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May 25, 2018 | Grain Hedge Insights | Kevin McNew | Views: 37

Weekly Cash Comments

Weekly Cash Commentary for week ending 5/25/2018

Soybean basis garnered more upside as export trade winds turned favorable helping bolster US average soy basis by 2.3 cents on average, while corn was fractionally higher on average with a 0.5 cent improvement.

In corn, some of the recent gains due to planting were erased as farmers returned to market grain, which pushed some basis lower at key end users in NE/IA/IL/IN. But in the Upper Midwest where planting is still in full force corn plants were slightly higher to try and meet needs. In the week corn plants were unchanged.

Around the river markets, barge rates have mostly stabilized in recent weeks. Gulf basis for corn was off a penny which kept corn river markets mostly flat to lower, while soy basis at the Gulf was up 7 cents which put upstream river markets higher by a nickel. Soy crush plants continue to hold firm advancing 2.3 cents on the week as May crush margins were the highest for this time of year.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 25, 2018 | Grain Hedge Insights | Kevin McNew | Views: 102

Brazil Ends Trucker Strike

July wheat up this morning by 5 cents; KC wheat is up over 6 cents

Brazil Ends Trucker Strike

Headlines

Private exporters reported to the U.S. Department of Agriculture export sales of 20,000 metric tons of soybean oil for delivery to unknown destinations during the 2017/2018 marketing year.

 

Brazil Ends Trucker Strike

Brazil's government struck a deal with truck drivers on Thursday to suspend a four-day protest. Truckers agreed to immediately suspend the strike for 15 days. Under the deal, a 10% price cut for diesel will be extended to 30 days. But normalization of trucking & logistics will take weeks to recover because of the magnitude of disruptions across numerous industries. At Paranaguá port, Brazil's second-largest grain export hub, the protests impeded 1,000 trucks from delivering goods over two days, Brazil's largest cooperative Coamo Agroindustrial said on Thursday.

 

South America Crops Continue to Slip

Brazil’s AgroConsult pegged the 2nd season corn crop at 57 MMT, down from their previous estimate of 60 MMT based on their ongoing crop tour. If realized it would be a 10 MMT shortfall relative to last year. They also estimate the country will only export 24 MMT of corn, a far cry from USDA’s estimate of 30 MMT. In Argentina, the Ag Ministry lowered their latest old-crop soybean production estimate to 36.6 from 37.2 MMT and off from USDA at 39.0

 

Argentina Government May Renege on Export Taxes

In a political bait-and-switch, Argentina may halt the gradual lowering of soybean export taxes to bail out the government ballooning budget woes.

President Macri was elected in 2016 on a populist support from ag by promising to gradually reduce the 35% export tax on soybeans and outright elimination of the tax on corn and wheat. The soybean tax currently stands at 27.5% and was expected to be eliminated by the end of 2019. It’s not clear that the budget coffers would benefit much in the short-run as the country has been crippled from drought creating limited excess supplies to export. Nonetheless, if the tax policies are rolled back it will likely lead to aggressive selling by Argentina farmers to front-run any new enacted taxes

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 24, 2018 | Grain Hedge Insights | Kevin McNew | Views: 176

Weekly Ethanol Production Declines

Still on pace to meet USDA expectations

Weekly Ethanol Production Declines

Headlines

  • Weekly ethanol production declines
  • Export sales mostly within expectations
  • Grains continue higher in the overnight  
  • Export sales of 264,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year
  • Cancellations of export sales of 132,000 metric tons of grain sorghum for delivery to unknown destinations during the 2017/2018 marketing year

 

Grains are higher in the Overnight

December corn closed above its previous high on Tuesday and is trending. November soybeans are at the high side of the trading range and may test the April high today. If soybeans close through $10.60 prices, it could impulse higher as short positions established due to trade war concerns are covered.

  

Ethanol Production

Weekly ethanol production declined to 1.028 million bpd from 1.058 million bpd LW. Weekly production was 1.8% ahead of LY pace during the same week. Ethanol production is still on pace to meet USDA expectations.

