Soybeans to test 100 day moving average
Soybeans printed a bullish price pattern in the last two trade sessions. Can it break through overhead resistance at the 100 day moving average?
In the overnight session the grains were mixed with corn up 1 cent, soybeans up 9 3/4 cents and wheat down 1/2 a penny. The U.S. dollar is trading a fraction of a percent lower and crude oil is higher by 73 cents. This morning the ADP jobs data showed that 185,000 workers were added to payrolls in July which was below expectations which ranged from 190,000 to 263,000. Egypt announced a tender for 55-60,000 metric tons of wheat from either the US, Ukraine, Russia or Australia. The U.S. is not expected to win the tender due a stronger U.S dollar and higher prices here in the U.S. Korea also issued a tender for purchase of up to 207,000 metric tons of yellow corn to be sourced from optional origins this morning.
Last night at 3:30 PM CST FC Stone announced their first 2015 corn and soybean production forecast which was below current USDA forecasts. FC Stone’s corn production estimate was 149 million bushels shy of the USDA with 13.381 billion bushels. They see corn yield at 165 bushels per acre compared to a current USDA forecast of 166.8 BPA. Soybean production was also below current USDA estimates with 3.797 billion bushels forecast for the 15/16 marketing year. Soybean yield was forecast at 45 bushels per acre compared to a current USDA forecast of 46 BPA. This morning China’s agriculture ministry proposed to lower corn prices to help support margins for domestic hog producers and lower the prices of pork.
The weather forecast looks to bring some excitement into the market for soybeans as chances of rain in the 6-15 day forecast provide low confidence that extensive showers will relieve the dry spots in northeast Iowa, northern Illinois and southern Wisconsin. Only 54 percent of the soybean crop has set pods making the short rooted crop more vulnerable to dryness in the coming weeks.
Bears and Bulls Continue to Battle it Out!
Cody reviews the chart technicals and weather outlook for the week.
Conditions Improve for Soybeans
The crop conditions report showed soybean ratings improved over last week.
In the overnight session the grains traded higher with corn up 3 1/4 cents, soybeans up 10 1/2 cents and wheat up 3 3/4 cents. The U.S. dollar is down .20 percent this morning with crude oil up 88 cents. Corn and soybeans seemed to find some buying support during yesterday’s session with both grains closing the day in the top half of the day’s trading range. Soybeans had the most dramatic price bar of the day, printing a doji near support indicating a possible change in trend.
Crop conditions were in line with analyst expectations with corn good-to-excellent ratings unchanged on the week at 70 percent. Weather continues to look promising this week with above average precipitation, and cooler than normal temperatures expected across the majority of the grain belt. These conditions will be critical for the soybean development as only 54 percent of the crop is setting pods. Soybean conditions improved this week by 1 percentage point to 63 percent rated good-to-excellent.
There are a two yield related items to pay attention to over the next couple days including the first FC Stone yield estimate for the 2015 corn and soybean crop. FC Stone will be releasing their estimate at 3:30 PM CST today. Informa will also be releasing their monthly crop production estimates on Wednesday.
Export inspections disappointed for wheat on Monday with only 298 thousand metric tons inspected for export, down from 439 thousand metric tons last week and below the range of expectations. Soybeans and corn inspections met expectations with 148 thousand metric tons and 920 thousand metric tons respectively. However, corn’s inspections did decline from last week’s levels of 1.1 million metric tons.
Positive Signs for Crop Yield
Cody looks at the charts, weather, and world news.
Soybean Prices Dip Again
Soybean prices fell again on Monday as ideal weather is mostly positive for early august during a critical development period.
In the overnight session the grains traded lower with corn down 5 1/4 cents, soybeans down 8 3/4 cents and wheat down 5 1/4 cents. The U.S. dollar is trading .21 percent higher and crude oil is down nearly a dollar on news that China’s factory activity contracted the most in two years.
The weather forecast continues to look positive for corn and soybeans across the Midwest with cooler than normal conditions expected this week. Rains should be widespread this week covering the eastern grain belt this evening and moving west later this week. The market will be watching the latest crop progress report scheduled for release at 3 PM CST with expectations for mostly unchanged to slightly higher crop conditions.
The latest Planalytics corn yield forecast released on July 31st increased its yield forecast by 1.3 bushels per acre to 166.7 bushels per acre as ideal weather over the past couple weeks helped corn through a critical reproductive phase. Planalytics left soybean yield unchanged at 45.6 bushels per acre with august weather still unknown. August weather will be critical as soybeans continue its pod setting stage and so far weather is positive. Current USDA yield estimates are 46 bushels per acre for soybeans and 166.8 bushels per acre for corn.
