May 22, 2015 | Grain Hedge Insights | Cody Bills | Views: 302

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: 179

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. 

May 21, 2015 | Grain Hedge Insights | Cody Bills | Views: 218
May 21, 2015 | Grain Hedge Insights | Cody Bills | Views: 200

Can export sales lift corn?

Export sales were positive this morning with strong old crop corn sales and a reportable sale announced early this morning.

In the overnight session the grains are trading higher, with corn up 1 1/2 cents, soybeans up 1 1/4 cents and wheat up 3 cents. The U.S. dollar is lower by 1/10th of a percent and crude oil is 48 cents higher. This morning a reportable export sale was announced for 152,400 metric tons of old crop corn to unknown destinations and 50,800 metric tons of new crop. Chicago wheat trades near its 100 day moving average (5.18 3/4) which has acted as strong resistance on Monday and Tuesday this week. Wheat traders are focusing on the heavy rains in the southern plains which have been causing concerns that the wheat will have quality issues at harvest. Wheat traders are also monitoring Russia whose forecast has turned dry over the next two weeks and whose crop is beginning to feel stress from the hot dry weather.


Export sales this week showed that wheat, corn and soybeans all met expectations. Wheat booked 74,400 metric tons of old crop sales and 128,200 metric tons of new crop. With analysts expecting to see as much as 200,000 metric tons of cancellations, this week’s sales were relatively positive. Old crop corn sales jumped 12 percent from the previous week with 812,600 metric tons booked above the 400,000-600,000 metric tons expected by traders. Soybeans also showed positive export sales this week with 165,500 metric tons of old crop sales which was a 21 percent improvement week over week. Soybeans continue to outperform sales expectations late in its export season.


Yesterday, the EIA weekly ethanol report showed a sharp jump in production by 46,000 barrels per day to a total of 958,000 barrels per day. This decisively ends the two week slump in ethanol production that brought weekly totals below 2013 levels. However, routine facility maintenance played a big role in the early may production slump and it appears production is picking back up again as we move into driving season. Ethanol production year to date is up 4.8 percent compared to the USDA’s expectations which only show a 1.3 percent increase YOY. Ethanol stocks also climbed by 135,000 barrels to 20.43 million barrels this week.  


A waterway leading to Argentina’s Rosario grain hub was blocked for the last two days after a ship ran aground. This disruption comes during the busiest season just following harvest

May 20, 2015 | Cody Bills | Views: 254

Ethanol Production Jumps

Ethanol production smashes through 2013 levels. Positive export sales are expected for the new crop grains.

May 19, 2015 | Grain Hedge Insights | Cody Bills | Views: 295
May 18, 2015 | | Views: 232
May 15, 2015 | Grain Hedge Insights | Cody Bills | Views: 335

Corn Basis Softens

Fundamentally, the grain market didn't see many changes. However, there are upcoming events that demand attention. Cody reviews these as well as weekly basis changes. Don't miss today's episode.

May 15, 2015 | Grain Hedge Insights | Cody Bills | Views: 291

Weekly Cash Comments

Weekly Cash Commentary for week ending May 15

Corn basis was mostly unchanged for the week with US average basis levels stagnate. However, a late week increase in futures prices but cash corn basis levels on the defensive. For soybeans, basis levels posted a modest 1-cent a bushel advance as nearby futures prices gave up 18 cents on the week.


In corn, Thursday’s 6-cent advance was met with relatively sharp drops in basis by corn merchants. Even Friday morning there was clear follow through with major plants in MN & NE posting lower basis compared to Thursday’s quotes. On average, ethanol buyers were off 1 cent a bushel but in the Western Cornbelt basis levels showed more weakness with some plants giving up 5 cents or more on the week. For export sensitive areas, basis levels were weaker thanks to a 2 cent drop at the Gulf. Upstream river terminals came under more pressure giving up 3 cents a bushel on average for the week.


For soybeans, USDA’s supply and demand report early in the week pointed to ample supplies of stocks in the coming growing season, and with near-term export business winding down, there seems like little incentive for end-users to aggressively bid higher for beans. At the Gulf, basis levels were up 3 cents a bushel, but river terminals on average only showed a 1-cent gain. For soy plants, there was only modest changes for the week with a 1-cent improvement on average. However, mid-week one Indiana plant was aggressively bidding up beans, but it was short-lived as pipeline supplies quickly filled the needs.

May 15, 2015 | Grain Hedge Insights | Cody Bills | Views: 315

NOPA numbers to be released mid-morning

Traders are anticipating NOPA crush numbers which are scheduled for release at 11 AM CST.

In the overnight session the corn traded a 1/4 cent higher, soybeans traded 2 cents higher and wheat in Chicago fell 2 1/4 cents. Wheat traded sharply higher in yesterday’s session fueled by rapid short covering and is now close to its 100 day moving average at 521 3/4 which will most likely offer up some resistance.


This morning Russia announced that they will remove the wheat export duty until a new formula can be introduced on July 1st. By removing the export duty, it is estimated that the country’s exports will increase by 1 million metric tons this marketing year.


Keep a close watch on NOPA crush numbers today which will be released out at 11 AM CST. Analysts are expecting to see April crush at 147.827 million bushels up from last year’s 132.667 million bushels. The average analyst guess pegs soyoil stocks to be at 1.461 billion pounds.


The climate prediction center is expecting to see El Nino continue throughout the summer in the northern hemisphere which may point to another year of optimal growing conditions. They estimated that there is a 90 percent chance that El Nino will continue through the summer and an 80 percent chance that El Nino will last through the end of the year.


Yesterday Informa announced it sees corn planted acreage at 88.737 million acres which is below the recent USDA most recent estimate of 89.199 million. Informa pegs its soybean acreage at 87.185 million acres which is 2.55 million acres over the USDA.

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