July 22, 2014 | Grain Hedge Insights | Cody Bills | Views: 262

Soybeans Impulse Through Lows

We discuss how soybeans traded today and what the price action could mean going forward. Logan also touches on a report out of Ukraine regarding export sales and harvest progress.

July 22, 2014 | Grain Hedge Insights | Cody Bills | Views: 585

String of Reportable Sales This Morning

A string of three reportable soymeal and soyoil sales were reported this morning.

The grain markets moved a couple cents higher in the overnight after trading down for the better part of yesterday. September corn is up 1 ¼ cents. September wheat is up 4 ½ cents and august soybeans is up 14 cents on the day. Crop conditions were released yesterday after the market closed, showing small changes week over week. Corn conditions were left unchanged at 76% good to excellent, while soybean conditions improved a percent, now rated 73% good to excellent. Progress is moving along nicely, with 56% of corn now silking and 19% of soybeans setting pods. The next several weeks will be critical for final yield and the forecast for pollination is looking very favorable. The 6-to-10-day forecast from Planalytics shows above average precipitation and below average temperatures for the U.S. grain belt.

A string of export sales were reported this morning with exporters selling 225,000 metric tons of U.S new crop soymeal to unknown destinations, 180,000 metric tons of U.S new crop soymeal to Vietnam and 20,000 metric tons of U.S. new crop Soyoil to unknown destinations.

Also on the demand front, Taiwain flour millers association has released a tender overnight to purchase 80,900 tonnes of milling wheat from the United States. The tender will close on Friday, July 25, and will give a better idea of demand following a three month price decline. Japan’s Ministry of Agriculture also issued a tender to buy 94,586 metric tons of food-quality wheat from the United States, Canada and Australia. The tender should close Thursday.

Yesterday, new crop soybeans were able to hold the key support level of $10.65 after twice attempting to penetrate that price level. However, November soybeans were able to rally 6 cents off their lows to close out the day, giving hope that we have found a short-term bottom. Today it will be important to watch the $10.65 price level again since another test of that level will likely yield lower prices.

This morning there was talk out of Argentina that grain shipments out of the port of Rosario started up again on Monday after several unions’ suspended strikes. The unions will continue to hold talks with the companies, but at least for now it seems that grain will once again be moving out of the country. We have seen these strikes end only to start back up again last week so we will keep a close watch on any further developments out of Argentina. The strikes out of Argentina have been a supporting factor for old crop U.S soybeans.    

July 21, 2014 | Grain Hedge Insights | Cody Bills | Views: 537

Grains Gap Lower in the Overnight Session

Corn, soybeans and wheat all moved lower in the overnight session as near ideal conditions during pollination weigh on prices.

This morning all the grains are trading lower as ideal weather during pollination weighs heavily on the market. September corn is trading down 6 cents, September wheat is down 3 ¾ cents and August soybeans is trading 4 ¾ cents lower.

This afternoon’s crop progress report should show unchanged conditions ratings and nearly 50% of the corn and soybean crop entering the reproductive phases. Weather looks to remain very favorable for the remainder of the week with NOAA and private analysts both expecting cool temperatures across much of the grain belt. Showers should be light and intermixed, continuing to support soil moisture.

The longer term outlook remains favorable, with the 8-to-14-day forecast from Planalytics projecting below average temperatures and above average precipitation for the majority of the grain belt. This is confirmation of NOAA’s projections from last week for a cool, wet, August for the U.S. Grain Belt.

New crop soybeans are now 6 cents away from the low printed at $10.65 per bushel following the last USDA supply and demand report. Since then new crop soybeans rallied to $11.18 ¾ last Thursday, helped to its high on Thursday by the Malaysian airlines incident over eastern Ukraine. The geopolitical event was used as a selling opportunity after the initial reaction sent soybean prices higher. Keep a close watch on new crop soybeans around $10.65 which should act as a strong support level during today’s trade.

