Grains Bounce Overnight
The grains recovered a couple pennies in the overnight after hard selling during yesterdays session that chart support levels broken.
In the overnight session the grains rebounded a bit after breaking through key support yesterday. The dollar index remains steady and crude oil has fallen a dollar overnight. Corn is up 2 1/4 cents, soybeans are up 6 cents and wheat is up 2 1/2 cents this morning. Today the FOMC statement will be released at 1 PM CST. Traders are watching the statement closely for indication that the first rate hike since 2006 may be near.
In the overnight, corn and soybean prices are testing the failed support levels that were broken during yesterday’s trade session. These support levels are likely to turn to resistance after failing to support prices in yesterday’s trade action. Keep a close watch on prices around 3.73 ¾ for corn and around 9.61 ¾ for soybeans.
China purchased over 600,000 metric tons of corn from Ukraine this year which is not a positive story for the U.S. corn market. China, a country which typically doesn’t import large amounts of corn, has turned to Ukraine to source its needs. In a statement made this month, China intends to double the nearly one million metric tons of corn it imported from Ukraine in 2014. In January Ukraine shipped 470,000 metric tons to China, which was well over the amount exported to China by the U.S.
Grains Feel Pressure from South American Harvest
Corn and Soybeans broke through the 2015 lows to close the day. Concerns for U.S. corn mount as China purchased 600,000 tonnes from Ukraine.
Traders Eye FOMC Meeting
The grains turned slightly lower in the overnight after selling yesterday in corn and soybeans. Wheat continues to benefit from short covering as traders focus on dry conditions in the Plains and western Russia.
The grains are trading lower in the overnight with corn down 2 cents, soybeans down 2 1/2 cents and wheat down 1 cent. The U.S. Dollar index is pulling back a fraction of a percent this morning and crude oil has slipped under $43 per barrel. Today marks the start of the FOMC meeting which will continue until Wednesday.
NOPA crush numbers showed 146.970 million bushels of soybeans crushed in the month of February, the largest recorded since 2010. This figure was lower than the average analyst guess of 148.537 million bushels, but up from last year’s figure of 141.612 million bushels. The trade reaction to the report was relatively mute with little action following the release of the NOPA numbers.
Yesterday export inspections were disappointing for corn which only showed 735,311 metric tons were inspected last week for export, missing analyst expectations of between 900,000 and 1,100,000 metric tons. Soybeans and wheat both met expectations showing 583,944 and 519,592 metric tons respectively were inspected for export last week.
Wheat continued its short covering rally yesterday as the national weather service issued a “red flag” warning across the plains covering Texas, Kansas, Nebraska and western Iowa. The warning for very warm temperatures, low humidity’s and southwest winds created an environment at risk of rapid wildfire growth. The dry conditions throughout the plains have lead Kansas into dropping its weekly wheat crop rating to 41 percent good-to-excellent from 46 percent last week. Texas weekly crop report showed a one percent increase in good-to-excellent rating and Oklahoma wheat conditions declined to two percent week over week. Russian growing conditions have also been unfavorable, receiving unseasonably warm dry weather fueling crop concerns as farmers begin seeding.
Wheat Trading Higher
Higher wheat prices are coming at a cost as some European and American wheat is emerging from dormancy. NOPA crush numbers were released and were within analyst expectations.
BNSF: Determined Not to Disappoint
CEO Carl Ice reassures NGFA annual meeting attendees in San Antonio, TX
"We disappointed, but we're going to do better. In fact, we already are."
That was the key message from Carl Ice, president and chief executive officer of BNSF Railway as he addressed the more than 600 members of the National Feed & Grain Association meeting at their 119th annual convention in San Antonio, Texas.
Ice reiterated what has recently been reported in Feed & Grain; that is, that the company introduced a $5 billion capital investment plan for 2014 that added more than 5,000 employees, 500 locomotives and 5,000 freight cars plus overall infrastructure improvements.
While the NGFA audience was understandably focused on the oil vs. grain capacity issues, Ice noted that BNSF measures 22 business segments, and in 2014, 19 of those segments were up. Domestic intermodal is the largest segment, at all-time records.
As such, Ice talked about investments that benefit the entire system, rather than targeting any particular segment. Overall capital investments for 2015 will approach $6 billon and include a new-generation signal system.
"Generally, our railroad is in the best shape it's ever been, as it should be," he said.
Ice also noted how unique it is to address an organization marking its 119th anniversary. "What's even more impressive," he noted, "is that our company and the ag industry have been working together since the 1850s."
The NOPA crush numbers are expected out today which could show the largest crush on record for the month of February. Here are the expectations.
In the overnight session corn, soybeans and wheat all traded lower but were able to recover to mostly unchanged going into this morning’s pause in trade. Corn is down ¼ a cent, soybeans are down ½ a cent and wheat is down 1 ¼ cents. The U.S. dollar is trading slightly below the 100.785 high which was printed last Friday. This week traders will be paying close attention to the FOMC meeting on Tuesday and Wednesday to get more clues on the direction of interest rate policy.
