Grains were listless overnight, marking time until this morning’s USDA report at 11 am CDT. In outside markets, S&P futures were trying to climb out of the hole that had been made by China and caused an 8% slide in equity markets in the last 2 weeks. Oil prices hit fresh lows overnight, but managed to claw back to nearly unchanged on the session.
Overnight, Brazil’s Mato Grosso Farm Institute estimates 30% of the soybean crop in the state is in bad or terrible condition, which is down from 43% in December. Rains are starting to pick up and become heavy in Northern Brazil which had been dry for much of December. There is mild concern that the extreme turnaround in rainfall could cause some flooding and cause some crop problems.
Japan's Ministry of Agriculture is seeking to buy a total of 140,729 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. In Russia, the wheat crop appears to be stabilizing after a dry fall planting season. Snow and mild temperatures are improving the condition of the crop. Around 89 percent was in good or satisfactory condition and 11 percent was in a poor condition. The country's winter grains were in a better condition than last year but in a worse state than the average of the last five years.
Today’s reports from USDA are expected to see little changes by USDA, but nonetheless the trade is on edge for any potential curveballs in the numbers, as well as the large short position by funds and spec traders. Even if the reports are benign, it has the potential to push shorts to exit positions and cause a short-covering rally.
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The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