Over the weekend France and Germany both received precipitation that stopped fieldwork during harvest. The moisture throughout Europe during harvest has caused quality concerns for the wheat in that region. This is has been an ongoing story this year for European wheat and the U.S markets are unlikely to respond to it in any kind of meaningful way. 

On the demand side this morning we have a few wheat tenders across the news wires that shouldn't affect the overall direction of the trade here this morning. Turkey’s state grain agency issued an international tender to import 165,000 metric tons of milling wheat and 65,000 metric tons of animal feed barley. Also, private Egyptian buyers were in the market purchasing 60,000 metric tons of wheat from the Black Sea region.

July 18, 2014 | Grain Hedge Insights | Cody Bills | Views: 245

Futures and Cash Markets See Volatile Week

Futures traded lower in Chicago as the Ukraine premium from yesterday was sold into for corn and wheat. Old crop soybeans got a bump as news came across the wires that Argentinian strikes were back on. Join us on GrainTV to discuss these and other factors

July 17, 2014 | Grain Hedge Insights | Cody Bills | Views: 428

Strong New Crop Soybean Sale!

Export sales report was strong for corn and old crop soybeans, but a sale for new crop soybeans may help lift soybeans for the second straight day.

The grains shed a couple pennies in the overnight session with old crop corn down 2 cents, Chicago wheat down 1 cent, and august soybeans down ¾ of a cent. Expectations at the office here are for a continuation of yesterday’s bounce, but we are concerned that the upside potential will be limited as strong selling pressure will likely meet any sharp rally. A strong new crop soybean sale to china should also help support the market this morning.  

Corn had great export sales this week beating expectations for both old and new crop. Old crop sales came in at 573,700 MT which was well over expectations of 250,000 to 350,000. Old crop corn still ahead of pace to meet USDA expectations by about 43 million bushels.

Soybeans met analyst expectations for both old and new crop. Old crop sales were small, but at least they were positive which kept soybean sales well ahead of pace to meet analyst expectations. This week's 37,700 MT pushed old crop sales now 38.7 million bushels ahead of existing export projections which indicates that net cancellations must occur between now and Aug. 31 to meet USDA projections. New crop sales were slightly lower than expected with only 495,000 MT booked, compared to expectations between 500,000-700,000 MT. However, a reportable sale announced this morning of 708,000 MT of U.S soybeans to China should help lift the market. Wheat sales missed expectations to the low side only booking 320,700 MT compared to expectations of 400,000-550,000 MT.

The European Union will begin taxing corn imports at a rate of $7.2 per metric ton. This was announced following U.S. export prices at the gulf moving below levels required by the European commission. Imports of corn have not been taxed since August 2010 and this is viewed as negative news for U.S. corn prices.

Port worker strikes in Argentina continued on Thursday. The key export facility of Rosario has come to a standstill as port workers and grain inspectors are demanding higher wages. Argentina is a major exporter of soymeal and soyoil, and the strike has worked to underpin the soy complex in the last two days.

July 16, 2014 | Grain Hedge Insights | Cody Bills | Views: 356

Grains Trade Higher Across the Board

Exports sales combined with oversold technical conditions helped to produce a snapback for corn, soybeans, and wheat today. We discuss the export sales, Argentina news, and ethanol production on today's GrainTV.

July 15, 2014 | Grain Hedge Insights | Cody Bills | Views: 288

November Beans Ready for a Bottom?

Soybeans found some strength today on the new crop. Today we discuss NOPA crush numbers and where the new crop November contract could be headed.

July 14, 2014 | Grain Hedge Insights | Cody Bills | Views: 262

Grains Bounce Back

Grains finally found some footing in today's trade. Today we discuss export inspections and crop progress numbers released after the market close.

July 11, 2014 | Grain Hedge Insights | Cody Bills | Views: 352

WASDE Report Reaction

US world ending stocks pressure corn.

Grains are continuing lower after this morning’s USDA report. Corn is down 9 cents and soybeans is trading 20 cents lower for the new crop contracts. This report was generally in-line with expectations for soybeans, but 2014/15 corn ending stocks were roughly 25 million bushels above trade expectations.

