U.S. grain markets are trying to find bottom today
Alert: Grain Markets close at noon central time on July 3, 2014.
U.S. grain markets are trying to find bottom today, two days after the June USDA report sent markets sharply lower. Coming into the morning trade break, we have corn down 2 cents, soybeans off a penny, and Chicago wheat down a cent. Old-crop soybeans are again taking ground on the new crop, with August up 4 cents.
Corn traders will be watching today’s ethanol crush report, out at 9:30 central time. Helped out by surging crude oil prices, ethanol production reached record levels in mid-June and has been a supportive story for the old crop corn market. Overnight tenders were issued from both the South Koreans and the Taiwanese for U.S. origin corn. Considering a corn crop now rated 75% good to excellent, any strength moving toward pollination will need to be helped out by export sales and domestic usage numbers.
Yesterday Egypt's state grain buyer bought 240,000 tons of Romanian and Russian wheat on an international tender, providing little support for U.S wheat. U.S wheat was offered on the high side of the price range at $259/metric ton while Romanian and Russian wheat was offered nearly $7 cheaper. Of the reported offers, the French wheat was the most expensive, at $262.37/metric ton.
August soybeans found some technical support after it touched briefly on its 200-day moving average at 1304. August, which is now the front month for soybeans sold off 48 ¼ cents on Monday following the report as stocks showed 27 million more bushels on hand June 1 than analysts were expecting.
Reported soybean acres surprised the market by over 2 million acres
U.S. Soybean acres at 84.839 million acres (82.154 Million Acres Expected)
U.S. Corn acres at 91.641 million acres (91.725 Million Acres Expected)
U.S. Wheat acres at 56.474 million acres (55.818 Million Acres Expected)
June 1 Soybean stocks 27 million bushels above expectations (405 Million Bushels)
June 1 Corn stocks 132 million bushels above expectations (3,854 Million Bushels)
June 1 Wheat stocks 8 million bushels below expectations (590 Million Bushels)
U.S. Soybean acres came out 2.5 million acres higher than trade estimates, pushing new crop prices sharply lower. Northern states saw the largest acreage additions year over year, with 1.35 million soybean acres added in North Dakota alone. Michigan, Minnesota, and Wisconsin saw a combined 1.42 million soybean acres added as well. Old crop stocks, which has been the backbone of the soybean markets relative strength, did little to support prices as the number came in 27 million bushels above expectations. Overall these are very negative numbers for new crop soybeans, especially considering the large world ending stocks projected for 2014/15.
Corn acres came out in line with trade expectations. The June 1st stock number is bearish as the 3.854 million bushels reported was 132 million bushels above trade expectations.
Wheat had an overall neutral report with quarterly stocks tighter than expected by only 8 million bushels and a slightly larger acreage figure. At the moment wheat is following the corn market lower.
THERE IS A SIGNIFICANT RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR FULL RISK DISCLOSURE AT WWW.GRAINHEDGE.COM
Corn basis slipped a couple cents along the upper Mississippi as heavy rains slow barge movement to the gulf.
Corn basis was unchanged on average this week but we again observed weakness along the upper Mississippi river system. Flooding remains a major problem for barge traffic and as a result grain buyers have been moving spot corn basis lower for the last two weeks. This week saw spot corn basis along the river down 2 cents, with many facilities backing off basis 5-10 cents. Corn has been most impacted by recent flooding, as corn shipments are making up the majority of grain shipments down river. Lock 27, north of St. Louis, reported that corn accounted for 93% of grain shipments down river for the week ending June 21st. With flood waters expected to crest late this week and into the weekend, river basis will have an opportunity to rebound as delays along the river clear up.
Soybean basis was off 2 ½ cents on average across the country, with the river system and crush plants showing relative strength. Old crop export sales worked to strengthen basis at the gulf and major river systems, with soy buyers along the river averaging a half cent increase over the last week. Thursday’s export sales report showed a resurgence of demand for old crop U.S. soybeans in response to the slide in prices seen early on in June. Export inspections have remained strong throughout June giving us reason to believe the USDA may have to revise their export sales forecast in the coming WASDE report.
