Can Export Sales Lift the Market
Export sales showed mostly average sales within the range of analyst expectations. Traders eye the June 30th WASDE report.
In the overnight session the grains traded higher with corn up 2 1/2 cents, soybeans up 8 1/4 cents and wheat up 2 1/4 cents. The U.S dollar is mostly unchanged this morning and crude oil has slipped 29 cents lower.
The EIA ethanol production numbers showed that last week’s production was the largest this marketing year. Weekly production increased 14,000 barrels per day to 994,000 BPD. Ethanol stocks dropped 878,000 barrels to 19.840 million barrels helping to paint a more bullish picture. This marketing year ethanol production is up 4.7 percent compared to 2013/14.
This week’s export sales report showed that wheat booked 434,300 metric tons which was on the high side of analyst expectations which ranged from 200,000-450,000. Soybean sales fell 11 percent compared to last week to 118,000 metric tons but was still within the range of analyst expectations. Corn sales declined 21 percent to 496,800 metric tons. This was below the analyst estimates that ranged from 500,000-700,000 metric tons.
New crop sales were strong for corn however, booking 297,500 metric tons which was above the 100,000-200,000 metric tons expected this week. Soybeans booked 202,500 metric tons to be delivered in the 2015/2016 marketing year.
Strong Ethanol Production Numbers
Cody reviews good demand fundamentals for ethanol and takes a look at the Allendale acreage survey.
Grains pull back in the overnight
The grains gave back some of the gains in the overnight session as traders prepare for the USDA planted acreage report to be released the end of June.
In the overnight session the grains traded lower with corn down 3 1/4 cents, wheat down 2 3/4 cents and soybeans down 6 1/2 cents. Crude oil is trading 10 cents lower and the U.S. dollar is down a fraction of a percent. The market will be focusing on the June 30th planted acreage numbers that is expected to have the biggest impact on Soybeans.
Soybeans were only 90 percent planted as of Monday which is 5 percent behind normal pace. Rains forecast across the Midwest this week helped lift soybean prices as traders became nervous about the remaining unplanted acreage. Allendale estimates corn planted acreage at 91.742 million acres which is up from the 89.199 million acres forecast by the USDA in March. Allendale expects soybean acreage to increase to 85.105 million acres which is up from 84.635 million acres estimated by the USDA in the March 31st report. The July soybean contract is currently above the 100 day moving average but is giving back some of its gains this morning. Look at 974 1/4 as a support level for today and tomorrows trade session.
Winter wheat harvest is behind the average pace during this time of the year. On Monday, the crop progress announced that only 19 percent of the crop had been harvested which is behind the 31 percent harvested we typically see. Harvest prospects look to be mostly uninterrupted in the near term with some scattered storms expected on Thursday and Friday. However, the forecast turns wet again for the beginning of July which is likely to continue to disrupt harvest pace. Traders are also concerned about the wheat quality after the plains received significant moisture late in the growing season. Head scab has spread rapidly in the winter wheat fields of central Kansas.
Surprising Strength from the Grains
Even as the U.S. Dollar found relative strength U.S. grains traded higher. Cody reviews the technicals and world news to see what may have cause the rise.
U.S. Dollar to pressure grains this morning
The U.S. dollar, which has risen sharply overnight, is expected to put pressure on the grain complex this morning.
In the overnight session, the grains were mixed with corn up 1 cent, soybeans down 1 3/4 cents and wheat up 2 1/2 cents. Crude oil has slipped 57 cents lower this morning with the U.S. dollar index up by over 1 percent. The dollar gained some strength following U.S. housing data and the euro was unable to hold onto recent gains as deal surrounding Greece’s debt remains in debate.
This morning there was some demand activity with Ethiopia buying 240,000 metric tons of wheat from optional origins. Traders expect this wheat to be sourced from the Black Sea region. Japan’s ministry of agriculture is also buying 114,510 metric tons of food quality wheat from the United States or Canada.
Export inspections showed that 1,105,000 metric tons of corn was inspected for export which was above the 800,000-1,000,000 metric tons expected. Soybeans showed 178,000 metric tons inspected for export which was within analyst expectations and wheat inspections missed expectations. Wheat inspections totaled to 290,000 metric tons compared to 300,000-400,000 metric tons anticipated by analysts.
