August 31, 2015 | Grain Hedge Insights | Cody Bills | Views: 182

Can the Grains Recover?

The grains are moving lower early in the week, but can late growing season weather help lift them out of their lows?

In the overnight session the grains are trading lower with corn down 2 1/2 cents, soybeans down 9 1/4 cents and wheat down 4 1/2 cents by the morning pause in trading. The outside markets are also trading lower with crude oil down $1.20, the U.S. dollar down .22 cents and the mini Dow Jones average down 1 percent. Today is first notice day for September grain contracts.

 

The grains could continue to move lower this week as optimal weather helps finish off the grain, however we believe that corn could show relative strength in a weakening grain complex. Planalytics, lowered its corn yield forecast by .4 bushels per acre to 166.8 bushels per acre on Friday. This is below the USDA estimate of 168.8 bushels per acre, but a couple bushels per acre higher than the Pro Farmer forecast a couple weeks ago. We believe that the USDA is more likely to move corn yield lower in the September report than higher, and the warm temperatures triggering rapid maturation of the crop will only rob yield potential in the eastern parts of the grain belt.  Planalytics soybean yield was increased last week up to 46.2 bushels per acre, just shy of the 46.9 bushels per acre forecast by the USDA in the August report.

 

Over the weekend Iowa received precipitation as the moisture passed eastward from the South Dakota. Over the next 5 days little if any precipitation will assist the filling grain. Exceptional coverage is however expected in the 6-10 day outlook and more precipitation covers the Midwest in the 8-14 day forecast. Chances of an early frost are still low. Temperatures in the 6-10 day forecast remain above average for the majority of the central to eastern grain belt. 

August 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 193
August 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 354

Weekly Cash Comments

Cash Commentary for week ending August 28, 2015

Grain basis was mixed again this week with corn basis gaining 1.5 cents a bushel, while soybean basis gave up 4 cents on average across the U.S.

 

In corn, basis levels were bolstered by strength at river terminals and the Gulf. Gulf corn bids were up 12 cents a bushel this week and surpassed their 5-year historical average for the first time since mid-June. At river terminals, basis levels were up 4 cents a bushel as gains were muted by a slight uptick in barge freight costs.

 

For soybeans, the premium of spot delivery over new-crop fall delivery continues to erode with harvest likely to start in the next month. Spot bean basis was off 4 cents for the week, but at the Gulf basis levels bucked that trend by posting a 9 cent advance. River terminals, however, failed to follow the Gulf market as losses upstream were about 7 cents a bushel. For soybean plants, double-digit losses were fairly typical this week, although as a group soy plants lost 5 cents a bushel. 

August 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 182

Grains pressured by positive weather outlook

The grains continue to be pressured by a positive weather outlook, higher global production and economic concerns out of China.

In the overnight session, the grains inched higher with corn up 1 1/4 cents soybeans up 5 cents and wheat up 1 cent. The U.S. dollar is trading mostly unchanged and crude oil is down 46 cents. The EU cut its corn production forecast this month to 58.7 million metric tons from 65.5 million metric tons last month. Europe was plagued by hot dry weather during a critical development period which reduced yield prospects significantly. The EU however raised their soft wheat harvest estimate to 140.7 million metric tons from 139.4 million metric tons last month.

 

Yesterday, the International Grains Council raised its global wheat production by 10 million metric tons to 720 million metric tons citing improved Russian production. The council also increased their global corn crop by 2 million metric tons to 968 million metric tons this month, mentioning a decline in EU production being more than offset by more favorable U.S. crop prospects.

 

The GASC tender set mid-week was won by Russia on Thursday with the low bid of $180.47 dollars per ton FOB. Egyptians grain buyer GASC issued another tender for 60,000 metric tons on Thursday which was also filled by Russian wheat at $190.07 per ton including freight.   