Ethanol stocks rebounded last week to 929 million gallons from 903 million gallons the week before. Ethanol stocks have been trending lower since mid-March, and will likely return to that trend as we move through the summer driving season.

 

U.S. seeks better access for GMO crops in China

According to a Thomson Reuters article this morning, the United States is looking for better access to import GMO crops into China as a part of the trade deal under discussion.

 

Brazil oil company Petrobras temporarily cuts diesel prices

Petrobras cut diesel prices by 10 percent in an effort to resolve the trucker strike that is disrupting the movement of newly harvested grains to export facilities. The cut in diesel prices will only be in effect for 15 days, and the government has struggled to reach a lasting solution.

Export Sales

Export sales were on the low side of expectations for soybeans this week with the large 894,500 MT cancellation announced last week showing up in the report.   Despite the net cancellations in soybeans it is a positive development that China’s Sinograin is back in the U.S. market and that the first cargo of U.S. soybeans was purchased by a Chinese importer yesterday. Corn sales were down 13 percent from last week but above the 4 week moving average. Wheat sales were up 78% from last week and were on the high side of expectations for both old and new crop.   

 

  

   Actual

Estimated

   Last Week

Wheat-OC

   112

(-100)-100

   63

Wheat-NC

   340

100-400

   131

Corn-OC

   854

700-1,100

   985

Corn-NC

   273

100-250

   129

Soybeans-OC

  -139

(-200)-400

   281

Soybeans-NC

      6

200-400

   224

Soymeal-OC

   239

100-400

   376

Soymeal-NC

 

0-100

    45


 

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 23, 2018 | Grain Hedge Insights | Kevin McNew | Views: 308

Dock Workers in Argentina Planning a Strike on Thursday

Grains up in the overnight session

Dock Workers in Argentina Planning a Strike on Thursday

Headlines

  • China looking at U.S. soybeans again 
  • Trucker protests in Brazil expand  
  • Optional origin sales of 140,000 metric tons of corn for delivery to Saudi Arabia.  Of the total 70,000 metric tons is for delivery during the 2017/2018 marketing year and 70,000 metric tons is for delivery during the 2018/2019 marketing year.  An optional origin contract provides that the origin of the commodity may be the U.S. or one or more other exporting countries.

 

Trump Says “Not Satisfied” with U.S. China Trade Talks

On Tuesday, President Trump said that he was “not satisfied” with how trade talks went with China. The president's remarks triggered selling in the U.S. equities market toward the end of the session on Tuesday. The comment was made during an Oval Office meeting with South Korean President Moon Jae-in and contrasts sharply from his message on Monday.   

 

Is China Back Buying Soybeans from the U.S.?

Chinese state grain buyer Sinograin has inquired about soybean prices in the U.S. for old and new crop. Sinograin has not purchased U.S. soybeans since April. The interest in U.S. soybean prices is a positive sign and comes after last week’s trade negotiations between the U.S. and China. No sales to China have been confirmed.

 

Brazil Trucker Strike Day 3

Truck drivers in Brazil will extend the protest a third day after the Government's proposal to cut a fuel tax was seen as unsatisfactory. On Tuesday the Government proposed to eliminate the CIDE fuel tax, and put additional revenue from payroll taxes to reducing fuel prices. The trucking group ABCAM said that the CIDE accounted for only a fraction of the taxes on diesel fuel. On Wednesday, the Brazilian government proposed a reduction of the PIS/Cofins tax on diesel in an effort to end the trucker strike. Diesel prices have risen nearly 50% in less than a year. Thousands of trucks were obstructing major roadways used to ship soybeans in Mato Grosso. The protest has grown to include 23 states and around 300,000 drivers on Tuesday. Pork and chicken producer Aurora said on Tuesday that it will halt work in fifteen plants across four states due to the disruption in road transportation and a lack of storage space.

Argentina Dock Worker Strike

Dock workers in Argentina are planning a 24 hour strike on Thursday, demanding better working conditions. The strike is also to protest government talks with the International Monetary Fund.  

