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Wednesday, October 31, 2012, 8:30 am Submitted by: Dustin Weiner
Wall Street is back in business today and will resume normal trading hours. The financial markets are called mostly higher, Home Depot is already trading sharply higher as storm cleanup begins across the eastern seaboard.
The $US is slipping back this morning which is aiding small rallies in other commodities such as crude oil & gold (this is friendly to our grains). We should also see some sort of an uptick in volume at the CBOT as traders get back online in the East. With the recent trend being a touch friendly to corn/soybeans, higher volume should be a good thing today.
The USDA is back open as well, we should finally see our crop progress reports (normally released Monday afternoon) later today. The USDA did report the sale of 25k MT of U.S. soybean oil this morning (to China) which is supporting the soy complex. Also, while the gov’t offices were shut down, trade rumors were running wild about China in buying additional cargoes of U.S. soybeans – any confirmation of this from the USDA could push us higher. I wouldn’t expect that until the next weekly export sales report, normally released Thursday mornings.
There are a few stories in world commodities that are friendly today as well – Ukraine’s wheat export ban will officially start on Nov 15th. Also, cash corn prices (offers) in places like Brazil and Argentina have continued to firm up which is slowly making US corn regain competiveness in world trade.
Tuesday, October 30, 2012, 7:59 am Submitted by: Dustin Weiner
Our markets are bouncing a bit higher this morning (Turnaround Tuesday perhaps?) - corn is a touch higher while soybeans are slowly rising from the ashes of yesterday’s sell-off. There are rumors floating around that China stepped in and bought 4-6 cargoes of US soybeans yesterday after the big break lower which is adding support. Confirmation of those trades could put us in full recovery mode.
Due to the now dubbed “Superstorm Sandy” hitting the east coast Wall Street is closed again today, this is the first time since 1888 (everyone remembers the blizzard of 1888, right?) that the New York Stock Exchange has been closed for two working days in a row. So, outside market influences will once again be mostly absent from today’s trade. The USDA’s crop conditions report that normally comes out Monday afternoon’s is also still under delay – not sure when we will see that but it could slip to tomorrow.
FC Market Commentary for October 29, 2012 from Dustin Weiner
Today looks to be a low volume, quiet, choppy day as attention is diverted to Hurricane Sandy. Wall Street is closed (first time since Sep 11th, 2001) along with basically the whole eastern seaboard (8000 flights cancelled) and USDA reports are being delayed at least a day as federal offices in DC are shutting down. The Chicago Board of Trade will struggle to find direction without influence from either the USDA or the financial markets.
Overnight the soybean market slipped lower on both the US and China after reading updated SA weather forecasts. These maps show much needed rain moving into central and northern Brazil which will allow farmers to plant.
Grain futures trading at the CBOT has been painfully slow for quite a while now and it feels like the trade is waiting for the Nov USDA S&D report for direction. I don’t feel like this report will hold some mysterious surprise to shock the market up or down, but when fundamental news is scarce we will take whatever we can get. Some feel like they could show a slight increase in soybean production while decreasing corn production (basically continuing their trend in both commodities). The private companies will all start releasing their projections (guesses) on what that report will say this week and next. The USDA will be releasing this S&D and Production report on Friday November 9th.
Corn is steady to 3c higher
Soybeans are 14 to 27 cents lower
Both of these are on LOW volume and could rally or drop in a hurry today.
Friday, October 26, 2012: AM Comments by Dustin Weiner
Our markets have been chopping around both sides of yesterday’s close this morning. The bearish side of the equation is coming from the outside markets. The $US is bouncing higher while crude oil and the financial markets slip.
The bullish side of the equation is still coming from the strength in the cash markets. Basis is strong across the Midwest in both corn and soybeans. The spread between US corn and SA corn is tightening up. If that continues to ratchet in, US corn could once again work into the export market – the risk of this happening could help put a bottom in the corn market as supplies are just too tight to allow additional corn to leave the country.
This morning our markets are starting off quiet, under some slight downside pressure. At 7:30 this morning the USDA released their weekly export sales report and it can be viewed as bearish corn, slightly bearish beans and bullish to wheat. Corn exports were abysmal (again) while soybean exports were strong, but a touch below estimates.
It is important to note that this weekly report is somewhat old news by definition. This report tells us what the US traders sold to other countries last week. For many major players in the market, especially basis traders, these general sales (or lack thereof) are usually known and this report is a non-factor.
