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Day of consolidation possible in grains
A slightly better start is likely this am, 1-3 higher wheat, corn and beans, following similar overnight gains. Crude oil and the equity markets are lower but the $ index is slightly lower also, presenting mixed signals to the grain market. It is the last day of the week and month so following yesterday's major gains in most pits, we could see a day of consolidation as the market fully digests these big gains. For now, I would give the bulls the benefit of the doubt and stick with the long side, at least in most pits, as there is little fresh bullish or bearish news. Taiwan passed on their tender for 40-60,000 tonnes of US/Brazilian beans due to high prices. China will attempt to auction 500,000 tonnes of beans Aug 5 but unless they lower their price or offer subsidies to their processors, it is unlikely they will sell any beans, as was the case the last two auctions. China has had much more success auctioning corn and they will offer 2 million tonnes again Aug 4. There were no bean or meal deliveries this am, first notice day, as expected. Oil deliveries reached 3990 with the delivery date July 30. There were no big commercial stoppers. The Indian monsoon is weakening again with hotter temps returning. This could increase stress on the crops unless the monsoon rains revive soon. Only light, scattered weekend rain is forecast for the western half of the Midwest (west of the Mississippi River) with continued cool temps. Light rain is predicted the first half of next week, favoring northern and eastern parts of the west. The eastern Midwest (east of the Mississippi River) had up to 1.5" of rain in the south, up to .4" in the north the last 24 hours. Light rain is possible tomorrow and Monday. The 6-10 day calls for below normal rain in the northwest part of the midwest, above normal rain in the southeast part. ---Vic Lespinasse
Higher to sharply higher grains start expected
A higher to sharply higher start is expected this am, led by beans. The early call is 7-10 higher wheat, 6-8 up in corn and 20-30 better beans. Crude oil and the equity markets are higher this am while the $ index is lower, a friendly combination for all the grains. Weekly export sales were mostly higher than expected: 575,000 tonnes of wheat; 485,000 tonnes old crop corn and 770,000 tonnes new crop corn; 246,000 tonnes old crop beans and 709,000 tonnes new crop beans; 168,000 tonnes old crop meal and 240,000 tonnes new crop meal; 23,000 tonnes old crop oil and 7000 tonnes new crop oil. China took 460,000 tonnes of the new crop bean sales but cancelled 8000 tonnes of the old crop sales. The USDA announced this am the sale of 120,000 tonnes of old crop beans and a huge 1.8 million tonnes of new crop beans to China, which should push bean prices even higher as Chinese bean demand seems to have no end, either for old crop or new! Japan bought 102,000 tonnes of US wheat at their weekly tender today. The Census Bureau reported 108.5 million lbs of US bean oil was used to make methyl ester (biodiesel fuel) in June, up from 82.7 million lbs in May but down from 279 million lbs in June 2008. Tomorrow is first notice day for August deliveries. Traders do not expect any deliveries in beans or meal but roughly 2000-2500 oil deliveries are likely. India's Meteorological Dep't said monsoon rains were 18% below average in the week ended July 29 and they were 19% less than average from June 1-July 29. The monsoon remains spotty with improved rains in some areas with a drying trend in others. The US Midwest had light, scattered rain the last 24 hours. Only light, scattered rain is forecast in the western half of the belt the next several days while the eastern half of the region will benefit from up to 3/4" continued rain during this time. Temps are forecast to remain on the cool side for at least the next several days. ---Vic Lespinasse
Lower grains start expected; Outside markets bearish
A mostly lower start is expected this am, steady/easier wheat, 1 down corn and 10 lower beans. Crude oil and equities are lower while the $ index is higher, a bearish combination for all the grains. China attempted to auction 500,000 tonnes of beans from their reserves today at above market prices and had the same result as last week, selling nothing. They will have to either lower prices or subsidize buyers to sell the beans, which they are expected to do eventually as they want to make room for the upcoming harvest in the fall. The spring wheat tour concluded its first day, reporting very big yields in southern North Dakota of 45.7 bushels per acre (bpa). This compares with last year's 37.6 bpa for the same area and the tour's 5 year average of 35.9 bpa. Currently, the USDA yield guess is 38.3 bpa. The tour reported the crop is behind normal in development, as expected, due to late planting because of the wet, cool spring. These big yields are due to very favorable growing conditions over the last couple of months. The same result is likely in the Midwest corn and bean fields where very favorable weather has been the rule the last two months. The USDA will make its first field survey based yield and production guess for these crops on Aug 12. The monsoon is weakening again in India with little rain forecast in the main bean growing areas the next 5 days or longer, for example. The US delta bean growing area will continue to benefit from mild temps and scattered rain. The Midwest will see up to 1" widely scattered rain in the west today and tomorrow, along with continued cool temps. More scattered rain is forecast Sat and Mon, favoring southern and eastern parts of the belt. The northwest part of the belt needs more rain. The eastern half of the midwest had up to 1" scattered over the last 24 hours. More is forecast tomorrow, up to 1", and again over the weekend. ---Vic Lespinasse
Steady to higher start in grains following overnight gains