 

FOMC Minutes Released Today

FOMC minutes will show the policy meeting in May. Traders will be looking for any hint on the pace of U.S. monetary tightening and look for confirmation for a rate hike in June.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 22, 2018 | Grain Hedge Insights | Kevin McNew | Views: 306

Soybean Planting Makes Strong Advance

USDA Planting Progress shows big jump for beans

Soybean Planting Makes Strong Advance

Headlines

  • Planting Progress Speeds Along
  • Weather Expected to Turn Hot and Dry
  • Brazil FOB Prices Mixed Relative to US
  • Brazil Truck Strike

USDA Planting Progress

  • Corn was 81% planted vs 62% last week and 81% on the 5-year average
  • Soybeans jumped 21% on the week hitting 56% and well above the 44% 5-year average
  • Both Minnesota & South Dakota had big jumps in corn planting getting to 77% and 66% respectively, so the threat of a late planting is waning
  • Early crop condition ratings in some states show a solid start to the crop. Illinois was rated at 88% good-to-excellent and Indiana at 83% with Missouri faring slightly worse with 71% rated good-to-excellent

Weather Models Point to Hot/Dry Conditions

Latest GFS weather model shows temps rising into the upper 80s/low 90s for much of the U.S. plains over the next 10 days.

Major portions of the grain belt from Iowa to the East should see more moderate temps in the 80s.

Major rain events stay mostly in the Southeast over the next 10 days.

 

Brazil Beans Weaken Relative to US

Brazil’s soybean prices continue to erode relative to U.S. soy export prices

Latest quotes show Brazil at an $11/MT discount relative to the US versus $7/MT discount mid last week.

However, in corn Brazil prices moved higher on Monday to be on par with US FOB values, after trading at a $5 discount last week.

 

Brazil Trucker Strike

Brazil truckers blocked major roadways in the largest grain state, Parana, to protest rising fuel costs.

Santos Port Authority says protests have slowed loading and unloading at export terminals.

 

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May 21, 2018 | Grain Hedge Insights | Kevin McNew | Views: 373

Grains Higher with Trade War “on Hold”

Strong precipitation is expected across country's mid-section this week

Grains Higher with Trade War “on Hold”

Highlights

  • Grains higher on positive developments in U.S./China trade negotiations 
  • Precipitation expected across Midwest in 1-5 day forecast   
     

Grains Higher with Trade War “on Hold”

U.S. Secretary Steven Mnuchin said that the trade war with China is “on Hold” while the two countries work out a wider trade agreement. On Saturday, both countries said they would keep taking measures that would allow China to import more energy and agricultural commodities from the U.S. The U.S. will send a team to China to work out the details for increasing Ag and Energy exports. On Monday, U.S. President Donald Trump said China had pledged to buy “massive amounts” of American agricultural products. The grains rallied higher in the evening session with Dec ‘18 corn touching a high at $4.24 ¾ and November soybeans reaching 10.29 ¾.   

 

U.S Weather

Strong precipitation is expected across eastern NE, IA, S. MN and IL this week with the heaviest precipitation expected in IA. 6-10 day forecast brings moisture into the eastern corn belt where precipitation is needed. Temperatures are expected to be in the 80’s through the majority of the corn belt.

 

South America Weather

Argentina farmers have returned to the fields to assess the damage from excessive moisture. Harvest pace has been slow and is now 71% complete for soybeans and 34% complete for corn. Rains next week are expected in northeastern Argentina which will continue to slow harvest, but drier conditions are expected in the 11-30 day forecast. Weekend showers benefited Brazil’s 2nd crop corn over the weekend.     

 

Commitment of Traders Report- Week ending May 15th

Bullish bets declined for corn and soybeans for Managed Money (MM)  in the latest Commitment of Traders report. MM net long positions in corn declined 20,220 contracts to 191,672. MM net long positions in soybeans declined 18,980 to 108,061. MM CBOT wheat declined 9,848 to a net short position of 5,522. MM KCBT wheat also declined, slipping 4,440 to a net long position of 44,190.