Monday will be an important day for spot basis traders as the USDA releases June 1st quarterly grain stock estimates. Traders expect the USDA to report June 1st stocks at just 378 million bushels. If expectations are realized, that would be the lowest June 1st soybean stock figure since 1977. Convergence of old and new crop cash prices will be a major issue in the coming weeks, as buyers roll from July to August or September futures. At the moment the spread between July and August is 54 cents and the spread between July and September at $1.66 per bushel.
Kansas City wheat basis increased 2 ½ cents this week across the country as harvest picks up in the southern states. This year should be a particularly difficult year for merchandisers in the winter wheat regions as the heat and drought slashed yield into a fraction of what is considered normal production in that region. On the 23rd, Texas reported its winter wheat was 69% harvested, Oklahoma was 74% harvested, Kansas was 24% harvested and Nebraska had not yet begun harvest. We expect futures prices to continue to be pressured by large global wheat stocks, but domestic basis is to increase in compensation for the tight domestic stocks.
Want to view the markets live from your cell phone on report day? Visit us at GrainHedge.com and start your 14 day trial today!
THERE IS A SIGNIFICANT RISK OF LOSS IN TRADING FUTURES AND OPTIONS.
FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS.
PLEASE READ OUR FULL RISK DISCLOSURE AT WWW.GRAINHEDGE.COM
Monday, June 30th at 11:00 AM Central Time, the USDA will release the Planted Acreage and June 1st Quarterly Stock Reports. Below are trade expectations and our bias on the numbers coming into the report. If you’d like how Grain Hedge can help your farm marketing, please call our office at 877-472-4607. Click here to set up a live demo of the Grain Hedge trading platform that allows you to watch the live market reaction on Monday.
2014/15 U.S. Planted Acreage (Million Acres)
Traders expect the USDA to report 2014/15 soybean acres at 82.15 million acres, up nearly 700,000 acres from the record acreage projected in the March 31st Prospective Planting report. Assuming yield potential remains favorable, this acreage figure would push U.S. production to 3.7 billion bushels for 2014/15, up 12% from 2013/14. It is important to keep in mind that this surge in U.S. production is coming at a time when global ending stocks are expected to increase 22% in 2014/15.
In light of these bearish fundamentals, the new crop soybean market has remained relatively strong in recent weeks. With November 2014 soybeans closing at $12.44 in Thursday’s trade session we feel there is more downside, than upside, looking toward harvest prices. With this in mind, it is our opinion that now is a good time to protect a portion of expected production using a futures or option strategy.
Corn remains a different beast in the upcoming marketing year, with few acreage revisions expected in Monday’s report. On average, analysts only expect the USDA to raise corn acres by 25,000 acres from their projection in the Prospective Planting report. This slight increase would still have overall corn acres down 4 million acres year over year, and leave overall production unchanged from 2013. World corn stocks are expected to only increase 8% year over year, well below the surge in global ending stocks expected for soybeans.
Considering a corn market which has traded lower in recent weeks and the questions surrounding new crop acreage, we feel corn has a larger chance of holding a bullish surprise in Monday’s report.
Call the office to discuss pricing strategies as we come into Monday’s USDA report. Our number is 877-472-4607 and can be reached between 8AM and 4PM central time each day.
Growing Condition Outlook – Impact of El Nino
Today Planalytics had its web meeting focusing on the factors that would influence the intensity of the expected El Nino weather event. Senior Meteorologist Jeff Doran’s main take away was that not all El Nino weather events are the same! In fact a mild El Nino which is classified as sea surface temperatures that average between +0.5ºC and +1.0ºC might actually result in a growing season with little precipitation. Although Planalytics is expecting an El Nino event to occur, there are still indicators that have yet to point to a Moderate or Strong cycle that typically results in more mild growing conditions and adequate moisture throughout the growing season. For a full report on the Planalytics El Nino web meeting give the office a call at 877-472-4607.