A steady to mostly higher start is expected this am following overnight gains in some pits, especially beans. The early call is 2-3 up in wheat, steady/better corn and 10-15 higher beans. The outside markets are modestly negative for the grains this am with crude oil and equities lower while the $ is only slightly lower. The Weekly Crop Ratings yesterday afternoon were unchanged for beans, 67% good to excellent. Corn was 70% vs 71% while spring wheat was 74% vs 73% previously. Traders had expected a decline of 1-2% in the condition of these crops, which is the usual seasonal tendency at this time of year. The fact they only fell 1% in the case of corn and were steady to better in the case of beans and spring wheat is a sligthly negative background influence for the market this am. Crop development remains well behind normal: beans blooming reached 63% vs 76% average; beans setting pods were just 20% vs 36% average; corn silking was 55% vs 76% average; corn in the dough stage of development is only 7% vs 17% average; spring wheat headed is 93% vs 98% usually by this time in the season. Winter wheat harvesting is now 79% complete vs 84% average. The Commodity Futures Trading Commission (CFTC), which regulates all futures trading in the US, will hold hearings today, tomorrow and Aug 5 on position limits and exemptions to these limits. These hearings will be chiefly concerned with the energy markets, such as crude oil. Agricultural markets position limits are set by the CFTC but in some of the other markets, such as energy, positions limits are determined by the exchanges. Many blame excessive speculation for the huge run up in energy prices last year and the CFTC wants to address this so-called problem. Notice that while speculators are blamed for the huge run up in energy prices last year, no one thanks speculators for the just as big sell off in energy prices this year! It certainly is true that massive long liquidation by speculators was one of the major reasons for the big sell-off in energy prices seen this year. These hearings will not affect the grain markets directly but grain traders will still watch them. The Argentine government has invited the four major farmers unions to a meeting Friday to discuss possible farm policy changes, including the sky high 35% export tax on beans that farmers detest. No significant Argentine rain is predicted for the next 7 days or longer, once again increasing stress on their wheat crop. Generally favorable weather continues in the main Chinese grain areas although it will be warmer and drier in the north the next 7 days, according to this morning's forecast. The US delta will continue enjoying very good conditions the next several days or longer with mild temps and scattered rain. The Midwest also will benefit from good weather with scattered rain and cool temps persisting. However, more rain would be welcome in parts of the northwest as well as the northern part of the far eastern half of the belt. Traders will be keeping an eye on the $9 level in Nov beans today since this level held yesterday and prices rallied sharply after the bears failed to break below it. ---Vic Lespinasse
Easter grains start expected; Outside markets indecisive
A slightly easier start is forecast this am, down 5 in beans, 1 in corn and steady/easier wheat. Crude oil is a little higher while the $ is slightly lower but probably not enough to influence the grains strongly unless they move more decisively. China will attempt to auction 500,000 tonnes of government-owned beans from their reserve stockpile Wednesday but the government's offering price is too high so it is likely this auction will achieve the same result as last week's auction, when there were no buyers at all. Eventually, the government is expected to subsidize crushers (processors) to reduce government stockpiles and make room for the new crop beans that will be harvested in the fall. Until then, crushers will probably continue to import beans since they are cheaper. The government will also auction 2 million tonnes of corn tomorrow. The annual spring wheat tour will be held this week, focusing on North Dakota, the largest US spring wheat-producing state. The tour is expecting to find the crop in good shape but behind normal in development. For comparitive purposes, the current USDA yield guess is 38.3 bushels per acre with production guessed at 506 million bushels. The Pro Farmer Midwest corn and bean tour will take place next month. Little rain is forecast for the Argentine wheat belt the next 7-10 days. There was very helpful rain last week but the driest part of the belt, the southwest, had the least amount of rain. More rain is still badly needed there. The Indian monsoon is still spotty, good in some areas, poor in others. The US Delta continues to enjoy favorable weather with scattered rain and mild temps. The Midwest saw up to 1 1/2" of scattered weekend rain in the east but only light, scattered rain during this time in the west. The northwest part of the belt could use more rain but the cool temps reduces the need for large amounts of moisture. Scattered, light amounts of rain are forecast in the west this week while more widespread, heavier rain is predicted in the east. ---Vic Lespinasse
Mixed overnights and outside markets; Mixed grains start expected
A mixed start is expected this am following mixed prices overnight. The outside markets are mixed also this am, drifting in a narrow range on either side of unchanged and not offering any guidance to the grains. China announced they will auction 500,000 tonnes of beans and 2 million tonnes of corn next week. They tried to auction similar amounts of these grains this week with poor results and unless they lower their asking price, especially for beans, they probably won't do any better next week. There is little fresh market moving news this am so we could have a dull trading day with the usual late session evening up ahead of the weekend. The monsoon remains spotty in India, benefiting some areas but neglecting others. Bean growing areas had good rains this week, for example, while rice and sugar cane areas had very little. We will probably see more of the same next week. Cool but mostly dry weather is forecast for the Argentine wheat belt the next 7 days or more, increasing the need for additional moisture soon. The US Midwest will see light, scattered rain in the western half of the region the next several days while the eastern half of the belt gets up to 3/4" today-tomorrow and up to 1.5" early next week. Temps are forecast to remain cooler than normal. The 6-10 day calls for cool temps with below normal rain in the northwest, above normal in the southeast. More rain is desired in parts of Minnesota and the western part of the northern plains spring wheat belt. Otherwise, conditions remain extremely favorable overall.