Soy Crush Plant Strike in Argentina

A strike by crush plant workers started on Thursday to protest layoffs earlier this year. On Friday, the labor ministry ordered a “mandatory reconciliation” that would end the strike. Crush plant workers said they would obey a government order to end the strike.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 18, 2018 | Grain Hedge Insights | Kevin McNew | Views: 340

Weekly Cash Comments

Corn basis was fractionally higher on the week

Weekly Cash Comments

Corn basis was fractionally higher on the week while soybeans put on an impressive 3-cent advance on the week.

 

For corn, it was a mixed week with ethanol plants generally higher while river terminals were broadly weaker. Gulf basis was off 5 cents on the week but the PNW export market was 6 higher. Barge freight appears to be tightening on the Mid-Miss River and higher but lower stretches of the MS River and OH rivers seem to have ample barge capacity.

Soybeans saw a bit more strength at river terminals which posted an average gain of 3.5 cents while soy plants were up 2.5 cents on the week. Nonetheless, some soy plants were up 5 to 12 in the Upper Midwest as farmers are actively trying to catch up on planting there.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 18, 2018 | Grain Hedge Insights | Kevin McNew | Views: 372

China Retreats from U.S. Sorghum Probe Amid Global Market Havoc

Grains were up in the overnight session

China Retreats from U.S. Sorghum Probe Amid Global Market Havoc

Export Sales

Cancellations of export sales of 949,000 metric tons of soybeans for delivery to unknown destinations.  Of the total 829,000 metric tons is for delivery during the 2017/2018 marketing year and 120,000 metric tons is for delivery during the 2018/2019 marketing year; and

Export sales of 168,000 metric tons of soybeans for delivery to unknown destinations.  Of the total 56,000 metric tons is for delivery during the 2017/2018 marketing year and 112,000 metric tons is for delivery during the 2018/2019 marketing year.

 

China’s Anti Dumping Claim on Sorghum Ends

China abruptly ended it’s anti-dumping claim on US sorghum today in a sign of good-will to the US during China’s Vice Premier visit to the US to improve trade tensions. The Commerce Minister said in a statement that the penalties imposed would hurt China’s consumers causing meat prices to rise. It’s not thought much sorghum will flow there now at this late in the marketing season. Furthermore, sorghum is still on the list of ag products the Chinese government would include 25% tariffs on. Ongoing China-US talks in Washington this week had been rumored to include a Chinese concession to reduce the trade imbalance from $375 billion to $200 billion. But that rumor was quashed quickly by Chinese foreign ministry spokesman Lu Kang who told a regular news briefing."This rumor is not true. This I can confirm to you.”

 

Overnight Tenders

Iraq bought 100,000 MT of hard wheat with 50K coming from the US and the other 50K coming from Australia. South Korea's largest animal feed maker Nonghyup Feed Inc. (NOFI) bought about 63,000 tonnes of feed wheat in a tender which closed on Friday, European traders said.

South America Estimates Slip Further

The Buenos Aires Exchange pegged Argentina’s soy crop at 36 MMT, down from their previous forecast of 38 MMT and below USDA at 39 MMT.  FC Stone is expecting further downward revisions to its projections for Brazil's main corn crop after rains in the first half of May were again below-average, worsening conditions for corn growth in key regions. "Earlier in May, our numbers indicated losses of 21 percent in Sao Paulo, 16 percent in Mato Grosso do Sul and 15 percent in Paraná. But considering the weather in the first half of May, it is almost certain that those losses will be bigger," FC Stone analyst João Macedo said in a report.   The expectation is that losses in those regions could go up to between 20 percent and 30 percent, Macedo said.
 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 17, 2018 | Grain Hedge Insights | Kevin McNew | Views: 368

Weekly Export Sales Mostly Within Expectations

Grains trading higher on optimism toward U.S./China trade talks

Weekly Export Sales Mostly Within Expectations

Headlines

Grains trading higher on optimism toward U.S./China trade talks. Wheat higher on crop damage concerns. Ethanol production stronger again this week. Private exporters reported to the USDA export sales of 132,000 metric tons of soybeans for delivery to unknown destinations during the 2017/2018 marketing year.

 

U.S. to hold trade talks with China on Thursday and Friday

Treasury Secretary Mnuchin is hosting trade talks with Chinese Vice Premier Liu today and tomorrow. Many speculate that Liu is coming to the U.S. to make a deal. However, rhetoric on Tuesday from U.S. trade representative to China indicated that the two countries are still “far apart.”

