Weekly Cash Comments
Grain futures fell sharply this week following the release of USDA's revised supply and demand data.
Grain futures fell sharply this week following the release of USDA’s revised supply and demand data. As a result, corn futures were off 14 cents, while front-month Mar soybean futures plummeted 57 cents. In the cash market, basis improved on average by 2 cents for soybeans and 3 cents for corn.
In corn, the big stimulus was a sharp increase in Gulf export basis, which improved 17 cents a bushel for the week. Export business has been improving in recent weeks. This week’s export sales tally came in at 818,700 MT versus trade expectations that ranged from 550,000 to 750,000 MT. Although the Gulf was up sharply on the week, river terminals were less subdued showing only a 7-cent advance on average. Barge rates began to creep up after recent lows which limited basis strength along the Mississippi & Illinois River systems. For ethanol, basis levels were up 2 cents a bushel this week, but many plants in the Western Cornbelt saw more impressive gains of 5 to 10 cents a bushel.
For soybeans, basis at the Gulf by a slimmer margin than corn posting a 6 cent advance on the week, while river terminals as a group were up 3 cents. Even so, export sales for soybeans continue to be impressive with this week’s total eclipsing 1,100,000 MT versus trade expectations of only 700,000 to 900,000 MT. For soybean plants, basis levels improved more than the US average posting a 3 cent average for the week. Gains were most prominent in the Eastern Cornbelt with advances of 5 to 10 cents a bushel fairly typical in Indiana and Ohio markets.
Soybean Cancellations Add Bearish Sentiment to Market
Strong export sales this marketing year have been a key demand element to support soybean prices in spite of large production. Soybean cancellations could begin to undermine prices.
The grains were mixed in the overnight with corn up 1 ¾ cents, soybeans down 2 cents and wheat up 3 ¼ cents going into the morning pause in trade. In a report from FAS this morning, China canceled 285,000 metric tons of Soybeans which will likely pressure the market lower this morning. FAS also reported a 101,600 metric ton old crop sale of corn to unknown destinations.
NOPA crush numbers were released on Thursday showing that the total number of soybeans crushed in the month of December was 165.383 million bushels falling just shy of 165.384 which is the monthly crush record set in December 2013. Despite the fact crush was near record highs, this report disappointed many analysts whose average guess was to see 166.9 million bushels crushed last month. This surprise further pressured soybeans causing the oilseed to close out the day at $9.91 ¾ just a fraction of a cent above the extreme lows of the range soybeans has traded in since late October. Producers should be alert in this trading environment looking to hedge prices if soybeans were to fall below $9.91 on strong volume.
Keep a close watch on March corn in the 60 minute chart today after yesterday the contract printed a bounce off $3.76. Another test of that level would leave me suspicious that corn could continue lower.
Chinese flour mills purchased 83.6% of the 2 million metric tons of high protein wheat offered to lock in import quotas for high-protein wheat. Another 630,000 metric tons of Chinese wheat will be offered at regular auctions on the 20th. It was also stated in an announcement today that China will sell 139,000 metric tons of imported high protein wheat from state reserves on January 21st in an effort to provide relief to a tight domestic market. U.S. wheat has closed lower for seven consecutive sessions and since December 19th has only posted four days out of eighteen where the contract closed higher than it opened.
Export Sales and NOPA out Today
Tune in to hear how the Export Sales Report and NOPA numbers effected the market. Cody will also discuss what he thinks will cause wheat to find a bottom.
Export Sales Support Bounce in Grains
The export sales helped support the bounce in the grain complex after showing better than expected corn and soybean sales.
In the overnight session we have seen some buyers come back into the market with corn up 4 ½ cents, soybeans up 6 ½ cents and wheat in Chicago up 4 ¼ cents. Yesterday, corn and soybeans both found some support with soybeans dipping below $10 during the day but closing the session at 10.10 ¾. This morning 127,000 metric tons of old crop corn sales were reported for delivery to Japan.
Also out this morning will be NOPA crush numbers which may add a sharp amount of volatility to the market. Expectations for December crush is for 166.9 million bushels of soybeans which would be a record. The previous crush record was December 2013 which used 165.3 million bushels of soybeans.
The weekly export sales were released at 7:30 AM CST this morning showing that wheat met analyst expectations with sales of 284,000 metric tons sold. Wheat sales were up 89% week over week, but even with the improvement that kind of volume will do little to help wheat prices move back toward the high printed on December 18th. Last night Egypt’s GASC set a tender to buy an unspecified amount of wheat from global suppliers, the market will be watching the results closely.
Corn sales picked up this week with 818,800 metric tons compared to expectations of 550,000-750,000 metric tons. This week’s corn export sales more than doubled last week’s numbers which only booked 387,648 metric tons, well below analyst expectations. This week’s export sales show corn sales now 63% booked compared to the USDA’s January 12th expectations.
Soybean sales booked 1,133,200 metric tons of old crop sales which is up 24% from last week and well above analyst expectations of between 700,000-900,000 metric tons. Soybean export sales have now booked 92% of projected USDA export sales.
Today we will also see Informa Economics’ projected acreage for the 2015/16 marketing year.
Actual Export Sales Analyst Estimates
Corn 818,800 550,000-750,000
Soybeans 1,133,200 700,000-900,000
Wheat 284,000 250,000-500,000
Grains Continue to Feel Pressure from Monday’s WASDE
Cody discusses the continued effects of the recent WASDE report as well as what is behind relatively strong ethanol production. Tomorrow Informa and export sales numbers will be released. Tune in for the full brief.