USDA to update corn acreage
A higher start is expected in all pits, led by corn. The USDA announced yesterday that they will update corn acreage for their August 12 crop production report. This will almost certainly show lower corn acreage, the only question being by how much. This pushed corn prices higher overnight and helped pull wheat and beans higher as well. Corn and beans are both called 7-10 higher this am while wheat is expected 3-5 better. China's 500,000 bean auction had no bids according to early reports, which isn't a surprise given the above-market price the government wanted. It is widely thought the government will have to subsidize crushers (processors) to get them to buy government-owned beans instead of cheaper imported beans. The Census Bureau June crush report showed a crush of 140.2 million bushels with oil stocks 3.403 billion lbs and meal stocks 417,900 short tons. This report was a little friendly for beans, neutral for the products. Weekly export sales this am were 342,000 tonnes for wheat, 758,000 tonnes old crop and 577,000 tonne new crop corn, 320,000 tonnes old crop and 382,000 tonnes new crop beans, 158,000 tonnes old crop and 35,000 tonnes new crop meal along with 17,000 tonnes old crop and minus 6000 tonnes new crop (due to cancellations) oil. Wheat sales were toward the low end of trade ideas and oil sales were much less than expected, only 11,000 tonnes net between the old and new crop years. Corn, bean and meal sales were all better than expected. Included in the bean sales were 158,000 tonnes of old crop and 115,000 tonnes of new crop to China. The Indian Meteorological Dep't reported monsoon rains were 15% above normal for the week ended July 22, the second week in a row of above normal rain. Since the start of the monsoon season on June 1, rains are still 19% below normal. The US Midwest will remain on the cool side the rest of this week and next week as well, according to the latest 6-10 day outlook, keeping heat stress out of the picture for corn and beans. Only light, scattered rain is forecast in the western half of the belt the rest of this week into next but the east will see more rain the next few days as well as early next week. Overall, conditions remain very favorable for crop development although more rain would be welcome in the northwest part of the region as well as in the western half of the northern plains spring wheat belt. ---Vic Lespinasse
Grains start expected steady/lower
A steady/lower start is expected this am, 3-5 down in wheat, steady/easier corn and steady/mixed beans. Crude oil and equities are lower while the $ index is steady, a slightly negative background influence for the grains. Taiwan passed on their tender for up to 120,000 tonnes of US or Brazilian beans due to high prices. Corn hit a new 7 month low yesterday as very favorable weather continues to depress prices. The Commodity Futures Trading Commission will hold hearings in late July and early August to consider position limits and banning waivers of these limits. Gary Gensler, head of this government agency that oversees all commodity futures and options trading in the US, testified in front of the US Senate Permanent Subcommittee on Investigations yesterday. He said the lack of convergence in the wheat futures market is unacceptable and indicated changes will be implemented over coming months to enhance convergence, or the coming together of the cash and futures price of wheat when the futures contract expires. Many blame index funds for this lack of convergence but this hasn't been a significant problem in other grain markets, where index funds are active. The issue has only been evident in the wheat market. I think this makes the argument highly suspect that index funds are responsible for the lack of convergence in wheat. More very welcome rain fell in Argentine wheat areas the last 24 hours, improving conditions considerably with the exception of the southwest part of the belt, where only light rain fell. Conditions remain very good in the main Chinese grain areas but a period of hot and dry weather is expected to start early next week, which shouldn't be a problem unless it lasts more than a few days. The Indian monsoon continues its hit and miss pattern, greatly benefiting some areas while remaining poor in others. The US Midwest had scattered rain yesterday and more of the same is predicted the rest of the week in the east while the west turns drier. Temps remain cooler than normal, preventing any heat stress. The 6-10 day calls for continued cool temps with below normal rain in the west, above normal in the east. ---Vic Lespinasse
Weekly Crop Progress figures; weather concerns for grains
A lower start is likely this am, about 3-4 wheat, 1-3 corn and 7-10 beans. Equities and crude oil are higher this am while the $ index is slightly lower, a friendly combination for all the grains but probably not enough to influence grain prices strongly. The Weekly Crop Progress report yesterday afternoon showed some improvement in the condition of beans at 67% good to excellent vs 66% last week, and spring wheat at 73% vs 71%. Corn was unchanged at 71%. Crop development remains well behind normal due to late planting this spring with corn silking only 31% done vs 54% average, beans blooming just 44% vs 62% average and spring wheat headed 84% vs 93% normally for this time of year. Egypt is in the market for optional origin wheat this am with results due shortly before our opening. Depending on what Egypt does, this could impact opening prices in wheat. Some much needed rain fell in the very dry Argentine wheat belt over the last 24 hours but much more will be needed over coming weeks and months to ensure even a fair sized crop. There is little rain in the forecast for dry areas of the Russian spring wheat belt the next 7-10 days. Growing conditions remain mostly very favorable in the main Chinese grain areas with more of the same expected. The US Delta had scattered rain the last 24 hours with more forecast today-tomorrow and again this coming