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Lower to Much Lower Grains Start Expected
A lower to much lower start is expected this am, down roughly 5 in wheat, 5-7 in corn and 25-30 in beans. China's equity markets fell almost 7%, triggering economic worries around the world, which are reflected in lower crude oil prices and a higher $, bearish signals for the grains. There were no corn, bean or meal deliveries this am, as expected. Wheat deliveries totaled 5600 and oil was 7600, both to Aug 28. ADM stopped 2700 of the oil for the only commercial feature. No new reports on the Argentine farmers strike this am, which is scheduled to end at the end of this week - if it isn't extended, which would be supportive for our bean market. The weekly crop progress report will be out this afternoon at 3 pm central time, showing how far behind corn and bean development remains. Weekend rains eased drought conditions in northeast China, where 40% of China's corn and over 50% of China's beans are grown. Severe drought earlier in the season is still expected to cut production, however. The northeast region, which includes Jilin and Heilongjiang, the two largest corn/bean growing provinces, grows around 60 million tonnes of corn in most years but production this year could be cut as much as 30%, according to reports. Bean production could be trimmed around 20% vs last year. China has ample stocks to make up the shortfall but this will also likely cause China to keep importing large amounts of US beans for months to come. Chinese crushers currently enjoy good margins (the difference between the cost to buy and crush or process beans and the price the crushers can sell the beans for) so they have the incentive to continue importing beans. Hot temps and dry weather further stressed Argentine wheat over the weekend but cooler temps are predicted later this week, along with at least some much needed rain. Improved monsoon conditions were seen in India over the weekend in the form of better rain. Here in the US Midwest, very cold temps for this time in the season were seen this weekend with lows in the 40's. Warmer temps are predicted later this week along with mostly dry weather. The threat of an early freeze will continue to provide underlying support for corn and beans for weeks to come, however.
Higher start expected
A higher start is expected, led by Sep beans and meal. The early call is 2-4 up in wheat and corn, 12-15 higher in beans with Sep beans 20 or more higher while Sep meal opens roughly $10-15 stronger. Crude oil and equities are a little higher but the $ is mostly steady this am, not providing much guidance for the grains. Tight supplies, which are expected to get even tighter ahead of the new crop bean harvest, coupled with strong ongoing demand are behind the upward explosion in Sep beans and meal. The USDA announced this am the sale of 110,000 tonnes of US beans to China, the latest in a long list of bean sales to China at a time in the season when South America usually dominates the bean export business. Argentine farmers started their 7 day strike today, increasing uncertainty about their reliability in the eyes of foreign buyers such as China. Due to the severe drought that hit Argentina this season, they don't have much of a crop to export even without a strike. Brazilian bean supplies are very tight with only roughly 6 million tonnes of stocks available until the new crop harvest, which is still at least 5 months away. This leaves the US as the only big source of beans for the next several months. China has already bought almost 8.4 million tonnes of US beans so far this season, twice the amount they had bought at this time last year! Taiwan also bought US beans today, taking 60,000 tonnes. The cash bean market here in the US remains very strong as exporters vie with crushers for dwindling supplies, driving up prices in the process in both the cash and Sep futures markets. Monday is first notice day and no deliveries are expected in either beans or meal. Big deliveries are forecast in oil, roughly 3-4,000 lots. The CFTC said they will not release their newly formatted Commitment of Traders report this afternoon. They will issue the old formatted report today with the new format delayed until sometime in the future. The CFTC didn't say when the new version of this report will be released but this did say they will announce it ahead of time. The market is caught between two extremes currently: if an early freeze hits the crops, as many traders fear could be the case following this very cool summer, prices will shoot sharply higher. On the other hand, if we do not have an early freeze, especially if we have an extended growing season, we will have a record large bean crop and the second largest corn crop ever, which could drive prices much lower. Many traders simply don't know what to do in this situation and they are being extra cautious. Drought has hurt Chinese corn and bean production prospects this season but there is beneficial rain in the picture in the main growing areas the next several days. India's monsoon rains are forecast to continue improving the next several days as well, which will be very welcome. The US Midwest will be very much cooler than normal this weekend well into next week, further slowing development of the corn and bean crops and making them more vulnerable to an early freeze. There has been plenty of rain across the Midwest this week and more is forecast in the east today.
