Grains Pressured on Monday Morning
The grains are pressured by precipitation in the southern plains, a stronger dollar and the easing of the trucker strike in Brazil.
In the overnight session the grains traded lower with corn down 2 1/4 cents, soybeans up 1/2 a cent and wheat down 2 cents going into the morning pause in trade. Crude oil is down 28 cents and the U.S. dollar is trading a fraction of a percent higher. Exporters reported 158,000 metric tons of old crop soybeans sold to unknown destinations. Taiwan issued a tender to purchase 65,000 metric tons of corn to be sourced from U.S, Brazil, Argentina or South Africa this morning.
Concerns that the Brazil trucker strike would escalate eased on Monday as the number of strike locations were on the decline. On Thursday evening there were 17 reported strike instances which compare to over 100 instances during the peak of the logistics crises. By Friday the number of strike related blockages on highways had fallen to 11.
More precipitation is expected today in the southern plains providing some relief to parts of Texas and Oklahoma, with chances of more precipitation in the 6-15 day forecast. The past two weeks provided between .5-5 inches of precipitation to the winter wheat fields of the plains, with over half of the region receiving 2 or more inches of rain. The moisture helped avoid serious crop loss, but continued precipitation is necessary to improve the overall condition of the crop. Without moisture in the coming weeks, the trade will begin to focus on the low subsoil moisture levels as a risk factor for the plains wheat.
Crop conditions and planting progress will be released out today with expectations of corn planting to jump from 9 percent complete to nearly 23-25 percent complete. This will be the first week of soybean planting progress and expectations are for around 3-4 percent completed nationwide.
Weekly Wrap Up
Cody gives and update on the Brazilian trucker strike and weather in the plains. He ends with a report of weekly basis changes.
Weekly Cash Comments
Weekly Cash Commentary for week ending April 24
Grain basis levels were modestly higher this week with both corn and soybeans posting an anemic 1-cent a bushel gain on average across the US this week.
In corn, it was a quiet week for export basis with the Gulf basis unchanged. River terminals found only modest strength with barge rates slipping a bit from the previous week. For ethanol, production continues to be robust which is keeping plant bids for corn relatively strong. Although basis levels were up on average only about a penny for the week, some plants in IA and MN were posting 5-cent advances for basis.
For soybeans, Gulf bids were modestly weaker with a one-cent decline, but river terminals found added strength, posting a nearly 3-cent gain on the week. Export sales for soybeans continue to be positive and while not as big as early season sales, are significant enough to keep buyers aggressively trying to get beans out of farmer hands. For crushers, it was a pretty quiet week overall, but there was some modest strength in the Eastern Cornbelt with some plants up 5 to 7 cents on the week.
Corn Weak on Prospects of Record Argentina Crop
The agricultural ministry announced Argentina is anticipating a record corn harvest and raised their forecast by 1 million metric tons yesterday.
In the overnight session the grains traded lower with corn down 2 cents, wheat down 1 3/4 cents and soybeans down 3 3/4 cents. The U.S dollar index is down 1/4 of a percent and crude oil is off 11 cents this morning. This morning a reportable export sale was announced for 121,400 metric tons of old crop corn to unknown destinations.
Yesterday, the Argentinian Agricultural Ministry is anticipating a record 59 million metric ton soybean harvest this growing year, up from their previous forecast of 58 million metric tons. The increase in production was due to higher than expected yields in certain growing regions.
By Thursday night truckers in Brazil took to the roads to strike again, with local authorities counting 17 strike locations. Truckers began striking again after not adequately addressing their issues in the latest negotiations. Although it is improbable that the latest Brazilian trucker strike will escalate to the level it reached over the last couple months, it is still an issue that deserves close attention over the coming week.
The weather outlook next week is positive for U.S. planting and fieldwork with limited showers expected in the forecast. Planting pace was reported at 9 percent for corn in the last planting progress report, while spring wheat made the largest gains, jumping to 36 percent planted compared to a four year average of 19 percent during the same time period.
Brazilian Truckers Back on Strike
Tune in to hear the export sales update and a discussion of the implications of the new Brazilian trucker strike.
Strong Export Sales Lift Grains
The grains got a nice shot of positive news after export sales were announced this morning well above analyst expectations.
In the overnight session corn, soybeans and wheat are trading higher with corn up 1 cent, soybeans up 4 3/4 cents and wheat up 3 1/2 cents. The dollar is trading down nearly 1/4 of a percent and crude oil is up 56 cents a barrel.
Export sales were very positive today for the grains with corn, soybeans and wheat either beating analyst expectations or reporting weekly sales on the high side of expectations. Corn reported 867,000 metric tons of sales, an increase of 48 percent from the previous week and well above the 400,000-600,000 metric tons expected by analysts. Corn is still well ahead of the pace needed to meet USDA expectations. Soybeans booked 102,100 metric tons of export sales which was a decline of 67 percent from last week. With the market expecting cancellations however, positive soybean sales are bullish news. Continued export sales show that despite the record harvest in Brazil, demand for U.S. soybeans remains strong. Wheat sales showed some strength this week booking 397,500 metric tons of sales, above the 0-100,000 metric tons expected by the market and well over the 47,000 reported last week.
The Ethanol production reported showed an increase in production last week by 6,000 barrels per day bringing the total to 930,000 barrels per day. This was the first increase reported in three weeks, but despite the trend lower in weekly production since the beginning of the year we are still 5.3 percent ahead of last year’s production levels. Ethanol stocks increased week over week by 697,000 barrels per day to 21.34 million barrels per day.
The International Grains Council raised its forecast for global corn supply by 10 million metric tons to 951 million metric tons this morning. The council also cut wheat production for the 15/16 crop by 4 million metric ton to 705 million metric tons, citing a decline in crop predictions across Argentina, China and India. The international grains council’s global wheat forecast is a substantial decline from last year’s 721 million metric tons.
Cody reviews ethanol production trends, weekly weather, and gives an update of the current Bird Flu situation in Iowa.
Corn Lower Again in the Overnight
The corn market is pressured again this morning by the rising concern of bird flu and its effects on U.S. poultry
In the overnight session the grains were mixed with corn down 1 3/4 cents, soybeans down 3 3/4 cents and wheat up 1 1/4 cents going into this morning’s pause in trading. The U.S dollar is trading mostly unchanged and crude oil is off .25 percent.
Concerns about the reaction to the bird flu have the corn market nervous that feed use for hens could start to slow. Although the number of birds killed by the flu may not directly affect the feed use in a big way, the reaction by importers could hurt the demand for U.S poultry. Mexico in response to the growing cases of bird flu has stopped all imports of live birds and eggs from the state of Iowa.
Precipitation throughout the Midwest is expected over the weekend and again in the middle of next week. Heavier precipitation in the western grain belt is forecast later in the 11-15 day outlook. The U.S is now 9 percent planted for corn, just behind the four year average of 13 percent at this point of the season. There are no significant planting delays expected in the forecast. The plains should continue to receive precipitation throughout next week which helps limit the stress on the winter wheat crop.
Reports of Bird Flu
Cody takes a look at how the news of bird flu will affect feed usage and discusses the Brazilian Real.
Keep an Eye Out for Basis Opportunities
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Monday Morning Sell-Off
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