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.
Grains Lower in the Overnight
Wet weather continues to be a concern for the markets.
Grains dipped lower in the night trade after taking a breather from the two-day rally that pushed soybean prices to their highest level in a month. Going into the morning break, soybeans were down 5, corn was down 1 and wheat was fractionally higher.
Wet weather continues to be a concern for the markets as soybean planting still needs to be completed in some areas where excessive moisture is present. Also, soggy fields are taking a bit of a toll on the crop health with the condition of the US corn crop slipping 1 percent last week and soybean condition dipped 2 percent. The remnants of Tropical Storm Bill are expected to push through southern Missouri, Illinois and Indiana over the next few days bringing as much as 3 to 5 inches of precipitation to already soaked fields. However, once this system blows through temperatures are expected to rise and precipitation should be limited.
On the river systems, high water is causing issues with barge traffic and the result has been a sharp increase in barge costs. In ethanol news, output for the week was off 12,000 barrels per day to 980,000 barrels per day but the big change was a large jump in ethanol stocks, which were up 472,000 barrels to 20.72 million barrels, the highest point since May 1.
Export sales this morning were mostly on par with expectations. Wheat sales for the new-crop marketing year came in at 315,700 MT versus trade estimates of 200,000 to 400,000 MT. Old-crop corn totaled 627,000 MT as compared to the trade estimate range of 400,000 to 600,000 and new-crop sales were 200,400 MT versus trade estimates of 50,000 to 200,000 MT. New-crop soybeans were well above expectations with 532,000 MT while analysts expected only 150,000 to 350,000 MT but old-crop sales came in at the low end of expectations at 132,900 MT versus trade estimates of 100,000 to 250,000 MT.
Continued Recovery in the Overnight
Declining crop conditions have markets moving higher.
Grain futures continued their recovery in the night session as heavy rains and declining crop conditions have the markets moving higher. Corn was up 3 cents a bushel while wheat and corn are up 6 cents a bushel.
In wheat, heavy rains from Tropical Storm Bill will push through Eastern OK/TX over the next few days. While this is not in the path of the major HRW wheat belt, the rains should eventually find their way to SRW wheat territory of IL/IN/MO. In export news, Taiwan bought 97,420 MT of US wheat and the market is waiting to see the outcome of the Japanese wheat tender expected to be announced in the next day.
For soybeans, new-crop November futures posted its largest daily gain since February closing up 23 cents. It continued higher in the overnight session but met some selling pressure going into the break. Although planting delays are a moderate concern, excess moisture at this time of year may not be a catalyst for a sustained rally. This year is still expected to be another year of record production and acreage so any slip in acres would likely be muted by the beneficial soil moisture for much of the country.
In corn, prices moved higher on Tuesday and in the overnight session but the gains are rather tepid. The one bright spot of late has been two large purchases announced by USDA on Monday and Tuesday morning which showed over 100,000 MT booked for new-crop delivery by Japan and over 100,000 MT booked for old-crop delivery by unknown destinations.
Grains Up in the Overnight
Monday brought a new week of selling pressure.
Monday brought a new week of intense selling pressure in the grains and Tuesday’s overnight trade found only a modest recovery from the lows established the day before. In night trade, wheat was up 4, corn was up 2, and nearby soybeans posted a 5 cent advance.
On Monday, NOPA’s crush forecast for May came in at 148.4 MB, well above analyst estimates of 147.3 MB. However, substantially higher soy oil stocks kept a lid on soybean prices with inventories of soy oil pegged at 1.58 billion pounds versus estimates of 1.40 billion pounds. With ample soyoil stocks and concerns about Chinese defaults on soymeal purchases, there was little need for the soybean market to rally on this news. After the close, USDA estimated that 67 percent of the crop was in good to excellent condition, below the 69 percent level that had been expected. The pace of plantings has stalled as wet weather continues to hamper the last of the crop. As of Sunday, 87 percent of the crop had been planted versus a 90 percent 5-year average for this time of year.
In corn, crop conditions also slipped a bit in USDA’s latest report going to 73 percent this week versus 74 percent last week and 76 percent this time last year. Overly wet conditions in the Southern Midwest is causing modest concerns but with ample stocks and sluggish demand it may prove difficult to see a big rally on overly wet conditions at this time of year.
For wheat, harvest pace continues to drag in the Southern Plains as rain-soaked fields hamper the progress. As of Sunday, 11 percent of the winter wheat crop has been harvested versus 4 percent last week and a 5-year average of 20 percent. Crop conditions for winter wheat were unchanged from last week at 43 percent good to excellent, while spring wheat increased one percent to 70 percent. In export news, Japan's Ministry of Agriculture is seeking to buy a total of 113,117 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.
Rains Pressure Grain Futures
Grains started the week with a continuation of last week’s selling. Going into the morning break, wheat was down 7 cents a bushel, soybeans were off 6 cents and corn gave up 2 cents a bushel.
In wheat, US prices continue to be uncompetitive in generating global trade deals. Last week’s tenders by Egypt went to Romania and Russia, and over the weekend it was announced that Russia was the lowest offer in an Iraqi tender. While US prices and stockpiles are both bearish, international weather has not been cooperating for ideal crops abroad. Rain of less 0.2 inch has fallen across the entirety of agricultural regions of Ukraine. The same can be said for the entirety of Russian winter wheat areas (Southern, Central, and Volga districts). With winter wheat undergoing grain fill, the crop would greatly benefit from additional moisture and will likely not reach full yield potential should dryness continue.
For corn, good weather in the US has kept prices on the defensive. Crop ratings released after the close today are expected to be around 74% good to excellent. In China, government policies are being implemented to force domestic users to utilize more government-owned corn in their stockpiles, and rely less on imported cheaper substitutes like milo & barley. U.S milo exports have surged in the past 18 months thanks to new found Chinese business so this new bushel by leaders in Beijing would out a big damper on US milo premiums that have been trading well above corn in the past year.
In soybeans, rains in the Southern Midwest continue to be a mixed bag. On the one hand it is slowing farmer planting but on the other hand it is providing beneficial moisture to benefit the crop long term. Traders are currently betting on the benefits of moisture and are less worried about the crop getting in the ground. Today at 11 am CDT NOPA is going to announce its May crush estimate which is projected to be 147.299 MB. If realized this would be a record for May crushing.
If the Grains Rally What Should You Be Paying Attention To?
Cody takes a look at resistance levels for corn, wheat, and soybeans and gives an update on weekly basis changes.
Wheat Harvest Underway
In the overnight session the grains were mostly unchanged with corn down 1 ½ cents, soybeans down ¼ cents and wheat up 1 ¼ cents going into this morning’s pause. The U.S. dollar is up .3 percent and crude oil is trading lower by 73 cents. The U.S. dollar finds some strength this morning after the Greek debt negotiations have begun to take a turn for the worse. The international monetary fund announced their delegation has flown home due to major differences with Athens.
Wheat harvest has kicked off in Texas with 23 percent harvested and Oklahoma 17 percent complete. Harvest has started in southern Kansas but little harvest progress has been made in the largest winter wheat producing state.
On the demand side of the equation, there is market talk about government plans to support new crop corn prices by lowering the volume of cheap imports into their country. This should help encourage domestic grain demand and lower stocks which have accumulated during their buying program intended to lift rural incomes.
The weather next week is expected to bring precipitation to the eastern and northwestern U.S. as temperatures remain cooler than normal throughout most of the grain belt.
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