Weekly Cash Comments
Cash Commentary for week of 13 February 2015
Grain markets were mostly quiet this week with corn and soybean futures showing little directional bias. In the cash market, basis continued to firm with US average corn basis up 2 cents while soybeans were up 3 cents a bushel.
In corn, ethanol plants continue to show less basis strength then other areas as the outlook for ethanol is clouded by falling energy prices. For the week, average basis levels improved less than 1 cent a bushel at ethanol plants. For river terminals, basis levels came under modest pressure as Gulf export basis lost 3 cents on the week. However, river terminals as a group still managed a modest half-cent a bushel gain. Weekly corn export sales of 1,000,000 MT were positive and with 17.2 MMT of corn outstanding to be shipped, the 2nd largest total for this time of year in the past 10 years, river terminals will likely need to keep their bids strong to draw gain out of reluctant farmer hands.
For soybeans, basis at the Gulf was unchanged this week but river terminals bid up basis to nearly 4 cents higher than the previous week. Export movement continues to be brisk although weekly new sales and cumulative outstanding sales are starting to slip. At crush facilities, facilities, basis levels were up 3 cents a bushel on average for the week.
Markets Prep for Long Weekend
The markets are trading higher Friday morning as traders eye a three day weekend followed by NOPA crush numbers released on Tuesday the 17th.
In the overnight session the grains are trading higher with corn up 1 ½ cents, soybeans up 7 ¼ cents and wheat up 4 ½ cents going into the morning pause in trade. This morning it was announced that 110,000 metric tons of new crop soybeans was sold to China. The market will be closed on Monday and reopen at 7 PM CST on the 16th.
The market is awaiting the NOPA crush numbers on Tuesday which are expected to decline from last month’s report to 162.673 million bushels in January. This would be a sharp increase from January 2014 crush numbers which were 156.943 million bushels. Soyoil stocks are expected to come in at 1.170 billion pounds in the Tuesday report, up from 1.067 billion pounds the previous report.
In its first corn production estimate of the season Buenos Aires Grain Exchange is expecting to see 2014/15 corn production Argentina to come in at 22.3 million metric tons. This is slightly below both the USDA and the Rosario Grain Exchange which expects to see Argentina corn production at 23 MMT and 23.5 MMT respectively.
The Russian Agriculture Ministry said in a statement on Thursday that Egypt cannot be exempt from the export tax according to Russian Law.
Export Sales Released Earlier Today
Cody and Kevin break down corn basis and the export sales numbers.
Are Export Sales Strong Enough To Lift the Grains?
This morning’s export sales were strong, but are they strong enough to get grain prices moving higher again?
In the overnight session corn is trading ¾ of a cent lower, soybeans are trading 2 ½ cents higher and wheat is trading lower ¾ of a cent lower going into the morning pause.
Corn export sales beat analyst expectations by increasing 19 percent week over week and booking 1,003,100 metric tons. This week’s sales were well above the 600,000-800,000 metric tons expected by the market. Soybeans also had a fantastic week booking 745,400 metric tons which is up 52 percent from last week and nearly double the 250,000-450,000 metric tons expected by the market. Soybean sales are still well ahead of pace even after accounting for the 20 million bushel increase in the February WASDE report. Wheat sales improved only 3 percent over last week with a weekly total of 409,300 metric tons compared to expectations of 300,000-500,000 metric tons.
Corn 600,000-850,000 1,003,100
Soybeans 250,000-450,000 745,400
Wheat 300,000-500,000 409,300
Weekly ethanol production increased 13,000 barrels per day to 961,000 BPD even as weekly ethanol stocks rise again. This week stocks grew 149,000 barrels to 21.14 million barrels. Ethanol production continues to run 5.6 percent ahead of last year’s production pace. In the February WASDE report the USDA increased their corn used for ethanol forecast by 75 million bushels, lifting their ethanol production forecast from .8 percent increase over last year to 2.3 percent.
The Rosario Grain Exchange lifted its forecast for corn and soybean production forecast for Argentina significantly in their latest report. Corn production was raised to 23.5 million metric tons compared to their last forecast of 22.4 MMT. Soybean production was increased to 58 million metric tons from 54.5 MMT. Both estimates were higher than the February WASDE report which estimated Argentina corn production at 23 MMT and soybean production at 56 MMT.
The Brazilian government’s crop supply agency Conab cut its corn and soybean production estimates for Brazil in a recently released report. Corn production was lowered to 78.4 MMT from 79.1 MMT in January. Soybean production was lowered to 94.6 MMT from 95.9 MMT.
Soybeans Trade Higher
Tune in to hear Cody and Kevin discuss whether the shift in soybeans was a fundamental shift. They will also break down the weekly ethanol report and South American Production numbers.
Grain Market Continues Lower Following Tuesday Reports
The grains finished the evening session off weaker after USDA cuts corn and soybean ending stocks in yesterday’s WASDE report.
