October 06, 2017 | Grain Hedge Insights | Kevin McNew | Views: 533

Weekly Cash Comments

Weekly Cash Commentary for week ending 10/06/2017

Grain basis had extreme bouts of volatility this week driven in part by a spurt in harvest progress as well as low river levels which sent barge freight shooting to 3-year highs. But, by the end of the week the meteoric rise in barge costs reversed course giving way to basis levels to return to a more normal state. On the week, corn basis was unchanged while soybean basis was off 2 cents.

 

For corn, the upper Midwest and WCB regions continue to be slow to harvest which has given some limited life on basis and a few buyers occasionally popping quick-ship premiums. This week saw another ethanol plant in NW IA put a premium to their basis boosting it 7 cents a bushel. In Illinois & Indiana as well some corn plants there also found the need to push their basis higher by 10 cents.  While these few isolated buyers bid up their basis, this was against a broader backdrop of weakness or steady basis for much of the remaining corn processors. In the southern Plains, basis levels have been holding firm as strong feed demand and a mediocre crop has made for some early season premiums existing in the marketplace for OK feed buyers.

In the soybean market, crush plants were mostly under pressure this week with a loss of 4 cents a bushel as a group. However about 25% of the plants saw 5 to 15 cent losses on the week as there were virtually no quick-ship premiums to be found. For river terminals, after the dust settled from the barge freight gyrations on the week the average river basis was mostly unchanged. But this masks significant losses in areas on the lower MS River that ended the week with double-digit drops.

 

With big crops on the way to market and large carry-out from the old-crop 2016 marketing year basis levels seem likely to face more pressure ahead. Crop storage space will be at a significant premium this year making on-farm storage an attractive marketing tool to capture better basis levels into late 2017 early 2018. The average carry from now until January across all grain buyers is 18 cents a bushel for corn and 22 cents a bushel for soybeans.

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

October 06, 2017 | Grain Hedge Insights | Kevin McNew | Views: 566

Tropical Storm Nate Closing Down Gulf Oil and Natural Gas Platforms

Grains Mostly Unchanged in the Overnight Session

Grains mostly unchanged in the overnight session with Dec Corn up ¼ of a cent, Nov Soybeans down 1 cent and Dec Wheat down ½ cent. Chicago Corn and Soybean futures in 2017 have been confined to the smallest ranges during the US growing season in over a decade as the world continues to bang out bumper crops with minimal interruption.


 

Exporters sell 195,000 metric tons of Corn for delivery to unknown destinations during the 2017/2018 marketing year. -USDA

 

Rains from tropical Storm Nate farther east Sunday/Monday, slow cotton/soy harvest in mainly the E Delta/Tennessee Valley. Periodic rain events throughout next 2 weeks keep Central Midwest corn/soy harvest slow at times; damage risk is low. Plains showers are more limited after today; threatening only minor wheat seeding delays through mid-October.

 

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French farmers had harvested 15 percent of this year’s grain maize crop by October 2, up from 5 percent a week earlier. The harvest was running ahead of the pace seen last year when 9 percent of the crop had been gathered by the same date said France AgriMer in the weekly update.

 

The Dollar rose to its strongest in 10 weeks on Friday and short-dated US Treasury yields climbed to a nine-year high after data showing the largest gain in US wages since December 2016 bolstered bets on an interest rate hike by year-end. US two-year yields hit their highest since October 2008 at 1.52 percent as US bonds led a sell-off in world bond markets. The dollar index (which measures the greenback against a basket of major currencies) climbed to 94.267, its highest since late July.

Oil and natural gas operators began evacuating staff and halting production at US Gulf of Mexico platforms on Thursday ahead of Tropical Storm Nate, the second storm in as many months to rattle the Gulf Coast energy corridor. Nate, which has killed at least 10 people in Costa Rica and Nicaragua and caused intense rainfall, is forecast to scrape Honduras and Mexico, enter the Gulf and strengthen into a hurricane before making landfall this weekend in Louisiana, near several major refineries.
 

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October 05, 2017 | Grain Hedge Insights | Kevin McNew | Views: 540

Better Than Expected Weekly Export Sales for Corn This Week

Grains Modestly Higher in the Night Trade

Grains were modestly higher in the night trade with corn up 2, soybeans up 4 and wheat posting a 1-cent advance.

