Weekly Cash Comments
Weekly Cash Commentary for week ending April 17
Grain basis levels continued to stagnate this week with both corn and beans each posting less than a 1-cent improvement on the week.
In corn, the biggest movement occurred at the Gulf where export bids were up 3 cents a bushel on nearby basis, but river terminals as a group posted only a 2-cent improvement. Strength was more prominent along the Ohio River areas were many terminals were up a nickel on basis. For the ethanol sector, production levels continue to slip along normal seasonal lines but plants as a group managed a modest 1-cent advance. In eastern Nebraska the two big plants continued to jockey for corn, raising nearby basis by 7 cents a bushel and currently stand at +10K, which exceeded the recent high of +8K in mid-March.
For soybeans, crushing plants were up a modest 1 cent a bushel but several plants in the Western Cornbelt boosted basis by 5 to 10 cents a bushel. In Minnesota, key crushing plants have been steadily ramping up basis with gains of 25 cents a bushel since the first of March. At river terminals, basis levels were up modestly with a 1-cent gain on average, but like corn, bean basis along the Ohio River should greater strengthen the rest of the country.
Wheat Prices under Pressure
Wheat prices have come under pressure from increased precipitation throughout the plains, weak export sales and the possibility Russian export taxes being lifted after July 1st.
In the overnight session corn is down 3/4 of a penny, soybeans are up a cent and wheat is up 3 1/4 cents. The dollar is trading slightly higher this morning, now hovering at 97.640 while crude oil is trading down nearly a percent after news that OPEC’s production in March added to the burgeoning global supply.
Wheat prices have suffered this week from beneficial rains to the plains region. Precipitation should expand into the central plains over the weekend bringing an expected .5-2 inches of rain to 80 percent of the wheat belt. The improvement in the weather, coupled with yesterday’s disappointing export sales provides little fundamental support for the grain going into the weekend.
The Russian Agricultural Ministry recently proposed to end the export tax on Russian wheat after July 1st. The decision will be voted on in either May or June after this year’s crop yield becomes clearer. Also on the international front, the Ethiopian government has issued an international tender to purchase 400,000 metric tons of milling wheat to be sourced from optional origins. Traders are waiting on the results of that tender.
Grains to Trade Higher?
Cody speculates where corn, soybean, and wheat prices will go and reviews the export sales report.
Soybean Sales Beat Expectations
Export sales showed a stark contrast between wheat and soybeans this morning. Can yesterday’s NOPA crush numbers and this week’s export sales help propel soybeans higher into Friday?
In the overnight session corn and soybeans traded a relatively wide range but went into the morning pause mostly unchanged. Wheat increased 3 1/4 cents in the overnight and the U.S. dollar index continued its slide for the third straight day. Crude oil is also trading lower this morning off nearly 1/4 of a percent.
Export sales were slow for wheat this week booking 47,900 metric tons of old crop sales, down 85 percent from last week’s sales. This week’s wheat sales were a marketing year low, missing analyst expectations which ranged between 100,000-300,000 metric tons. Old crop corn sales were reported at 588,200 metric tons which was down from 639,000 metric tons reported last week. Corn sales were on the high side of the analyst expectations which ranged from 400,000-600,000 metric tons. Soybeans beat analyst expectations by booking 312,000 metric tons this week. This week’s soybean sales were a large improvement from last week which saw 176,000 metric tons of cancellations. Notable sales were reported to Germany, Netherlands, unknown destinations and South Korea.
NOPA soybean crush came in well over analyst expectations with 162.822 million bushels of soybeans crushed in the month of March. Analyst expectations ranged from 150.5 to 159.5 million bushels with the average analyst guess expecting 155.261 MBU. The latest NOPA report marks the largest March soybean crush on record. Soyoil stocks were reported at 1.420 billion pounds well over analysts’ expectations of 1.383 billion pounds, but below last year’s levels of 2.023 billion pounds.
Ethanol production declined for the second week in a row bringing weekly ethanol production to 924,000 barrels per day. This week’s 12,000 barrel per day decline in ethanol production marks the first time since October that weekly 2014-15 production has fallen below 2013-14 levels. Despite falling below last year’s weekly production level, cumulative ethanol production this year has increased 5.4 percent compared to a USDA expected increase of 1.3 percent. This year’s ethanol stocks increased 162,000 barrels to 20.65 million barrels this week.