In the overnight session the grains continued lower with corn down 2 ½ cents, soybeans down 2 cents and wheat down 5 cents going into this morning’s pause in trading. Crude oil is also trading lower and the U.S. dollar is up a fraction of a percent.
Yesterday’s WASDE report provided a small surprises for the market with both corn and soybean ending stocks revised lower, but funds responded to the news by selling 7,000 contracts of corn, 7,000 contracts of soybeans and 6,000 contracts of wheat. Traders will begin to turn their attention toward spring planted acreage expectations and continue to focus on South American production.
Yesterday, Corn ending stocks were revised 50 million bushels lower from January’s report to 1.827 billion bushels. The current stocks to use ratio is now 13.38 percent. The adjustments to the balance sheet were primarily made up of an increase in corn used for ethanol by 75 million bushels. Ethanol production has been running well ahead of pace increasing 5.6 percent year over year compared January WASDE expectations of a .8 percent increase.
Soybean ending stocks declined 25 million bushels from the January report to 385 million bushels. Both export sales and crushings increased in February’s by 20 million bushels and 15 million bushels respectively.
U.S. wheat ending stocks increased 5 million bushels to 692 million bushels which was slightly more than analysts expected. Export sales were revised lower by 25 million bushels which was mostly offset by a 20 million bushel decline in imports. Global wheat stocks also increased to 197.85 million metric tons, compared to expectations of 195.83 MMT.
Also in the news this morning is talks that Egypt is negotiating with Russia to be exempted from the wheat export tariffs that Russia established early this year.
Export Numbers Out Today
Cody and Kevin talk about what producers and traders should do following the export sales and production numbers.
What Surprise will the February USDA Report Hold?
Here are the analyst expectations for the February WASDE report and what traders will be paying close attention to.
In the overnight session the grains turned negative with corn down 1 ½ cents, soybeans down 2 ¼ cents and wheat down 3 ½ cents on the week. The dollar index is trading higher this morning and crude oil is trading slightly lower. This morning at 11 AM CST the USDA will release their February Supply and Demand report.
Analysts are expecting a 2 million bushel increase to both corn and wheat ending stocks, while soybean ending stocks are expected to decline 12 million bushels to 398 MBU carryout. Soybean export sales continue to run well ahead of pace, building traders’ expectations that the USDA will revise export sales higher in this month’s report. Looking at the last five February WASDE reports we have seen the USDA revise ending stocks on average 56 bushels lower for corn and 9 bushels lower for soybeans.
South America will be highly focused on this report as harvest begins to pick up pace in the southern hemisphere. Some traders believe that revisions in Brazil and Argentina production will occur in next month’s WASDE report with such little harvest data available at this time. However, January was an exceptionally dry month for the northern part of Brazil providing 40 percent less moisture than normal over the last 30 days. With the precipitation significantly less than normal it is likely we see at least a minor revision in production in South America. The average analyst expects Brazil soybean production to be cut to 94.67 million metric tons, and corn production to be cut by nearly a half million metric tons. These production cuts will most likely be offset with increases in Argentina corn and soybean production, with the average analyst expecting 22.54 MMT and 55.58 MMT respectively.
In the overnight session Australia increased their 14/15 wheat crop estimates to 23.61 million metric tons, up from 23.22 million metric tons in December. Texas winter wheat condition also improved this week with 44 percent of the crop rated good-to-excellent up from 42 percent a week before.
Grains Trade Slightly Higher
Today Cody discusses export expectations, ending stock expectations, and South American production. Tune into tomorrow for a break down of the USDA Supply and Demand Report.
Weekly Cash Comments
Corn basis saw modest growth this week advancing 2 cents a bushel on average across the country, but bean basis was unchanged thanks to higher futures and better farmer selling.
In corn, basis levels were up largely driven by strength at ethanol plants in the Western Cornbelt. On...[Read More]
Grains Higher Going into Friday
In the overnight the grains traded higher with corn up ¼ of a cent, soybeans up 3 ½ cents and wheat up 6 ¾ cents going into this morning’s pause. Wheat seems to be bouncing higher this morning after holding a major support level of $4.92 ¼ which was the low back on February 2nd. Today is...[Read More]
South American Trucker Strike Continues
Export sales provide little support to the markets
In the overnight session the grains traded mixed with corn and soybeans up 2 ¼ each and wheat trading 1 ¼ cent higher going into the morning pause in trade. Today is the last day to get out of any March grain contracts with first notice day Friday the 27th.
Yesterday at 11 AM CST...[Read More]
Ethanol Production out this Morning
Soybeans slip in overnight after yesterday’s gains
The grains are moving lower this morning with corn down a penny, soybeans down 4 cents and wheat in Chicago down 3 ½ cents. Yesterday’s rally in Soybeans sparked some farmer selling after prices rose sharply to an intraday high of $10.29. Keep a close watch on corn today as it trades next...[Read More]