weekend, improving crop conditions. The Midwest will benefit from scattered rain the next several days, ending around Friday in the west, Saturday in the east. The 6-10 day calls for more beneficial weather with cool temps, preventing any heat stress for developing corn and beans. Rainfall will be below normal in the northwest, above in the southeast. Some weather forecasters, such as Drew Lerner at World Weather, are predicting a cooler than normal summer in the Midwest, which certainly has been the case up to this point. Lerner mentions the absence of sun spot acitivity as a possible cause for this cooler than usual pattern. In today's New York Times, section D, page 1, there is a big article about the absence of sun spot activity this year. This article also links the absence of sun spot activity to the cooler than usual temps we are having this summer. A cooler than usual summer is important because cool summers often result in above normal crop yields. In 1994, for example, we had a cool summer in the Midwest and record corn and bean yields that stood for many years to come. This would be bearish for prices, of course. On the other hand, some think a cool summer increases the chances of an early frost. Given the slow pace of development for corn and beans this season, an early frost would do more damage than usual, which would be very bullish for prices. As is often the case, it is too early to determine what the outcome will be but this could make for big market moves over coming weeks and months. ---Vic Lespinasse
Higher grains start likely with positive signs from outside markets
A higher start is likely this am, roughly 5 in wheat, 2 corn and 10 beans, following overnight gains. The $ index is lower while crude oil and the equity markets are a bit higher, all positive signs for the grains. Not much fresh market-moving news so far this am. China is expected to offer 500,000 tonnes of beans from their reserve stockpile Thursday but their offering price, $549 a tonne, is too high compared with imported beans so there will probably be few takers. Still, just the fact they are trying to sell beans and could lower their offering price could hang over our bean market this week. China will also offer corn from their reserves tomorrow but since they don't import any corn this is unlikely to have any impact on our corn market. Taiwan tenders Wednesday for up to 120,000 tonnes of US/Brazilian beans. The USDA announced this am the sale of 120 US corn to Egypt, half old crop and half new crop. They also said Mexico bought 134,000 tonnes of US corn, 27,000 tones old crop and 107,000 tonnes new crop. The new crop corn year starts Sep 1. Continued very favorable conditions are forecast in the main Chinese grain growing areas again this week. Hot and dry weather is forecast to stress corn and spring wheat in parts of Russia and the Ukraine the next several days or longer. The US Delta will continue to benefit from cool temps with up to 1" of scattered rain the first half of the week. The Midwest was mostly cool and dry over the weekend. Rain is forecast in the west today/tomorrow and in the east Tue-Wed, up to 1". More cool temps are predicted this week. More rain is predicted Fri-Sat. ---Vic Lespinasse
Little Fresh News to Account for Higher Overnight Prices
A higher start is expected this am, roughly 5-7 wheat, 2-3 corn and 10 beans. The outside markets point lower as far as the grains are concerned this am with crude oil and equities a little lower while the $ index is bit higher. There is little fresh market moving news this am to account for our higher prices overnight. I think we were up last night and will start higher this am in a technical reaction to losses in corn and beans this week. The weekend is almost here and some traders might want to take profits or even up ahead of this, which could prop up prices today. Rain is still forecast in the dry Argentine wheat belt early next week but the driest part of the belt, La Pampa and western Buenos Aires provinces, is expected to only get light, scattered rain so more will still be needed very soon to prevent even more crop stress. More beneficial monsoon rains are predicted the next few days in India, helping improve the still guarded outlook for crops there. The US Midwest will continue to enjoy very favorable weather for corn and beans, one of the main reasons these crops are lower for the week so far. Scattered rain coupled with mild temps has been the main weather feature the last few weeks across most of the midwest and more of the same is forecast the next several days. The 6-10 day calls for continued mild temps and above normal rain. The Delta will see more scattered rain the next several days and the 6-10 day predicts more of the same with cool temps, a favorable weather combination. ---Vic Lespinasse
Weather, News from China Influencing Grains
A lower start is expected in all pits this am, about 5 in wheat and corn, 15 in beans. The outside markets are sending mixed signals to the grains this am with crude oil and equities down, a negative influence, while the $ index is slightly lower, a supportive influence. Two salient items are likely to influence the market this am: great weather, which helped drive prices down in corn and beans yesterday; and news China is finally going to start selling grain from its state-owned reserves. There have been many rumors over the last few months, including yesterday, that China was going to start selling some of its reserve stockpiles of grain. The Chinese government announced they will initially offer to sell 500,000 tonnes of beans starting next Thursday and 2 million tonnes of corn next Tuesday. They will also sell 750,000 tonnes of wheat and 700,000 tonnes of rice. This news had a negative impact on our grain prices. However, it would be more accurate to say the government is going to try to sell this grain as their prices might be too high to attract many buyers. For example, they will offer beans at $549 a tonne when crushers (processors) can import beans currently around $512 a tonne