Wheat Harvest Underway
In the overnight session the grains were mostly unchanged with corn down 1 ½ cents, soybeans down ¼ cents and wheat up 1 ¼ cents going into this morning’s pause. The U.S. dollar is up .3 percent and crude oil is trading lower by 73 cents. The U.S. dollar finds some strength this morning after the Greek debt negotiations have begun to take a turn for the worse. The international monetary fund announced their delegation has flown home due to major differences with Athens.
Wheat harvest has kicked off in Texas with 23 percent harvested and Oklahoma 17 percent complete. Harvest has started in southern Kansas but little harvest progress has been made in the largest winter wheat producing state.
On the demand side of the equation, there is market talk about government plans to support new crop corn prices by lowering the volume of cheap imports into their country. This should help encourage domestic grain demand and lower stocks which have accumulated during their buying program intended to lift rural incomes.
The weather next week is expected to bring precipitation to the eastern and northwestern U.S. as temperatures remain cooler than normal throughout most of the grain belt.
Export Sales Update
Tune in to hear how the grains have been moving worldwide and an update of ethanol production.
WASDE Sinks Wheat
In the overnight session the grains are continuing lower with corn down a penny, soybeans down 3 ¾ cents and wheat trading down 5 ½ cents. Crude oil is trading lower and the U.S. dollar is higher by over ¾ of a percent this morning.
The trade reacted to the WASDE report with some selling on Wednesday after the USDA raised ending stocks for wheat and corn. Old crop corn ending stocks were increased 25 million bushels after corn used for ethanol was revised lower. Old crop wheat ending stocks increased by 3 million bushels after exports were revised 5 million bushels lower and imports fell by 2 million bushels as well. Soybean ending stocks had the largest revision, getting cut 20 million bushels to 330 million bushels carryout. Soybean ending stocks were cut below the average trade guess which was looking for ending stocks of 339 million bushels. However, a 10 million bushel increase in crushing and a 10 million bushel increase in exports helped surprise the market, making soybeans the relative strength in yesterday’s trade session.
Wheat provided the biggest surprise for new crop ending stocks. New crop wheat production was lifted 34 million bushels which was partially offset by a rise in feed and residual by 15 million bushels. This lifted new crop wheat ending stocks from 793 million bushels in May to 814 million bushels of ending stocks in June. Soybean ending stocks fell 25 million bushels to 475 which was primarily a result of smaller beginning stocks, and new crop corn ending stocks increased 25 million bushels which was also a result of smaller beginning stocks.
More bearish news was released this morning from Conab, Brazil’s government supply agency. The organization lifted their 2014/15 corn and soybean production forecast for Brazil. Corn production is expected to jump from 78.59 million metric tons to 80.21 million metric tons and soybean production is now forecast at 96.04 million metric tons.
Export sales were released this morning with corn reporting 495,600 metric tons of old crop sales which was on the low side of analyst expectations. Soybeans booked 164,000 metric tons of old crop sales which was another strong week for the oilseed.
Does It Matter Whether the EPA Targets Volumetric Or Fractional RFS Standards?
Analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel
In a farmdoc daily article last week, we analyzed whether the ethanol mandates recently proposed by the EPA for 2015 and 2016 were high enough to provide a "push" for biofuels use beyond the E10 blend wall. The analysis confirmed that the proposed mandates do indeed imply pressure towards higher ethanol blends or non-ethanol biofuel, but this depends on assumptions about growth in gasoline use and ethanol inclusion rates. Relatively modest increases in the rate of growth in gasoline use and slightly higher ethanol inclusion rates largely eliminated the push above the blend wall. Our analysis assumed that the EPA targeted fixed volumes of ethanol when proposing RFS standards. There is some uncertainty on this point given that the standards are actually enforced in a fractional manner. The purpose of today's article is to examine how estimates of the push above the blend wall implied by the 2015 and 2016 ethanol mandates change depending on whether the EPA targets a fixed volumetric or fixed fractional standard.