 

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The EU increased its estimate of 2017/18 usable soft wheat production in the European Union by 1 MMT to 140.4. That’s up from last year’s 133.7 MMT. For corn, they pegged the crop at 59.1 MMT slightly below last season’s 60.8.

 

Soybeans are finding modest support as rains are expected to slow the US harvest. Dry Spring planting in Brazil is also supporting the market.  Brazilian oilseeds industry group, Abiove, estimated the nation's soybean output at 108.5 million tonnes in the 2017/18 season, down from a record 113.8 million tonnes in the previous crop cycle. Longer term traders are considering the implications of a La Nina weather event which appears to be a more likely outcome in the next few months. This tends to be associated with dry weather in Argentina.

This morning’s export sales from USDA showed better than expected sales for corn on the week while wheat and soybeans were at the high end of expectations. Year-to-date sales for corn and beans continue to significantly lag last year’s pace with corn sales 40% lower than the sales achieved at this point last year while soybean sales are 18% lower. USDA for the year expects corn sales to be 20% lower while soybean sales are expected to be 4% higher.

 

Weekly Export Sales-

 

Actual

Estimated

Wheat

492

300-500

Corn

814

500-700

Soybeans

1,016

1,000-1,300

 

 

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

October 04, 2017 | Grain Hedge Insights | Kevin McNew | Views: 384

Dec Corn Down 1 Cent and Nov Soybeans Unchanged in The Overnight Session

Forecast To Clear Up Favoring Harvest in the Next 6 to 10 Days

In the overnight session the grains were mixed with December corn down 1 cent, November soybeans unchanged and December wheat down 2 ½ cents. Precipitation is expected to pass back over the Midwest from Thursday through Saturday which should continue to slow harvest pace. The forecast clears up favoring harvest in the 6-10 and 11-16 day precipitation forecasts.  

 

According to a Reuters article published this morning China’s soybean imports from the United States are expected to be delayed for at least two weeks as exporters struggle to find soybeans that meet quality specifications. Quality has been a huge challenge because early harvested soybeans are sourced out of the Mississippi Delta which suffered crop damage from the recent Hurricanes. The scarcity of soybeans that meet quality specs in the Gulf region has caused delays at the U.S. Gulf shipping terminals as waiting times have grown to 10-12 days, which is above the usual 5 days during this time of year. This situation is made worse by the low water levels along the Mississippi and delays in barge traffic which have driven barge rates sharply higher.  

 

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Recent precipitation has aided soil moisture in 80 percent of Brazil’s corn and soybean planting areas. The slow transition out of the dry season had slowed initial planting pace, but recent moisture has helped the situation. The next 10 days show little signs of moisture and any precipitation will be isolated to the southern regions of Brazil through the middle of the month.

 

Egypts GASC announced this morning that they purchased 180,000 metric tons of Russian wheat.


 

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

October 03, 2017 | Grain Hedge Insights | Kevin McNew | Views: 718

Ohio River Near Brockport IL Closed to Navigation

Grains Were Mixed in the Overnight Session

In the overnight session the grains were mixed with December corn down 1 ¼ cents, November soybeans down 2 ¼ a cents and December wheat up 1 cent. Rains are slowing harvest in the Northwestern Midwest early this week and are expected to slow harvest again between Thursday and Saturday.

 

Harvest pace for corn is moving slower than expected with only 17 percent complete compared to average expectations of 21 percent and a four year average of 26 percent during this time of year. Soybean harvest is also behind pace with only 22 percent harvested which missed expectations of 25 percent. Soybean harvest over the last four years averages 26 percent complete this week.

 

Corn ratings improved to 63 percent rated good-to-excellent in this week’s Crop Progress report, which was above expectations of 61 percent. Soybean conditions held steady at 60 percent of the crop rated good-to-excellent.

 

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The USDA announced that 151.6 million bushels of soybeans were crushed in August which was slightly below trade estimates of 152.3 million bushels. This brings total soybean crushings for the 16-17 marketing year to 1.899 billion bushels which is above the USDA’s forecast in the latest WASDE report of 1.895 billion bushels. Soybean oil stocks at the end of August were at 1.81 billion pounds which was below analyst expectations of 1.887 billion pounds. The USDA also reported that corn used for ethanol in August was 481 million bushels which was up from the previous month which reported 454.8 million bushels used.