for Oct/Nov. This could keep sales very slow unless import prices rise or the government cuts its price. Still, the announcement China would at least offer to sell some of its grain reserves had a bearish impact on our grain market and could do so again this am. Weekly export sales were in line for wheat at 422,000 tonnes. Corn was at the high end of trade ideas at 700,000 tonnes old crop and 468,000 tonnes new crop. Beans were better than expected at 134,000 tonnes old crop and 550,000 tonnes new crop. China bought 111,000 tonnes of the old crop sales and 525,000 tonnes of the new crop. Meal sales were 62,000 tonnes, well below trade ideas but oil sales were much higher than expected, 48,000 tonnes old crop and 42,000 tonnes new crop. India's Meteorological Dep't is forecasting good, widespread monsoon rain the next 5 days. They reported rain in the week ended July 15 was 6% above normal but from June 1 to July 15 it remains 27% below normal. Weather in the main growing areas of China remains very good overall. Rain is still forecast in the dry Argentine wheat belt early next week but the driest part of the belt, western Buenos Aires province, will see the least amount of rain. Hot and dry weather continues stressing corn in parts of southern Russia and the Ukraine while temps are forecast to turn hot next week as well as dry in the spring wheat belt of Russia. The US Delta will benefit from more scattered rain the next 2 days. Scattered rain will slow winter wheat harvesting in the southwest the next several days. The Midwest will continue to benefit from near ideal weather with scattered rain every few days and mild temps. The 6-10 day calls for more of the same. Despite very bullish outside markets yesterday, corn and bean prices sold off to a much lower close due to the ongoing very good weather pattern in the Midwest. As I said yesterday, Jul and Aug are the two critical weather months for these crops so this continued very favorable weather pattern should continue weighing on prices. ---Vic Lespinasse
Crude, Equities Higher; Better Grains Start Indicated
A higher start is expected in most pits this am following bullish signals from the outside markets with crude oil and equities higher while the $ is under considerable pressure. Early indications point to a 5-7 better start for wheat, 1-2 up in corn and 10 higher beans. Malaysian palm oil jumped 67 ringgit today, which could lend some early support to our bean oil market. The USDA just announced the sale of 113,000 tonnes of US beans to China for the 2008-09 crop year, which ends Aug 31. This should lend good additional support to beans this am, especially Aug. I would stick with the long side today, except in the case of meal. Rain is still forecast in the dry Argentine wheat belt early next week, where it is badly needed. Good growing weather continues in the main Chinese grain growing areas. Monsoon rains are forecast to increase over coming days in India, which would be very beneficial to crops there. The US Midwest had scattered rains of up to 1" the last 24 hours and more scattered rain is forecast the next couple of days, followed by dry weather in much of the belt over the weekend. Temps are predicted to turn cool within a day or two. The 6-10 day calls for cool temps with below normal rain in the western half of the belt, above normal rain in the eastern half. The Delta had up to 3/4" scattered rain the last 24 hours. Up to 1.5" more is predicted today through Friday, which will be welcome. The 6-10 day calls for cool temps and normal rain. It has been a relatively cool summer so far in the Midwest. Cool temps result in a lack of heat stress for developing crops and often are associated with above normal yields. 1994 was a summer of cool temps with record yields for both corn and beans in the Midwest, records that lasted for years afterward. Cool temps this summer could also give yields a boost, even though fertilizer use has been reduced due to high prices. High yields would, of course, be bearish for prices. ---Vic Lespinasse
Outside markets modestly supportive for grains
A mostly better start is expected this am, steady/better wheat, 3-5 up in corn and 5-7 better beans. The outside markets are modestly supportive this am for the grains with crude oil higher, equities slightly better and the $ index slightly lower. Jul futures expire at noon today US Central time and there could be some big moves in Jul corn, beans and meal, none of which have had any deliveries so far this month. There were 1100 wheat and 900 oil delivered this am with Dreyfus stopping 534 oil the commercial feature. Weekly Crop Ratings yesterday afternoon showed 71% of the corn crop in good to excellent condition, unchanged from last week. Beans rated 66% good to excellent, also unchanged from last week. Spring wheat was 71% good to excellent, down 1% from last week. Crop development remains way behind normal due to late planting caused by the very wet, cool spring. Only 16% of the corn is silking vs 32% average while just 24% of the beans are blooming against 43% average. Spring wheat headed reached just 57% vs 83% average. Winter wheat harvesting is almost caught up with 66% in the bin vs 69% average. The National Oilseed Processors Association June crush totaled 133.1 million bushels with oil stocks 2.907 billion lbs. Traders were expecting a crush of 134.8 million and oil stocks of about 2.800 billion lbs. These differ from the estimates I listed yesterday because they were revised late yesterday afternoon. The crush report was a bit negative for beans and oil as the crush was lower than expected while oil stocks were higher. A little export business was done this am with South Korea taking 55,000 tonnes of US meal and 55,000 tonnes of US corn. The Indian monsoon appears better organized than previously with good to heavy rain forecast the next 3-5 days. Much needed rain is still forecast in the dry Argentine wheat belt late this weekend or early next week. Good conditions continue in China's main grain growing areas. The US Midwest will see more good growing weather the next several days or longer with scattered rain and no heat to stress the crops. The 6-10 day calls for cool and wet weather so crop conditions should remain very good. The delta will see welcome cooler and wetter weather the next several days as well. ---Vic Lespinasse