Higher grains start indicated wtih no outside market guidance
A higher start is indicated this am, roughly 2-3 wheat and corn, 7-10 beans. The outside markets aren't providing any guidance for the grains this am with the $ slightly lower along with crude oil while equities are slightly higher. The Census Bureau July crush was 129.4 million bushels, a bit higher than expected. Oil stocks were 3.338 billion lbs and meal stocks were 350,000 short tons. Weekly export sales were poor for oil at minus 400 tonnes old crop and plus 3500 tonnes new crop. Corn sales were in line at 266,000 tonnes old crop and 707,000 tonnes new crop. Wheat sales were higher than expected at 653,000 tonnes. Bean sales were very good at 88,000 tonnes old crop and 1.966 million tonnes new crop. Meal sales were good at 68,000 tonnes old crop and 100,000 tonnes new crop. China accounted for 1.53 million tonnes of the new crop bean sales with 303,000 tonnes of new crop beans sold to an unknown destination, also likely China. The Argentine farmers strike starts tomorrow and is supposed to last 1 week. During this time, farmers supposedly will refrain from selling any grain or livestock. This is potentially bullish for US bean exports and prices, especially if the strike lasts more than one week. Improved monsoon rains over the last week were seen in India and more very beneficial rain is forecast the next several days in several of the main growing areas. The drought in Argentina's wheat and corn growing regions continues, especially in the western areas. Much hotter than normal temps are predicted today through Saturday. The US Midwest saw rain over the last 24 hours in scattered locations, up to 2" in the southwest part of the belt and up to 1" in the east. More rain is forecast today in the west, today-Friday in the east, up to an additional 1.5". Colder temps are predicted along with dry conditions this weekend into early next week. ---Vic Lespinasse
Outside markets a negative background for grains
A mixed start is expected this am following mixed prices overnight. Crude oil is a little lower while the $ index is a bit higher, a negative background combination for the grains. Egypt is in the market for optional origin wheat today with results due shortly before our opening and depending on what Egypt does, this could influence wheat's opening direction. Argentine farmers are going on a 7 day strike starting Friday, during which time they will not sell any grain. If the strike only lasts 7 days its impact will be minimal but if it lasts a lot longer it could provide support for our grain prices as uncertainty about export availability causes buyers to look to other sources for grain, such as the US. Of course, Argentina doesn't have much exportable supplies of beans currently following their devasting drought last year and ahead of their next harvest, which is still roughly 6 months away. Therefore, barring a protracted months-long strike, the market isn't likely to react much to the Argentine strike. South Korea will be in the market tomorrow for 110,000 tonnes of optional origin meal. The Commodity Futures Trading Commission is revising their weekly Commitment of Traders report, issued every Friday afternoon, to include much more information. For example, they will break down trader's positions into more catagories, such as farmers, merchants, swaps dealers and hedge funds. The CFTC said they will put out the revised version of the Commitment of Traders report this month so supposedly that is what we will see this Friday, the last Friday of the month. Better monsoon rains are forecast in India the next 3-5 days, where they are badly needed. Only light, isolated rain fell in the western half of the US Midwest the last 24 hours but up to 1" better rain was seen in the eastern half of the belt during that time. Up to 1.5" of rain is likely in the southern half of the west the next couple of days, followed by mostly dry weather for several days. The eastern half of the belt will see rain today-Friday, up to 1.5", followed by dry weather for a few days. Much cooler temps are predicted across the belt over the weekend, which will slow development of corn and beans. ---Vic Lespinasse
Weekly Crop Ratings a negative surprise
A slightly lower start is expected this am, steady/easier wheat, 1 down corn and 1-3 off in beans. The $ is a little lower this am but so are equities while crude oil is steady so these outside markets will not provide much guidance for the grains unless they move sharply in either direction from here. The Weekly Crop Ratings yesterday afternoon were a bit of a negative surprise for corn and beans with their good to excellent ratings rising. Corn went from 68% to 70% while beans jumped from 66% to 69%. Traders had expected generally unchanged good to excellent ratings. Spring wheat declined from 74% to 72%. Spring wheat harvesting remains way behind normal, just 22% complete vs 66% average, due to late planting this spring and the cool summer, both of which delayed development of this crop. Corn's development still lags way behind normal with only 18% of the crop in the dent stage vs 43% average while 57% is in the dough stage against 79% average for this time in the season. Beans setting pods are behind also at 85% vs 92%. The problem with the slow pace of development for corn and beans is that it makes them hyper-vulnerable to damage should an early frost hit the Midwest. It has been a very cool summer this year and many traders fear this could result in an early frost so they are wary of shorting the market. China bought US beans every day last week but no new sales were announced yesterday. This am, however, China is back with the USDA saying China bought 110,000 tonnes of US beans for the 2009-10 crop year, which starts Sep 1. Some light rain was seen in the western half of the Midwest overnight, up to 3/4". The eastern half of the belt was mostly dry the last 24 hours. Rain will fall in the west today-tomorrow, up to 1.5" with more possible Fri-Sat. The east will see up to 1.5" of rain the second half of the week. Much cooler temps are forecast in the Midwest this weekend, keeping the possibility of an early frost in traders minds, which could limit selling pressure in corn and beans. ---Vic Lespinasse
Higher Grains Start Indicated
