Monthly Archives:: July 2016

Weekly Grain Update 7.29.16

The week of the “Peek-a-boo ridge”.  Depending on the day, forecasts waivered back and forth between notable heat and more moderate temps in the extended forecasts.  This provided ample fodder for the headline traders in the grain space.  While it is less likely that corn will suffer due to extreme temps at this stage of the game, soybeans are just entering their more critical production time frame.  This gave the beans  more reason to price weather risk back into prices while corn was stuck in a fairly narrow range for the week.

World demand for grain from the US appears to be steady rather than showing a sharp drop in favor of our South American counterparts.  The slow pace of harvest in key South American regions is helping our cause.  Furthermore, the US dollar index has been trading lower recently making US grain more competitive in the world.

In light of the recent market drop, cash grain sales have slowed dramatically.  From a local basis perspective, this has been supportive to values.  The prevailing opinion in mid-June was there was ample grain in the country that has yet to move to market.  The price drop may have slowed the movement down but at some point the grain will need to move meaning basis strength is likely to be short-lived.  On the futures side, mother nature is driving the bus.  If weather is perceived to be damaging to overall crop production, particularly in beans, we are likely to see a boost.  Should this is the case, corn could be a reluctant follower to the upside.

Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS bases its recommendations solely on the judgment of CHS personnel.

Weekly Grain Update 7.22.16

The dome of doom, the blocking high pressure ridge, that was forecasted to harm crops this week turned out to be very short-lived and punctuated with rain events.  Most of the country is enjoying near ideal crop conditions as is reflected by the weekly crop ratings at near record high levels.  Given the great conditions, there is little incentive for the market to price in weather risk premiums.  As a result funds liquidated positions throughout the week as confidence grew in cooler weather ahead.  Remember, what goes up must come down.  The funds fueled this rally starting in late February with astonishing speed and volume, meaning it is just as likely the decline will be just as dramatic.

From a fundamental perspective, end-user demand for grain is more attractive at these lower prices.  Now it becomes a tug-o-war between the end-user, who find these prices attractive, and the producer who cringes at these loss-inducing low prices.  As the calendar ticks by it seems reasonable that logistics and space, more so than price, will be the ultimate decision maker when it comes to selling grain.

Where we go from here is as clear as mud.  Short term weather forecasts will continue to induce volatility.  Long term we have monthly USDA reports which are typically uneventful this late in the season, barring any large projected yield increase due to stellar crop conditions.  Our next directional input is likely not going to come until combines start to roll and yield reports start to trickle in.  Our fate lies soundly in yield and acreage, both figures that are unlikely to make see major adjustments until October or even January.

Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS bases its recommendations solely on the judgment of CHS personnel.

Weather whip-saw is the best description of grain markets this week.  Each new forecast model is quickly translated to perceived potential yield loss in both corn and soybeans.  Within a matter of minutes futures respond.  The most dramatic example took place on Thursday when soybeans were trading higher at 11:00 am and by 11:30 there were down 30 to 40 cents.  This trend is likely to continue for the foreseeable future, until a crop is finally considered “made.”

Also this week the USDA gave us a look at the updated Supply & Demand, incorporating the June 30 acreage estimates.  Pre-report estimates showed corn carryout increasing 100 million bushels for 2015/16 and nearly 200 million for 2016/17.  However, the actual numbers showed a slight decrease for this year and a mild 70 million increase for next year.  As for soybeans, USDA figures came very close to analysts’ estimates.  In the end, both corn and soybeans shrugged off the report and quickly refocused attention on the weather.  Given the consistently strong export sales and shipments, it is plausible to think we will see soy carryout drop in coming reports, which should lead to a recovery in prices.  As for corn, demand has been stagnant, potentially increasing carryout.  However, there is stuff much skepticism of the current acreage figures leading some to believe carryout could yet slip lower.

Going forward, the day to day trade direction will continue to push fundamentals to the sidelines in favor of hourly weather forecasts and their implied production impacts.

Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity while we all start to focus on better weather and spring planting season.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS bases its recommendations solely on the judgment of CHS personnel.

Weekly Grain Update 7.1.16

At the risk of sounding like a broken record, as we flip the calendar to July, it is clear the corn market is trading purely based on weather.  Starting a week ago the weather forecasts turned more favorable, showing more rain for dry parts of the corn belt, initiating the sell off.  On Thursday the USDA released the Planted Acreage and Quarterly Stocks reports.  Both reports provided the unexpected, an outcome we should always expect from a USDA report but never do.  Corn acreage was reported at 94.1 million, 7% higher versus a year ago and higher than the pre-report guesses.  Stocks as of June 1 came in at 4.72 billion bushels, also higher than the high guess.  These figures weighed heavily on futures for the balance of the week.  Further pressuring the corn market is forecast for heavy rains over much of Iowa and Illinois, areas in need of moisture, through the long weekend.  As is generally the case, the July 4th holiday is again a pivotal time for corn.

Soybeans had a choppy week prior to the USDA data dump.  Thursday’s report showed an increase in soy acres to 83.7 million, about as expected.  Stocks were reported at 870 million, just above the average guess.  Logic would say beans should have traded lower, but instead, the soy complex took a jump higher, gaining $0.30+ on the day.

Beyond the printed numbers, we still have to produce the crop.  Any production hiccups, or overstated acreage, will dramatically affect the overall S&D balance sheet going forward, leading to either a recovery or more dramatic sell-off.  However, for the time being we will continue to trade the numbers as printed on Thursday.

Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity while we all start to focus on better weather and spring planting season.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

Read Full Market Update

CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS Rochester and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS Rochester bases its recommendations solely on the judgment of CHS Rochester personnel.

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