last Monday of $4.92 as a result of a strong macro move in the outside market on Tuesday and talks that Egypt might announce a tender for U.S. wheat as a way to take advantage of a special $100 million dollar credit GASC has at its disposal. Price action on Friday was volatile with some traders getting nervous with no signs of Egyptian buying interest.

February 06, 2015 | Grain Hedge Insights | Cody Bills | Views: 208

Weekly Wrap Up

Tune in for a review of Tuesday's rally and hear Cody break down nationwide basis changes.

February 06, 2015 | Grain Hedge Insights | Cody Bills | Views: 210

Weekly Cash Comments

Weekly Market Wrap Up February 06, 2015

Grain basis was mostly stronger on the week even with futures prices trying to rebound off of recent lows. For the week ending February 5, spot corn basis was up 1 cent a bushel while spot bean bids advanced 2 cents on the week.


For corn, the action in basis continues be mostly playing out along river terminals. A combination of strong export sales and falling barge freight have helped keep basis levels moving higher at river markets in recent weeks, and this week saw average spot basis at river terminals jumping 5 cents a bushel. For ethanol plants, basis levels as a group were on par with the US average posting a modest 1-cent advance. Ethanol production for the week was down 30,000 barrels per day bringing the weekly average to 948,000 barrels per day. Ethanol stocks climbed again this week by 355,000 barrels to 20.99 million barrels.


In soybeans, export business has begun to take a down turn as China buying has dried up. River terminals were fractionally lower this week pressured by a 6-cent loss at the Gulf export market. For crushing plants, basis levels actually improved 3 cents a bushel as farmer selling has all but dried up in the past 6 weeks thanks to the slide in futures prices.


New-Crop 2015 Average Basis by State  

                                     CORN                                              SOYBEANS
State           Avg    WeeklyChange    YearlyChange    Avg        WeeklyChange    YearlyChange
IA             -43.8          0.1                 -2.7            -66.2             0.1                 -2.0
IL              -36.6         0.3                 -2.8            -36.0             0.4                -10.2
IN              -31.8         0.4                 -1.1            -35.0            -0.1                 -2.6
KS             -29.6          0.2                  0.2            -84.7            -0.1                 -5.4

MI             -50.8          0.6                  0.6            -59.7             0.0                   6.3
MN            -52.9          0.2                 -2.1            -68.4             0.4                  -2.1
MO           -43.4           0.4                 -9.1            -57.6            -0.1                -11.6

ND           -73.7            0.3                 -6.5            -98.4             0.0                -14.2
NE           -45.7            0.7                 -5.9            -77.8             0.5                  -5.2
OH           -39.3            0.5                -1.4            -46.4              0.0                   0.8
OK           -12.8            0.8                  6.8            -84.8              0.0                -14.0

SD            -70.8            0.1               -11.7            -81.8              0.6                 -3.4
WI            -42.1            0.3                -1.1             -59.4              0.2                  0.5

February 06, 2015 | Grain Hedge Insights | Cody Bills | Views: 213

Grains were higher in the Overnight

Wheat led the advance while corn and soybeans also came in higher.

Grains were higher overnight led by wheat which posted a 5-cent advance; corn was up 2 while soybeans came in 3-cents higher.


Wheat has found continued support thanks to news Egypt’s GASC may be in the market for US-only SRW wheat. However, the decision to buy US-only wheat may not be strictly a result of better prices. Instead, Mamdouh Abdel Fattah, vice chairman of the General Authority for Supply Commodities (GASC), said Egypt has a special $100 million credit line the United States made available to the Egyptian government in recent years for purchases of U.S. wheat. He went on to suggest "This has been an option for us for some time, so if the prices are right and we feel the need to use that to buy U.S. wheat, we will.”  Overall, however, US export business remains slow. Thursday’s weekly US sales report showed only 397,000 MT. On Thursday, EU showed a record high week of 1.674 MMT, besting the previous record in 2010 of 1.03 MT


For beans, the Buenos Aires Grains Exchange said on Thursday that Argentina should produce a record-high soybean crop in the 2014/15 season of 57 MMT, giving its first harvest forecast for this crop year. That estimate is quite a bit higher than the latest USDA forecast of 55 MMT.


In the corn market, Thursday’s export sales were at the low end of expectations but still coming in relatively strong at 844,900 MT this week. Although sales slowed from last week, corn bookings are still running 2.6 MMT ahead of pace to meet the USDA’s expectations. At the National Cattlemen's Beef Association conference in San Antonio, Texas, meteorologist Art Douglas, a professor emeritus in the Dept of Atmospheric Sciences at Creighton University, says cool weather will likely delay U.S. crop planting in the spring. He says the U.S. will go through US corn pollination with cool weather and then temps will heat up in August.  At the same conference, CattleFax projects this year's U.S. corn yield will be in the low 160s, with production of around 13.3-13.5 billion bushels.

February 05, 2015 | Grain Hedge Insights | Cody Bills | Views: 226
February 05, 2015 | Grain Hedge Insights | Cody Bills | Views: 194

Are todays export sales enough to fuel higher prices

Export sales this morning were mixed, will they be enough to fuel higher prices?

In the overnight session corn is up 1 ¾ cents, soybeans is up 5 ¼ cents and wheat is trading 5 cents higher.