Continue reading here.
June WASDE Breakdown
Cody looks at the effects of the WASDE report and discusses where he thinks prices may be headed.
Traders will be eyeing the June WASDE report scheduled to be released at 11 AM CST
In the overnight session the grains traded higher with soybeans up 4 1/2 cents, wheat up 2 1/2 cents and corn unchanged this morning. The U.S. dollar is helping grains this morning, trading down nearly 1/2 a percent. Crude oil is trading higher by $1.28 this morning after the EIA raised its 2015 oil demand growth forecast.
Traders will be watching the June WASDE report which is scheduled for release out at 11 AM CST today. According to a Reuters poll of Analysts the average guess for old crop corn endings stocks is 1.859 billion bushels up from 1.851 billion bushels last month. Analysts are also expecting wheat ending stocks to rise to 712 million bushels which would be up 3 million bushels from May. Old crop Soybean ending stocks are expected to fall by 11 MBU to 339 million bushels.
For new crop, analysts are expecting both corn and wheat ending stocks to rise while soybean ending stocks decline from the May report. The average guess for new crop corn ending stocks is 1.779 billion bushels up from 1.746 billion bushels in May. Wheat ending stocks are also expected to rise, with expectations of 798 million bushels from 793 last month. Soybean ending stocks are expected to decline this month with the average trade guess looking for 487 million bushel carryout compared to 500 million bushels in May.
This morning the Taiwan Flour Millers association has issued a tender to purchase 97,420 of wheat from either the U.S or Europe. Israeli private buyers purchased an unknown amount of optional origin corn and feed wheat in a tender for 115,000 metric tons of corn and 65,000 metric tons of wheat this morning. The USDA announced a reportable sale of 128,000 metric tons of primarily new crop soybeans to unknown destinations this morning.
Favorable Weather Outlook
Cody discusses positive news for the grains even as the northern U.S. warms. WASDE expectations are also discussed.
Grains mixed as trader’s eye USDA report on Wednesday
The crop progress report showed corn planting is complete with little change in corn conditions in the good-to-excellent ratings.
In the overnight session corn is down 2 1/2 cents, soybeans is up 1 3/4 cents and wheat is trading lower by 3 3/4 cents. This morning the U.S. dollar is trading about .20 percent higher with crude oil up nearly a dollar.
The crop progress report was released out yesterday afternoon showing that corn planting was complete and 91 percent of the crop has emerged. Crop conditions improved slightly with the excellent category rising to 13 percent from 12 percent last week. Corn rated good-to-excellent was unchanged on the week at 74 percent which met expectations.
Soybeans were 79 percent planted which is just 2 percentage points behind the four year average which hovers at 81 planted during this time. Soybean condition was a little bit behind the analyst expectations with 69 percent of the crop rated good-to-excellent. Last year during this time the crop was rated at 74 percent good-to-excellent.
Export inspections was released yesterday which showed that 302,725 metric tons of wheat was inspected for export which was within analysts’ expectations. Corn inspections were a bit on the light side at 740,543 metric tons, missing expectations which ranged between 775,000 and 975,000 metric tons. Soybean inspections outperformed analyst expectations with 216,590 metric tons inspected for export.
Can This Rally Be Sustained
As grains rally today, Cody looks at trends to see if the market structure has fundamentally changed
Continued Strength out of Soybean Conditions
Can the Grains Recover?
In the overnight session the grains are trading lower with corn down 2 1/2 cents, soybeans down 9 1/4 cents and wheat down 4 1/2 cents by the morning pause in trading. The outside markets are also trading lower with crude oil down $1.20, the U.S. dollar down .22 cents and the mini Dow Jones...[Read More]
Improving Yield Potential for Beans?
Weekly Cash Comments
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.[Read More]
Grains pressured by positive weather outlook
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...[Read More]