No direction from outside markets for grains this AM
A moderately lower start is likely in most pits, steady/easier wheat, 2-4 down in corn and 5-10 off in beans. Crude oil and the equity markets are slightly higher while the $ index is steady, not providing any direction for the grains this am. There were no deliveries again this am in beans, meal or corn but 1200 wheat and 800 oil were delivered. July futures expire at noon tomorrow, US Central time. The Weekly Crop Progress Report this afternoon is expected to show the good to excellent ratings for wheat, corn and beans steady to 2% lower, the usual seasonal tendency for this time of year. The USDA announced the sale this am of 120,000 tonnes of US corn and 42,000 tonnes of US bean oil to unknown destinations for the 2009-10 crop year. Heilongjiang province produces about 40% of China’s bean crop each year. This province suffered from very dry weather during May but in June just the opposite problem occurred - Excessive rainfall flooded many fields with rain falling 20 of the first 28 days of the month, according to the Chinese government. It is now estimated that bean production could be down 10% due to this flooding. Lately, weather in the main growing areas of China has been much better, however, so the outlook could improve going forward. Much needed rain is possible in the very dry Argentine wheat belt by the end of the week. Cooler temps and light rain is forecast in the dry Russian spring wheat belt the next 5-7 days. The US Midwest continues to enjoy very good weather with moderate temps and scattered rain forecast this week. The 6-10 sees more of the same. Some harvest delays are possible in the southwest winter wheat belt from scattered rain this week. Scattered, light rain is forecast in the Delta this week after some modest amounts of rain fell there over the weekend, improving the outlook for crops there. ---Vic Lespinasse
Outside markets negative influence on grains
Prices were mixed to mostly a little lower in overnight trading but this can be ignored as the market will react to the USDA numbers this am, ignoring overnight trading. The market won't ignore the outside markets, which are a negative influence for the grains this am. Crude oil is lower, as are equities, while the $ is higher. There were still no deliveries in corn, beans or meal, as expected. Last trading day for the Jul contracts is next Tuesday. Wheat deliveries totaled 1100 contracts with 1750 oil delivered. The only commercial feature was Bunge delivering 200 wheat. China's Customs Office reported June bean imports at a record 4.71 million tonnes. The first 6 months of the year, bean imports reached just over 22 million tonnes, up 28% vs the first 6 months of last year. Monsoon rains are predicted in bean growing areas of India the next several days but the monsoon has been disappointing so far this season and India's Farm Minister said poor monsoon rains in the north of the country are a serious problem so traders will continue watching developments there. Relief in the form of cooler temps and scattered rain is forecast for Russia's spring wheat belt the next 5-7 days but it remains too dry in parts of the Ukraine and southern Russia where corn is grown. The US northern plains spring wheat belt continues to enjoy very good growing weather with more rain expected early next week. The southwest winter wheat belt could see some harvest delays in the north from scattered rain the next 5 days or more. The 6-10 day calls for above normal rain in the northern part of the belt, where harvesting is going on. The Midwest corn and bean belt is forecast to continue benefiting from very good growing conditions, no extreme heat and ongoing scattered rain every few days. The 6-10 day calls for more of the same. ---Vic Lespinasse
Export sales at high end of trade ideas; Exception: meal
A higher start is indicated for the grains this am, 6-8 wheat, 5-7 corn and 15 beans. Once again, there were no deliveries in corn, beans or meal this am but we saw 2000 wheat and 2100 oil on delivery. Crude oil and equities are higher this am while the $ is lower, a bullish combination for all the grains. There will probably be a lot of evening up today ahead of the USDA July crop report tomorrow am. Weekly Export Sales were at the high end of trade ideas with the exception of meal, where only 30,000 tonnes was sold between the old and new crop years. Wheat sales were 584,000 tonnes, corn 749,000 tonnes old crop and 415,000 tonnes new crop for a total of 1.164 million tonnes. Bean sales were 287,000 tonnes old crop and 942,000 tonnes new crop, a total of 1.229 million tonnes. Oil sales were minus 60,000 tonnes old crop but 98,000 tonnes new crop for a total of 38,000 tonnes. How important is China for large US bean exports? 283,000 tonnes of the old crop and 830,000 tonnes of the new crop sales were to China, or 1,113,000 tonnes out of 1.229 million! China's Commerce Ministry raised their estimate of Chinese bean imports during July to 4.28 million tonnes vs their previous guess of just 3.56 million. India's Meteorological Dep't said monsoon rain during the week ended Jul 8 was just 8% below normal but rain from Jun 1 to Jul 8 was 36% less than average. Monsoon rain is forecast to continue in India's main bean growing region the next few days. Heavy rain fell in the North China Plain the last 48 hours, bringing very welcome moisture. Rain has improved in the dry corn growing areas of Russia and the Ukraine recently, easing concerns there for the time being. Continued mostly dry weather is stressing spring wheat in Russia, however. Only light, scattered rain is forecast in the US Delta region the next several days and the 6-10 day calls for warmer and drier than normal weather, increasing the need for more rain there soon. Some winter wheat harvest delays are expected again with up to 1.5" falling in the eastern part of the belt yesterday and more forecast over the next several days into early next week. The Midwest will continue to benefit from favorable weather the next several days into next week. ---Vic Lespinasse