It may be more practical to use these official export numbers we get every week as a way to simply tally annual export sales versus projections. For example, right now based on these reports we know that the U.S. is exporting beans at a faster pace than what the USDA is projecting for the crop year. It is also known that we are exporting corn at a much pace than what the USDA shows. Neither of those statements are big shockers but changes to those trends will be watched closely, thanks to the weekly export sales report.
So. Today could/should be a slow day in Chicago, farmer movement is zilch, basis is strong in both corn and beans and it is raining in the Midwest. If the markets bounce back today (like they have been lately) it will be because of the strength in the cash market, aided by lack of farmer selling.
We are kicking the day off lower, the macro markets are all bearish this morning. The negative news is coming from Spain as Spanish bonds continue to tumble and their GDP fell .4%. Because of this the $US is sharply higher while crude oil is down over $1.50, gold is down over $15, and the Dow futures are 140 points lower. Not pretty.
If we are to mount a recovery today it could be due to strength in the cash markets. Farmer selling is nearly non-existent in both corn and soybeans and basis is strong and getting stronger. These lower prices not only discourage farmer selling but they also could encourage additional demand. That is all well and good for nearby but it could cause a violent swing in values later on in the year if it doesn’t change
So for today expect everything to remain under pressure – all eyes are on EU economic problems. Because of that, today could be classified as a ‘risk-off’ day for many traders.
Our markets are higher this morning, a couple cents higher in corn and double digits higher in soybeans. The outside markets are a slightly friendly input: the dollar is a touch weaker while the DOW and crude oil are a touch stronger.
The trade is still discussing Ukraine and the forced slowdown of their wheat exports – this has wheat double digits higher this morning. In South American weather news, Southern Brazil and Argentina have experienced some heavy rainfall (4-5”) which is slowing down the planting of soybeans. While still early, this is starting to get the market’s attention as the forecast for the week still looks wet.
Other than that, expect a quiet day as fundamentallythere is very little to discuss.
Our markets have been trading higher all morning on thin volume, led by soybeans. Farmer selling in both commodities (especially soybeans) is slow. This is keeping both basis & spreads firm, which in turn helps support flat price.
The USDA released their export sales data this morning – somewhat disappointing in both corn and beans, coming in less than expected. Our pace of exports is still faster than what the USDA has been projecting but you can’t put a lot of stock into that just yet. For example, our soybean pace is gangbuster right now but when SA starts harvesting their soybeans in Feb/March you can expect exports to fall back to reality for the remainder of the crop year.
Other than that – it is a quiet news day today. Informa (private company) will be out at 10:30 this morning with their corn/soybean production projections for next year already. These numbers will likely be big for both corn and soybeans, but this shouldn’t affect the market much – we have a lot of variables to factor in between now and spring planting.
Quiet overnight session with both corn and soybeans trading in a tight range. The only thing being talked about this morning is the outside markets which are a touch positive. Crude is currently up 50c, the dollar down 389 points, and equity markets up. The equity markets firmer note is provided by Moody’s decision to leave Spain debt rating where it is after some debate to downgrade them to junk status. The US became a net importer of Ethanol for the first time since Oct. 2009 as we imported 98 m/gal in August while exporting 50 m/gal.
Brazil planting seems to be on pace with Mato Grosso estimated to be 18-20% planted, slightly down from last year’s 23-25%. Parana is 25% planted vs. 30% last year. A small delay in planting is expected in the next 10 days while rains move across much of Brazil.
-On a side note the CME has decided to purchase the Kansas City Board of Trade(KCBT) for $126 million.
Today feels like your standard “Turnaround Tuesday” bounce across the grain complex. Our markets are rallying this morning aided by friendly outside markets (weak dollar, DOW futures higher). The funds have been selling off their positions for three days now and this higher market could be sign that the liquidation is coming to an end. To stage a small recovery we may not need the funds to come back and buy our grain futures, we probably just need them to stop selling them: fundamentals (lack of farmer selling, strong demand) could take care of the rest.
The crop progress report was out yesterday afternoon, nothing major to see there. Corn is 79% harvested while beans are 71% harvested (U.S.). As the harvest season slowly moves out of the way it won’t be long before all eyes turn to weather, namely South America (big, big acres means big, big potential). Weather in the U.S. also needs some attention. Noted ISU Cyclone meteorologist Elwynn Taylor said that we need approximately 16 inches of rain just to replenish soil moisture levels by Spring. After we get that 16” any additional rains received will then start to benefit the rivers and streams. If we do stay dry the market will eventually take note of that, for now it is just one more thing for us to watch.