 

Yesterday, it was announced that the Ohio River was closed to navigation near Brockport, Illinois after an equipment failure leaving roughly 89 vessels waiting to pass. It is unclear how long it will take to resolve the issue. This will continue to put pressure on grain basis which has already been pressured along the river as lower water levels have slowed the movement of freight.
 

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

October 02, 2017 | Grain Hedge Insights | Kevin McNew | Views: 681

Barge Rates Jump to a Three Year High

Grains Trade Lower in Sunday Night Session

In the Sunday night session the grains are trading lower with December corn down 1 cent, November soybeans down 3 ¾ cents and December Chicago wheat trading 5 cents lower this morning. Rains are expected in the first half of the week across the Northwestern Midwest which will slow harvest pace. Precipitation is then expected to move eastward by the later half of the week.

 

The Quarterly Grain Stocks was released on Friday surprised the market lifting corn and soybeans and sending wheat prices on another slide lower. U.S Corn stocks were reported at 2.295 billion bushels which was lower than the average Reuters analyst guess of 2.353 billion bushels. Soybean stocks were reported at .301 billion bushels which was below the analyst expectations of .338 billion bushels. The USDA also announced that based on the quarterly grain stocks report, they have adjusted their 2016 harvested area down 40,000 acres to 82.7 million acres and revised their yield estimate down .1 bushels per acre.

 

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Total wheat in all positions was reported at 2.253 billion bushels which is down 11 percent from a year ago, but above analyst expectations of 2.205 billion bushels. Spring wheat was the biggest surprise with the stocks report showing 416 million bushels compared to the trade expectations of 382 million bushels. Spring wheat is now trading down 35 cents lower than its opening price on Friday.  

 

Barge rates have jumped to a three year high as harvest is underway in the U.S. Rates have been further lifted due to low river levels which have caused some delays as emergency repair work is conducted. This will likely have a negative impact on basis along the river.

 

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

September 29, 2017 | Grain Hedge Insights | Kevin McNew | Views: 568

Dec Corn and November Soybeans Down in the Overnight Session

Grain Stocks Report to be Released Later Today

In the overnight session the grains traded lower with December corn down ½ a cent, November Soybeans down 3 cents and December Wheat down 1 cent. Weather forecasters are watching the Northwest grain belt for harvest delays early next week.  

 

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The Grain Stocks report will be released today, September 29th at 12 PM. Traders will be focusing on this report as the final carryout number for the 2016-2017 marketing year. With the marketing year complete and last years use set, the remaining stocks will give the clearest picture of 16-17 production. In the last 17 September stocks report, the USDA has revised its crop production estimate in 15 of them which makes this quarters grain stocks more difficult to predict.  

 

Here are the expectations for the Grain Stocks report. In a Reuters poll of analysts the average trade guess for soybean stocks on September 1st is 338 mbu with guesses ranging from 321 mbu to 363 mbu. Analysts are expecting corn stocks to be at 2.353 billion bushels and wheat stocks at 2.205 billion bushels.  

 

Wheat production in Australia will be impacted by the high temperatures and low soil moisture during the spring this year. The hot dry conditions across Australia have analysts polled by Reuters estimating a production at 20.015 million metric tons which is below the USDA’s September WASDE report of 22.5 MMT and a long ways from last years production of 35.56 million metric tons. Australian wheat prices have been rising and are already above offers being made for U.S. cargoes in Asia which should help North America export sales this marketing year.     

 

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

September 28, 2017 | Grain Hedge Insights | Kevin McNew | Views: 499

Weekly Export Sales Numbers Are In

Grains Trade Lower in the Overnight Session

In the overnight session the grains traded lower with December corn down 1 ½ cents, November Soybeans down 5 ¾ cents and December Wheat down 2 ¼ cents as clear weather throughout the majority of the grain belt will allow harvest to progress uninterrupted over the next 11 days. Precipitation early next week might cause some rain delays in the Northwest but widespread delays are unlikely.

 

There has been some light showers in parts of Mato Grasso over the last day and rains are expected to expand into the north over the next five days which will help planting which has been delayed recently due to dry weather.

