Weekly Grain Update 9.18.15

This was a week of transition: Transition from trading government numbers to trading harvest activity and yield.  Early on there ideas that yields would be reduced more in the October round of reports.  As the week progressed, more and more yield results were reported from key states of Illinois and Iowa with varying results.  Keep in mind these yield reports are from early harvest activity and not necessarily indicative of the crop as a whole.  The market has agreed with that sentiment, giving up the gains from last week, realizing there is still a lot of  harvest left.  Soybean yields thus far have been  at or above average, leading traders to believe the USDA number is fairly accurate, perhaps even low.

Now that harvest is kicking in and futures have taken a tumble, market focus is shifting to two very intertwined concerns: basis and ownership.  Typically basis is falls dramatically once harvest really gets rolling.  However this year could be different.  Many elevators still have substantial inventories of old crop grain on hand as storage obligations.  And with cash prices well below cost of production producer selling is expected to be minimal, making space and ownership ongoing concerns.  Enter basis.  In this situation basis could be forced to do the heavy lifting to entice selling, thereby transferring ownership to keep the supply pipeline charged.  Proceed with caution though, as any type of rally is likely to be short lived.  One likely scenario is that elevators will allow only a predetermined amount of grain to go on open storage before forcing grain to be sold, or put on Delayed Pricing, relieving the ownership struggle.  Once the ownership struggle is relieved, basis is very likely to fall in its typical fall fashion.

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

Weekly Grain Update 9.11.15

Market reaction to today’s USDA report was riddled with volatility but ultimately sent corn higher on the day, pulling soybeans along for the ride.  As printed the report was nothing bullish.  Corn was slightly friendly while soybeans were slightly negative.  Initially November soybeans traded sharply lower but buying in the corn market pulled soybeans back to unchanged.  As always, it is the number as printed that gets the trade reaction, not the actual number.  Headline traders rule the trade on report day.  Sunday night’s open and Monday will be more indicative of future trade direction as the numbers are digested more fully.

National average corn yield was lowered 1.3 bushels per acre to 167.5.  The corresponding reduction in total production dropped expected carryout for next year to 1.592 billion bushel, a net decrease of 121 million from last month’s estimate.

On the soybean balance sheet yield was increased 0.2 to 47.1 bushels per acre.  Given the near perfect growing conditions seen over the past three to four weeks, this small adjustment was taken mostly in stride.  Locally, some concern has surfaced regarding Sudden Death Syndrome and White Mold in soybeans and their resultant yield destruction.  Thus far though, the greater marketplace has not taken notice.

On the cash front, harvest is right around the corner which means the end user is playing a waiting game, buying only what is need to bridge the gap to cheaper, more ample, new crop supplies.  Watch for basis to continue to soften in the old crop, particularly if the board does continue to march higher.

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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.

Weekly Grain Update 8.28.15

Macro markets drove the bus this week.  The financial meltdown that started late last week saw the most dramatic drop on Monday, pulling the commodity sector along for the ride.  In some instances, commodities will benefit from investors pulling money from the financial markets due to a sense of relative safety.  No such luck this week.  Why?  It all goes back to China and the economic power.  Economic trouble in China led to fear of reduced grain imports from the U.S. especially in the soybean arena.  As a result soybeans took the brunt of the bearish fundamental blow early in the week. However, once the financial markets began to stabilize, so did the grains and soy complex.  For the week, December corn was down just over two cents while November beans managed to lose just four cents.

Through all the board volatility basis remained peppy during the week.  Cash movement has remained very slow over the past 30 days which has kept basis supported for the old crop time frame.  Soybeans have enjoyed the most strength with substantial premiums paid to those with trucks and beans ready to roll.  New crop beans have shown some signs of strength as well, despite what many predict to be a near record crop just weeks away.

As we look ahead to the new month, the USDA will release the latest S&D table on September 11.  We should start to see private estimates roll in next week as well as some early harvest results from the Delta… just enough to fuel the yield debate fire for a few more days.

 

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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.

Weekly Grain Update 8.21.15

Markets were mostly influenced by social media this week as the Pro Farmer made their annual trek through the Corn Belt to check crops.  Starting in the east, yields were generally disappointing, but not necessarily unexpected given the early season struggles.  Corn had a more negative bias than the soybeans which was generally reflected in board action for the week.  As the Tour proceeded from West to East, corn was less disappointing, but still somewhat below USDA estimates.  While soybean yields are harder to predict this time of year, pod counts are taken as an indication of potential, with an average estimate released at the end of the week.