 

Wheat Trading Higher

Chicago and Kansas winter wheat are both trading higher this morning after reports of crop damage from high wind and hail from storms in Kansas and Colorado. Australia weather continues to be very dry during fall planting. Recent satellite imagery shows record lows for vegetation density across all of Australia’s major wheat growing region.

 

Ethanol Production

Ethanol production increased to 1.058 million bpd from 1.040 mbpd last week. Weekly production was 3% above LY during the same week. LY production levels declined from late May through June which will provide further opportunity for TY ethanol production to make significant gains over LY. Ethanol stocks declined this week to 903 million gallons from 922 million. Ethanol stocks usually reach a peak in April and decline until August during the summer driving months.  The decline in ethanol stocks from the seasonal peak to mid-May was 11% this year, which is significantly larger than 2017 when ethanol stocks were reduced by only 4%.

Weekly Exports

Export sales were mostly within expectations this week with soymeal beating expectations.

Wheat sales were up 79% from last weeks terrible performance. Corn sales were up 42% from last week and were on the high side of analyst expectations. Soybean sales were down 20% from last week and narrowly missed expectations to the low side.

 

  

   Actual

Estimated

Last Week

Wheat-OC

   63

0-200

   35

Wheat-NC

   131

100-300

   48

Corn-OC

   985

700-1,000

   695

Corn-NC

   129

50-200

    90

Soybeans-OC

   281

300-600

   354

Soybeans-NC

   224

100-400

   278

Soymeal-OC

   376

100-300

    90

Soymeal-NC  

    45

0

    -6

 

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

May 16, 2018 | Grain Hedge Insights | Kevin McNew | Views: 366

U.S. Soy Plantings Well Ahead of Usual Pace

U.S. winter wheat production down on continued dry & warm weather in southern plains

U.S. Soy Plantings Well Ahead of Usual Pace

Headlines

  • Corn and wheat higher in the overnight as soybeans slip.
  • NOPA crush within expectations.
  • Brazil soybeans cheaper than U.S.

 

Weather Updates

Precipitation in Brazil brings relief to 2nd crop corn in south and western Parana. More rains are expected this weekend. Rains will be limited throughout Argentina over the next week bringing some relief to an over-saturated soybean crop during harvest. 1-5 day GFS forecast brings moisture to western Kansas and Oklahoma. 6-10 day GFS forecast bring significant precipitation into Northern Texas, Oklahoma  and southern Kansas.

 

NOPA Crush Results

The NOPA Crush report showed that the amount of soybeans crushed in April met analyst estimates. April soybean crush was reported at 161.016 MB, compared to analyst estimates of 160.966 MB. Last year April soybean crush totaled to just 139.134 MB. April Soyoil stocks were reported at 2.092 billion pounds, up from 1.946 billion pounds at the end of March. Soyoil stocks were above the average analyst guess of 1.98 billion pounds and are at a five year high.

 

Brazil soybean prices dip below U.S.

The price of Brazilian soybeans for export has dropped below U.S. export prices as Chinese buying has cooled. Brazilian soybeans were quoted at $389.10 a MT compared to U.S. cargoes being offered at $405.50. With pork margins compressed, Chinese buyers have slowed purchases of soymeal in recent weeks. Some traders expect soybean exports to be slow for the next month as Chinese crush facilities have ample supplies of soymeal and there is indications that near-term demand for the feed ingredient is weaker than expected.  

Informa Economics latest Forecast

Informa revised 2018 corn and soybean planted acreage estimates in their latest report. Informa estimates corn acreage planted at 89 million acres compared to the USDA estimate of 88 million acres. The group also estimates soybean planted acreage at 89.4 million compared to the current UDSA figure at 89 million acres. All wheat other than Durum was estimated at 12.4 million planted acres compared to USDA’s 12.6 million acres.  

 

Overnight Tenders

Taiwan Flour Millers’ Association purchased 83,350 MT of milling wheat from the U.S in an international tender that closed on Wednesday.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)

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