 

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Ethanol production declined sharply week over week to 996 thousand barrels per day from 1.033 million barrels per day. Despite the decline production was still above last year’s numbers for the same time period. Ethanol stocks also declined this week to 871 million gallons from 888 million gallons last week. Ethanol production will have to run about 1 percent ahead of last years pace to meet the USDA’s corn used for ethanol estimate of 5.475 billion bushels.

 

The Buenos Aires Grain Exchange released their latest expectations for Argentina’s 2017-18 corn and soybean harvest. Corn production was seen at 41 million metric tons which is just below the 42 MMT estimated by the USDA in the September WASDE report. The exchange pegged Soybean production at 54 million metric tons which was 3 million metric tons below the latest WASDE report. Wheat harvest was seen at 17 million metric tons which was ½ MMT below the USDA’s most recent projections.

Export sales were strong for soybeans which were well above expectations. China and unknown destinations accounting for 2.4 million metric tons of the 2.982 total sales this week. Wheat sales were also strong this week, up 42 percent from last week and on the high side of analyst expectations. Corn sales on the other hand were a disappointment missing expectations with only 320,000 metric tons sold.
 

Weekly Export Sales-

 

Actual

Estimated

Wheat

435

250-450

Corn

320

500-800

Soybeans

2,982

1800-2200

 

 

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

September 27, 2017 | Grain Hedge Insights | | Views: 575

Planting Pace for Winter Wheat is Running Ahead in Ukraine and Russia

Grains Trade Lower in the Overnight Session

In the overnight session the grains traded lower with December corn down 1 ½ cents, November soybeans down 2  ¾ cent and Chicago Wheat down ¾ cents.

 

On Friday, September 29th the USDA is scheduled to release its Quarterly Grain Stocks report. The average trade guess for corn is for 2.353 billion bushels with the highest analysts forecast at 2.495 billion bushels and the lowest forecast at 2.083 billion bushels. The average trade guess for soybeans is 338 million bushels with analyst forecasts ranging from 363 million bushels to 321 million bushels. The average trade estimate for wheat is 2.205 billion bushels with forecasts ranging from a high of 2.495 billion bushels to a low of 2.083 billion bushels.

 

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The planting pace for winter wheat is running ahead of pace in both Ukraine and Russia. Russia has reached 64 percent planted on an expected 43.24 million acres and Ukraine is 35 percent planted on an expected 6.17 million acres. Ukraine and Russia are expected to plant the same acreage as last year but some rainy weather throughout certain regions of Russia poses a risk to the crop according to the Agriculture Ministry.

 

With last years bumper wheat harvest, Russia is widely expected to become the world’s largest wheat exporter this marketing year. Weather conditions are better than last year throughout Ukraine which should continue to support a rapid planting pace.

 

On Tuesday, the U.S Environmental Protection agency announced it was seeking comment on a proposal that was announced in July to reduce the 2018 biodiesel blending requirements. The agency has expressed concern that the potential decline in biodiesel imports could raise domestic prices in a way that would cause economic harm.

 

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

September 26, 2017 | Grain Hedge Insights | Kevin McNew | Views: 557

Crop Progress Shows Corn Harvest Behind Average

Grains Trade Lower in Overnight Session

In the overnight session the grains traded lower with December corn down ¾ of a cent, November soybeans down 3 ¼ cents and December Chicago wheat up 2 ¾ cents this morning.

 

Temperatures should cool down in the second half of this week. The recent  warm weather has helped speed along maturity after a cooler than normal late summer had some traders concerned about growing degree days. The corn crop is 51 percent mature according to the Monday crop progress report which is behind the five year average of 64 percent. Precipitation should be limited throughout the Midwest over the next couple weeks which will continue to support harvest work.  

 

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The Crop Progress report released on Monday showed that corn harvest for the third week in September is running behind the five year average with only 11 percent of the corn crop harvested compared to the average 17 percent. The corn crops good-to-excellent rating held steady this week at 61 percent. Soybean harvest is 10 percent complete compared to the five year average of 12 percent. Winter wheat is in line with the five year average with 24 percent planted.    

South Africa’s 2017 corn harvest is expected by analysts to be the largest on record at 16.498 million metric tons which is well above last year’s drought impacted production. The Crop Estimates Committee will provide its final production estimates on Thursday the 28th. Currently, the largest South African corn crop was in 1981 and produced 14.656 million metric tons.


 

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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