August 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 83

Weekly Cash Comments

Cash Commentary for week ending August 28, 2015

Grain basis was mixed again this week with corn basis gaining 1.5 cents a bushel, while soybean basis gave up 4 cents on average across the U.S.

 

In corn, basis levels were bolstered by strength at river terminals and the Gulf. Gulf corn bids were up 12 cents a bushel this week and surpassed their 5-year historical average for the first time since mid-June. At river terminals, basis levels were up 4 cents a bushel as gains were muted by a slight uptick in barge freight costs.

 

For soybeans, the premium of spot delivery over new-crop fall delivery continues to erode with harvest likely to start in the next month. Spot bean basis was off 4 cents for the week, but at the Gulf basis levels bucked that trend by posting a 9 cent advance. River terminals, however, failed to follow the Gulf market as losses upstream were about 7 cents a bushel. For soybean plants, double-digit losses were fairly typical this week, although as a group soy plants lost 5 cents a bushel. 

August 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 88

Grains pressured by positive weather outlook

The grains continue to be pressured by a positive weather outlook, higher global production and economic concerns out of China.

In the overnight session, the grains inched higher with corn up 1 1/4 cents soybeans up 5 cents and wheat up 1 cent. The U.S. dollar is trading mostly unchanged and crude oil is down 46 cents. The EU cut its corn production forecast this month to 58.7 million metric tons from 65.5 million metric tons last month. Europe was plagued by hot dry weather during a critical development period which reduced yield prospects significantly. The EU however raised their soft wheat harvest estimate to 140.7 million metric tons from 139.4 million metric tons last month.

 

Yesterday, the International Grains Council raised its global wheat production by 10 million metric tons to 720 million metric tons citing improved Russian production. The council also increased their global corn crop by 2 million metric tons to 968 million metric tons this month, mentioning a decline in EU production being more than offset by more favorable U.S. crop prospects.

 

The GASC tender set mid-week was won by Russia on Thursday with the low bid of $180.47 dollars per ton FOB. Egyptians grain buyer GASC issued another tender for 60,000 metric tons on Thursday which was also filled by Russian wheat at $190.07 per ton including freight.   

 

The western grain belt saw rain last night with the heaviest rains in South Dakota. The storm should move eastward into the Midwest over the next couple days. Following this rain event the forecast looks mostly dry until late next week when the northern half of the grain belt looks to be wetter than normal. Showers will aid the crop in the 11-15 day forecast. 

August 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 143
August 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 100

Can Soybeans Rebound Higher?

Export sales, a rebound in the Chinese stock market and positive U.S. news helped lift soybeans early Thursday morning.

In the overnight session the grains are trading higher with soybeans leading the charge up 14 1/2 cents, corn up 1 1/2 cents and wheat up 3/4 of a penny. The U.S. dollar index is trading 1/2 a percent higher and crude oil is up $1.33. This morning exporters sold 130,000 metric tons of new crop soybeans to unknown destinations making this the third reportable soybean sale this week. 

 

Last night the China market rallied over 5 percent in the last hour of trading after the government took steps to stabilize their stock market before a September 3rd military parade which celebrates the 70th anniversary of the WWII victory over Japan. With China showing strength late in the session soybeans have been able to rebound. Positive news about the U.S. economy was also announced this morning with GDP expanding at a 3.7 percent annual pace up from the 2.3 percent reported last month.  Unemployment claims also fell more than expected last week by declining 6,000 to 271,000 for the week. 

 

Export sales this week were disappointing for old crop but new crop beat expectations for corn and soybeans. New crop corn booked 986,600 metric tons of sales compared to expectations which ranged between 450,000-650,000 metric tons. New crop soybeans booked 1,457,400 metric tons of sales which was nearly double last week’s sales and well outside the estimates which ranged from 600,000- 900,000 metric tons.  Old crop sales however were disappointing with cancellations of 131,000 metric tons of corn and 131,600 tons of soybeans. Wheat sales beat expectations, booking 572,100 metric tons which is up 68 percent from the previous week. 

Ethanol production decreased 13,000 barrels per day this week to 952,000 barrels per day. Despite the decline in production cumulative ethanol production is still running 4.5 percent ahead of last year’s pace. This week’s production was 87,000 barrels per day above the four year moving average for this week and 39,000 barrels per day ahead of 2013/14 production during the same week. Ethanol stocks rose by 67,000 barrels this week to 18.63 million barrels this week.​

August 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 147
August 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 127

Global Markets Try to Rebound

Global markets will be a major influence on the grains as markets try to rebound after hard selling early on this week.

