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.
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.
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.
Thursday and Friday prices had a hard time breaking lower and holding their levels. Will prices bounce this morning?
In the overnight session the grains turned higher with corn up 2 ¼ cents, soybeans up 3 cents and wheat in Chicago up ¾ of a cent. A reportable sale of 132,600 metric tons of corn was sold to Mexico which was primarily made up of old crop corn. Corn started off Thursday and Friday’s trade sessions trending lower, but was able to find support and close off close on the high side of the day’s range. Another day of positive price action may define this area between $3.66 and $3.70 as a key support level.
Over the weekend 85 percent of the U.S. wheat belt received between ¼ and 1 inch of precipitation. More snow is on its way later today with Chicago and other parts of the Midwest getting 10 inches or more. Sub-zero temperatures are expected to arrive this week, but the snow cover provides protection and little cause for concern.
Brazil’s crop conditions are improving after 55 percent of the growing regions received precipitation between ¼ of an inch. Forecasts show that increased moisture is expected in the Central and Northern parts of Brazil over the next 10 days.
The futures market slide 12 ¼ cents for soybeans and 8 ½ cents for corn but despite the sharp slide in prices, basis remained for the most part steady increasing only a penny for soybeans and 1 ½ cents for corn.
Basis along the river declined more than the rest of the U.S. declining an average of 2 cents despite barge rates declining across all five major river regions. Basis along the gulf slipped 4 cents over the last week helping explain the relative weakness along the river. Soybean basis along the river held steady in the face of declining futures prices, improving 1 ¼ cents this week. Soybeans moved by barge over the past week was down 35 percent below the same week in 2014. Year to date barge movement of soybeans is 174,000 tons behind where we were at this time last year, while corn moved by barge is ahead of last year’s pace by 143,000 tons.
Ethanol basis was in line with the national average increasing 1 ¾ cents on average across the U.S., while soybean plant basis only improved ¾ of a cent over the past week. Ethanol production continues to maintain above forecasted production up 5.6 percent over the year compared to a USDA forecasted increase of only .8 percent. Strong DDG prices have helped support crush margins as ethanol values have declined over the last month.
Wheat prices bounced off $5.00 per bushel on Thursday as export sales began to pick up pace from previous weeks and prices become oversold. Can they continue their rally in Friday’s session?
In the overnight session corn is trading ¾ of a penny lower with soybeans unchanged and a 2 cent increase in wheat. Wheat prices found support yesterday after touching $5.00 ¾ briefly during the session. Wheat seems oversold at these levels after falling sharply from the $6.77 high on December 28th. Keep an eye out for a bounce in wheat prices during the day session.
In the US, showers are expected throughout the plains through this weekend which should improve the soil moisture profile for ¾ of the Plains wheat acreage. The precipitation should be followed by snowfall of between 4-8 inches which will help protect the crop from the below zero temperatures that are forecasted for next week.
Yesterday, it was announced that the USDA’s attaché in Canberra Australia pegged the countries 14/15 wheat production at 23.2 million metric tons which is .8 million metric tons below the existing USDA forecast. The forecast was cut due to dryness in late 2014 which especially affected Queensland, New South Wales and Victoria. Due to the dry weather the USDA is expecting a 16% decline in yields compared to last year and a 14% decline in wheat production compared to last year’s total of 27.01 million metric tons.
Central Brazil continues to benefit from precipitation which is expected to expand north beginning next week. The northern part of Brazil’s growing region has received 61% below normal precipitation over the last 30 days which will negatively impact crop yields in this growing region. Southern parts of Brazil are currently experiencing more showers and are expected to receive more precipitation in the 11-15 day forecast. A grains analyst out of Brazil, Safras & Mercado, lowered their Brazil soybean production forecast to 95 million metric tons from 95.9 previously expected in December. They also lowered their Brazil corn forecast to 74.7 million metric tons from their previous forecast of 75.5 million metric tons.
The grains are mixed this morning with corn up 1 ¼ cents, soybeans down 3 ¾ cents and wheat in Chicago down 2 ½ cents. Traders should keep an eye on the Informa Economics latest crop estimates scheduled for release at 10:30 AM this morning. Also on the horizon is the USDA Supply and Demand...
In the overnight session the grains traded mixed with corn down 1 cent, soybeans up 2 ¼ cents and wheat up 2 cents going into the morning pause in trade. The Chicago wheat market seems to have held support off $4.96 last Thursday which was the previous low back on February 2nd....