August 13, 2015 | Grain Hedge Insights | Cody Bills | Views: 172

Grains Bounce in Overnight

The grains have been able to claw back some losses in the overnight, after sharp selling dominated the market following the UDSA report on Wednesday

In the overnight session the grains traded higher with corn up 3 cents, soybeans up 8 cents and wheat up 4 cents. The U.S. dollar is trading higher by .30 percent and crude oil is down 25 cents this morning. Grains traded sharply lower on the August Supply and Demand report which was released out yesterday. A surprise yield increase for both corn and soybeans shocked the market resulting in significantly larger ending stocks than originally expected out of this report. Corn yield was adjusted 2 bushels per acre higher to 168.8 BPA bringing new crop corn ending stocks to 1.713 billion bushels which was 289 million bushels over expectations. Soybean yield was revised .9 bushels higher to 46.9 BPA in this report pushing ending stocks 169 million bushels above analyst expectations to 470 million bushels.  


Export sales showed some slight improvement this week for corn and soybeans but sales remained lackluster. Wheat booked 421,600 metric tons this week which was down 50 percent from the previous week and was on the low end of analyst expectations. Corn sales were positive but only recorded 29,200 metric tons of old crop sales which was well below the expectations which ranged from 50,000-250,000 metric tons. New crop corn sales met expectations with 501,900 metric tons sold last week. Old crop soybean sales were up noticeably from the net cancell​ations in the previous week. With 96,300 metric tons sold, this week’s sales were able to meet expectations. New crop soybean sales were also strong with 660,500 metric tons reported this week.     


Ethanol production increased 4,000 barrels per day this week to 965,000 BPD snapping a four week decline in production. Ethanol production this week is recorded 86,000 barrels per day more than the four year average and 34,000 barrels per day ahead of production in the same week last year. Cumulative ethanol production this year is 4.6 percent ahead of the pace last marketing season. Ethanol stocks declined this week by 710,000 barrels to 18.53 million barrels.  ​

August 12, 2015 | Cody Bills | Views: 476
August 12, 2015 | Grain Hedge Insights | Cody Bills | Views: 222

Report Day Expectations

The USDA Supply and Demand report is scheduled out at 11 AM CST. Below are some expectations.

In the overnight session the grains are mixed with corn up 3/4 of a cent, soybeans down 2 3/4 cents and wheat up 3 3/4 cents. The U.S. dollar index is down nearly 1 percent and crude oil is trading higher by 64 cents. China’s Yuan fell for a second day after policy makers took steps to lower interest rates and devalue the national currency on Tuesday.  


Excessive storms throughout Santa Fe and northern Bueno’s Aires has dropped as much as 7 3/4 inches of rain and triggered flooding across a key wheat growing region in Argentina and threatening 2015/16 yield.


Today, the USDA will release two major crop reports including the Crop Production report and the August Supply and Demand report. The August Supply and Demand report could provide some spark to the market with analysts expecting planted acreage to be revised lower and yield to be adjusted due to the excessively wet spring that left Missouri, Indiana and Ohio saturated. In the July report, the USDA announced that planted acreage in certain states was going to be re-surveyed which will be revealed in today’s report. This August Supply and Demand report also has impact because it will be the first survey-based yield estimates. 


Below are the expectations for the production for the 2015/16 marketing year. Analysts are expecting to see corn production revised 202 million bushels lower to 13.327 billion bushels and soybean production to be revised 161 million bushels lower to 3.724 billion bushels. Acreage is expected to be left mostly unchanged for corn, but soybean acres are expected to fall by 1.178 million acres to 83.271 million acres in the August report.


The average analyst expects to see significant yield revisions in the August WASDE report. The average corn yield guess for this report is 2.3 bushels below last month and the yield guess for soybeans is 1.3 bushels per acre below the July report. However we are questioning if the USDA will make much of a revision at all. The crop conditions have actually improved by 1 percent in the good-to-excellent ratings and soybeans are unchanged at 63 percent rated good-to-excellent. However, despite crop conditions remaining steady throughout July, keep in mind that this is the first survey based yield results which will likely render an adjustment from the forecast given to us by the USDA in July. 

August 11, 2015 | Cody Bills | Views: 233
August 11, 2015 | | Views: 468
August 11, 2015 | Grain Hedge Insights | Cody Bills | Views: 159

China’s Yuan Falls Sharply in the Overnight

The sharp drop in the Chinese Yuan rippled throughout global markets last night and triggered selling in commodities.