A higher start is indicated this am, around 2 cents in wheat and corn, 15-20 in beans. Crude oil and equities are a little higher this am but so is the $ so these outside markets shouldn't have much impact on the grain market unless they move much more decisively later in the day. The Pro Farmer crop tour estimates are roughly in line with the Aug USDA guesses and are not expected to have much impact on the market today. Pro Farmer estimated the US corn crop at 12.807 billion bushels with a yield of 160.1 bushels per acre. Their bean guess was 3.150 billion with a yield of 41. The August USDA estimates were 12.761 billion bushels of corn with a yield of 159.5. The USDA bean guess was 3.199 billion with a yield of 41.7. Reports continue circulating from China about serious drought hurting crop prospects in at least two of China's main grain growing provinces: Jilin, which accounts for about 13% of China's total grain crop, and Heilongjiang, which produces around 40% of China's bean crop. China's buying a total of 896,000 tonnes of US beans last week underscores this bullish (for prices) weather situation. There is some much needed rain in the forecast for the main Chinese growing regions this week, according to Meteorologix Weather. There is still a growing need for more rain in parts of Australia's wheat belt, specifically Queensland and northern New South Wales. These two states would likely be stricken by drought should El Nino continue to strengthen over coming weeks and months. The US Midwest was mostly dry over the weekend. Up to 1.5" of rain is forecast Tue-Wed in the west with more possible Thursday. The eastern half of the belt will see rain the second half of the week, helping keep conditions favorable although corn and beans remain well behind normal in development. The Weekly Crop Progress report will be out this afternoon at 3pm US Central time, showing how far behind development of the crops remains. ---Vic Lespinasse
Crude, equities higher; $ lower: Higher grains start expected
A higher start is expected in all pits, 3-5 wheat and corn, 20 beans, following overnight gains. Crude oil and the equity markets are higher this am while the $ index is lower, often a prescription for higher grain prices. Stats Canada estimated their all wheat crop at 23.61 million tonnes, durum wheat at 4.52 million, oats at 2.97 million, canola at 9.54 million and barley at 8.95 million. The all wheat number was a little higher than expected, as was the oats estimate but the canola guess was a bit lower than trade ideas, which could lend a little support to our bean oil market. For the 5th day in a row, China bought US beans, taking 233,000 tonnes today, a total of 896,000 tonnes for the week! This continued Chinese presence in our bean market should lend support to this pit this am. India's Weather Department is forecasting little rain outside of the eastern and northeastern parts of the country the next 5 days, which will stress the major growing areas, most of which are located outside of these two regions. However, some forecasters, such as Meteorologix Weather, see rain returning to central and possibly northwest parts of the country, where it is most needed, by the middle of next week. There is a growing need for rain in northern New South Wales and Queensland states in Australia for the wheat crop but little is forecast there the next 7 days, possibly due to the influence of El Niño, which has been strengthening lately. The US Midwest saw light rain in the east the last 24 hours with mostly dry weather in the west. More of the same is forecast in both the west and east today-Monday with rain possible Tue-Wed. I have seen two different weather forecasters's outlooks this am for the 6-10 day forecast. They both see a chance for below normal temps in the east but above normal in the west during this time frame. Despite these mixed forecasts, many traders on and off the floor this am are talking up the prospect of cooler temps in the 6-10 day period and that somehow this will raise the likelihood of an early freeze in the Midwest. This might well turn out to be the case but I don't see how this kind of talk is justified by the forecasts I have seen so far this am. Still, many times the market acts on half right or even wrong perceptions but I don't want to stand in its way, right or wrong because oftentimes the market "knows" things any one individual does not. ---Vic Lespinasse
Slightly better grains start expected
A steady/slightly better start is expected this am. The outside markets are mixed this am so they aren't expected to impact grain trading unless they move decisively one way or the other. The big buyer at the end of the session yesterday was JP Morgan in both corn and beans, enabling the local traders that had bought ahead of this to sell out their long positions at a profit. Weekly export sales were a little slow for wheat at 359,000 tonnes, in line for meal at 111,000 tonnes old crop and 45,000 tonnes new crop and poor for oil, minus 12,000 tonnes old crop and plus 5000 tonnes new crop. Corn sales were very good at 577,000 tonnes old crop and 858,000 tonnes new crop. Bean sales were also very good at 275,000 tonnes old crop and 583,000 tonnes new crop. The new crop year starts Sep 1 for corn and beans, Oct 1 for meal and oil. Traders are still talking about the CFTC announcement yesterday that they were withdrawing the position limit exemption in wheat, corn and beans for multi-billion-dollar index funds, now identified as Deutsche Bank and Gresham Investment Management. Both these index funds will now have to comply with federally-mandated position limits in these markets. Index funds are always long, never short, so this announcement weighed on prices yesterday, especially wheat. As of Aug 11, the latest date available, index funds, held 46% of the open interest in wheat futures and options, that's over 190,000 contracts! The two index funds named above will now have to liquidate any long positions over the limit over coming weeks. The market fears that the CFTC will soon move to withdraw the exemption of other index funds, which could have a very bearish impact on prices as there are roughly two dozen other index funds that have been exempted in the past by the CFTC from position limits. China has purchased US beans again. This am the USDA announced the sale of 165,000 tonnes of US beans to China, the fourth day in a row China bought US beans. The Pro Farmer crop tour reported late yesterday that corn and beans look great in Iowa but only fair in Illinois, as expected. The tour ends today and a final guess on the size of these crops will be released tomorrow. The monsoon improved a little in India over the last week but Meteorologix Weather thinks it is starting to withdraw already from the northwest part of the country, which would stress crops in this area. Thre is a growing need for rain in parts of the Australian wheat belt, which could be severely hurt if the nascent El Niño weather pattern strengthens. There was up to 1.5" of beneficial widespread rain in the Midwest over the last 24 hours. Mostly dry weather is expected in the west the next several days with up to 1.5" more rain forecast in the east today, followed by several days of dry weather. ---Vic Lespinasse