THERE IS A SIGNIFICANT RISK OF LOSS IN TRADING FUTURES AND OPTIONS.
FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS.
PLEASE READ OUR FULL RISK DISCLOSURE AT WWW.GRAINHEDGE.COM
Strong weekly soybean export sales indicates demand responding to early June selloff.
Soybean export sales were reported at 317,200 – well above trade expectations for around 150,000 tonnes sold. This morning’s report included the large reportable sale of 140,000 tonnes to unknown destinations from last week. This was a very strong week for U.S. soybean exports, considering the fact that excluding the large reportable sale it would have been the largest week for U.S. soybean sales since March. Keep an eye on the July and August soybean contracts as the market opens this morning.
Corn export sales were reported at 321,000 tonnes, also above trade expectations for this morning’s report. Our models now indicate that U.S. export sales of old crop corn are running 145 million bushels ahead of pace to meet USDA expectations. Wheat export sales were very strong, but in line with trade expectations. Gulf basis for SRW wheat has moved 20 cents higher in the last week as export demand and quality issues at harvest have forced merchandisers to improve their spot wheat bids.
The cash basis at the gulf has increased in the recent days as moisture during flowering has elevated the levels of Vomitoxin. The quality of SRW wheat does not meet quality standards leaving exporters willing to pay a premium for high quality wheat. The Kansas City wheat market was also supported by confirmation that Brazil has postponed the usual 10% import tariff for up to 1 million tonnes of wheat through August 15th, a terrify that usually applies to U.S. and Canadian wheat. Brazil was forced to take action after concern about supplies from Argentina which is Brazil’s primary source of wheat.
For corn and soybeans traders are mostly focusing on the USDA acreage report and quarterly stocks numbers. Soybeans quarterly stocks will be closely watched as analysts expect the smallest stocks since 1977. This morning soybeans are trading higher, moving up through its 100 day moving average, but still within the consolidation range that we have traded in since the 13th.
A female reader shares her experiences as a woman in agriculture.
Have you ever walked into a room full of people and been the only one that is “different?” — I have, and I do frequently.
Welcome to being a woman in commerical agriculture, a still male dominated field. In many of my classes at Michigan State University, they told us this, but it was hard to believe when most of my classes had a higher percentage of women than men. This disparity tells me that the agriculture world is changing — slowly but surely.
Working at an elevator is different from where most of my colleagues ended up. At the elevator where I work, there are a total of three females out of 50 employees. I am the only one who is not in administration out of those three women.
We have never had a woman stay in a position outside administration for more than six months. There are many reasons why, but in my mind it all comes down to the fact that it is a challenge. I also have had days where I want to throw in the towel, but I am determined to make a change in the ag world. My goal is to make it known who I am and what I represent. The entire world is changing, and women are taking a stand and moving up in all aspects of society. Agriculture is not any different.
I work with farmers on a daily basis, and I understand how their parents and grandparents grew up. They were told women were put on earth to take care of men and their families. Men were the breadwinners and women stayed home. I understand this mentality and try to handle each situation with someone of that generation with it mind. When I get out of my truck on a farm to visit a producer, I am being judged. I know this. I have been told multiple times “Ah, um, you’re not, uh, what I expected.” I smile kindly and ask “Well, what were you expecting — a gorilla?” I make a joke to make it less awkward. I’ll have to prove myself a million times to win over a producer’s trust. Some I honestly don’t think they mean to, but they just have a hard time taking advice or direction from, not only a woman — but a young woman. I also find this to be very true with the employees that work for me in my division.
I am in charge of one of our divisions at the elevator. I have all men working under me, and all are older than I am. It has proved to be a challenge for them to take me seriously and do as I ask. It has gotten better, but we have a long way to go.
