Soybeans and Wheat Higher in the Overnight
USDA will release export inspections later this morning and crop progress after the close.
Soybeans and wheat were higher overnight while corn continued to drift lower in the night session. In outside markets, stock futures were lower while oil tried to recover from sharp losses on Monday.
Grains were mostly listless in Monday's trade with the Columbus holiday providing no key government data. Today, USDA will release export inspections later this morning and crop progress after the close. Overnight rains of 0.25 to 1" fell in southern Indiana, southern Ohio, Kentucky, and Tennessee yesterday, aiding soft wheat germination. Dry weather persists across Midwest/Delta harvest areas all week. A cold front crosses the Midwest/Delta later next week, but rains have been scaled back. Still, showers should improve germination for soft wheat in the southwest/eastern Midwest and western Delta. Plains rain prospects remain limited to the southeast third of the wheat belt in the 6 to 15 day. This will hamper hard red wheat establishment, especially in Kansas/Colorado where rain deficits have been most pronounced over the past month.
In international news, China's soybean imports were 7.26 MMT in September, down from 7.78 in August. However, the Sept 2015 total is still 2 MMT above last year's amount and by far the largest Sept soybean import total to date.
U.S. stock-index futures slipped overnight with the Standard & Poor's 500 Index (ESZ5) at a seven-week high, after a weaker-than-expected fall in China's imports underscored the headwinds to global growth. Oil (GCLX5 / QMX5) posted positive gains overnight after falling nearly $3 a barrel. However, the recovery may prove short-lived as oversupply conditions continue to hold true. This morning's Chinese trade numbers were also uninspiring. China's September exports fell 3.7% year-over-year in dollar terms, an improvement from a 6.1% fall in August and a 6.5% drop expected by the market, while imports fell 20.4% in dollar terms, falling short of a 16% fall expected by the street, deepening worries that the world's second-largest economy is spattering. China's September crude-oil imports rose 1.4% year-over-year to 27.95 million tons, rising 8.8% year-over-year to 248.62 million tons in the first nine months of the year. The rise in crude imports isn't too impressive considering the broader prolonged imports decline.
Any Incentives for Beans to Buck the Current Trend?
Soybeans continue to struggle through their current trend. Kevin looks at what will be needed to move to market and gives an update on the current Ukraine crop production.
Grains Sluggish in the Overnight
Friday’s USDA report did little to change the mood in the markets, as only modest changes in US supply had little stimulus for prices.
Grains were sluggish overnight with only soybeans showing significant movement, gaining 5 cents in the night trade. Corn and wheat were mostly unchanged in the overnight.
Friday’s USDA report did little to change the mood in the markets, as only modest changes in US supply had little stimulus for prices. Soybean production was slightly below trade expectations while corn production was just above trade expectations. Many traders still look for higher supply numbers in future reports, as this survey was based on conditions as of Oct 1, and farmers will have a better handle on supplies once harvest is further along.
One point of caution from Friday’s report was that USDA did not lower their corn exports for the marketing year, leaving them at 1,850 MB only fractionally below the previous year’s total of 1,864 MB. However, year-to-date export sales are 28 percent off the pace set last year.
For wheat, USDA substantially lowered their estimate of US supplies, but after dropping feed use and exports the end result on carryout was only a small reduction in stocks from 875 MB last month to 861 MB this month. Global carryout increased however, thanks to larger production forecasts in Australia, Canada and the EU.
In overnight news, Saudi Arabia bought 740,000 MT of hard wheat and France’s farm ministry bumped their wheat crop forecast to 41.0 MMT from 40.8 MMT last month.
In S&P (ESZ5) futures, prices were mostly unchanged going into the opening bell this morning. Global stocks rose on Monday, with investors betting on the Federal Reserve keeping interest rates steady through the rest of the year. The Fed is still likely to raise interest rates this year, unless global economic conditions push the U.S. economy off course, Fed Vice Chairman Stanley Fischer said on Sunday. The Fed pulling the trigger this year was "an expectation, not a commitment," he said. The Fed, which has not raised rates since 2006, has said it is waiting for signs of stable inflation before lifting rates off near-zero levels.
