Grains were mostly lower overnight with soybeans leading the losses to the downside. In outside markets, S&P futures were higher while crude oil was under pressure.
Thursday brought a round of unexpectedly good news for grain with USDA reporting that corn, soybeans and wheat posting better than expected export sales for the week. Corn sales were 779,000 MT versus trade expectations of 500-700,000 MT while wheat was 722,000 MT as compared to expectations ranging from 200-400,000 MT. Soybeans were also well above expectations which were 700-1,100,000 MT, coming in at 1,797,000 MT.
In overnight news, the International Grains Council (IGC) trimmed its forecast for world corn production in 2015/16 by 3 MMT to 967 MMT, reflecting drought-related cuts to production in China, Ethiopia and South Africa. In world wheat production, IGC pegged 2015/16 at 726 MMT, unchanged from last month's forecast, with an upward revision from Ukraine (to 27.5 million from 26.0 million) offset by cuts for Egypt (to 8.5 million from 9.2 million) and Brazil (to 6.2 million from 6.6 million). The IGC also said that wheat's global harvested area for the 2016/17 season was forecast to fall by almost 1 percent to 221.8 million hectares. World soybean production in 2015/16 was projected to equal the previous season's record high of 321 MMT.
S&P futures (ESZ5) are heading for its biggest weekly gain since October. Traders will be watching Federal Reserve Bank of St. Louis President James Bullard and Fed Bank of New York President William C. Dudley comments today for insight into the state of the US economy. Recent data has bolstered the case for raising borrowing costs for the first time since 2006, with the latest payroll report -- released after the Fed’s October meeting -- showing the biggest increase in hiring this year.
Crude oil (GCLF6 / QMF6) continued to drift lower overnight as oversupply continues to be the driving theme of the market. Market data suggests oil traders are preparing for another downturn in prices by March 2016, as forecasts for an unusually warm winter dent demand and Iran prepares for post-sanctions crude oil exports.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