The NOPA crush report will be released at 11 AM CST today. Analysts are expecting 148.537 million bushels of soybeans crushed in the month of February which would be the largest February crush on record and a nearly 7 mllion bushel increase from last year. In a poll of eight analysts the average crush estimate ranged from 143.2 million bushels to 160.5 million bushels. Analysts see soyoil stocks coming in at 1.332 billion lbs which would be up from 1.228 billion lbs last month.
The recent warm-up has triggered flooding on the Ohio River which has halted grain loading at many river terminals. The National Weather Service has issued a flood warning in the Cincinnati area and expects the river to stay at flood levels at least through Thursday. This will hurt spot basis along the river this week.
Weather this week is expected to be wetter for the Plains which have been experiencing excessive dryness. Although the precipitation is expected to be light throughout the next 10 days the added moisture should provide some benefit to the region’s wheat. Brazil continues to get precipitation in the north which has slowed harvest in the region. Despite the rains, there are no significant concerns for that region yet. Argentina looks to see drier weather over the next 6-15 days which should help the northern fields which have been saturated by heavy rains throughout February and March.
Another Volatile Friday
U.S. Dollar finds strength while the Brazilian Real loses ground. This in combination while a strong Brazilian harvest season seems to be putting pressure on U.S. Soybean exports.
Weekly Cash Comments
Cash Commentary for week of March 13
Corn grain basis levels continued to show positive strength this week gaining 2 cents on average across the US for the week. Soybeans were up one-cent a bushel but continue to have limited strength after weeks of falling futures and basis levels.
In corn, bigger gains were seen along river terminals thanks to a 4-cent boost in export basis at the Gulf. On average, river terminals were up 3 cents a bushel, with the biggest gains occurring along the Ohio River region. For ethanol plants, they were up 1.5 cents for the week, with no significant trends in basis by region. Ethanol production increased week over week by 13,000 barrels per day to 944,000 barrels per day which is still well over last year's production pace. In the latest WASDE report released on Tuesday the 10th the USDA cut ethanol production by 50 million bushels. The USDA cited that the new Grain Crushing's and Co-Products Production report showed corn used for ethanol between October and January occurred at a higher conversion rate than previously assumed.
For soybeans, basis levels have been stagnant since mid-February and this week was not much different. Basis levels on average across the country were up only 1 cent a bushel. At the Gulf, export basis levels were up by a similar amount and with this week’s export sales coming in at a paltry 161,000 MT expectations are for slow business in the remainder of the marketing year. At crushing plants, gains were also muted when averaged across the country. However, there was more noticeable strength in MN & IA where there were some plants up 5 cents a bushel.
Traders Eye NOPA on Monday
The market is mixed this morning with traders eyeing the NOPA crush report. Export sales were sluggish this week as export pace has picked up in South America.
The grains are mixed again this morning with wheat continuing its short covering action, up 3 3/4 cents this morning. Corn is down ½ a cent and soybean are trading 6 1/2 cents lower. The U.S. Dollar moved higher by a fraction of a percent this morning after pulling back from its peak on Thursday. Keep in mind NOPA crush numbers will be released at 11 AM CST on Monday March 16th.
Analysts are expecting 148.537 million bushels of soybeans crushed in the month of February which would be the largest February crush on record and a nearly 7 million bushel increase from last year. In a poll of eight analysts the average crush estimate ranged from 143.2 million bushels to 160.5 million bushels. Analysts see soyoil stocks coming in at 1.332 billion lbs which would be up from 1.228 billion lbs last month.
The USDA attaché stated in a report that it expected China’s 2015 hog imports could jump to 1,200,000 metric tons which would be a 20 percent increase over the latest official USDA forecast. The jump in import demand developed as a result of higher internal corn prices which has stressed profitability and reduced the 2015 hog count.
Wheat was higher in the overnight session.
Wheat was higher in the overnight session posting modest 4 cent gains while corn and beans were mostly unchanged in listless trade activity.
Wheat found support in the overnight session as concerns over dryness in the Plains continue to support prices. Weekend rains were nonexistent for...[Read More]
Wheat Yield Forecast
Weekly Cash Comments
Corn grain basis was unchanged for the week, while soybeans posted a 2-cent advance.
In corn, basis levels were up one-cent a bushel at the Gulf export market, but river terminals were on average unchanged for the week.[Read More]
Grains Mixed on Friday with Traders Eyeing Tuesday’s Reports
In the overnight session the grains were mixed with corn down 3/4 of a cent, soybeans down 2 3/4 of a cent and wheat up 4 cents going into this morning’s pause. Traders are eyeing two market moving reports that will be released next Tuesday the 31st which include the planting intentions...[Read More]