In crude (GCLX5 / QMX5), futures were up about 0.3 percent overnight but still below the pivotal $50 a barrel mark which it breached on Thursday & Friday’s trade. On Friday, Baker Hughes reported a decline in the active U.S. oil rig count for the fifth straight week, dropping by nine, bringing the total count to 605, the lowest since June 2010. Rig count is an important gauge of future production.
Beans Struggle to Find Direction
Tune in to hear what's driving the bean market and where it may be headed.
Weekly Cash Comments
Weekly Cash Commentary for week ending October 9th
Grain basis was unchanged this week for both corn and soybeans as flat futures prices and slow farmer selling during harvest keep the markets mostly in check.
Futures saw little action this week as early week gains were erased by the end of the week as a tug of war continues between bulls and bears. Production is expected to be cut at the end of the week in USDA’s monthly supply and demand report, but at the same time export business especially for corn continues to be somewhat limited.
For spot basis, there were no significant moves this week as basis stayed mostly flat. For both corn and soybeans, processor or end-user bids fell a bit on the week, but at river terminals basis level found a bit of strength. However, at the Gulf export terminal both corn and beans came under pressure losing 6 and 8 cents a bushel on the week.
Grains Recovered some losses in the Overnight
Grain markets are looking for a slight drop in corn and soybean production from USDA this morning
Grains recovered some of their losses overnight as traders await the latest USDA crop supply and demand forecasts released later this morning at 11 am CDT. In outside markets, crude oil rallied above the pivotal $50 a barrel mark for the first time since July, while S&P futures were up slightly in the night session.
Grain markets are looking for a slight drop in corn and soybean production from USDA this morning with average analyst estimates coming in at 13.504 BB versus USDA in September of 13.585, and soybeans at 3.908 BB versus USDA in September of 3.935 BB. Ending stocks are also expected to fall slightly in this morning’s report.
2015/16 U.S. Crop Production
Oct Expectation Oct Range USDA Sept
Corn 13.504 13.28 – 13.79 13.585
Soybeans 3.908 3.83 - 3.98 3.935
2015/16 U.S. Ending Stocks
Oct Expectation USDA Sept
Corn 1,534 1,592
Soybeans 414 450
Wheat 819 875
In overnight news, Ukraine may reduce winter grain sowing acres for the 2016 crop by up to 30 percent due to excessively dry weather across most of the country, a senior weather forecaster said on Friday. For this year’s 2015 corn crop, Ukraine output may decline to 23 MMT versus 25.9 MMT in 2014.
In export news, Algeria bought 675,000 MT of optional origin wheat for prices ranging from $202 to $202 a MT, while Egypt was also expected to announce a purchase of wheat later on Friday.
S&P Futures (ESZ5) were higher on Friday closing out a solid week as minutes to the U.S. Federal Reserve's last policymaking meeting raised expectations that the central bank will keep interest rates at record lows for longer than anticipated. Those minutes from the Fed's September policy meeting are the main driver in markets as they showed officials worrying over low inflation amid weak commodity prices. Though they expressed confidence in the underlying state of the U.S. economy, traders think policymakers may be getting cool on the idea of raising interest rates for the first time in more than nine years in December and may opt to keep the main Fed funds rate at near zero percent until next year.
In oil (GCLX5 / QMX5), crude extended its gains on Friday and was set for its biggest weekly rise in over six years, on the heels of the Fed news and a private forecaster suggesting higher prices. Forecaster PIRA Energy Group issued a bullish oil price prediction on Thursday, saying oil would hit $70 a barrel by the end of next year and to trade at $75 in 2017. However, overhanging the market is a significant oversupply issue that should make it difficult for a rally to be sustained.
Corn Exports Lagging Behind
Kevin looks at few options producers have to make it through the upcoming months.
Grains were Mixed in the Overnight
Grains should mostly mark time in the coming two sessions with USDA slated to announce their latest supply and demand estimates on Friday, October 9 at 11 am CDT.