Global economic worries weigh on grains
A lower start is expected in all pits this am following renewed worldwide economic worries. China's Shangai equity market fell sharply today and this bearish influence is reverberating through all equity and commodity markets as the day continues around the world. Crude oil is lower and the $ index is a little higher, encouraging selling in the grains. Malaysian palm oil fell 76 ringgit today, another victim of worldwide economic worries.The early call is roughly 1-2 down in wheat, 2-4 off in corn and 12-15 lower in beans. Egypt is in the market for wheat today and results should be known shortly before our grain opening. Depending on what Egypt does, this could influence the direction of our wheat market this am. The important Canadian grain growing province of Alberta is reportedly 2-4 weeks behind normal in development, meaning an extended growing season is needed to ensure crops there reach their full potential. Even a normal first freeze date could do considerable damage to late developing crops. Reports from the Pro Farmer Crop Tour of the Midwest continue coming in. As expected, conditions are much better in the west than in the east. For example, Nebraska corn yields were estimated at almost 159 bushels per acre, way above the 3 year tour average of 141.5 but Indiana corn yields were put at 157.3, only modestly above the 3 year average of 154.1. Monsoon rains remain spotty in India, continuing to stress some of the crops there. Beneficial rain fell in parts of China's main grain growing regions yesterday and more is forecast today-tomorrow, which will also be very welcome. The US Midwest was generally dry yesterday but welcome rain is predicted today and tomorrow, up to 1.5" across much of the belt, followed by mostly dry weather Fri-Sun. ---Vic Lespinasse
Midwestern weather remains favorable for grains
A lower start is likely in most pits this am, 2-3 wheat and corn, 8-10 beans. The Weekly Crop Progress report showed corn rated 68% good to excellent, unchanged from last week and beans were 66% good to excellent, also unchanged vs last week. Spring wheat improved to 74% vs 72% previously. Crop development remains way behind normal with corn in the dough stage only 40% vs 64% average while corn in the dent stage was just 9% vs 26% average. Beans setting pods reached just 72% vs 85% average. Winter wheat harvesting is almost done at 94%, but spring wheat harvesting is only 13% complete vs 48% usually by this time. There were no bean, meal or oil deliveries this am. The outside markets haven't moved far enough to be a factor in the direction of the grains at this time. Gary Gensler,the head of the Commodity Futures Trading Commission (CFTC) which regulates all futures trading in the US, said he isn't satisfied with the convergence problem in the wheat market. The steps that the CME Group, the owner of the exchange, has taken haven't solved the problem yet, although Gensler didn't say what steps the CFTC would insist on to resolve the issue. Convergence is the coming together of the futures and cash price of a market, such as wheat, when the futures contract expires. Reports from China indicate the government is considering subsidizing bean crushers (processors) but no announcement has been made yet. This is thought to be a necessary step in order to get the crushers to buy beans from the government auctions, which so far haven't been very successful. The next bean auction is tomorrow when 500,000 tonnes will be offered for sale. Australia's Weather Bureau says the southern oscillation index fell to -4 from -2 the previous week, a growing indication of an El Niño weather event, which often brings drought to Australian wheat fields and disrupts normal weather in various countries around the world. India's Prime Minister Singh said the country is staring at the prospect of an impending drought due to the poor monsoon so far this season. Only light rain was seen in a few Midwestern US states yesterday but up to 1.5" is predicted the second half of the week along with cool temps over much of the region as conditions remain very favorable for corn and bean development. ---Vic Lespinasse
Sharply lower outside markets may open grains lower
A lower to sharply lower start is likely this am, around 10 in wheat, 7-10 corn and 25 beans. Crude oil and equities are sharply lower this am while the $ index is stronger, a bearish combination for all the grains. Malaysian palm oil fell 102 ringgit today as most commodities markets fell sharply, reflecting economic concerns in several countries that will spill over into the grains this am. The annual Pro Farmer crop tour of Midwestern corn and bean fields starts today. Pro Farmer publishes a widely-followed, popular farmer-oriented magazine and every year they send analysts out into the fields to estimate the size and condition of the corn and bean crops. The tour concludes Thursday night and Pro Farmer will issue its production guesses afterward, which could impact the market. Daily summaries will also be made which can also impact trading at any time during the session with many wire service reporters, including Dow Jones, Reuters and others, on the tour and sending out comments at any time. Traders will watch these reports and the market sometimes is effected by them. The tour is split into eastern and western groups with the Mississippi River the dividing line between the two. Expect reports from groups traveling in the west to report much more advanced crop progress than groups in the east, where corn and beans were planted much later and are well behind normal in development. Hot and dry weather recently in some of the main corn growing areas of China, such as Jilin, have stressed the crop there but rain is falling today and more of the same is forecast this week, which will be very welcome. Drought continues to stress corn in parts of the Ukraine and southern Russia with little relief expected the next 7 days. The monsoon improved in parts of India over the weekend with better rains but it is still poor in the northwest part of the country. Up to 2" beneficial rain fell in the US western Midwest over the weekend with up to 1.5" in the east. More welcome rain is predicted in the region this week, along with mild temps. The 6-10 day calls for above normal rain. ---Vic Lespinasse