Grains Continue Slide in the Overnight
The grains continue their slide in the overnight in the wake of heavy fund selling during yesterday’s trade session.
The grains continued their selling in the overnight after a sharp day lower caused by significant fund liquidation. Going into the morning pause in trading corn is down 6 cents, soybeans is trading down 6 cents and wheat is 5 ¾ cents lower. March soybeans has broken through $10 and currently trades at $9.98 which is the low side of the range it has been trading in since late October. This morning two reportable sales were announced at 8 AM CST including 102,750 metric tons of old crop soybeans to unknown destinations, 100,000 metric tons of new crop soybeans to unknown destinations and 125,000 metric tons of corn to Taiwan for 2014/15 delivery. Today is the 5th and final day in the annual five day re-balancing period for commodity index funds.
Thursday the 15th will be another important day for traders to watch closely. NOPA crush numbers for December will be released at 11 AM CST and are expected to show a record for number of bushels crushed for that month. Analysts expect to see 166.9 million bushels of soybeans crushed in the month of December above the previous record of 165.384 in December of 2013. The analysts crush guesses range from 164.263-171.135 million bushels. Analysts expect the average soyoil stocks to reach 1.122 billion pounds up from 1.005 billion pounds in November. Also on Thursday, Informa Economics will release its 2015 acreage forecast update which will include implications for U.S. production in the 15/16 marketing year.
Although the U.S. wheat market hasn’t been able to find any traction after printing highs of $6.77 on December 18th it appears French wheat has been benefiting the Russian curb in exports. Farm office FranceAgriMer cut French 14/15 soft wheat ending stocks to 4.34 million metric tons from 4.55 million metric tons last month. Exports were also increased to 8.8 million metric tons compared to 8.5 million metric tons last month.
Grains Trade Lower
Tune in to hear Cody discuss what factors moved the market lower today as well as what traders should be paying attention to as the week closes.
So Where Do Prices Go From Here
After four major reports were released onto the market yesterday many producers are wondering where prices will go from here.
In the overnight session the grains bounced with corn up 3 ¼ cents, soybeans were up 7 ¼ cents and wheat trading 10 ½ cents higher going into the morning pause. This morning's trade session should be supported by a nice export sale of 105,000 metric tons of old crop corn sold to unknown destinations.
Soybeans sold off sharply yesterday after the USDA revised yield and harvested acreage higher, lifting production by 11 million bushels. Ending stocks held steady after the USDA raised the 14/15 export sales expectations. However, traders looked at the 410 million bushels of U.S ending stocks as bearish after expecting to see a 17 million bushel revision lower in yesterday’s report.
U.S production wasn't the only place ending stocks increased. Brazilian soybean production was also revised higher by 1.5 million metric tons which helped lift global ending stocks by .9 million metric tons. With the current quality of the South American crop, and a continuation of the existing precipitation profile, we could begin to see more revisions higher in South American production over the next month which would weigh heavily on the market. With the South American crop expected to reach the peak of harvest in late February I would expect to see weaker prices over the next couple months.
In Brazil, showers are expected to cover central and northwest part of the growing region which will continue to improve the crop development. The northeastern part of Brazil is still the driest region. In Argentina, rains over the weekend helped provide relief to fields after experiencing some hot and dry weather over the last week. In the overnight more rains are expected throughout central Argentina.
Corn prices were mostly stable following the report after yield was slashed to 171 bushels per acre and harvested acres were left unchanged. However, despite the decreased production, quarterly grain stocks were larger than expected revealing weaker than expected feed usage. Ending stocks were revised 121 million bushels lower providing a positive surprise for bulls. With a bullish revision in supply behind us, and demand weaker than expected in this round of reports, I am concerned prices will not be able to make new highs in the rally that began back in October. We will need to see a strong increase in demand to be the backbone behind any further rally, especially with no foreseeable threat in South American production.
Big Reports Today
Many important reports were released today. Tune in to hear Cody dissect the reports and discussed how this week's market might be affected.
Weekly Cash Comments
The futures market slide 12 ¼ cents for soybeans and 8 ½ cents for corn but despite the sharp slide in prices, basis remained for the most part steady increasing only a penny for soybeans and 1 ½ cents for corn.
Can wheat extend bounce off $5.00?
In the overnight session corn is trading ¾ of a penny lower with soybeans unchanged and a 2 cent increase in wheat. Wheat prices found support yesterday after touching $5.00 ¾ briefly during the session. Wheat seems oversold at these levels after falling sharply from the $6.77 high on...[Read More]
Export Sales Review
Soybean Sales Bounce Back
In the overnight session corn is trading down 2 ¼ cents, soybeans are trading 3 ¾ cents higher and wheat is down 2 ¼ cents. This morning a reportable sale of 116,000 metric tons of sorghum was announced to unknown destinations with 58,000 metric tons for delivery in 14/15 marketing year and...[Read More]
Strong Ethanol Stocks
Will Brazil transportation logistics lift U.S. soybean exports
The grains are all trading lower this morning with corn down 2, soybeans down 4 cents and wheat down 4 cents. Yesterday, mixed export news hit the market early with a 120,000 metric ton cancellation of soybeans to China followed by an announcement of a new sale that included 111,000 metric...[Read More]