Corn rated good-to-excellent fell 2 percent in this week’s crop progress report which was a bit more than traders were looking for. At this point in the marketing year 71 percent of the corn crop is rated good-to-excellent compared to 74 percent last year. Corn conditions in the eastern grain belt states like Indiana and Ohio dropped the most.
Soybean rated good-to-excellent also fell 2 percent this week which was in line with trade expectations. However, only 90 percent of the crop was planted which is now behind the 4 year average of 95 percent planted during this time of year.
Continued Support for Soybeans?
Cody's back and breaks down export inspections, soybean technicals, weather reports, and crop progress.
Soybeans Push Higher
The soybean market pushed higher above the 100 day moving average early Monday morning.
In the overnight the grains are higher with soybeans leading the charge up 7 1/2 cents, wheat up 4 1/4 cents higher and corn down 1/2 a penny. July soybeans now trades above $9.74 which is the 100 day moving average after closing Friday below that level. Crude oil is up 22 cents this morning and the U.S. dollar is only a fraction of a percent higher. The USDA crop progress is expected out at 3 PM CST today.
On Friday, Informa Economics lowered its estimate of U.S. soybean plantings this year to 86.760 million acres down from 87.185 million acres in its previous forecast. Despite the downgrade, Informa is still above the current USDA estimates of 84.635 million acres which was released in March. The USDA will revise its Planted Acreage estimate on June 30th.
The European Union’s crop monitoring service MARS revised its yield estimates from 5.93 tons per hectare to 5.85 metric tons per hectare as a result of low soil moisture throughout the western and central parts of Europe. Higher than normal temperatures early this month accelerated development of crops in Spain Italy and Southern France, but the lack of soil moisture recently has begun to stress the crop. MARS has left corn yield estimates unchanged.
U.S. weather is expected to bring widespread showers later on this week which should continue to help the crops development. Following the showers on Thursday and Friday the outlook shifts to a drier milder outlook.
Weekly Cash Comments
Cash Commentary for week ending June 19
Grain basis was mostly stable this week with both corn and soybeans unchanged for the week across the U.S.
Weather was the big concern this week as Tropical Storm Bill hit Texas and Oklahoma and made its way into the Ohio Valley by late in the week. Wet conditions are leading to not only planting problems, but shipping delays along the IL & MS River as swollen rivers are shutting down some stretches for barge traffic. In FOB market, export premiums were firmer on Thursday because of high water levels on Illinois and Mississippi rivers. FOB soybean basis offers for July were offered at 105 cents over CBOT July on Thursday, up 10c from Wednesday.
End users were mostly quiet this week with little directional movement for either corn or soybean plants. The sharp rally in soybean futures helped increase some farmer selling of old-crop which caused basis levels at soy plants to be weaker as a result. In ethanol, production levels were off this week by 12,000 barrels per day to 980,000 barrels. Basis levels in the Western Cornbelt tended to be weaker for corn end users this week.
Excess Moisture Slows Wheat Harvest
Grains were lower in the overnight
Grains were lower overnight with soybeans leading the complex to the downside with a 5-cent drop in the night session. Corn gave up 3 cents a bushel while wheat was fractionally lower.
Beans continue to find it difficult to trade for an extended time above $9.40 basis the new-crop November contract. After trading as low as $8.97 early in the week, the market bolted higher on flooding concerns and planting delays but over the past two sessions that bullish rally has grown tame. As Tropical Storm Bill’s impact reaches the Ohio Valley, rainfall totals are not expected to be as large as once feared. In other news, Argentina’s Ag Ministry bumped their old-crop soybean forecast to 61 MMT from its previous estimate of 60 MMT.
In wheat, harvest progress continues to be slowed in the Southern Plains due to excess moisture. U.S. HRW wheat harvest summary released on Friday by Plains Grains, a company that tracks wheat quality based in Oklahoma, reports Texas harvest is 49 percent complete and Oklahoma wheat is 41 percent done. In export news, a South Korean flour mill bought 73,000 MT of US wheat overnight.
For corn, weather forecasting firm Planalytics released their latest US yield forecast which they now peg at 166.2 bushels per acre, up from their previous forecast two weeks ago which came in at 164.1. Flooding halted barge traffic on the Illinois River. Traders said the disruptions would likely have a limited impact on grain trading because they will probably be over before the end of the month, when traders can begin delivering crops against futures contracts. The Illinois River is forecast to crest at many locations by early next week, according to the National Weather Service.
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