March 16, 2015 | Grain Hedge Insights | Cody Bills | Views: 220

Wheat Trading Higher

Higher wheat prices are coming at a cost as some European and American wheat is emerging from dormancy. NOPA crush numbers were released and were within analyst expectations.

March 16, 2015 | By Steve Davidson | Views: 852

BNSF: Determined Not to Disappoint

CEO Carl Ice reassures NGFA annual meeting attendees in San Antonio, TX

BNSF: Determined Not to Disappoint

​"We disappointed, but we're going to do better. In fact, we already are."

That was the key message from Carl Ice, president and chief executive officer of BNSF Railway as he addressed the more than 600 members of the National Feed & Grain Association meeting at their 119th annual convention in San Antonio, Texas.

Ice reiterated what has recently been reported in Feed & Grain; that is, that the company  introduced a $5 billion capital investment plan for 2014 that added  more than 5,000 employees, 500 locomotives and 5,000 freight cars plus overall infrastructure improvements.

While the NGFA audience was understandably focused on the oil vs. grain capacity issues, Ice noted that BNSF measures 22 business segments, and in 2014, 19 of those segments were up. Domestic intermodal is the largest segment, at all-time records.

As such, Ice talked about investments that benefit the entire system, rather than targeting any particular segment. Overall capital investments for 2015 will approach $6 billon and include a new-generation signal system.

"Generally, our railroad is in the best shape it's ever been, as it should be," he said.

Ice also noted how unique it is to address an organization marking its 119th anniversary. "What's even more impressive," he noted, "is that our company and the ag industry have been working together since the 1850s."

March 16, 2015 | Grain Hedge Insights | Cody Bills | Views: 107

NOPA Expectations

The NOPA crush numbers are expected out today which could show the largest crush on record for the month of February. Here are the expectations.

In the overnight session corn, soybeans and wheat all traded lower but were able to recover to mostly unchanged going into this morning’s pause in trade. Corn is down ¼ a cent, soybeans are down ½ a cent and wheat is down 1 ¼ cents. The U.S. dollar is trading slightly below the 100.785 high which was printed last Friday. This week traders will be paying close attention to the FOMC meeting on Tuesday and Wednesday to get more clues on the direction of interest rate policy.

 

The NOPA crush report will be released at 11 AM CST today. Analysts are expecting 148.537 million bushels of soybeans crushed in the month of February which would be the largest February crush on record and a nearly 7 mllion bushel increase from last year. In a poll of eight analysts the average crush estimate ranged from 143.2 million bushels to 160.5 million bushels. Analysts see soyoil stocks coming in at 1.332 billion lbs which would be up from 1.228 billion lbs last month.

 

The recent warm-up has triggered flooding on the Ohio River which has halted grain loading at many river terminals. The National Weather Service has issued a flood warning in the Cincinnati area and expects the river to stay at flood levels at least through Thursday. This will hurt spot basis along the river this week.

 

Weather this week is expected to be wetter for the Plains which have been experiencing excessive dryness. Although the precipitation is expected to be light throughout the next 10 days the added moisture should provide some benefit to the region’s wheat. Brazil continues to get precipitation in the north which has slowed harvest in the region. Despite the rains, there are no significant concerns for that region yet. Argentina looks to see drier weather over the next 6-15 days which should help the northern fields which have been saturated by heavy rains throughout February and March.    

March 13, 2015 | Grain Hedge Insights | Cody Bills | Views: 179

Another Volatile Friday

U.S. Dollar finds strength while the Brazilian Real loses ground. This in combination while a strong Brazilian harvest season seems to be putting pressure on U.S. Soybean exports.

March 13, 2015 | Grain Hedge Insights | Cody Bills | Views: 242

Weekly Cash Comments

Cash Commentary for week of March 13

Corn grain basis levels continued to show positive strength this week gaining 2 cents on average across the US for the week. Soybeans were up one-cent a bushel but continue to have limited strength after weeks of falling futures and basis levels.

 

In corn, bigger gains were seen along river terminals thanks to a 4-cent boost in export basis at the Gulf. On average, river terminals were up 3 cents a bushel, with the biggest gains occurring along the Ohio River region. For ethanol plants, they were up 1.5 cents for the week, with no significant trends in basis by region. Ethanol production increased week over week by 13,000 barrels per day to 944,000 barrels per day which is still well over last year's production pace. In the latest WASDE report released on Tuesday the 10th the USDA cut ethanol production by 50 million bushels. The USDA cited that the new Grain Crushing's and Co-Products Production report showed corn used for ethanol between October and January occurred at a higher conversion rate than previously assumed.

 

For soybeans, basis levels have been stagnant since mid-February and this week was not much different. Basis levels on average across the country were up only 1 cent a bushel. At the Gulf, export basis levels were up by a similar amount and with this week’s export sales coming in at a paltry 161,000 MT expectations are for slow business in the remainder of the marketing year. At crushing plants, gains were also muted when averaged across the country. However, there was more noticeable strength in MN & IA where there were some plants up 5 cents a bushel.

