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January 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 367

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.      

January 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 233

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. 

January 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 210
January 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 235

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.

January 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 261

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.

January 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 221

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.

January 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 280

Soybeans Down Again

Soybeans lost much of Monday's traction, Cody and Kevin look at why prices faded.

Soybeans Down Again
January 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 225

Can Soybeans Continue Yesterday’s Move?

Strong export inspections and concerns about the northern growing region of Brazil had soybeans move higher yesterday.

In the overnight session corn soybeans and wheat were mostly unchanged to slightly higher. Yesterday’s export inspections were positive for corn and soybeans which both beat analyst expectations. Soybeans recorded 1.5 million metric tons inspected for export which beat the high side of analyst expectations by nearly 50,000 metric tons. Corn beat expectations by an even higher margin, recording 886,825 metric tons compared to expectations which ranged between 600,000-750,000 metric tons. Wheat expectations were weak again with only 263,035 inspected to leave the country well on the low side of the average analyst guess.

 

Yesterday, the USDA attaché report adjusted wheat production to 12.5 million metric tons and 14/15 corn production to 22.5 million metric tons. Both estimates for corn and wheat are 500,000 metric tons over the USDA official estimate in the January Supply and Demand report.

 

Wheat continues to experience selling pressure as the market looks for some signs of life in the export sector. Since the sharp run-up in wheat prices which peaked on December 26th, the market has been searching for a pickup in wheat sales that would have otherwise gone to Russia.  However, U.S. wheat has struggled to gain competitiveness in the global market with the sharp decline in the Euro and the U.S. Dollar continuing to gains strength.

 

In Brazil, showers are expanding in the central regions this week with the North East parts of the growing region expecting to receive precipitation by next week. Northern Brazil has experienced significant precipitation deficits over the last 30 days, with actual precipitation 61% below the average precipitation for that time period. The lack of precipitation over the month of January has led AgRural to announce last Friday it expects to cut Brazil soybean production forecasts in their February report. Soybeans bounced over 11 cents yesterday and could possibly trade higher today. Overhead resistance is around the $9.91 level.    ​

January 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 243

Why Did Soybeans Outperform Today?

Tune into GrainTV and hear Kevin and Cody discuss why they feel soybean was the only grain to move substantially higher. Also, listen to Kevin discuss what he thinks it will take for wheat to find a bottom.

January 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 174

Corn and Soybeans Begin Week Lower

Corn and soybeans start off their week lower on technical selling.

In the overnight corn is trading 2 3/4 pennies lower, soybeans is down 2 3/4 cents and wheat is up 1/2 a penny after closing last week near one month lows. This weekend the Korea Feed association purchased 110,000 metric tons of corn from optional origin. Last week U.S. export sales were very strong for corn booking 2.1 million metric tons, twice the amount analysts were expecting.   

 

AgRural said in a report issued on Friday that they plan on cutting their forecast for Brazil’s soybean production in their February report due to the dry weather which has damaged soybean development in the northern part of the country. Over the last 30 days northern Brazil has received 60% less precipitation than its average during the same period in time.  

 

Soybeans looks to trend lower this week after falling through $9.91 which held as support since late October. After falling through $9.91 support, soybeans paused its decline but failed to trade back above that level. The price area of $9.91 which acted as support is now a firm resistance level. Considering the bearish surprise in ending stocks in the January Supply and Demand report, the disappointing NOPA crush numbers in December and the significant dip in export sales last week, soybeans may continue to feel selling pressure going forward.

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