May 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 204

Can exports lift soybeans?

Export sales continue to outperform for soybeans late in the marketing year.

In the overnight session the grains were mixed with corn up 2 1/2 cents soybeans down 1/2 a cent and wheat down 1 1/2 cents. The U.S. dollar is mostly unchanged with crude oil 74 cents higher. Rains are likely to continue in the southern plains over the next few days and then a drying trend is likely to take hold for the first part of June.


Yesterday, the weekly ethanol production numbers showed an increase in production by 11,000 barrels per day to 969,000 barrels per day. Stocks declined this week by 337,000 barrels to 20.1 million barrels. Ethanol production has picked up sharply in the late part of May which is typical going into the driving season. Ethanol production is up 4.8 percent over last year compared to the USDA’s corn used for ethanol balance sheet item which suggests only a 1.3 percent increase.


Export sales were mostly in line with expectations for old crop sales, but new crop corn and soybean sales disappointed. Old crop soybean sales beat analyst expectations at 322,400 metric tons which was up sharply from last week’s sales of 98,909 metric tons. The buyers this week included China, the Netherlands, Germany, Japan and others. Soybean sales continue to show above average export demand late in the marketing year. However, this morning the Argentine soy crushers union stated that he expects a salary agreement which would end the strike that has negatively affected the local market and slowed exports form the Rosario Region.  


Old crop corn and wheat sales met expectations with corn showing sales of 654,600 metric tons of old crop and wheat recording 42,500 metric tons. Sales were down 19 percent and 43 percent respectively but managed to fall within the range of expectations.


On Thursday GASC purchased 240,000 metric tons of which 75 percent was sourced from Russia and 25 percent was sourced from Romania.


Russia has taken measures to limit exports in the event of a sharp decline in the Rouble by setting a wheat export tax at 50 percent minus 5,500 Roubles per metric ton. The government set a minimum tax at 50 Roubles per ton. The export tax was designed to limit wheat exports in the event wheat prices reached 13,000 Roubles.  

May 28, 2015 | Cody Bills | Views: 545
May 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 261

Will Wheat Bounce?

After a hard two days of selling is the bounce off of yesterday’s lows sustainable?

In the overnight session the grains traded higher with corn up 3/4 of a penny, soybeans up 3 cents and wheat in Chicago up 3 3/4 cents. Yesterday wheat continued trading lower throughout the better part of a day but bounced off support and closed 6 1/2 cents off its intraday lows. Both $4.84 and $4.85 were previous lows from March 6th and April 16th respectively and provided some buying support during yesterday’s session.  During today’s trade session we might see continuation of the bounce seen yesterday, but it is important to remember that wheat is still firmly stuck in a downtrend and that selling pressure is likely to be the more dominant force in the long run.


The International Grains Council raised its forecast for global 2015/16 corn and wheat output on Thursday. The council raised wheat production to 715 million metric tons up from a previous projection of 705 million metric tons. Although this is a substantial jump from previous forecasts, it is still below last year’s production levels of 721 million metric tons. The world corn crop was revised higher by 10 million metric tons to 961, below last year’s production levels of 997 million metric tons.


Purchasing activity seems to be picking up as the state grain buyer for Egypt set a tender on Wednesday for an unspecified amount of wheat from global suppliers this morning. Japan bought 100,262 metric tons of U.S. wheat in a tender that closed on Thursday and Algeria purchased 540,000 metric tons of grain last week from optional-origin which was more than the 450,000 reported.  The dollar is trading only slightly higher this morning after jobless claims rose to 282,000 metric tons from 275,000 a week earlier. 

May 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 208
May 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 183

Can wheat find some support today?

The wheat market continued lower this morning with continued pressure from the rising dollar.

In the overnight session corn is trading down 1 3/4 cents, soybeans are up 3 cents and wheat is down 8 cents going into this morning’s pause. The U.S. dollar is higher again this morning by .35 percent on continued worries out of Greece and the Euro zone. Crude oil is trading down 9 cents.


Crop progress was released after the close of trade yesterday and showed that 92 percent of corn was planted as of May 24th which is ahead of the four year average of 88 percent. Soybeans are also ahead of pace with 61 percent of soybeans planted compared to the four year average of 55 percent. Spring wheat is now 96 percent planted. The USDA released their first crop condition ratings for corn in yesterday’s report which showed 74 percent of the crop was rated good to excellent just two percentage points behind the first crop conditions report of 2014 on June 1st.  


