May 31, 2017 | Grain Hedge Insights | Kevin McNew | Views: 396

USDA’s Crop Progress Data Shows Weaker than Expected Corn and Soybean Ratings

Grains Higher in the Overnight

Grains were higher overnight trying to recover some of Tuesday’s steep sell-off.

 

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Yesterday after the market close, USDA’s crop progress data showed weaker than expected corn and soybean ratings. The US corn crop was rated as 65% good-to-excellent vs 68% expected while winter wheat ratings slipped 2% on the week to only 50% good-to-excellent. For spring wheat, the crop was rated at a sub-bar level of 62% good-to-excellent versus expectations of 71% going into the report. For planting, both corn and soy plantings were off the expected pace by only 1% with corn at 91% completed and soybeans at 67%.

 

Soy crushing margins in China are at 3-year lows, which is forcing some buyers to try and cancel shipments. Losses on the margin are around $43/MT. China was a heavy buyer from Brazil at the beginning of the year and lower prices following bumper harvests. But those profits have swung to the biggest losses in nearly three years after China's edible oil markets were flooded with rapeseed oil auctioned from national reserves and by growing imports of other alternative vegetable oils.

 

Egypt’s GASC issued a tender to buy wheat. The last Egyptian tender saw US garner some business for the first time in two years after the GASC upped their protein requirements. A South Korea feed group was also tendering for 140,000 MT of corn.

 

In weather, longer-term forecasts for the US in June and into July see no major threats to crop growing regions. June is expected to remain slanted towards cool temps and active moisture patterns. The only regions expected to be on the dry side are the high Plains of Western ND/Eastern MT. Some heat and dryness could materialize in the Eastern Cornbelt, but with high soil moisture values right now in much of the grain belt, meteorologists suggest that should put a downward bias in temps over the next few months.

 

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May 30, 2017 | Kevin McNew | Views: 373
May 30, 2017 | Grain Hedge Insights | Kevin McNew | Views: 297

Weather Forecasts Continue to Point to Rain for much of Grain Belt

Grains in a Sour Mood after Long Holiday Weekend

Grains came back from the long holiday weekend in a sour mood with wheat leading the complex lower in overnight trade.

 

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The French wheat crop improved slightly with 76% of the crop there rated good-to-excellent vs 75% last week. In Russia, cold and wet weather is leading to concerns about crop quality problems. In Argentina, farmers are expected to boost wheat production in 2017/18 to 17.5 MMT, up from 16.3 last year.

 

USDA reported a 130,000 MT sale of old-crop 2016 soybeans were sold to unknown destinations

 

On Friday, USDA’s Cattle on Feed report showed much higher than expected placements of 111% vs 106.8% expected. Overall cattle on feed numbers were 102% as compared to 100.8% which was projected by the trade.

Weather forecasts continue to point to rain and cool temps for much of the Grain Belt over the next week. The forecast into June is said to be a bit murky by meteorologists as indicators suggest some areas may warm up.  The areas that demonstrate the highest probability of experiencing a warm month include the Southeast, Northeast, and Western regions of North America. There is also some consensus in a cool pattern persisting from May into June over the U.S. Southern Plains to some extent. The June precipitation forecast shows continued rainfall from the Southern Plains through the eastern U.S. Corn Belt, including some areas that have been wet over the last several weeks. On the other hand, it also shows more of the dryness that began to develop during May across the Northern Plains and into Alberta.


 

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May 26, 2017 | Kevin McNew | Views: 301
May 26, 2017 | Grain Hedge Insights | Kevin McNew | Views: 268

Weekly Cash Comments

Weekly Cash Commentary for week ending 5/26/2017

Basis levels continued to rise this week with corn and soy basis advancing about 2.5 cents across the US on average.

 

Active farmer planting and weaker futures prices have helped to support basis in the past two weeks. For corn, basis in Western Kansas continues to be an area of notable strength. This week we also saw some activity good movement by Corn plants in Southern Indiana, although basis improvements were relatively short-lived for only a couple of days. There are also some reports of a few isolated push opportunities by buyers that look to get short-term needs covered.

 

For soybeans a few soy crushing plants in the Western Cornbelt increased their basis this week, and plants in Northern Indiana and Ohio were trying to bid up basis as well with gains of 3 to 5 cents fairly typical in these regions.

 

On the river, market basis for corn was notably weaker this week with a 2.5 cent loss on average across buyers. The Gulf was off 1 cent, but some river markets were off 3 to 5 on the week.  For soybeans, basis levels at river terminals were up 1.5 cents on average, lagging the broader market gains of 2.5 cents.

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May 26, 2017 | Grain Hedge Insights | Kevin McNew | Views: 303

Soybeans Move to Fresh Lows Overnight

New Crop Corn and Bean Sales for the US Continue to Disappoint

Grains continued to grind lower overnight with soybeans moving into fresh 11-month lows.

 

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In international news, Japan bought food quality wheat overnight in a usual tender bid. Of the 117,800 MT deal, the US garnered nearly 80,000 MT with the remainder going to Australia. Also, Philippine feed makers were in the market for 50,000 MT of South American soymeal. And, a South Korea feed group bought 65,000 MT of feed wheat, likely to come from the Black Sea region.