 

Old crop corn carryout was raised 100 million bushels, bringing 2013/14 carryout to 1.246 billion bushels. 2014/15 production was lower 75 million bushels as planted acres and harvested acres were lowered from the June report slightly. Yield was left unchanged at 165.3 bushels per acre. On net, supply for 2014/15 was raised 25 million bushels as a result of larger old crop carryout. Feed and residual use was down 50 million bushels and all other demand side numbers were left unchanged. On net, 2014/15 ending stocks were raised 75 million bushels to 1801 million bushels – 25 million bushels above trade expectations coming into the report. The USDA did not aggressively increase demand numbers for 2014/15 as some traders had expected coming into the report. Overall negative report for corn and we are now testing technical support at $3.80. Adding to the bearish sentiment was world corn ending stocks which were raised 5.4 million metric tons (3%) from the June report.

 

The old crop balance sheet was one of the items that fueled soybean selling in the wake of the USDA supply and demand report. Ending stocks jumping 15 million bushels from last month’s report catching some traders off guard and triggering selling throughout the soybean complex. The ending stocks increase was primarily driven by a negative residual number of -69 million bushels. In the last 21 growing seasons and most likely further back than that we have only seen one year with a negative residual number and that was the 2011/12 growing season when we recorded a -2 million bushel residual. We did have an increase in both crushing’s and exports by 25 million bushels and 20 million bushels respectively to eat through some of the beans but ending stocks were raised to 140 million bushels in the end. This has weighed heavily on the bull spread between August and November futures. 

 

New crop soybean ending stocks missed analyst expectations, showing 415 million bushels instead of the anticipated 418 million bushels. The difference was not significant enough to cause any kind of bullish move and the market quickly sold into the report. The USDA revised total supply up 180 million bushels over the June report and increased demand a little over 4% adding 40 million bushels to crushing and 50 million bushels to export sales. Overall this is a report met trade expectations for 2014/15 ending stocks. World soybean ending stocks were raised by 2.43 million metric tons, but this was almost entirely made up of increases to US ending stocks. Overall a neutral report for soybeans but the argument can still be made that $10.70 futures will not hold through harvest with ending stocks at 415 million bushels for the upcoming marketing season.

July 10, 2014 | Grain Hedge Insights | Cody Bills | Views: 289

Will the July WASDE Report Help Grains Find a Bottom?

With the crop good-to-excellent ratings on soybeans at a 20 year highs, yield will likely be left alone from the June report.

With the crop good-to-excellent ratings on soybeans at a 20 year highs, yield will likely be left alone from the June report. This means 14/15 soybean supply is likely to come out 169 million bushels over last month's WASDE report and up 425 million bushels from last year. The average analyst expects ending stocks to be reported at 418 million bushels which would imply that demand would increase nearly 76 million bushels from June's report, less than half the expected supply increase. Looking back over the last 14 years we would expect the majority of the demand gains to come from exports which responds more readily to large changes in supply and price. In 2006/07 when supply increased 10% year-over-year, export sales made up nearly ¾ of the demand response to the increased production. In 2009/10, another year with a 10% increase in supply, we saw export sales account for 70% of the demand response year-over-year. 

 

Trade estimates for 14/15 U.S. soybean ending stocks do not factor in a robust response from the demand side as seen in 2009/10 or 2006/07. This sets up the soybean market for a potentially positive report on Friday following weeks of sharp selling. We feel any bounce should be used as a pricing opportunity as the long term fundamentals still look undoubtedly bearish. During the 2006/07 marketing year prices approached $9.00 per bushel and looking back to 1975 soybean prices have found support around the $9.00 per bushel level. These historical benchmarks are important as we enter a very different marketing year from what traders have become accustomed to in recent growing seasons.

 

Please call the office if you have questions regarding your marketing strategy as we enter harvest. Our number is 877-472-4607 and we would be happy to discuss the markets.

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