Early call for Grains: Steady/better
The early call is steady/better across the floor. Crude oil is lower while the $ is slightly higher, a negative combination for all the grains. Malaysian palm oil fell 67 ringgit today. Traders are getting ready for the USDA Crop Report Friday am and some evening up ahead of this report is likely tomorrow. I will have all the trade averages later today. There were no deliveries in beans, meal or corn but 3400 wheat and 2400 oil was delivered. Australia's Weather Bureau said the likelihood of an El Nino developing over coming weeks and months is increasing but only a medium intensity one is currently expected. Some rain has fallen recently in eastern Argentine wheat areas this week but the western growing areas remain very dry with below normal rain forecast the next 10 days. Beneficial rain is expected to fall again today in the North China Plain, which will help the corn and bean crops. Welcome rain is forecast in India's bean belt the next several days as monsoon rains improve. The US southwest winter wheat belt will enjoy favorable harvest weather the next several days. Rain is needed in the Delta bean belt with only scattered, light rain forecast Sun-Mon. The Midwest will benefit from scattered rain and moderate temps the rest of this week and the 6-10 day calls for normal to above normal rain, which should help keep condtions favorable. ---Vic Lespinasse
Grains appears set for Turn-Around Tuesday
A higher start is expected this am, 5 in wheat, 3 in corn and 7-10 in beans following overnight gains. The market appears set to follow the "turn-a-round Tuesday" pattern with sharply lower prices on Monday followed by an upside reaction today. The two main catalysts for this expected recovery are the weekly crop ratings, which unexpectedly fell from last week despite seemingly ideal weather; and the supportive outside markets. Crude oil is slightly higher this am while the $ is slightly lower, both in sharp contrast to yesterday at this time when these outside markets were sending strong sell signals to the grains. Corn's good to excellent rating fell to 71% from 72% last week. Beans declined from 68% last week to 66% this week while spring wheat dropped from 76% to 72%. All these ratings had been expected to be unchanged to 1-2% better so the fact they declined was a bullish surprise for the market. Crop development remains well behind normal due to their late planting this spring: Corn silking is only 8% vs 16% average while beans blooming reached only 14% vs 24% average. Spring wheat heading is only 30% done vs 65% average. Winter wheat harvesting is almost caught up at 56% vs 59% average. 4300 wheat was put out on delivery along with 3000 oil. The USDA attache in New Delhi, India said rain is needed by mid-July for various crops or India could be headed for a severe drought. The monsoon is now expected to bring much needed rain to India's bean belt over the next 3-5 days. Reports from Australian weather forecasters indicate El Nino is thought to be behind the poor monsoon season so far in India. Pacific Ocean conditions that are thought to cause El Nino moderated in June. This offers hope El Nino might not be as intense this season as feared, allowing crops in countries around the world to escape severe weather conditions. Beneficial rain is predicted in the North China Plain the next 1-3 days, along with cooler temps, which will also be beneficial for crops there. Russian spring wheat regions continue to suffer from very dry weather with little relief in sight. The US Midwest will see scattered rain the rest of this week into the weekend, keeping conditions favorable for corn and beans. The 6-10 day calls for above normal rain, which will also be welcome. Generally favorable harvest weather is forecast in the southwest winter wheat belt the next several days or longer. ---Vic Lespinasse
Heavy Bearish Influences Weigh on the Grains
A sharply lower start is likely in all pits, roughly 30-35 down in beans, 10 lower in corn and 5-7 off in wheat. Two very bearish influences are weighing heavily on the market this am: very favorable US weather and very bearish outside markets. Either of these influences would be enough to drive the market sharply lower and combined they should keep prices on the defensive all day today. Crude oil is sharply lower, equities are down and the $ index is much higher, all bearish for the grains. There were no deliveries again this am for beans or meal and none are likely ahead of expiration of these contracts Jul 14, which could keep Jul beans and meal relatively strong vs the other months. Deliveries reached 5000 today in wheat and 3900 in oil. Saudi Arabia said they bought 440,000 tonnes of wheat from the US, EU and Canada for Sep/Nov shipment. Light, scattered rain is expected in the very dry Argentine wheat belt today but below normal rain is predicted the next 10 days, keeping the crop in poor shape. The North China Plain will see welcome rain mid-week. The Indian monsoon is forecast to move further north later this week, bringing much needed rain to dry areas as it advances. No rain is forecast in parts of Russia's spring wheat belt the next 7 days. Up to 1.25" of scattered rain fell in the US Midwest over the long holiday weekend with scattered rain forecast this week, keeping conditions very good overall. Currently, there is no hot and dry weather threat in sight. The southwest winter wheat belt saw some harvest delays over the weekend with up to 1" of rain scattered over the region. Better harvest weather is forecast this week. The delta saw much needed rain over the weekend, up to 1 with around 55% coverage. More scattered rain is possible today.