Lower grains start forecast
A lower start is forecast this am, roughly 2-4 wheat and corn, 10-15 beans. Malaysian palm oil fell 74 ringgit today, a negative background influence for our bean oil market. Aug beans plunged 48 cents overnight due to a big jump in bean deliveries with 227 lots delivered to Aug 13. There was one commercial stopper, Bunge, who took 55 lots. The outside markets haven't moved enough in either direction this am to have much of an influence on the grains at this time, although traders will continue to watch them, especially crude oil and the $, as the day progresses, in case they make a sharp move, which could then lend some direction to the grains. The National Oilseed Processors Association July crush this am was only 120.9 million bushels, almost 10 million bushels less than expected. Oil stocks were 2.804 billion lbs, around 30 million lbs below trade ideas. However, with the crush much lower than expected, oil stocks should have been even lower so this report is considered bearish for both beans and oil. China will auction 2 million tonnes of corn next Tuesday and try to auction 500,000 tonnes of beans the following day. The Argentine Senate could vote as early as next week on extending power to President Cristina Fernández to set export taxes for another year on grains, including beans. The Lower House already voted in favor of extending this power and the Senate is expected to follow suit. The new legislature, which is likely to be against many of President Fernández' agricultural policies, won't take office until December. Some analysts think this extension of the President's powers will lead to even more planting of beans. It will allow the President to keep limiting Argentine wheat, corn and beef exports, depressing their prices to keep domestic food prices low. Bean and product exports are not restricted as domestic demand is relatively limited and supplies always ample. Unfettered bean and product exports also adds additional tax revenue for the government. This encourages Argentine farmers to plant more beans and less wheat and corn even thought they are burdened with a very high 35% export tax rate on beans. Farmers planted a record amount of land to beans last year due to these policies and are expected to plant even more this year, perhaps as much as 20 million hectares. (one hectare = 2.471 acres) More beneficial monsoon rain is expected in the central Indian bean belt the next 5 days but little rain is forecast in northwest parts of country where ground nuts are grown during this time. There are also signs the monsoon might retreat to the southeast part of the country with the next 6-10 days, which would further reduce the already dim prospects for a strong finish to the monsoon season over the next month or so. The threat of a frost in the Canadian Prairies next week now appears much less than it did earlier this week. The US Midwest will stay warm and dry until Sat in the west and Monday in the east, when rain is forecast to sweep across much of the belt, up to 1.5" in the west, up to 1" in the east. More rain is predicted the second half of the week, keeping conditions very favorable overall. Dec wheat replaces Sep as the top month today so trade Dec as of today if you want to be in the most active, liquid month. Also, remember Aug beans and products go off the board at Noon today, US Central time. ---Vic Lespinasse
Higher grains start forecast across the floor
A higher start is forecast across the floor, about 5 in wheat and corn, 20 in beans. Crude oil and equities are much higher while the $ index is lower, a bullish combination for all the grains. Malaysian palm oil jumped 55 ringgit today amid indications of continued strong Indian vegetable oil import demand. South Korea bought 110,000 tonnes of US corn. Weekly export sales this am were good for wheat at 479,000 tonnes, and beans at 259,000 tonnes old crop along with 762,000 tonnes new crop. Corn sales were slow at 541,000 tonnes old crop and 292,000 tonnes new crop. Product sales were also slow at 41,000 tonnes old crop meal, 15,000 tonnes new crop meal and 5000 tonnes oil. Stratagie Grains, the widely-followed French analytical firm, upped its 2009-10 EU soft wheat crop guess from 126.5 million tonnes last month to 130 million today.They boosted their total EU grain crop guess for the 2009-10 crop year to 289 million tonnes vs 283 million last month. The head of India's Meteorological Dep't said the monsoon situation is "grim". For the week ended Aug 12, monsoon rains were 56% below normal. However, very heavy rain was seen in the bean region of central India and more beneficial rain is forecast the next 5 days in the bean and sugar cane growing areas of the country. The northwest part of the country, the major ground nut region, is forecast to remain on the dry side, increasing stress on crops there. The US Midwest was dry yesterday and more of the same is likely until Sun-Tues, when rain will move across the western half of the belt, bringing up to 1.5". Up to 1" of rain is predicted in the eastern half of the belt Mon-Wed. The 6-10 day calls for normal rain. This is a bearish forecast for corn and bean prices but the market seems to be discounting it, rallying yesterday and again overnight. Certainly, the rally in crude oil and equities and the sell off in the $ yesterday encouraged buying in the grains as these outside markets were signaling a potential worldwide economic recovery, which would be bullish for all commodities, including grains. The same pattern seems ready to repeat again today. We will roll our wheat position into DEC at the next reversal.
