Grains continued to drift lower overnight, while stock futures gave up some on Monday’s gains and crude oil reversed its selloff from the previous trade session.
In soybeans, Jan 16 bean futures drifted down to $8.76 pushing lower for a second consecutive trade session. Improving rains over the weekend in Brazil helped alleviate fears of dryness as planting season is in full swing there. On Monday, USDA reported yet another flash sale of soybeans to China for 120,000 MT. Also, USDA’s weekly export inspections came in at 2.5 MMT, well above trade expectations of 1.9 to 2.3 MMT.
For corn and wheat, export business continues to be lackluster. Monday’s USDA report showed corn exports at only 447,000 MT, below trade expectations of 475- to 625,000 MT and wheat was at a paltry 170,900 versus 275- to 400,000 MT expected.
Weather in Ukraine and Russia continues to show little signs of improvement for the wheat crop there. Russian Agriculture Minister Alexander Tkachev says 25% of the country’s winter crops are in poor condition as planting nears completion. In Ukraine, almost a third of winter wheat was weak and thinned, according to data from UkrAgroConsult. That’s comparable to conditions in 2011, which resulted in a 29% drop in output. Most of Ukraine and western Russia received less than 80%, and in some cases less than 20% of normal rainfall in the 90 days through Oct. 31.
S&P futures (ESZ5) were lower following Monday’s solid advance. Earnings reports this week from Time Warner Inc., Allergan Plc and Facebook Inc. are among more than 100 S&P 500 companies releasing results this week.
Crude oil futures (GCLZ5 / QMZ5) rose slightly overnight. An Energy Information Administration report Wednesday will probably show inventories rose for a sixth week. While the supply glut continues to be an issue, a mild start to the US winter has traders looking for soft demand in the form of heating oil.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