In the overnight session the grains traded lower with corn up 1 cent, soybeans unchanged and wheat up 1 1/4 cents this morning. The U.S. dollar is trading up .38 percent and crude oil is 34 cents higher this morning. This morning the U.S. stock market is expected to open higher after a rally in European markets. China however, which has been the driving force in the recent sell-off, has been unable to see a market gains since the PBOC lowered interest rates yesterday. The Shanghai composite index fell another 1.27 percent last night.

 

The volatility over the last two days has triggered two reportable new crop soybean sales to be delivered to unknown destinations totaling to 330,000 metric tons. Despite this week’s sales, new crop soybeans has still only booked around 68 percent of sales volume compared to what we typically see around this time period.

 

Weather looks to remain cool and dry this week except for the western grain belt which should receive above average precipitation in the middle of this week. The 8-14 day weather outlook shows moisture forecast for the northern parts of the grain belt which should aid crops in main growing regions. Currently, there is no significant threat of an early freeze.  

August 25, 2015 | Grain Hedge Insights | Cody Bills | Views: 182
August 25, 2015 | Grain Hedge Insights | Cody Bills | Views: 163

China Lowers Rates to Support Sliding Markets

China made a move to lower interest rates in an attempt to turn around a sliding market.

In the overnight session the grains are trading higher with corn up 5 cents, soybeans up 14 1/4 cents and wheat up 6 1/4 cents. The U.S. dollar is trading .76 percent higher and crude oil is up $1.17. After experiencing another sharp day of selling, China announced they were cutting interest rates for the 5th time since last November and supplementing that with an additional move to lower the reserve requirement at major banks. This announcement triggered an immediate rebound in the market after 5 days of selling.

 

Export inspections were in line with analyst expectations with wheat showing 277,922 metric tons inspected for export. Corn recorded 883,987 metric tons inspected for export which was within the 825,000-1,000,000 metric tons expected by analysts. Soybeans recorded 210,128 metric tons inspected for export which was also on the high side of analyst expectations.

 

On Monday, Argentine farmers started a five day crop sales strike to help bring farm policies to the front of attention during an election year. Farmers have not been satisfied with the policies of President Cristina Fernandez saying that her policies have damaged profitability.  

 

This week should remain cooler than normal throughout the Midwest with precipitation expected during the middle of the week in the northwestern part of the grain belt. According to the latest crop conditions report 87 percent of the soybean crop is pod setting which is on par with the 4 year average. Corn conditions remained unchanged this week at 69 percent rated good to excellent. Soybean conditions also remained unchanged. 

August 24, 2015 | Grain Hedge Insights | Cody Bills | Views: 212
August 24, 2015 | Grain Hedge Insights | Cody Bills | Views: 179

Macro Selling Pressures Corn Lower

The grains couldn't escape the selling that has left the Shanghai index down 8.49 percent at the close.

In the overnight session, the grains are trading sharply lower with corn down 10 cents, soybeans down 31 1/4 cents and wheat down 8 1/2 cents today. The U.S. dollar index is trading down 1.26 percent and crude oil is trading down $1.57 at $38.875 per barrel. This morning a global sell-off is pressuring the grains lower with the Shanghai index closing down 8.49 percent, Japan’s Nikkei 225 down 4.61 percent, the German DAX down 3.73 percent. Corn, Soybeans and Wheat are not immune to this sort of macro selling and have moved sharply lower this morning. This morning a reportable export sale of 120,000 metric tons of new crop soybeans did little to slow the slide in prices.

 

On Friday, Pro Farmer announced its national corn and soybean forecasts after touring the U.S. from Ohio to South Dakota last week. Pro Farmer sees 2015 corn yield at 164.3 bushels per acre compared to the current USDA’s August forecast of 168.8 bushels per acre. Pro Farmer’s soybean forecast was lower than the USDA by .4 bushels per acre at 46.5 bushels per acre. Pro Farmer pegged 2015 corn production 363 bushels below the current USDA projection at 13.323 billion bushels. Soybean production is estimated at 3.887 billion bushels.

 

The EU crop monitor cut its forecast for corn yield to 6.4 tons per hectare, down 4.6 percent from last month’s forecast. The EU crop monitor kept its yield forecast for soft wheat mostly unchanged at 5.81 tons per hectare. 

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