On October 11, 2012, FC hosted the ISU Agronomy Club. The students mingled with FC employees over supper, listened to a presentation about FC and the career opportunities, toured the corporate office and ended the evening with their club meeting. Shown here is the Agronomy Club with a check for FC’s sponsorship of the club. Together we can!
It was a down and dirty overnight session as most grains and commodities pushed lower on very little news. Both the corn and soybean markets benefited greatly over the summer from speculative longs entering the market and driving prices higher. Now you can routinely check the markets on a random morning and find them double digits lower on no news as these same spec longs decide to take profits. Because of this, the charts do not look good on soybeans and any bounces in the market are quickly being sold.
In both corn and soybeans there are buyers under the market: the commercials/end users because these prices are attractive and profitable. China was in over the weekend for example, rumored to be purchasing additional cargoes of US soybeans.
You may ask yourself, if commercials are out there bottom-picking and locking in margins, why aren’t the prices going higher? I guess the simple answer to that would be because they are buying/crushing the physical commodity, not necessarily the futures – evidence of this should be found in subsequent weekly export sales reports and quarterly stocks reports. It is important to note that even if we get proof from the USDA that corn/soybeans are slowly disappearing -- this doesn’t guarantee futures prices will blindly run higher. Today even when the flat price is working lower you can see the tightness of grains in spreads (inversed) and basis (historically firm). If inverted markets and basis continue to do the job in getting grain to market, the futures don’t necessarily have to follow.
On Tuesday October 9th, FC hosted a group of agricultural products buyers from Mexico at the Farnhamville location. The group was sponsored by the Iowa Economic Development Authority, in cooperation with the Iowa Corn Promotion Board and the Iowa Soybean Association. The group was introduced to FC and given a presentation about our history as well as the current corn and soybean supply/demand situation. They then toured the facility and enjoyed a home-cooked Iowa lunch. They expressed interest in doing more business directly with the local source of grain, instead of brokers or trading companies. This may lead to future business endeavors. FC - Together We Can
The Oct 11 USDA Report and the numbers we are all watching are the projected carry-outs for next summer.
CORN – 619mb
SOYBEANS – 130mb
The average trade guesses for those carryouts was 645mb for corn and a 134mb for soybeans so this report can be considered a touch friendly for both markets. In general terms what this data confirms is that our markets need to continue to ration demand, especially corn. 619 million bushels is too tight.
In soybeans the yield was bumped up by 2.5 bpa (now at 37.8bpa) compared to last month (August rains!). This 226mb of extra production was not surprisingly offset by an increase in demand keeping carryouts snug. Not wildly bullish but the general theme here is that any extra supply we find will be immediately soaked up by domestic crush and exports.
In corn they reduced our production number slightly, taking yield down 0.8 bpa to 122.0bpa. In the September stocks report remember – they reduced our carry-in to this year by 193mb. Both of these reductions in supply were offset today by a decrease in exports which kept the carryout relatively the same. This carryout of 619mb brings our stocks to use ratio down to 5.6%. All of this means that carries in the market will remain pretty much non-existent and basis/flat price should remain firm – all in an attempt to keep demand from increasing because we frankly don’t have the supply to spare.
So. General theme? While this report isn’t overly bullish it confirms what we already knew in regards to corn – supplies are tight. The story in beans is probably more about how the demand sector has will still be there to buy beans until SA harvests their crop. From here till the end of the year the weather in SA will be watched closely.
The word of the day today is “China” as the Peoples Bank of China has injected 42.14 billion $$ into their money market overnight. All of this is an attempt to spur their slowing economy – China’s stock market is up 2% after this announcement. Also, China is rumored to have bought (or has interest in buying) additional U.S. soybeans, which has the soybean market sharply higher. U.S. soybean meal basis has firmed up as well and sure enough: rumors of meal exports are floating around.
Other than that, the newswire is quiet. The USDA S&D report is out Thursday morning, the weekly harvest progress will be out this afternoon.
Our markets are weaker this morning, led by the outside markets. Crude oil is down over $1/barrel and the dollar is bouncing sharply higher. The dow is also weaker over concerns of an economic slowdown in Asia. This should make it difficult for our grains to rally today.
China was on holiday all of last week, returning today. It will be interesting to see we see any additional export sales to China this week…
Today is Columbus Day, the banks and government offices are closed but our markets are open. The weekly crop progress report is delayed till tomorrow because of this holiday.
