Monday Morning Bounce
Thursday and Friday prices had a hard time breaking lower and holding their levels. Will prices bounce this morning?
In the overnight session the grains turned higher with corn up 2 ¼ cents, soybeans up 3 cents and wheat in Chicago up ¾ of a cent. A reportable sale of 132,600 metric tons of corn was sold to Mexico which was primarily made up of old crop corn. Corn started off Thursday and Friday’s trade sessions trending lower, but was able to find support and close off close on the high side of the day’s range. Another day of positive price action may define this area between $3.66 and $3.70 as a key support level.
Over the weekend 85 percent of the U.S. wheat belt received between ¼ and 1 inch of precipitation. More snow is on its way later today with Chicago and other parts of the Midwest getting 10 inches or more. Sub-zero temperatures are expected to arrive this week, but the snow cover provides protection and little cause for concern.
Brazil’s crop conditions are improving after 55 percent of the growing regions received precipitation between ¼ of an inch. Forecasts show that increased moisture is expected in the Central and Northern parts of Brazil over the next 10 days.
Will Crops Find a Bottom Next Week?
Today Cody discusses weekly basis changes and gives his predictions for price changes next week.
Weekly Cash Comments
Cash Comments for week of 30 January 2015
The futures market slide 12 ¼ cents for soybeans and 8 ½ cents for corn but despite the sharp slide in prices, basis remained for the most part steady increasing only a penny for soybeans and 1 ½ cents for corn.
Basis along the river declined more than the rest of the U.S. declining an average of 2 cents despite barge rates declining across all five major river regions. Basis along the gulf slipped 4 cents over the last week helping explain the relative weakness along the river. Soybean basis along the river held steady in the face of declining futures prices, improving 1 ¼ cents this week. Soybeans moved by barge over the past week was down 35 percent below the same week in 2014. Year to date barge movement of soybeans is 174,000 tons behind where we were at this time last year, while corn moved by barge is ahead of last year’s pace by 143,000 tons.
Ethanol basis was in line with the national average increasing 1 ¾ cents on average across the U.S., while soybean plant basis only improved ¾ of a cent over the past week. Ethanol production continues to maintain above forecasted production up 5.6 percent over the year compared to a USDA forecasted increase of only .8 percent. Strong DDG prices have helped support crush margins as ethanol values have declined over the last month.
Can wheat extend bounce off $5.00?
Wheat prices bounced off $5.00 per bushel on Thursday as export sales began to pick up pace from previous weeks and prices become oversold. Can they continue their rally in Friday’s session?
In the overnight session corn is trading ¾ of a penny lower with soybeans unchanged and a 2 cent increase in wheat. Wheat prices found support yesterday after touching $5.00 ¾ briefly during the session. Wheat seems oversold at these levels after falling sharply from the $6.77 high on December 28th. Keep an eye out for a bounce in wheat prices during the day session.
In the US, showers are expected throughout the plains through this weekend which should improve the soil moisture profile for ¾ of the Plains wheat acreage. The precipitation should be followed by snowfall of between 4-8 inches which will help protect the crop from the below zero temperatures that are forecasted for next week.
Yesterday, it was announced that the USDA’s attaché in Canberra Australia pegged the countries 14/15 wheat production at 23.2 million metric tons which is .8 million metric tons below the existing USDA forecast. The forecast was cut due to dryness in late 2014 which especially affected Queensland, New South Wales and Victoria. Due to the dry weather the USDA is expecting a 16% decline in yields compared to last year and a 14% decline in wheat production compared to last year’s total of 27.01 million metric tons.
Central Brazil continues to benefit from precipitation which is expected to expand north beginning next week. The northern part of Brazil’s growing region has received 61% below normal precipitation over the last 30 days which will negatively impact crop yields in this growing region. Southern parts of Brazil are currently experiencing more showers and are expected to receive more precipitation in the 11-15 day forecast. A grains analyst out of Brazil, Safras & Mercado, lowered their Brazil soybean production forecast to 95 million metric tons from 95.9 previously expected in December. They also lowered their Brazil corn forecast to 74.7 million metric tons from their previous forecast of 75.5 million metric tons.
Export Sales Review
Tune in for a late brief of the corn and soybean export sales report.
Soybean Sales Bounce Back
Soybean sales beat analyst expectations and sharply bounced back from the dismal level announced last week. Can this help soybeans rally this morning?
In the overnight session corn is trading down 2 ¼ cents, soybeans are trading 3 ¾ cents higher and wheat is down 2 ¼ cents. This morning a reportable sale of 116,000 metric tons of sorghum was announced to unknown destinations with 58,000 metric tons for delivery in 14/15 marketing year and the other 58,000 delivered for new crop.