March 13, 2015 | Grain Hedge Insights | Cody Bills | Views: 164

Traders Eye NOPA on Monday

The market is mixed this morning with traders eyeing the NOPA crush report. Export sales were sluggish this week as export pace has picked up in South America.

The grains are mixed again this morning with wheat continuing its short covering action, up 3 3/4 cents this morning. Corn is down ½ a cent and soybean are trading 6 1/2 cents lower. The U.S. Dollar moved higher by a fraction of a percent this morning after pulling back from its peak on Thursday. Keep in mind NOPA crush numbers will be released at 11 AM CST on Monday March 16th.

 

Analysts are expecting 148.537 million bushels of soybeans crushed in the month of February which would be the largest February crush on record and a nearly 7 million bushel increase from last year. In a poll of eight analysts the average crush estimate ranged from 143.2 million bushels to 160.5 million bushels. Analysts see soyoil stocks coming in at 1.332 billion lbs which would be up from 1.228 billion lbs last month.

 

The USDA attaché stated in a report that it expected China’s 2015 hog imports could jump to 1,200,000 metric tons which would be a 20 percent increase over the latest official USDA forecast. The jump in import demand developed as a result of higher internal corn prices which has stressed profitability and reduced the 2015 hog count.  

March 12, 2015 | Grain Hedge Insights | Cody Bills | Views: 192

Wheat Rallies

We saw Chicago wheat trade higher following the export sales report. Cody discusses the export sales numbers as well as a Beijing attache hog report.

March 12, 2015 | Grain Hedge Insights | Cody Bills | Views: 138

Export Sales Disappoint

Export sales disappointed this week with corn and soybeans both booking well below analyst expectations.

Export Sales Disappoint

The grains are mixed this morning with corn down ½ a cent, soybeans unchanged and wheat up 5 ¾ cents going into this morning’s pause in trade activity. Continued dryness in the U.S. wheat belt is providing reasons for continued wheat short covering after prices fell to new lows last Friday. The forecast expects some beneficial rains for the plains wheat crop next week. The U.S. Dollar is trading off yesterday’s highs after briefly trading over the 100 mark in the overnight. 

 

Export sales didn't provide much support for the grains with corn and soybeans missing analyst expectations to the low side. Wheat sales were stronger than expected booking 445,000 metric tons compared to 300,000-450,000 metric tons expected. Large purchases from China, Mexico, unknown destinations and the Philippines helped maintain export sales in the face of a rapidly rising dollar. Corn sales fell to 418,000 metric tons of old crop sales, down 50 percent from the previous week and well below analyst expectations of between 600,000-800,000 metric tons. Soybeans also disappointed analysts by booking only 167,900 metric tons this week compared to 300,000-500,000 metric tons expected by analysts. Soybean sales are expected to come under pressure during the second half of the marketing year with 98 percent of expected sales already booked. The USDA left soybean export sales unchanged in the latest WASDE report.

 

On Wednesday, most Argentinian farmers halted grain sales in protest to bring attention to existing agricultural policies. The strike is expected to be limited to three days and will most likely not affect the loading at port facilities.

 

Ethanol production increased week over week by 13,000 barrels per day to 944,000 barrels per day which is still well over last year’s production pace. In the latest WASDE report released on Tuesday the 10th the USDA cut ethanol production by 50 million bushels. The USDA cited that the new Grain Crushing’s and Co-Products Production report showed corn used for ethanol between October and January occurred at a higher conversion rate than previously assumed. 

March 11, 2015 | Grain Hedge Insights | Cody Bills | Views: 184
March 11, 2015 | Grain Hedge Insights | Cody Bills | Views: 202

Grains Higher in the Overnight Following WASDE Report

The grains are trading higher in the overnight following the Tuesday WASDE report and despite the higher U.S dollar.

The dollar index continues to rally in the overnight reaching 99.145 in a rally that started after breaking through 95.90 on March 4th. The grains are also moving higher in the overnight with corn up 3 ¾ cents, soybeans up 5 ¾ cents and wheat up 6 ½ cents this morning. Be aware that the May Corn chart has resistance from the 100 and 50 day moving averages at 3.94 ½ and 3.95 ¾.

 

Yesterday, the USDA revised the corn ending stocks lower by 50 million bushels to 1,777 million bushels. The revision was a result of increased feed and residual use, increased export sales and a decreased ethanol production. Soybean ending stocks were held steady at 385 million bushels despite the strong pace of export sales this year. Analysts were expecting a cut in ending stocks by around 9 million bushels. Wheat ending stocks were cut to 691 million bushels down from 692 in February.

 

Global ending stocks for corn fell by 4.36 million metric tons in March as a result of higher U.S. usage and a 2 million metric ton production decline out of South Africa from hot dry weather conditions. Argentina production was increased by .5 MMT, but the rest of Argentina corn and soybean production was left unchanged.

 

Yesterday the Brazilian government representatives and independent truckers met to discuss freight rates, a central issue in the two week long trucker strike and blockade that clogged Brazil’s highways and kept fuel and grain from market. Rain in northern Brazil is likely to cause harvest delays over the next two weeks.

 

This morning the Taiwan Flour Millers association purchased 83,950 metric tons of milling wheat to be sourced from the U.S.  

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