Grains started the week in positive territory, jumping higher on the open Sunday night and holding those gains throughout the overnight session.
Wheat led the advances with dry, warm weather over the weekend in the Plains. From North Dakota to Texas, high temps over the weekend were in the mid-70s, with no precipitation falling. There will be at least some rain in a part of the region daily through Thursday. However, the western portions of the region are not likely to get much “meaningful” moisture. A few hundredths of an inch to 0.25 inch with local totals to 0.50 inch is all that can be expected from southwestern Nebraska and eastern Colorado southward into the Texas Panhandle. Much of the moisture will not be enough to seriously lift topsoil moisture. Areas to the east will do much better with parts of central and eastern Oklahoma and northern Texas to receive 0.50 to nearly 2.00 inches of rain. All of the precipitation will be welcome, but more will be needed to seriously lift soil moisture in the central Plains.
CFTC Commitment of Traders after the close on Friday showed much larger-than-expected fund selling in both corn and soybeans. The Supplemental report found large spec traders net sellers of 64,000 corn contracts through March 1st. That is roughly 25,000 contracts more than estimated, and would put them net short 247,000 corn contracts heading into Wed March 2nd. Even when assuming modest purchases the past three sessions, that would still leave them net short close to 235,000 contracts, including option deltas. The “modern era” record high is 255,000, though they did drift close to the current level coming into the USDA’s January crop report. This may force more waves of short-covering and higher prices.
Wednesday will bring USDA monthly report. Other than more adjustments to the South American stats, only modest balance sheet tweaks are likely for US grains. Conditions in both Brazil & Argentina remain supportive for higher production forecasts. Firming currencies in both Brazil & Argentina are giving a short-run boost to US export competitiveness. This is probably more pertinent for beans than corn, though, as the Brazilians will be focusing nearly all of their attention on bean shipments over the next three months.
Crude-oil prices extended gains in early Asia trade Monday as the market turned more bullish on expectations of smaller supply and growing demand. Last week, the number of rigs drilling for crude in the U.S. dropped by eight to 392, to the lowest level since 2009, according to industry group Baker Hughes. The combined number of oil and natural-gas rigs fell by 13 to 489, just above the record low of 488 rigs in 1999, the group said. U.S. shale production has also ebbed from its peak level in April of last year, emphasizing the financial struggles seen across the energy sector.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