No major surprises in USDA Grain Report figures
For once there wasn't any major surprise in the numbers. One could say the biggest surprise this morning was the lack of any surprise! The August report is the first field survey based estimate of the corn and bean crops so there often is a big surprise. The initial reaction of traders is for a slightly lower start in wheat and corn, steady to slightly better in beans. Here are some additional numbers from the report that aren't in the tables: the bean crop estimate would make it the largest US bean crop ever while the corn number would make it the second largest ever. There was very little acreage switching between the corn and beans despite trade expectations of up to 1 million acres less corn and a similar increase in beans. The USDA raised their estimate of the amount of corn used to make ethanol in the 2009-10 crop year to 4.2 million bushels from 4.1 million bushels in July. In 2008-09, 3.65 million bushels were used. The amount of bean oil used to make bio diesel fuel was left unchanged from last month at 2 billion lbs. In the 2008-09 crop year, 1.700 billion lbs was used. Note the contrast between the USDA estimate of China's corn crop and the estimate of China's government think tank reported in my pre opening comment earlier this am, with the USDA 4 million tonnes lower than the Chinese estimate. There are smaller differences between the two in estimating the other crops as you can see from the numbers. Another day, another US bean sale to China: the USDA reported the sale of 113,000 tonnes of US beans to China for the 2009-10 crop year, starting Sep 1. However, 58,000 tonnes had been previously reported sold to an unknown destination so only 55,000 tonnes of the sale is new business. ---Vic Lespinasse
Weekly Crop Progress Report: Corn, beans development well behind normal
A higher start is forecast across the floor, 4-5 wheat, 3-5 corn and 15-20 beans. Crude oil and the $ are both mixed this am, trading back and forth on either side of yesterday's close and not offering any guidance for the grains this am. The Weekly Crop Progress Report showed corn and bean development remains well behind normal, as expected, due to their late planting this spring, especially east of the Mississippi River. Beans blooming reached 86% vs 93% average but beans setting pods were only 55% vs 72% average. Corn silking was 89% vs 96% average but corn in the dough stage of development was only 24% vs 46% average while corn in the dent stage was just 5% vs 14% average. Beans rated 66% good to excellent vs 67% last week while corn was unchanged from last week at 68% good to excellent. Spring wheat was 72% good to excellent vs 71% previously. Spring wheat harvesting was 8% complete vs 31% average and winter wheat harvesting was 91% done vs 96% average. There were no bean or meal deliveries again this am, as expected. China will try to auction 500,000 tonnes of beans tomorrow but until they subsidize their crushers or bean prices rise further, it is unlikely they will have any success. China's Deputy Chief of the Economic and Trade Dept under the National Development and Reform Commission, said China's domestic bean output growth can't match the rate of rising demand so bean imports will continue to rise. He also said the government will encourage processing plants to increase their bean reserves and that China's bean imports will total 40 million tonnes this year vs 37.44 million tonnes last year. If he is right, this is friendly for US bean export prospects to China. The USDA announced China bought 110,000 tonnes of US beans this am for the 2009-10 crop year, starting Sep 1. Good monsoon rains are forecast in the bean belt of India by week's end. There is a chance of much needed rain in sugarcane and ground nut areas of India late this week also. The US Midwest was mostly dry the last 24 hours in the west but the east saw up to 1.25" during this time. The west will stay mostly dry the next few days but weekend rain is forecast, up to 1". The east will see light rain early next week. Starting Friday, Dec will replace Sep as the main month in wheat so trade Dec starting that day if you want to be in the most active, liquid month. ---Vic Lespinasse
Market may wait for Wednesday USDA report
A mixed start is expected this am, likely steady/easier wheat and corn, steady/better beans. There isn't a lot of fresh market moving news this am so many traders will be content to wait for what is likely to be the big event of the week, Wednesday morning's USDA crop report. The outside markets are mixed this am, not providing much guidance for the grains. The USDA announced Egypt bought 60,000 tonnes each of old crop and new crop US corn. Here are the latest trade estimates for the USDA report: 12.502 billion bushels of corn, 3.219 billion beans, 2.151 billion all wheat, 1.531 billion winter wheat, 526 million spring wheat and 85 million durum wheat. Traders expect a corn yield of 157.3 bushels per acre with beans 42.13. The Indian monsoon rains remain poor but some improvement is expected by midweek in the main bean and sugar cane growing areas. The general director of India's Meteorological Dep't now expects monsoon rains to fall 13-15% under the 50 year average vs earlier expectations of only a 7% decline. Here in the US Midwest, weekend rains in a few parts of the western half of the belt reached as much as 2.5" along with hot temps. The eastern half of the belt saw up to 1.5" in a few areas during this time. Light rain is forecast in the west today-tomorrow with mostly dry weather the second half of the week. The eastern half of the belt will see scattered rain today and tomorrow, up to 3/4" in some areas. Dry weather is likely to be the rule the second half of the week. Temps will be warmer but no heat stress is expected. ---Vic Lespinasse