After the week of headlines, generally supportive to corn and bearish to soybeans, final yield estimates were released after the close Friday.  At this point Pro Farmer is estimating national corn yield at 164.3 bpa, 4.5 bpa below the most recent USDA figure.  National soybean yield was estimated at 46.5 bpa by Pro Farmer compared to 46.9 by the USDA.

When it was all said and done, corn closed marginally higher on the week but soybeans couldn’t brush off the negative headlines, closing down $0.26 on the week.  Now that we have the Tour out of the way, focus will once again shift to USDA yields and balance sheet gymnastics.  Believe it or not, harvest is really just a few weeks away and had progress moves north, we will get a better handle on reality.  Until then, look for sideways trade with slightly higher bias in corn due to lower yield estimates.  Soybeans look have much more downside risk than upside potential moving forward.

 

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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.

Weekly Grain Update 8.14.15

You may have noticed fireworks in the commodities markets this week.  No, it wasn’t delayed Independence Day celebrations.  It was just another USDA report.  What was projected to be benign Supply & Demand and Crop Production reports turned out to be shockers, to say the least.  Much of the market news this summer has been dominated by the wet start to Eastern Corn Belt corn and soybeans and how tough conditions looked as a result.  The Feds didn’t buy into the negativity.  Estimated national corn yield was raised 2.0 bushels per acre to 168.8.  This was 4.3 bpa higher than the average trade guess heading into the 11:00 report.  The estimated national bean yield was increased a relatively mild 0.9 bpa to 46.9 against average estimates of 44.7.  Some will argue that conditions improved throughout July making the increased yield projections warranted.  Maybe so for corn, but traditional wisdom says beans are made in August, not July.  Weather will be a big driver for beans going forward.

At the end of the week, corn lost just $0.08, after trading in a wild $0.44 1/2 range.  Soybeans lost $0.47 inside a volatile $0.95 range.  For the time being, we will likely trade the numbers as printed, but debate will rage on until we see solid harvest, which is still over a month away.

In the face of all the futures volatility, basis has remained mostly steady.  The big carries from old to new crop corn are still present, but shrinking slowly.  Soybeans are in high demand and tight supply which has processors paying pushes to keep the pipeline charged.

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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.

Weekly Grain Update 7.31.15

It was yet another tough week for commodity prices this week.  Crop conditions seems to have stabilized in most areas and weather is forecast to be fairly benign in the coming weeks.  Very little news on the fundamental front to keep rallies alive.  Now that prices have taken a big step back, traders are hesitant to take any significant positions, especially with the USDA report due next week.  On Wednesday, the USDA is due to release the latest crop production estimates and Supply & Demand reports..  This should give us an updated look at the much-debated acreage mix.  The big question remains, what will our national yield be this year, and will the USDA start to show their hand in the August report?

Soybeans are still trying to discern what the export program will look like this fall as competing South American supplies won’t run dry as early as past seasons.  There was a brief glimmer of hope for soybeans this week with a big export sale announced in the weekly reports, however it was later revealed that the 300 tmt of old bean sales to China were actually for new crop.

Producer selling ground to a halt this week as the board continued to collapse.  As a result, end users have started to show signs of basis strength to keep supplies moving up to harvest.  Old crop basis has shown the most strength of late, which for corn means the carry to new crop is narrowing.  Holding old crop to new is slowly losing its appeal.

 

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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.

Weekly Grain Update 7.24.15

What happens when national weather patterns turn more favorable, and technical signals turn less favorable? Sharply lower markets. In the last two weeks, corn has lost more than $0.40 in both the old and new crop slots. Soybeans dropped $0.40 + in old crop, while new crop November dropped nearly $0.60! Some parts of the Eastern corn belt were in need of dryer, warmer weather, while select pockets of the Western belt needed a shot of rain. And this week provided just what the doctor needed in each area. Crop conditions on Monday are expected to improve slightly after the beneficial rains and heat. The jury is still out on total acreage, and the yield debate rages on, at least in corn. General consensus is the rally in corn was too far, and too fast, with this week likely being a correction. Some risk premium will still need to remain priced into futures as most expect the USDA to come off the 166.8 bpa figure in the current balance sheet. It seems the trade is pricing corn with a 163 to 165 yield in mind. Anything lower, and we could see another rally, but the trade needs confirmation. Look for sideways to lower trade until the next round of reports on August 12th.
Grain sales moved soundly to the famine category after the feast of sales over the first half of the month. While many will hope for improving basis in the face of falling futures, the abundant supply of corn in the world is holding basis back. Small improvements were seen in basis, however, changes were measured in pennies, not dimes like the futures. Try not to get hung up waiting for a nickel gain in basis only to watch the board drop a quarter.