We haven’t been able to say this for a little while, but our markets are higher this morning. Yesterday the soybean market made a big comeback, early in the session they made new lows for the move and the came all the way back and closed around a penny higher. Technically this could be viewed as a reversal and is a sign that the selling is done for now.
The outside markets are helping continue that positive momentum -- overnight the European markets bounced higher, weakening our dollar and strengthening all commodities.
This morning the USDA released their weekly export sales report. The trade was already expecting a big export number on soybeans (around 30 million bushels) and they came out with a whopping 47.6mb! This is no doubt friendly and beans are currently trading near their highs of the day. Corn exports came in in-line with expectations, which weren’t much.
The extended weather forecasts have turned wetter for mid-month. Decent (1-2”) rains could show up across the belt, helping replenish the bone-dry soils in Iowa and Illinois.
Soybeans once again are under pressure. It sounds like a broken record but so far this morning they are leading the charge lower on ideas that those August rains were more beneficial than originally thought to yield.
FCStone came out with their projections on crop sizes late yesterday. They had production numbers higher than what the USDA said in September for both corn and soybeans. Finding an additional 97mb of corn and 215mb of soybeans. The corn # could be viewed as surprising but the beans are in line with what we have been hearing for the last 10 days. Either way this is just a private estimate, one of many. The USDA will grace us with their number next Thursday and that will be what we trade on for the next 30 days.
There are a few stories hitting the news wire that could help establish a bottom in the soybean complex. Soybean oil has been getting hit hard lately (thanks to Malaysian palm oil falling apart) but this morning the USDA says that we exported 21k tons of soybean oil to China. There are also rumors that 2-3 cargoes of soybeans were sold to an unknown destination late last night (likely China there too). So. Low prices cure low prices and these low soybean are doing nothing to curb demand, they may actually be stimulating new demand. Time will tell on that.
Soybean planting in South America seems to be going along OK. There are some warmer/drier forecasts that are causing a little concern throughout parts of Brazil, including Mato Grosso. This will be watched intently as the whole market structure on soybeans this year revolcvs around the idea that nearly all the US bean exports will be shipped by Jan/Feb, after that the demand shifts almost entirely to South America. If South America fails or slips, things could get wild here in the US as they try to find additional supply.
Soybeans are under severe pressure again as traders continue to talk about better bean yields across the US and farmers are selling. In September the USDA had the US bean yield pegged at 35.3bpa, there are wild thoughts out there that this yield could be somewhere between 37 and 40 bpa! Not sure if that will happen, but with the USDA Production/S&D report out next Thursday (Oct 11th) the private analyst’s estimates will start rolling in to the marketplace. FC Stone comes out with theirs sometime today, Informa comes out Friday.
Harvest progress is still chugging along at a record pace. Usually it takes till the last week in October to have corn harvest at 54% complete and that is where we were at as of September 30th. Bean harvest is also quick – we are 41% harvested which is more than double the 5-year average. This all adds to the weakness.
Demand is still strong for beans, and it could gett stronger with this price break. Domestic crush margins are still strong, benefiting from weaker bean prices and a strong meal basis. In September the US exported a record 76.7 million bushels of soybeans! The old record was 72.8 million. Current export sales -- already on the books -- for the coming crop year is 782.2 million bushels (per the USDA). On the September S&D report the TOTAL projected exports was 1055 million bushels. That means that the US has already sold 74% of all the projected exports for the year. If any new demand shows up in the marketplace we will need the bean yield to improve just to cover it.
There isn’t a lot of news out for corn. Yields are still a big question mark and the report next week could hopefully answer a lot of those questions. It seems that if soybeans weren’t falling out of bed corn would be steady/higher. Any recovery in beans and corn should snap back quickly.
The grain markets are starting off mixed this morning with soybeans and wheat trading lower while corn is trading higher. Friday’s stocks report was bullish corn – pushing it limit higher, and that strength is continuing into today. This lower ‘carry-in’ into the 12/13 crop year just means that the October crop production (and S&D) report will be that much more important for corn. The market hopes to find additional yield/bushels in that report because without that – demand may need further rationing. One other note – because corn closed limit higher (+40c) Friday the limits today are expanded to 60c – although it doesn’t appear we will be testing that.
Soybeans were reluctant followers of corn on Friday and are giving some of their gains back today, down just over double digits. But after putting 30c on beans Friday, only giving a third of that back is probably a good sign that we may be putting a short term bottom in the soybean complex.
This afternoon we will get to see the USDA’s weekly harvest progress report – it should show corn over half completed across the US.