Grains were mixed overnight with soybeans a leader to the downside on a 4-cent loss while corn gave up 1 cent. Chicago wheat was trying to hold on to a 1-cent advance. In outside markets, crude oil was up $0.40 a barrel while the S&P 500 slipped 0.40 percent.
Grains should mostly mark time in the coming two sessions with USDA slated to announce their latest supply and demand estimates on Friday, October 9 at 11 am CDT. For corn, analysts look for US production at 13.504 billion bu (vs USDA Sept 13.585); yield 167.1 (USDA Sept. 167.5), harvested acres 80.826 million (USDA last 81.101). For soybeans, the average expectation of USDA’s production figure was 3.908 billion bu (vs USDA Sept. 3.935), yield 47.2 (USDA Sept. 47.1), harvested acres 82.914 mln (USDA last 83.549).
In global supply news, USDA’s attaché in Brazil expects farmers there to increase area to a record Brazilian soybean crop of 97 MMT, which matches USDA's current official forecast. However, in Argentina the 2015/16 soybean production area is unchanged at 20 million hectares with production forecast at 57 MMT.
USDA’s weekly export sales report showed little variation from expectations this week. Soybeans came in at the high end of expectations with weekly net sales of 1,284,600 MT while corn came in just below expectations with weekly sales at only 519,700 MT. Wheat did improve from last week’s disappointing sales to hit 288,200 MT but was in the middle of analyst expectations.
U.S. stock-index futures slipped, with the Standard & Poor’s 500 Index (ESZ5) near a seven-week high, before the release of minutes from the Federal Reserve’s latest policy meeting and earnings from Alcoa Inc. A report today showed filings for unemployment benefits declined last week to the lowest level since mid-July, extending a run of applications near decade lows that shows dismissals remain in check. Jobless claims fell by 13,000 to 263,000 in the week ended Oct. 3, the fewest since July 18, according to the Labor Department. The median forecast in a Bloomberg survey called for 274,000 applications. The benchmark S&P 500 reached its highest level since Aug. 20 yesterday, at the top end of a range the index has traded in since bottoming at 1,867.61 on Aug. 25.
Crude (GCLX5 / QMX5) was up in the overnight trying to recover losses from yesterday’s news of higher stocks. U.S. commercial crude inventories increased by 3.1 million barrels last week, maintaining a total U.S. commercial crude inventory of 461 million barrels. The commercial crude inventory remains near levels not seen at this time of year in at least the past 80 years.
USDA WEEKLY EXPORT SALES (in thousand metric tons)
Weekly Net Sales Expectations
Corn 519.7 550-750
Soybeans 1,284.6 700-1,200
Wheat 288.2 175-375
Lower Expectations for the Upcoming WASDE
Cody reviews expectations for a few of the big reports coming up.
Grains Nearing Resistance
The grains are nearing resistance in the charts. Can corn and wheat continue marching higher?
The grains are moving higher with corn up 3/4 of a cent, soybeans up 6 cents and wheat up 3 1/2 cents this morning. The outside markets are mostly supportive with the dollar unchanged, the E-MINI S&P up .61 percent and crude oil up 48 cents this morning.
The grains have been drifting higher over the last couple days but be wary as corn and wheat near resistance levels. Corn resistance at $4.02 could be relatively potent if corn has the momentum to test it. The resistance level was a gap on July 27th and was unsuccessfully tested back on August 10th. If prices can close above that price level we could see further short covering added to this rally. Wheat resistance is at $5.33 ¼ cents which was also a high back on October 10th. With wheat and corn only cents away from testing these resistance levels both corn and wheat could find it hard to continue the climb higher in today’s session.
The Midwest harvest should be mostly uninterrupted over the next couple weeks. The Planalytics 6-10 day forecast shows 50-60 percent drier than average weather throughout the heart of the grain belt. The 8-14 day forecast also shows no significant moisture entering the Midwest which will provide a large window to progress through the bulk of harvest.