NOPA Crush and Ethanol Reports
Wheat prices continue to fall as weather forecasts improve. Cody also discusses NOPA Crush and Ethanol Reports.
Soy Market Focused on NOPA Crush
The soybean market will be watching the NOPA crush numbers this morning with expectations for a record March soybean crush.
In the overnight session the grains were mixed again with corn down 2 cents, soybeans up 1 3/4 cents and wheat in Chicago up 3 cents. The NOPA crush numbers will be released at 11 AM CST this morning which is expected to show a record amount of soybeans crushed for the month of March. Analysts are expecting March soybean crush to be reported at 155.261 million bushels with a range of estimates from 150.5 to 159.5 million bushels. In the same poll conducted by Reuters the average guess for soyoil stocks was 1.383 billion pounds. Estimates for soyoil stocks ranged from 1.275 to 1.463 billion pounds of oil on hand.
A few wheat tenders were reported in the overnight session which helped to support wheat prices after two days of selling. In a tender that closed Wednesday, the Taiwan Flour Millers Association purchased 85,710 metric tons of hard milling wheat sourced from the United States. Jordan’s state grain buyer issued a tender to purchase 100,000 metric tons of optional origin hard milling wheat.
An announcement out of Russia also helped support wheat prices this morning with Russian Agriculture Minister announcing that there is no reason to cancel the wheat export tax ahead of schedule. The tax is set to expire on June 30th and the ministry has made no decision yet on whether or not to extend the tax.
This morning the U.S dollar is continuing higher, up nearly 1/2 a percent which should put some pressure on commodities. Oil is trading higher as well, but currently trades near the 100 day moving average which may act as a resistance level to any attempt at a rally.
Wheat Continues to Trade Lower
Cody looks at the factors driving wheat prices lower and gives his opinion on whether soybeans will break their sell-off pattern.
Wheat Continues to Slide on Improved Weather
The wheat market continues to slide lower after weather has turned favorable for the drought stricken plains region.
In the overnight session the grains were mixed with corn up a penny, soybeans up 7 cents and wheat in Chicago down 2 1/4 cents. The June U.S dollar index is trading down slightly after trading over 100 during yesterday’s session. Crude oil is trading up 3/4 of a percent. In the overnight there were a couple tenders including a tender from the Japanese Ministry of Agriculture looking for 109,005 metric tons of food quality wheat from the United States, Canada or Australia and an Iraqi tender for 50,000 metric tons of wheat.
Yesterday the Crop progress report was released showing winter wheat conditions slipped to 42 percent rated good to excellent, down 2 percentage points from last week but still well over last year’s 34 percent good to excellent rating. However, prices continue to fall for the second straight day after the plains received much needed precipitation over the weekend. This week’s forecast shows continued precipitation in the southern half of the U.S and has eased the fears of significant crop damage as a result of dryness.
Yesterday wheat export inspections came out on the high side of expectations with 445,674 metric tons inspected for export compared to expectations of between 325,000-450,000 metric tons. Soybeans and corn both reported export inspections that fell within expectations with 450,317 metric tons and 855,766 metric tons inspected respectively.
As a reminder, tomorrow the March NOPA crush values will be released. Analysts are expecting 155.261 million bushels of soybeans to have been crushed for the month of March, the largest on record since last year’s record of 153.840 million bushels.
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Monday Morning Sell-Off
In the overnight session the grains traded sharply lower with corn down 10 1/2 cents this morning, soybeans down 13 cents this morning and wheat down 5 1/2 cents this morning for the December contracts. The U.S. Dollar is trading over 1/2 a percent lower and crude oil is also lower, losing...[Read More]
Disappointing Price Action for the Week
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In the overnight session the grains traded lower with corn down 5 cents, soybeans down 7 cents and wheat down 5 cents. The U.S. dollar is higher by nearly ½ a percent and crude oil is 33 cents higher this morning. For Soybeans, the 50 percent retracement of the sharp rally in November...[Read More]
Will the U.S. Meet the Export Sales Forecast
Can Export Sales Lift Wheat?
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