Grains Were Mixed in the Overnight
Yesterday’s supply and demand report from USDA did little to reverse the trend of lower prices
Grains were mixed overnight as corn and wheat came under pressure while soybeans posted modest gains. In outside markets, equity futures had a rare rally going into the morning trade while crude oil tried to maintain positive territory ahead of EIA’s inventory numbers.
Yesterday’s supply and demand report from USDA did little to reverse the trend of lower prices as government forecasters increased their expectations on old-crop supply carry-out. Corn and wheat stocks showed the biggest increase thanks to a drop in USDA’s projections for exports. Soybean crush numbers were lowered as well helping boost soybean inventories to 450 MB. The USDA also raised its forecast of 2015/16 world wheat ending stocks to 238.87 MMT, above trade estimates. The figure would be the largest in history if realized.
In overnight news, Japan announced the results of its regular wheat tender. The US garnered about a third of the deal totaling 146,000 MT while Australia and Canada factoring heavily in the offer. Russia will ban imports of corn and soybeans from the United States starting from Feb. 15, a spokesman for Russia's agricultural watchdog, Rosselkhoznadzor, told Reuters on Wednesday. Earlier on Wednesday, the watchdog said its deputy head, Yulia Shvabauskene, had told the United States about concerns related to the phytosanitary safety of corn and soybean imports. Since September Russia imported 396,000 MT of US beans and there's no outstanding (still to ship) sales on the US books.
European stocks rose on Wednesday, rallying after losses in Asia, as concerns about the health of banks that have hammered shares globally in recent days eased and oil prices recovered from Tuesday's steep falls. Investors and traders awaited Congressional testimony from Federal Reserve Chair Janet Yellen for clues to the outlook for monetary policy. Sharp falls in global stocks and weak U.S. economic data have led markets to slash expectations for the pace and extent of Fed interest rate rises to follow December's first hike in nearly a decade.
Oil rose on Wednesday, after having posted its third-biggest daily fall since the 2008 financial crisis the day before, supported by the possibility of major producers cooperating to tackle a supply glut that has sent prices to 12-year lows. Iran's oil minister said Tehran was ready to negotiate with Saudi Arabia and the Kremlin's oil tsar Igor Sechin proposed producing countries reduce output by 1 million barrels per day - without saying whether non-OPEC member Russia would cut. While traders and delegates from OPEC doubt any deal between the group and rival producers - which would be the first in over a decade - will happen, talk of it has boosted the market.
Metals drifted lower in overnight trade as gold took a break from its recent high of $1,200 an ounce, the highest since June 2015, but remains supported by safe haven demand amid tumbling stock markets and concerns over the health of global economy. Silver also pulled back overnight as the US dollar found some stability with investors waiting on fed chair Yellen’s comments today.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)