Export sales were mixed this morning with soybeans booking 489,700 metric tons this week which was on the high side of analyst expectations. Soybean sales fell 35 percent week over week, but have booked 94 percent of total export sales forecast by the USDA in the January 12th crop report. Wheat sales came in a bit lighter than expected this morning booking only 397,600 metric tons compared to expectations of between 300-500 thousand metric tons. Wheat sales declined 27 percent week over week and continues to struggle gaining a competitive edge on the global market. Corn sales were reported at 844,900 metric tons this week, which was on the low side of analyst expectations ranging between 800-1,000 thousand metric tons. Although corn sales declined 12 percent from last week, sales are still ahead of the seasonally adjusted pace to meet USDA expectations by 2.6 million metric tons. Corn has booked 72 percent of anticipated export sales.


Yesterday ethanol production showed a decline in weekly production by 30,000 barrels per day bringing the weekly average to 948,000 barrels per day. Ethanol stocks climbed again this week by 355,000 barrels to 20.99 million barrels. In the face of rising ethanol stocks ethanol production could continue to decline in the coming weeks. Despite the decline in stocks this week ethanol production is still up 5.6 percent over last year at this time.


Egypt may utilize a special $100 million dollar credit line from the United States to purchase U.S. origin wheat. This morning Egypt’s GASC stated that they may announce some tenders for U.S. Wheat only soon.


Rains continue to expand into the northeastern growing regions of Brazil and will likely continue into the beginning part of next week. The rains are expected to ease the dry concerns but not eliminate them. Scattered showers may also provide some relief to the north in the 11-15 day forecast.

February 04, 2015 | Grain Hedge Insights | Cody Bills | Views: 169

Grains Slide Back

Cody discusses ethanol production numbers, export sales expectations and what drove the markets lower.

February 04, 2015 | Grain Hedge Insights | Cody Bills | Views: 187

Grains Pause in a Slow overnight trade

Will grains continue to rise? Or is this a golden opportunity for producers to take advantage of sharply higher prices following Tuesdays rally?

In the overnight session corn is down 2 ¼ cents, soybeans are down 5 ¾ cents, but wheat has been able to hold onto overnight gains of 2 ¼ cents. The dollar index has found some support in the overnight and turned back higher while crude oil turned lower on news that crude stocks rose more than 6 million barrels last week.


Informa economics revised their South American forecast higher increasing both corn and soybean production in Argentina by 1 million metric ton to 23 MMT and 57 MMT respectively. Informa left Brazilian soybean production estimates unchanged at 93.5 million metric tons but increased corn production to 72.8 million metric tons. Further increases in Brazilian soybean production seem unlikely with the northern growing region still struggling with significant dryness.


Ethanol production numbers will be announced mid-morning and may start to show signs that crush margins are beginning to weigh on overall ethanol production. Yesterday, Acher Daniels Midland said ethanol producers will have to cut output amid high stocks and stagnant demand. Ethanol production remains 5.6 percent ahead of last year’s pace while the USDA expects only a .8 percent increase year over year.   


StatsCanada announced this morning that total wheat stocks were at 24.82 million metric tons which is down 13.5 percent from a year earlier and right on par with the average trade guess of 25 million metric tons. Canola Stocks were 11.10 million tons as of December 1st which was higher than the average guess of 10.7 million metric tons. Barley stocks were above the average trade estimates with 5.38 million metric tons recorded at the end of the year compared to expectations of around 4.9 million metric tons.


China offered 40,270 metric tons of U.S. soft winter wheat this week in an auction and ended up selling only 6.1 percent out of state reserves a decline from 30 percent that was sold the previous week.

February 03, 2015 | Grain Hedge Insights | Cody Bills | Views: 210
February 03, 2015 | Grain Hedge Insights | Cody Bills | Views: 183

Wheat conditions mixed across the Plains

The state level winter wheat conditions reports showed mixed conditions by state. Light snow cover and lack of precipitation damaged some states while others managed to improve crop conditions over last month.

In the overnight session the grains bounced sharply with corn up 4 ½ cents, soybeans up 11 ¼ cents and wheat up 6 ¼ cents after falling during yesterday’s trade session. Precipitation is still expected in the northern part of Brazil’s growing region which will help reduce some of the dry areas. Actual precipitation in Northern Brazil currently runs 28 percent below normal over the last 60 days and 65 percent below normal over the last 30 days.


There were a number of tenders over the last day with Jordan’s state grain buyer issuing two international tenders to purchase 100,000 metric tons of hard wheat and 100,000 tons of animal feed barley. Iraq also issued a 50,000 metric ton tender for wheat and Egypt’s GASC announced a tender for 55,000-60,000 metric tons of wheat. We will keep a close watch over these tender results for signs that U.S. wheat is gaining competitiveness on the global market.


Yesterday, USDA/NASS announced their monthly crop reports for the winter wheat states. Of the states that reported the condition of winter wheat four reported declines in the good-to-excellent rating with the most notable decline in Colorado which fell to 38 percent compared to 62 percent G/E last month. Two states showed improvement in their winter wheat conditions.  


Export inspections were strong last week for wheat and soybeans but analysts were disappointed with the corn number. Corn only recorded 661,675 metric tons inspected compared to expectations of 750,000-900,000 metric tons. Wheat performed in line with the high side of analyst expectations recording 394,029 metric tons while soybeans beat analyst expectations by a large margin showing 1.69 million metric tons inspected for export.  

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