 

The International Grains Council raised its forecast for global grains consumption for 2017/18 on Thursday, signalling a bigger draw-down of world stocks than previously expected. The IGC, in its monthly report, revised its global grains consumption estimate for 2017/18 up by 7 MMT to 2.086 billion tonnes, just below the 2.087 billion forecast for 2016/17. The group attributed the increase to higher industrial consumption in maize-based ethanol in the United States and starch in China.

 

New-crop corn and bean sales for the US continue to be disappointing with USDA’s weekly report on Thursday showing no new deals. So far, 2017 new-crop corn sales have totaled 2.4 MMT vs 3.5 MMT for the same time last year, while soybeans are only 2.8 MMT currently for new-crop vs 3.6 last year at this time. Keep in mind USDA expects soybean exports in 2017/18 are expected to a record large 2.15 billion bushels, up 5% from this year. With disappointing pre-sales so far & heated competition from South America, that may be a difficult mark to hit.

 

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May 25, 2017 | Grain Hedge Insights | Kevin McNew | Views: 230

Grains Bounce Higher in the Overnight

Export Sales Number this Morning are Dismal for New Crop Deliveries

Grains bounced higher overnight with soybeans leading the complex on a 4 cent advance.

 

USDA reports a 115,400 MT sale of US corn to unknown destinations for 2016/17 marketing year.

 

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Rains continued to be problematic for IN/OH with 3 to 5 inches of rain falling in the last 24 hours and more expected this weekend. Next week should bring more showers to MI, KS, MO & S. IL.

 

Yesterday, meeting minutes from the Fed revealed they would hold off on raising interest rates until they see evidence that a recent economic slowdown was transitory.   Nearly all policymakers at the May 2-3 meeting also said they favored starting the wind-down of the Fed's massive holdings of Treasury debt and mortgage-backed securities this year.

 

 

This morning’s export sales report was dismal again for new-crop deliveries of corn and beans.

 

Export Sales-

 

   Actual

   Estimated

Wheat - OC

   202

   0-200

Wheat - NC

   343

   250-450

Corn - OC

   457

   600-900

Corn - NC

   1

   0-200

Soybeans-OC

   472

   200-400

Soybeans-NC

   6

   0-150

 

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May 24, 2017 | Grain Hedge Insights | Kevin McNew | Views: 205

Chicago Wheat Futures Slid for a Third Session

Oil Prices Steadied on Wednesday

Chicago wheat futures slid for a third session with the US Hard Red Winter crop’s resilience to late spring snowstorms pulling the market lower while soybeans were virtually flat after recovering from early losses. Corn was down slightly, extending the previous day’s fall on concerns over planting delays in the US grain belt.

 

The market awaits the USDA’s first corn condition ratings for the season, which the government expects to release in its next weekly crop progress report on May 30.

 

US farm groups on Tuesday pushed back against President Trump’s proposal to slash agriculture spending, viewing it as a fresh threat to a struggling farm economy. The White House on Monday proposed $46.54 billion in cuts to federal government funding for the ag sector over the next 10 years, including limits on federal subsidies for crop insurance premiums. Congress has the final say on the government's budget and lawmakers said the president’s plan stands little chance of passing.

 

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Oil prices steadied on Wednesday as investors waited for news from Vienna where ministers from OPEC and other exporting countries were discussing whether to extend production cuts into the first quarter of next year. Benchmark Brent Crude Oil was up 10 cents a barrel at $54.25 by 1210 GMT. US light crude oil was unchanged at $51.47.

 

 

Both crude benchmarks have gained more than 10 percent from their May lows below $50 a barrel, rebounding on a consensus that the Organization of the Petroleum Exporting Countries and other producers will maintain strict limits on oil production in an attempt to drain a global oversupply. OPEC has promised to cut supplies by 1.8 million barrels per day until June and is expected on Thursday to decide to prolong that cut by up to nine months.

 

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May 23, 2017 | Kevin McNew | Views: 181
May 23, 2017 | Grain Hedge Insights | Kevin McNew | Views: 449

USDA Crop Progress Report Showed Another Strong Week for Farmer Planting

Grains were weaker to start Tuesday

Grains were weaker to start Tuesday giving up all of Monday’s gains.

 

EXPORTERS SELL 126,000 METRIC TONS OF SOYBEANS FOR DELIVERY TO UNKNOWN DESTINATIONS DURING THE 2016/2017 MARKETING YEAR- USDA

 

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USDA’s crop progress report showed another strong week for farmer planting. Corn planting hit 84% vs 71% last week while soybean planting moved to 53% planted vs 32% last week. Although there was no national crop ratings on corn, state ratings from IL improved to 51% good-to-excellent compared to 42% last week, and IA’s first rating came in at 75% good-to-excellent. Winter wheat conditions nudged higher to 52% good-to-excellent vs 51% last week.

 

In Brazil, the supreme court there will be weighing a decision to be announced on Wednesday about whether to let the corruption investigation of President Temer move forward. This will have important implications for the Brazilian markets and the Real. In Argentina, they have their own currency woes as the Argentinean Peso hit its lowest level ever against the US Dollar on spillover effects from the Brazil crisis.

 

Chinese soybean imports for April were record large and South America shipped its highest ever monthly amount to China to the tune of 6.2 MMT. In Ukraine, Lanworth is forecasting wheat yields are likely to fall to 3.72 tonnes per hectare this year from a record 4.21 tonnes last year. It said favorable weather could push the yield up to last year's level, but poor conditions could cut it to around 3.40 tonnes.
 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

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