This morning Ukraine announced it expects to increase grain exports to 36 million metric tons this marketing year from 34.9 million metric tons in the 14/15 marketing year. In Ukraine, the export pace in July increased 13 percent over last year to 2.5 million metric tons.
Soybean Basis Wars are Heating Up
Cody looks at weekly basis changes and a yield forecast for Planalytics.
Weekly Cash Comments
Cash Commentary for week ending 31 July 2015
Cash grain basis was mixed this week with corn basis up 2 cents a bushel, while soybean basis was off 2 cents a bushel.
In corn, basis levels were mostly firmer in Iowa and Nebraska as ethanol plants have bid higher in an interest to get more farmer grain after the recent sell off. In addition, buyers in Indiana and Ohio posted higher basis as futures prices declined and poor new-crop prospects limited farmer movement of old crop supplies.
For beans, a bidding war was brewing in Indiana as major soy crushing plants moved up sharply to attract spot supplies. River terminals also found strength this week as late season export business continues to be unusually brisk for this time of year.
Soybean Sales Cancellations
A cancellation of soybean sales this morning could continue to put pressure on the commodity as it struggles to rise above the 100 day moving average.
In the overnight session the grains traded mixed with corn up 1 3/4 cents, soybeans down 2 cents and wheat up 5 3/4 cents. Crude oil is trading down 69 cents and the U.S. Dollar has shed nearly 1 percentage point. Soybeans have struggled over the last two days to rise above the 100 day moving average which looms overhead at $9.56. This morning China canceled 200,000 metric tons of old crop soybean sales.
Some reportable sales were announced this morning with 72,136 metric tons of new crop corn sold to Mexico and 36,068 metric tons sold for 16/17 delivery. Exporters also sold 37,250 metric tons of white wheat, 67,650 metric tons of HRW and 22,000 metric tons of spring wheat to unknown destinations for 15/16 delivery. Taiwan’s MFIG group issued a tender to purchase 130,000 metric tons of corn from the United States, Brazil, Argentina or South Africa.
Yesterday, the Spring Wheat tour wrapped up after three days scouting the spring wheat crop in the producing state. Results were released on Thursday and estimated an average yield of 49.9 bushels per acre which is well above the 48.6 bushels per acre last year.
The latest Planalytics corn and soybean yield forecast was released on Friday, which is based on satellite imagery and uses the NDVI index which basically measures the greenness of the crop. Planalytics corn yield was revised higher by 1.3 bushels per acre to 166.7 BPA. Soybean yield held steady from the previous forecast of 45.6 bushels per acre on July 15th. This forecast is updated every two weeks.
Outstanding Export Sales Numbers
We are starting to see a pickup in export sales numbers but is it enough to catch up to the expected pace?
Grains Higher on Strong Export Sales
Strong export sales this morning helped lift the grains.
In the overnight session the grains traded higher with corn up 3 3/4 cents, soybeans up 10 1/4 cents and wheat up 5 1/2 cents this morning. The U.S. dollar is up nearly 1/2 a percent and crude oil is 29 cents higher. A reportable sale of 140,000 metric tons of old crop soybeans was announced this morning.
Export sales were strong this morning with soybeans and wheat beating analyst expectations. Old crop corn sales booked 364,900 metric tons which was within the analyst expectations and up sharply from last week’s marketing year low. Wheat sales topped expectations by 100,000 metric tons with 699,400 metric tons booked, and Soybeans booked 416,700 metric tons which was well above the 100-200,000 metric tons expected. New crop corn and soybean sales also outperformed with corn booking 443,300 metric tons and soybeans booking 899,100 metric tons. This week’s new crop sales were up substantially from last week.
Ethanol production declined 8,000 barrels per day this week to 965,000 barrels per day. This is the third weekly decline, but production levels are still well above last year and 101,000 barrels per day above the 4 year average. Ethanol stocks increased 89,000 barrels per day to 19.65 million barrels this week.
Today the spring wheat tour will be releasing its yield forecast after touring North Dakota since Tuesday. So far reports have been very positive with the first day yield estimate coming in 51.1 bushels per acre compared to 48.3 bushels per acre last year.
Russia’s largest farming region wrapped up harvest with 9.8 million metric tons of grain, an increase of 650,000 metric tons compared to last year. The Russian grain crop is looking relatively healthy with expectations for 100 million metric tons harvested this year, down 5 percent from 2014.
Basis is heating up for end users in the eastern grain belt after weeks of futures price declines. A soybean plant out of Claypool Indiana increased basis another 10 cents to +90X after jumping 10 cents the day before. In Morristown IN, a grain buyer lifted its bid by 15 cents last night to +120X. For producers that still have some old crop in the bins, the futures sell-off has introduced basis opportunity.