The wheat market is trading lower again today after breaking out of the consolidation pattern printed last week on the 100 day moving average. Wheat is pressured by the stronger dollar, the declining Russian ruble and an announcement by the Russian agricultural minister today that Russia expects grain harvest to exceed the most recent forecasts and reach 2014 levels which totaled to 105 million metric tons of grain. 

May 26, 2015 | Grain Hedge Insights | | Views: 305
May 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 187

US dollar up sharply

The US dollar is trading sharply higher this morning putting pressure on the grain complex.

In the overnight session the grains are trading lower with corn down 2 1/4 cents, soybeans down 1 cent and wheat down 4 3/4 cents. The U.S Dollar is trading up over a percent this morning and crude oil has slipped 68 cents.  Japan is seeking to buy 100,262 metric tons of food quality wheat from the U.S or Canada in a regular tender closing tomorrow.  


Heavy rains which ranged from 1-4 inches fell across Texas, Oklahoma and parts of Kansas causing localized flooding and adding to the concern of winter wheat crop quality. This is the 5th week in a row that significant rains have fallen throughout the southern plains. The southern plains are expected to receive more precipitation later on this week before the outlook turns drier once again.


Between 1/4 inch and 1 1/2 inch of rain fell throughout the majority of the Midwest this weekend providing excellent growing conditions for the newly seeded crop. Crop progress will be released at 3 PM CST today and will show the first crop condition ratings for corn. Last week the crop progress showed 85 percent planted with soybeans 45 percent complete.  


UkrAgroConsult announced that it has raised its 2015 forecast for grain harvest to 54.9 million metric tons from 52.3 million in its previous estimate. The increased grain outlook was primarily due to revision higher in wheat production. Ukrainian farmers have planted 95 percent of acreage as of May 25th. SovEcon announced it expects Russia to harvest 95 million metric tons of grain this year down significantly from the 105 million metric tons last year. 

May 22, 2015 | Grain Hedge Insights | Cody Bills | Views: 290

Short Covering Rally

Cody reviews the overall downward trend from the grains and looks at where they might find support.

May 22, 2015 | Grain Hedge Insights | Cody Bills | Views: 278

Weekly Cash Comments

Cash Commentary for week ending May 22nd

Basis levels for corn were off 1 cent for the week adding to the previous week’s losses, while soybean basis managed a 2-cent advance thanks to a sharply lower week on the futures market.


For corn, there was modest weakness along the river markets this week with a 3-cent loss at the Gulf providing the biggest catalyst of change to upstream facilities. Corn buyers along the East Coast and Plains saw relatively more strength this week, but ethanol plants as a group were off 2-cents a bushel. Areas of Iowa and Minnesota were especially prone to losses this week with 5-cent a bushel losses being fairly typical at some key end users.


In soybeans, basis levels improved on average by 2-cents a bushel this week, although there was a distinct dichotomy between end-user groups. For export sensitive areas, losses of 5-cents a bushel at the Gulf kept river terminals mostly weaker. Although soybean export business has been winding down this week’s sales of 165,500 metric tons was a 21 percent improvement week over week. For soybean plants, crushing facilities raised their basis by 2 cents a bushel for the week, but Eastern Cornbelt plants saw more impressive gains with some facilities up 5 to 10 cents a bushel.

May 22, 2015 | Grain Hedge Insights | Cody Bills | Views: 166

Wheat continues short covering correction

The wheat market continues its short covering correction higher this morning after four days of pause and consolidation near the 100 day moving average.

In the overnight session the grains traded higher with wheat leading the way up 4 3/4 cents, corn traded up 1 3/4 cents and soybeans up 1/4 cent. The U.S. dollar index is trading about a 1/4 percent higher this morning and crude oil is down 58 cents.


Yesterday, Agroconsult raised its forecast for Brazil’s 2014/15 corn and soybean crop higher. The consultancy raised its forecast for soybean production from 95.8 million metric tons to 96.1 million metric tons, and raised their first corn crop forecast from 29 million metric tons to 30.7 million metric tons. The consultancy also raised their second crop production expectations to 51.4 million metric tons up from 50.4 in March.


Argentina exports have slowed recently as buyers hold back from purchasing grain hoping the government will turn up pressure to resolve a three week long strike by the Industrial Oilseed Complex Workers Federation.  


The drought monitor has shown improvement over last week with the last of the severe and extreme drought in the southern Plains disappearing after four weeks of substantial rains. The rains have acted as a double edged sword providing moisture relief to parched soil, but causing quality concerns to a wheat crop late in its growing season. As a result of the heavy rains the western half of Kansas and Oklahoma and parts of Texas have been reduced to mostly moderate drought to abnormally dry from ratings like severe and extreme drought just weeks ago. 

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