Outside markets/overnights point grains lower but Export Sales bullish
Prices were lower overnight and the outside markets point the grains lower as well this am, as does the bearish US weather forecast. However, the Weekly Export Sales report was bullish this am, as were 2 USDA sales announcements so I doubt we will be as weak this am as we were overnight. Crude oil and the equity markets are lower while the $ index is higher, a bearish combination for all the grains. There were no deliveries again this am against beans, meal or corn. Wheat and oil deliveries both totaled 4800. Weekly Export Sales were a bit on the light side for wheat at 242,000 tonnes. Corn was very good at 1.155 million tonnes this crop year and 117,000 tonnes next crop year. Beans were very good also at 193,000 tonnes old crop and 250,000 tonnes new crop. Meal was minus 23,000 tonnes old crop due to cancellations but new crop sales were great at 304,000 tonnes. Oil sales were also very good at 69,000 tonnes. The USDA had some pre-Fourth of July fireworks for the bean market: They announced China was a huge buyer of 660,000 tonnes of US beans this am for the 2009-10 crop year, which starts Sep 1. This is the largest single bean sale in recent memory. The USDA also announced the sale of 152,000 tonnes of US corn to an unknown destination for the 2009-10 crop year. The Indian Meteorological Dep't said monsoon rains were 29% below average for the week ended July1 and 46% below average for June 1-July 1. The monsoon has shown some signs of improvement in the last few days but it is still well below normal, perhaps due to the El Nino weather pattern in the Pacific Ocean. Traders will continue watching this situation closely. More dry weather is forecast for the already drought stressed Argentine wheat crop the next 7 days or longer. Hot and dry weather continues in the North China Plain, stressing crops there, especially corn. Continued dry weather in Russia's spring wheat belt is a concern with more of the same forecast the next 7 days. The US southwest winter wheat belt will see some harvest delays due to weekend rain. Good growing weather is forecast to continue in the northern plains spring wheat belt. The Delta has been too hot and dry recently but cooler, wetter weather is forecast there this weekend, which will be welcome. The Midwest will see more beneficial growing weather with up to 1.5" of scattered rain forecast this weekend. Any high pressure ridge that might move into the belt later next week is currently not expected to last more than a few days, not long enough to do any damage from hot/dry weather. ---Vic Lespinasse
Outside Markets Supportive for Grains
A higher start is expected across the floor this am, roughly 7-10 in wheat, 3-5 corn and 15-20 beans. The outside markets are all supportive for the grains this am with crude oil and equities up while the $ index is down. Deliveries were 0 again this am for corn, beans and meal and likely to stay this way in beans and meal for days or even until the Jul goes off the board Jul 14. This means bull spreaders of Jul in beans and meal have little to fear currently about getting delivery, making them more inclined to stick with their long positions in Jul either on an outright or spread basis. There were deliveries in wheat of 5300, and oil of 5700, where ADM put out 680 on delivery. Chinese traders say they think China will release some corn from its huge stockpile as early as next week to cool off rising domestic corn prices. Australia's Bureau of Meteorology is now saying an el nino weather pattern is very likely to be declared officially in a matter of weeks. This could cause a drought to develop in Australian wheat areas and severly reduce the size of the crop, currently expected around 21-23 million tonnes. The Indian monsoon has once again slowed in its northwest advance across the country, heightening fears for Indian crop production this year as roughly 60% of Indian crops are dependent on good monsoon rains. The US southwest winter wheat belt is enjoying generally favorable harvest weather but up to 1.5" rain is forecast Sat-Mon which could once again disrupt harvesting. The Midwest will see light, scattered rain the next several days into early next week with normal to below temps. Warmer and wetter weather is forecast for the western half of the belt in the latest 6-10 day while the eastern half of the belt will see cooler temps and below normal temps. Either way, weather still appears favorable for Midwestern crops. Remember, starting this am electronic overnight trading stays open until 7:15am, not 6am. Times are US Central.---Vic Lespinasse
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