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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.

Weekly Grain Update 7.17.15

After three straight weeks of gains, grain futures took a step back this week. Money flow has been focused on the potential for a reduced crop in the US due to prevent planting and persistent rain. Now that the weather seems to be cooperating in the short term, more attention is shifting to the world stocks situation. Corn and soybeans are more than ample throughout the world, which should put a lid on any more significant rallies.
The futures gains seen over the past three weeks prompted the producer to move grain out of storage and get a solid start on new crop sales. Sales en masse of old crop corn in particular, pushed basis levels wider for the week. New crop corn basis is seen as mostly steady as this rally finally allowed the processor to establish an ownership base, though still lagging behind years past.
Bean basis is just the opposite. Old crop basis is steady to slightly firmer, while new crop basis is a little weaker. A week ago, the USDA report showed stocks at 255 million bushels. NOPA crush released this week was the highest June crush on record of 142.473 million bushels. While this number was in line with trade expectations, it still raises the question of accuracy of stocks figures and where we will end the year.
This week’s setback in prices is likely not a long term trend changer. Look for futures prices to drift sideways in the near term, unless we see a new weather threat, the fundamentals have not changed. World stocks will eventually outweigh US production concerns.

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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.

Weekly Grain Update 7.10.15

Another week, another USDA report to stir the markets. Today, the market was faced with the monthly crop production and supply & demand reports. Heading into the 11:00 am release, analysts looked for the yields to remain unchanged versus the June production report. And that is exactly what was printed. Acreage figures used in the S&D tables incorporated the June 30 figures.
As for the supply and demand, the numbers were more interesting. Corn usage for this year was increased 99 million bushels, through an increase in feed, ethanol, industrial and exports. A slight uptick in estimated imports and the end result was a lower 2014/15 carryout of 1.779 billion bushels. The 2015/16 carryout was lowered as well, by 172 million bushels, to 1.599 billion.
Soybean carryout was lowered a surprising 75 million bushels for this year, and 50 million for next year. Much of the change in 14/15 balance sheet came from the “residual” category, which is often described as a fudge factor to accommodate future changes in last years production.
For the week, corn ended higher while beans took a small step back. Weather still seems to be the key market driver at this point, along with the guessing game over yield and acres. These higher prices are leading to more producer sales, both here in the US and in South America, which is having a negative impact on basis. US and world buyers are waiting as long as possible, knowing full well there are ample stocks to move to market before the next harvest.

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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.

Weekly Grain Update 7.2.15

Another strong performance from grain markets this week. USDA on Tuesday released June 1 stocks in all positions report, as well as the planted acreage report. Acreage figures from the Feds were about in line with pre-report estimates, with 88.9 million acres of corn planted and 85.1 million beans. The corn figure was down just 300 acres while bean acreage was up 500 from the March Intentions report. This was the more mundane of the day’s reporting.
US Stocks in all positions showed less grain that was anticipated. Corn stocks totaled 4.447 billion bushels versus the estimate of 4.555 billion. Soybean stocks came in at 625 million versus per report guesses of 670 million. The lower stocks numbers combined with wet weather across the Southern and Eastern Corn Belt provided enough impetus for a major rally. Tuesday alone corn futures gained nearly 30 cents in old and new crop positions. Soybeans gained more than 50. With the huge rally came massive sales from the producer, which had a very pronounced, negative impact on basis with some locations dropping more than ten cents in one day. However, future gains still outweighed the basis losses.
Now we are faced with a three day weekend, which is often a recipe for volatility on Monday. Weather forecasts will be watched with bated breath on Sunday, as many areas to the east are beyond the “rain makes grain” stage and looking for hot and dry.

 

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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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