Outside markets, overnights mixed for grains
A mixed start is indicated this am, roughly 1 better wheat, 1-2 lower corn and 6-10 higher beans. The outside markets are not offering a strong sense of direction for the grains this am with the $ higher, which is negative for the grains, while crude oil and equity markets are also higher, which is supportive for the grains. 2300 oil was delivered this am but once again there were no bean or meal deliveries, as expected. China will hold another 2 million tonne corn auction Aug 11 and a 500,000 tonne bean auction the next day. The government announced they will subsize corn processors in the major corn growing areas through November, which should boost the amount of corn sold at auction. No subsidy for bean crushers was announced but this will probably happen soon. This should sharply increase the amount of beans sold at auction, which has been almost nothing so far. The Indian Meteorological Dep't said continued poor monsoon rains will probably continue the next 5 days. Some light, scattered rain is forecast in the bean belt of central India the first half of next week, however. The US Midwest will see up to 3/4" light, scattered rain today. A mostly dry weekend is predicted along with much hotter temps. Rain is expected to return early next week, up to 1.5", before drier conditions occur again mid-week. The hot temps are only forecast to be in place a few days, not long enough to cause any stress to the developing corn or bean crops. ---Vic Lespinasse
Lower grains start expected; outside markets unlikely to have impact
A lower start is expected in all pits, roughly 5 in wheat, 2-3 corn and 10-15 beans. Crude oil is slightly lower, equities a little better and the $ a shade higher so these outside markets are not expected to impact the direction of the grains unless they move decisively from here. Weekly export sales were all strong except meal, which was less than expected. Wheat sales were 553,000 tonnes, corn was 423,000 tonnes old crop and 729,000 tonnes new crop, bean sales were 494,000 tonnes old and 2.41 million tonnes new, meal sales were minus 58,000 tonnes old due to cancellations but 160,000 tonnes new for a net of 102,000 tonnes, and 81,000 tonnes of oil. Japan bought 106,000 tonnes of US wheat at their weekly tender. Conab, a division of the Brazilian Agricultural Ministry, raised their 2008-09 corn production estimate from last month's 49.45 million tonnes to 50.27 million. They increased their wheat production guess from 5.67 million tonnes to 5.85 million and left their bean crop guess unchanged at 57.12 million tonnes. The Indian Meteorological Dep't said monsoon rains were 64% below normal in the week ended Aug 5 and they were 25% less than average for the period Jun 1 to Aug 4. They expect better rain in central India, a major bean growing area, within 2-3 days. Improved monsoon rains are forecast elsewhere in India by early next week, which will be very welcome. The US Midwest will see beneficial rain over much of the region the next couple of days, followed by drier and hot weather this weekend. The heat isn't expected to last more than a few days at most and more beneficial rain is predicted early next week over much of the belt. This is a very favorable weather outlook, weighing on prices overnight. Judging by the way the market acted overnight and the lower call this am, worries about lingering heat in the Midwest and drier conditions seem to have dried up, pardon the pun! ---Vic Lespinasse
Better grains start expected despite lack of fresh news
A better start is forecast this am, around 3-4 up in wheat and corn, 10 higher in beans. There isn't a lot of fresh market moving news so far this am. 3200 oil was delivered to Aug 4 with no big commercial stoppers. Informa will put out their Aug production estimates at 10:30am US Central time. Usually, their numbers don't move the market significantly. China conducted their 3rd bean auction today, selling only 4900 tonnes of the 500,000 tonnes offered. While they sold less than 1% of what they offered, it was more than the previous attempts, when nothing was sold. If bean prices keep rising, future auctions should be more successful. Monsoon rains in India remain poor, currently falling mostly just in the northeast part of the country. There is a chance for improved monsoon rain in central Indian bean fields early next week but crops in western parts of the country, including important groundnut areas, are forecast to remain dry, as are sugar cane areas, increasing stress on these crops. Conditions in the major Chinese grain areas remain mostly favorable. The US delta has had good rains lately but a warmer and drier weather pattern is forecast to move into the region, which could deplete soil moisture rapidly. The Midwest is expecting up to 1.5" more beneficial rain the next few days, after up to 1.5" fell in eastern parts of the belt yesterday. More rain is predicted early next week as well, Sun-Mon in the west, Mon-Tue in the east, also up to 1.5". Temps are forecast to heat up over the weekend. The 6-10 day forecast calls for hotter and wetter than normal weather. There is a lot of concern, reflected by mostly higher grain prices since last Thursday, that the hotter temps moving into the Midwest starting this weekend will mark a lasting change in the cool weather pattern we have seen so far this season. IF this hotter weather only lasts a few days, it will be beneficial for developing corn and bean crops, helping speed their maturity, which remains well behind normal. However, IF this hotter weather persists beyond a few days, it could start stressing the crops as they go through their most weather-sensitive period. It appears this long-lasting hot weather threat is minor but the market is still very nervous about it, adding a weather premium to prices since last Thursday. I do not think this threat is serious but the charts still look bullish and I never argue with the market, which "knows" a lot more than me or anyone else. ---Vic Lespinasse