Women also work differently than men for physical reasons. For example, one day I went out to help a co-worker soil test in a field. We had been working for hours, and I suddenly could not hold the urge to have to go to the bathroom! I said to myself, "oh boy, now what? Where can I go to the bathroom in the middle of this open field?" I knew the co-worker I was with well, so I asked him, “where am I to go to the bathroom?” He laughed and replied with, “I never thought about that for you. I just stand behind the jeep and go.” I then said “well isn’t that just great for you!” We both laughed before I took the jeep to a fence line.
And we're different in the way we think and express emotions. It is no secret that men and women view things in differently, but neither way is necessarily wrong. We all need to remember to view everyone’s opinion, even if it isn’t the way you would do something. Though women express their emotions more easily than men, this does not make them the weaker of the sexes, it is just the way we express ourselves. Men need to remember that sometimes being blunt is not the way to get the job done. Just a word to the wise: watch your words and be aware of how you say things. Women tend to pick up on tones of voices and word-choice very easily.
Lastly, I would like to acknowledge how much harder women work to move up in not only their company, but through society. I want everyone to understand that if we get a promotion, we deserve that promotion. We got it through going above and beyond the call of duty. We put more sweat, tears and hours into it than you may realize. The next time you or someone around you judges a woman on “why” she got a promotion; just stop yourself. Women are going to continue to break the “glass ceiling.” So, to the entire world, I just want to say “accept it.” Women are here to stay, and we will continue to be a force to be reckoned with. We all want that top dog position, so let the best man or woman win.
Feed & Grain continues to update its digital offerings to improve user experience
“Views on the News” is taking a break from its regular format this week. Instead of a list describing the top five news postings from the past week, it will focus on the changes to the most popular way our readers consume the news —Feed & Grain’s Industry Watch eNews.
Over the last few weeks, you may have noticed changes throughout Feed & Grain’s digital offerings. We started by launching a new website design, followed by a new app for iPad and android tablets, then an interactive digital issue and now a new newsletter. The fresh features have been designed with readers in mind. They are easier to navigate, more engaging to read, and ultimately, further immerse you in the world of feed and grain. The new newsletter is user friendly, but let me give a behind-thescenes look at why we made some of the changes we did and how they can benefit you.
The first change you may notice is the new headline of the newsletter. While the lead article headline is still the email subject line, the newsletter now features a headline at the top of the email that summarizes what appears in this issue of Industry Watch eNews. It will be an easy way to gauge if you want to read on … or move on to the other pressing issues of your day and save Industry Watch for when you have free time.
When we explained our industry to an outside consultant, showing him some of the equipment and facilities, he exclaimed “you guys are a big industry; you deserve big photos.” We’ve taken that to heart, and you may have noticed that the new newsletter features big, beautiful images. Larger pictures have been sprinkled throughout the redesign to show you news, products, logos and stunning images of agriculture in the size and detail that our industry deserves.
The section we call Breaking News will now feature the top two news stories from the current day. These stories will often send ripples throughout the feed and grain industries, or agriculture as a whole. These are the stories with the widest range of interest, and if you only have time to read a few, we highly recommend these.
The last part of the newsletter will house Web Exclusives, more Industry News and Supplier Briefs. Excellent information for those who want to know what companies, associations, other facilities and academia are up to. It will also house all of Feed & Grain’s made-for -web content.
We hope you have fun exploring everything new Feed & Grain has to offer. We’ve always prided ourselves on being the best at what we do, and these new developments are a continuation of that ever increasing goal. Let us know what you think of the new e-newsletter or any of the other new features that have been rolled out over the past few weeks. Don’t forget to email me if you have any story ideas, comments on what news you want to hear about, or just to say, "Hey." Follow us on Twitter or like us on Facebook for all the latest news in the industry. See you next week.