This week’s export sales were mostly positive for the grains and should help support the price of soybeans in this morning’s session. Wheat sales picked up 19 percent from last week booking 544,400 metric tons and beating analyst expectations of between 250,000-450,000 metric tons. Although the last few weeks have showed improvement still larger export sales will be needed to halt the slide in prices. Corn export sales were booked at 1,068,200 metric tons which was on the high side of analyst expectations but only half of last week’s sales which came in at a marketing year high. Expectations for corn sales ranged between 850,000 and 1,200,000 metric tons. Soybean sales booked 888,200 metric tons up from the mere 14,000 metric tons booked last week and well above analyst expectations which ranged between 200,000-400,000 metric tons.
Yesterday, ethanol production declined 1,000 barrels per day to 978,000 barrels per day keeping ethanol production running 5.6 percent ahead of last year’s pace. Ethanol production continues to show strength as DDG prices have rallied sharply since China approved the GMO grain variety MIR-162. Currently, the USDA has accounted for only a .8 percent increase in ethanol production which could leave room for them to make further revisions higher in coming reports. Ethanol stocks have also lifted to a 5 year high for this time of the year, improving 244,000 barrels last week to 20.63 million barrels of ethanol.
There were a few tenders offered this morning including one that we will want to monitor in the coming days. Saudi Arabia’s state grain buyer issued a tender for 660,000 metric tons of hard wheat, while Tunisia’s state grains agency issued a tender for 117,000 metric tons of soft milling wheat and 50,000 metric tons of barley. Considering the sharp selloff we have seen in wheat over the last few days we will want to keep a close watch on the results of the tenders.
Strong Ethanol Stocks
Even with the highest ethanol stock on record, corn traded lower. Tune in to hear Cody discuss the reason for the lower trade numbers.
Will Brazil transportation logistics lift U.S. soybean exports
Brazil’s harvest is beginning and already there’s negative news hitting the market about transportation. Could logistics problems lead to more U.S soybean sales in the second half of the marketing year?
The grains are all trading lower this morning with corn down 2, soybeans down 4 cents and wheat down 4 cents. Yesterday, mixed export news hit the market early with a 120,000 metric ton cancellation of soybeans to China followed by an announcement of a new sale that included 111,000 metric tons of soybeans to unknown destinations. This is the third major cancellations in the last 2 ½ weeks which signals China is switching it buying to South America.
Yesterday was the first day newly harvested Brazil soybeans arrived into crushing plants and northern ports and market the start of the first vessel being loaded at the port of Paranagua. However, news out of South America is not all positive after an announcement yesterday that the Tiete River, a key waterway in Brazil will be closed for the start of the season due to the low draft caused by a much drier than average January. Although this may not immediately affect the U.S. grain prices, the fact that Brazil delayed much of its planting due to dry weather in the fall could mean the crop comes out of the field at the same time. If this were to happen it would put increased strain on the transportation of crops to export facilities. If ports get congested and significant delays begin to occur, the U.S may see further export sales announcements that would have otherwise gone to South America.
Weather could reach subzero temperatures next week throughout the Midwest leaving some of the winter wheat crop exposed to the harsh temperatures after the warm conditions reduced snow cover over the last few weeks. However, winter storm Juno should provide some snow cover throughout the Midwest late this weekend. Wheat continues to trend lower, pressured by the higher dollar and a lack of interest in U.S. wheat by foreign buyers.
Soybeans Down Again
Soybeans lost much of Monday's traction, Cody and Kevin look at why prices faded.
Weekly Cash Comments
Corn basis saw modest growth this week advancing 2 cents a bushel on average across the country, but bean basis was unchanged thanks to higher futures and better farmer selling.
In corn, basis levels were up largely driven by strength at ethanol plants in the Western Cornbelt. On...[Read More]
Grains Higher Going into Friday
In the overnight the grains traded higher with corn up ¼ of a cent, soybeans up 3 ½ cents and wheat up 6 ¾ cents going into this morning’s pause. Wheat seems to be bouncing higher this morning after holding a major support level of $4.92 ¼ which was the low back on February 2nd. Today is...[Read More]
South American Trucker Strike Continues
Export sales provide little support to the markets
In the overnight session the grains traded mixed with corn and soybeans up 2 ¼ each and wheat trading 1 ¼ cent higher going into the morning pause in trade. Today is the last day to get out of any March grain contracts with first notice day Friday the 27th.
Yesterday at 11 AM CST...[Read More]
Ethanol Production out this Morning
Soybeans slip in overnight after yesterday’s gains
The grains are moving lower this morning with corn down a penny, soybeans down 4 cents and wheat in Chicago down 3 ½ cents. Yesterday’s rally in Soybeans sparked some farmer selling after prices rose sharply to an intraday high of $10.29. Keep a close watch on corn today as it trades next...[Read More]