Possible Turn-Around Tuesday in store for grains
Grain prices have posted impressive gains the previous three days but they were lower overnight and are called lower this am due to profit taking possibly sparked by lower crude oil and equities this am. It's Tuesday and we could see the familiar "turn-a-round Tuesday" pattern where prices reverse course from yesterday. The early call is roughly 10 down in wheat with corn and beans off 4-5. There were no bean or meal deliveries again this am but 2700 oil was delivered to Aug 3. FC Stone estimated the US corn crop at 12.814 billion bushels with a yield of 160 bushels per acre (bpa). Their bean guess is 3.247 billion bushels with a yield of 42.4 bpa. Last month, the USDA estimated the corn at 12.290 billion bushels with a bpa of 153.4. Their bean crop guess was 3.260 billion with a bpa of 42.6. Informa supposedly will put out their Aug guesses tomorrow am, 10:30am US Central time. The weekly crop ratings showed winter wheat harvesting 85% done vs 90% average. Spring wheat rated 71% good to excellent vs 74% last week. Harvesting has started, 3% complete vs 15% average. Corn was 68% good to excellent vs 70% last week while beans were unchanged from last week at 70% good to excellent. Crop development remains well behind normal with corn silking 76% vs 89% average and corn in the dough stage 14% vs 29% normally by this time. Beans blooming reached 76% vs 86% average and beans setting pods are 36% vs 54% average. The USDA said South Korea bought 118,000 tonnes of US corn for the 2009-10 crop year, which starts Sep 1. China auctioned 834,000 tonnes of corn today out of 2 million tonnes offered. They will try to auction 500,000 tonnes of beans tomorrow. Previous bean auctions have failed due to a too-high offering price but following the big rally in US and world bean prices the last few days the Chinese government's offering price is now roughly competitive with the price of imported beans so tomorrow's auction might have some sucess. Continued overall favorable weather is predicted for the main Chinese growing areas the next several days or longer. The Indian monsoon is expected to remain mostly confined to the northeast through the end of the week, increasing stress on crops outside of this area. There is a chance for improved rain in central India early next week, which would be very welcome. The US Midwest will see widespread rain the next several days, up to 1" in the west and 1.5" in the east. Warmer temps are forecast the next several days, helping speed up crop development. Up to 1" more Midwestern rain is forecast early next week, which will also be welcome. The 6-10 day calls for warmer and drier conditions. ---Vic Lespinasse
Bullish factors could push grains higher
A higher to sharply higher start is likely this am, roughly 5-10 wheat, 10-15 corn and 40-50 beans. Essentially, the market is facing a repeat of last Thursday's conditions that drove prices much higher that day: a somewhat threatening weather outlook; higher crude oil and equities as well as a lower $. Prices were much higher overnight in response to this bullish combination of factors and more of the same is forecast this am. Malaysian palm oil jumped 106 ringgit today, a supportive background influence for our bean oil market. Taiwan tenders tomorrow for up to 120,000 tonnes of US/Brazilian beans. The four main Argentine farmers unions and the government met Friday and the government offered to lift restrictions on wheat and corn exports but said they will not lower the steep 35% bean export tax, which is what the farmers unions want most of all. The next big test between the unions and the government will be Aug 24, when the government's authority to set export taxes and other policies expires, reverting back to the Argentine Congress, which could implement changes much more to the unions liking. The Indian monsoon is currently weak and confined to the northeast part of the country. Late this week it is expected to strengthen again but this remains to be seen. Improved weather conditions in the form of cooler temps and increased rain is forecast this week in the stressed Russian spring wheat belt as well as the Russian and Ukrainian corn belt. The US delta will see the unwanted return of hotter and drier weather over coming days. The Midwest will continue to benefit from rain this week, up to 1.5" in the west and up to 1" in the east, all of which will be welcome. The 6-10 day calls for warmer temps and below normal rain. If this only lasts for a few days, it will be beneficial as it will help speed up development of the crops. However, the market fears this could signal a longer period of hotter and drier weather, which would be bullish. Up until now, we have had virtually perfect weather in the Midwest, which the market has discounted. If the weather doesn't remain "perfect", this change will be quickly reflected by a rally. ---Vic Lespinasse
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