 

The western grain belt saw rain last night with the heaviest rains in South Dakota. The storm should move eastward into the Midwest over the next couple days. Following this rain event the forecast looks mostly dry until late next week when the northern half of the grain belt looks to be wetter than normal. Showers will aid the crop in the 11-15 day forecast. 

August 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 277
August 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 170

Can Soybeans Rebound Higher?

Export sales, a rebound in the Chinese stock market and positive U.S. news helped lift soybeans early Thursday morning.

In the overnight session the grains are trading higher with soybeans leading the charge up 14 1/2 cents, corn up 1 1/2 cents and wheat up 3/4 of a penny. The U.S. dollar index is trading 1/2 a percent higher and crude oil is up $1.33. This morning exporters sold 130,000 metric tons of new crop soybeans to unknown destinations making this the third reportable soybean sale this week. 

 

Last night the China market rallied over 5 percent in the last hour of trading after the government took steps to stabilize their stock market before a September 3rd military parade which celebrates the 70th anniversary of the WWII victory over Japan. With China showing strength late in the session soybeans have been able to rebound. Positive news about the U.S. economy was also announced this morning with GDP expanding at a 3.7 percent annual pace up from the 2.3 percent reported last month.  Unemployment claims also fell more than expected last week by declining 6,000 to 271,000 for the week. 

 

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons.  Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week. 

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 million barrels this week.​

August 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 207
August 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 187

Global Markets Try to Rebound

Global markets will be a major influence on the grains as markets try to rebound after hard selling early on this week.

In the overnight session the grains traded lower with corn up 1 cent, soybeans unchanged and wheat up 1 1/4 cents this morning. The U.S. dollar is trading up .38 percent and crude oil is 34 cents higher this morning. This morning the U.S. stock market is expected to open higher after a rally in European markets. China however, which has been the driving force in the recent sell-off, has been unable to see a market gains since the PBOC lowered interest rates yesterday. The Shanghai composite index fell another 1.27 percent last night.

 

The volatility over the last two days has triggered two reportable new crop soybean sales to be delivered to unknown destinations totaling to 330,000 metric tons. Despite this week’s sales, new crop soybeans has still only booked around 68 percent of sales volume compared to what we typically see around this time period.

 

Weather looks to remain cool and dry this week except for the western grain belt which should receive above average precipitation in the middle of this week. The 8-14 day weather outlook shows moisture forecast for the northern parts of the grain belt which should aid crops in main growing regions. Currently, there is no significant threat of an early freeze.  

August 25, 2015 | Grain Hedge Insights | Cody Bills | Views: 231
August 25, 2015 | Grain Hedge Insights | Cody Bills | Views: 230

China Lowers Rates to Support Sliding Markets

China made a move to lower interest rates in an attempt to turn around a sliding market.

In the overnight session the grains are trading higher with corn up 5 cents, soybeans up 14 1/4 cents and wheat up 6 1/4 cents. The U.S. dollar is trading .76 percent higher and crude oil is up $1.17. After experiencing another sharp day of selling, China announced they were cutting interest rates for the 5th time since last November and supplementing that with an additional move to lower the reserve requirement at major banks. This announcement triggered an immediate rebound in the market after 5 days of selling.

 

Export inspections were in line with analyst expectations with wheat showing 277,922 metric tons inspected for export. Corn recorded 883,987 metric tons inspected for export which was within the 825,000-1,000,000 metric tons expected by analysts. Soybeans recorded 210,128 metric tons inspected for export which was also on the high side of analyst expectations.

 

On Monday, Argentine farmers started a five day crop sales strike to help bring farm policies to the front of attention during an election year. Farmers have not been satisfied with the policies of President Cristina Fernandez saying that her policies have damaged profitability.  

 

This week should remain cooler than normal throughout the Midwest with precipitation expected during the middle of the week in the northwestern part of the grain belt. According to the latest crop conditions report 87 percent of the soybean crop is pod setting which is on par with the 4 year average. Corn conditions remained unchanged this week at 69 percent rated good to excellent. Soybean conditions also remained unchanged. 

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