August 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 239

Grains Slip Overnight

Crude Oil holds steady

Grains slipped overnight with soybeans giving up 6 of yesterday's 10-cent advance. Corn and wheat also moved lower in the night session. In outside markets, crude oil held steady around the $43 mark while the US dollar was mildly lower.

 

On Monday after the close, USDA’s crop ratings showed a drop in corn condition from 76% good-to-excellent last week to 74% good-to-excellent this week. Soybean atins held steady on the week. In the Eastern Corn Belt of IN & OH, conditions continue to be sub-par. Corn in Ohio slipped on the week from 54% to 47%, soybeans 58% to 52%, Indiana corn from 77% to 73%; soy 75%  to 74%.

 

Rains were non-existent in the last day over the US Midwest except for parts of Western NE
and S MO. Weather models show some chance of rain in the ECB next week.

 

France's weather-hit soft wheat harvest will produce 28.68 million tonnes, down 30 percent from a record 2015 crop, consultancy Agritel said on Tuesday. The production estimate was based on an average yield pegged at 5.48 tonnes per hectare, down from 7.93 tonnes per hectare last year, Agritel said in a harvest report. However,Russia should see higher wheat production this year.  Russia's IKAR agriculture consultancy said on Tuesday it had upgraded its forecast for Russia's 2016 grain crop by 2 million tonnes to 116 million tonnes. Its wheat crop forecast for the year was raised by 1 million tonnes to 70 million tonnes, IKAR added.

 

Crude oil took a break overnight from recent gain $39 mark up to $43 a barrel in the past week. The market has found renewed strength thanks to OPEC  stating in a written statement on Monday the cartel will hold an informal meeting in Algeria on September 26-28 on the sidelines of the 15th International Energy Forum.


 

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August 08, 2016 | Grain Hedge Insights | | Views: 290
August 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 240

Soybeans Gapped Higher Overnight

Informa put out their forecasts for crops on Friday

Soybeans gapped higher overnight and were poised to go into the break with a 10-cent advance. Corn and wheat were also higher, extending gains from the end of last week.

 

On Friday, private analyst Informa put out crop forecasts generally lower than other analysts. For corn, they peg yield at 169.8 bushels/acre and production at 14.7 billion bushels while soybeans are projected to be 47.7 bushels/acre with a 3.96 billion bushel crop. Some talk has been circulating about potential issues with the corn crop. U of IL agronomists point to tip-back problems in some test plots suggesting the crop was under stress during the fill stage, even though it looks very green. Indeed, comparing Iowa yields in years of record production shows that high temperatures in June are generally in the low 80s. This year was the hottest June in 80 years which could limit the ability of the crop to hit a record yield this year.

 

Iowa Record Corn Yield Years and Average June High Temperatures

Year          Avg Jun High Temp      Yield

1986                     83.3                 135

1992                     81.9                 147

1994                     82.2                 152

2002                     84.3                 163

2004                     78.0                 181

2015                     81.9                 192

2016                     88.1                   ??

 

In the Eastern Corn Belt of OH & IN, a crop tour by Thomson Reuters found some drought stress in the late-planted crops there, but suggested the corn crops could still see respectable yields if weather is favorable in the later part of the season. Even so, it seems unlikely these areas will hit record yields.

 

Ohio soybeans were in much tougher shape than those in Indiana. Signposts of stress were very apparent on these soybeans, including many aborted flowers (meaning that pods will not form) and exposed leaves turned inward away from the sun even early in the day. Plants with aborted flowers still have the chance to produce new flowers, but it would be difficult to do without sufficient moisture. And once the pods are formed, the weather is instrumental in determining the size of the bean within.

But soybeans could be in luck because unlike corn, soybeans can often make do with just one or two good rainfalls in August, even if the temperatures are warmer. Current weather models suggest improved rainfall chances in the 7-14 day period.  

 

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August 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 249

Weekly Cash Comments

Weekly Cash Commentary for week ending 08/05/2016

National basis was mixed to end the week.

 

Corn basis showed the most volatility this week. On average, corn basis rose half a cent driven by the central plains and ethanol plants. Ethanol plants gained almost 2 cents per bushel. This was partly driven by higher demand in Brazil for U.S. Ethanol. Corn along the river defied the trend and lost almost 6 cents per bushel.

 

Overall, soybeans were the biggest loser this week off more than 8 cents per bushel. Crush facilities lost 4 ½ cents.  Even with strong exports, basis losses along the river were off 7 ¼ cents keeping in step with corn losses.

 

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August 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 274

Soybeans Gain in the Overnight Session

Crude prices end their two day rally

Grains found support in the overnight session. Soybeans lead the bounce, gaining almost 16 cents.

 

Concerns of moisture stress are on the horizon for parts of the grain belt. According to the Commodity Weather Group, scattered showers may occur in mainly southern Nebraska/Kansas/Missouri/southwest Iowa in the next five days, with only patchy activity elsewhere in the Midwest. However, widespread rains are expected to favor the central/northwest Midwest in the 6 to 10 day and will keep most of the driest spots in the Midwest limited to Indiana/Ohio/Michigan (15% of belt).

 

The CWG also stated there may be a few showers that may scatter through the southern Great Lakes in the 11 to 15 day, but some moisture stress will likely persist. Elsewhere, the favorable moisture and lack of extreme heat will aid corn/soy yields. Mid 90s are possible in the southwest Midwest next Wednesday to Friday, but highs otherwise remain in the 80s/low 90s in the next two weeks.

 

Crude prices began to slip today, ending a two-day rally. The glut of crude and its refined products weighed on markets while investors eyed a possible stutter in China’s imports.