In the overnight session the grains are trading lower with corn own 6 1/4 cents, soybeans down 14 3/4 cents and wheat down 7 3/4 cents. The U.S. dollar is lower by .17 percent and crude oil is trading lower by over a dollar. China policy makers cut its daily reference rate by 1.9 percent which triggered a sharp selloff in its currency the Yuan. The policy to cut the reference rate was intended to help combat the economic slowdown that has dominated Chinese markets over the last few months. The move to cut rates and devalue the Yuan triggered selling in commodities last night as traders worried that a continued decline in the currency would hurt the buying power of Chinese consumers.


Crop progress was reported yesterday and showed that corn and soybean conditions were unchanged. The corn crop was rated 70 percent good-to-excellent and the soybean crop was left unchanged at 63 percent rated good-to-excellent. Weather over the next two weeks will be critical for soybeans which have 69 percent of the crop setting pods. Winter wheat harvest has mostly wrapped up with 97 percent of harvest complete which is ahead of the 4 year average of 90 percent harvested. Spring wheat conditions declined by 1 percent to 69 percent of the crop rated good-to-excellent.


Brazil’s government crop supply agency dramatically increased their 2014/15 corn crop to 84.3 million metric tons from 81.81 million metric tons in July. The soybean crop was left mostly unchanged at 96.20 million metric tons compared to the July estimate of 96.22 million metric tons. Conab forecast 2015 wheat production would total to 7.00 million metric tons on par with July’s estimates.


Keep in mind that the August Supply and Demand report and Crop Production report will be released on August 12th at 11 AM CST. These reports will show the resurveyed acreage throughout much of the states that experienced heavy rainfall throughout the spring and will provide the first survey based yield estimates.   

August 10, 2015 | Grain Hedge Insights | Cody Bills | Views: 186
August 10, 2015 | Grain Hedge Insights | Cody Bills | Views: 268

Grains Start the Week on a Strong Note

Grains start higher on Monday, but two reports scheduled for release on Wednesday will dominate price direction for the second half of the week.

In the overnight session the grains traded higher with corn up 4 cents, soybeans up 7 1/2 cents and wheat up 1/2 cent this morning. The U.S. dollar is trading .16 percent higher and crude oil is up 21 cents this morning. Traders will be focusing on the Crop Production report and Supply and Demand report scheduled for release at 11 AM CST on Wednesday. Traders will also be paying close attention to the crop progress to be issued out at 3 PM CST.


Last week both Informa and FC Stone released their yield estimates for corn and soybeans below the existing July USDA forecast. Informa set its corn yield forecast at 165.4 BPA and its soybean yield forecast at 45.4 BPA. FC Stone set its corn yield estimates at 165 BPA and its soybean 45 BPA. The July USDA forecast set corn yield at 166.8 BPA and soybean yield at 46 BPA.


Thundershowers provided relief to some of the drier areas in the grain belt over the weekend and more scattered showers are expected today. The 6-10 day forecasts continues to show drier than normal conditions across the majority of the grain belt with some precipitation expected in the northern areas in the 8-14 day forecast.  


France is expected to harvest 28 percent less corn than 2014 after fewer acres were planted this year and dry, hot weather damaged crop development and robbed yield potential. The latest forecast for French corn production is roughly 13.2 million metric tons with an average yield of 8.3 metric tons per hectare. French corn production is down from a production record in 2014 that yielded 10.4 metric tons per hectare.  


On Friday, Saudi Arabia bought 505,000 metric tons of wheat in an international tender supplied by a variety of countries throughout the European Union, North America, South America, Australia and Canada. Jordan’s state grain buyer also issued a tender for 100,000 metric tons of corn to be sourced from optional origins. 

August 07, 2015 | Grain Hedge Insights | Cody Bills | Views: 229
August 07, 2015 | Grain Hedge Insights | Cody Bills | Views: 286

Weekly Cash Comments

Cash Commentary for week ending August 7th

Grain futures were mostly stable this week as traders’ awaited fresh news on the crop supply situation from USDA’s August 12th report. In the cash market, average basis levels across the country were mostly unchanged for soybeans but up 2 cents a bushel on the week for corn.


For corn, export bids at the Gulf were off this week by 3 cents a bushel which put upland river terminals on the defensive for the week. Some terminals slipped as much as 10 cents on the week. The one bright spot was ethanol plants which posted a 4-cent gain on the week. Eastern Cornbelt plants in Illinois, Indiana and Ohio were especially strong with gains of 10 to 15 cents on the week fairly common.


In soybeans, cash basis along the river was dragged lower by Gulf bids that plunged 41 cents this week. Cancellations of old crop export sales in the past few weeks has taken the premium out of spot beans and caused spot basis levels to erode. At soy crushing plants, basis levels put up a 3-cent advance for the week although double-digit moves up or down were fairly typical as plants jockey for late season supplies. 

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