 

In world news, France's farm ministry cut its yield estimate for this year's soft wheat harvest to a 30-year low. The plunge in yields led the ministry to reduce its soft wheat production estimate to 29.1 million tonnes from 36.95 million forecast last month, now down 29 percent on last year's record 40.9 million tonnes and the lowest level since 2003. The downward revision in French wheat crop is equivalent to the size of the entire wheat crop of Romania, the 5th largest wheat grower in the EU.

 

South Korea, the fifth largest market for U.S. wheat, had suspended clearance of U.S. wheat for food use and stepped up quarantine measures for U.S. milling and feed wheat shipments in the wake of the U.S. GMO wheat discovery last week. In other news, flash sales of 498,000 metric tons of new crop soybeans were sold to China.

 

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August 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 306
August 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 315

Grains Continue their Solid Gains

US Dollar and Equity Futures Positive

Grains yet again came into the morning break with solid gains, but in past sessions have been unable to hold those gains once day-trading commences. In outside markets, crude oil slipped slightly off of yesterday’s sharp advance while the US dollar and equity futures were in positive territory.

 

Traders continue to look for record large corn and soybean crops this fall. The latest private firm to put out a forecast was Linn Group. They peg the US corn yield at 171.4 and an overall crop of 14.8 billion bushels versus USDA’s July yield of 168 and production estimate of 14.5 billion. For soybeans, they see yield at 48.6 and production at 4.07 billion bushels versus USDA of 46.7 and 3.88. USDA will release their first survey-based estimate of crop size next Friday, August 12th.

 

US corn prices are competitive in the world market as Brazil has shortage issues and Argentina has significantly higher prices than the US. The only real competitive country is the Ukraine, but even they are a few dollars per metric ton higher than the US. Ukraine’s summer season is proving more problematic for corn growth as dry conditions are stressing about ⅓ of the country’s corn crop.

 

This week’s export sales were solid for corn and soybeans. Wheat was in-line with expectations. A recent discovery of an unapproved GMO strain of wheat in Washington may hamper Asian trade with the US as countries there look for signs of unapproved GMO wheat in their US imports.

 

WEEKLY EXPORT SALES

 

                                   OC-Act       OC-Exp      NC-Act       NC-Exp

Corn                                 331      300-500           896       500-700

Soybeans                          542      300-600        1,128    800-1,200

Wheat                                                                470       350-650


 

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August 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 340
August 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 240

Soybeans Lead the Overnight Gains

US Dollar Slightly Higher

Grains were higher overnight led by soybeans which posted nearly double-digit gains in the night session. In outside markets, crude was trying to push back to the $40 a barrel mark, and the US dollar was slightly higher as well.

 

This morning USDA released a new round of flash export sales. There was a 290,000 MT deal for new-crop corn and two soybean deals totaling 697,000 MT with 66,000 MT of that total for old-crop and the remainder to be exported in new-crop.

 

Brazil's government is working to adjust its regulations regarding imports of genetically-modified organisms (GMO) in order to allow entry of more transgenic varieties from the United States, the Agriculture Ministry said on Tuesday.  The imported GMO corn would restricted to use in animal feed, the ministry said.

 

Persistent rain in recent days and weeks is delaying Germany's harvest, especially of wheat and rapeseed, creating uncertainty about the crop outcome, the Association of German Farmers said on Wednesday. Wheat harvesting started in mid-July in early areas but rain means work is far from complete. It is possible that German winter wheat yields will be about 10 to 20 percent below last year, it said.


 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)


 

August 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 379

Steep Slide in Soybeans Yesterday

US Dollar Falls to 6-week lows

Steep Slide in Soybeans Yesterday

Grains found little relief overnight following yesterday’s steep slide in soybean prices. Overall the grain complex was mixed. In outside markets, crude oil tried to bounce off of it's $40 a barrel low while the US dollar fell to 6-week lows.

 

Crop conditions on Monday yet again came in unchanged with corn at 76% and beans at 72% good-to-excellent. Every week seems to bring a bearish surprise as traders look for a small down tick in crop conditions, but USDA conditions have held strong all season long.  Adding to the bearish sentiment, on Monday FC Stone estimated yields for corn at an all-time high of 175 and beans 48.8 bpa with production of 4.05 bb and 15.15 bb respectively. This compares to the most recent USDA yields of 168.0 and 46.7 and production of 14.540 and 3.880.
 

Brazilian soybean, meal and corn exports are expected to fall to half the level seen last year in August, according to shipping line-ups at the ports, as merchants focus on selling corn on the local market and soy loses its competitive edge abroad. Conab forecast exports of 22 MMT, well below the record 30.2 MMT exported in the previous year. Brazil exported only 7.6 MMT of corn from January through June, according to private-sector data.

 

USDA Census Crush showed June soybean crush at 4.623 mmt or 154.1 mb which was in line with expectations. The avg. daily rate of crush was 5.137 mb which is down from 5.194 in May. Oil stocks were 2.048 bln lbs vs. 2.063 last month. USDA June corn use for fuel alcohol was 421.31 mb vs. 425.78 last month. Dry mill DDGs were 1.893 mmt vs. 1.845 last month.

 

Oil prices rebounded sharply on Tuesday after a slide below $40 a barrel triggered some bargain hunting, although analysts said worries about a global glut in the oil market could take prices to as low as $35 in the near term. Other factors — the recent uptrend seen in U.S. oil drilling activities, Libya’s expected return to the oil exporting markets, and the likely output increase by prominent Organization of the Petroleum Exporting Countries members such as Iraq and Iran last month — are also sparking stronger risk-off sentiment across commodities.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)


 

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