February 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 312
February 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 108

Grains Lower Overnight

Stock futures and crude oil started the day with big losses.

Grains were lower overnight sinking to fresh lows on the month, while stock futures and crude oil started the day with big losses.

 

Overnight, Ukraine raised its grain export forecast for the 2015/16 season to around 37 MMT from 36. The increase comes from rising corn demand and expectations of a big corn crop next year. Wheat growers who suffered crop losses as a result of a severe drought last year and frost in winter would likely reseed much of the affected fields with corn. The drought has put the harvest across as much as one third of Ukrainian farmland at risk of poor yields.

In Argentina, the most important rainfall of the we

ek will occur today and Monday hitting Argentina’s driest region from eastern Cordoba through central and southern Santa Fe northeastern Buenos Aires, Uruguay and southernmost Corrientes. Rainfall in these drier areas will range from 0.80 to 2.50 inches and local totals over 4.00 inches. Two other significant rain events are slated for summer grain and oilseed crop production areas through the balance of the next two weeks. The first event occurs Friday into Sunday, Feb. 14, and the second event occurs Feb. 16 -18. If all three rain events occur as advertised corn and soybean production areas will be plenty wet and poised for good production potentials.

 

In outside markets, European stocks slid to fresh 16-month lows dragging down US stock futures and crude oil. Overnight, China's foreign reserves fell for a third straight month in January, as the central bank dumped dollars to defend the yuan and prevent an increase in capital outflows. China's foreign reserves fell $99.5 billion to $3.23 trillion in January, the lowest level since May 2012, central bank data showed, but higher than the median forecast of $3.20 trillion from economists surveyed in a Reuters poll. The size of the drop was second only to the $107.9 billion fall in December, the largest monthly decline on record. The central bank has intensified efforts to prop up the yuan after it staged a surprise devaluation in early August.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

February 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 137

Weekly Cash Comments

Weekly Cash Commentary for week ending 02/05/2016

Soybean basis came under pressure this week giving up 2 cents a bushel, while corn basis continued to flat line at unchanged on the week.

 

Corn basis, although on average across the country it was unchanged for the week, did find some modest strength on the Eastern Seaboards well as in parts of Nebraska and South Dakota as a massive blizzard midweek shut down grain flows. Corn piling continues to be fairly prominent still in the Western Cornbelt and will act as a constraint on any significant basis improvement. At the Gulf, basis levels slipped 4 cents a bushel although river terminals were more stable only giving up 1 cent a bushel. At ethanol plants, corn basis was unchanged for the week.

 

For soybeans, basis levels fell under weakness this week as higher futures brought on more farmer selling and a 10 cent loss at the Gulf export market signaled a significant slowing in the US export program. River terminals lost 5 cents a bushel on average although losses of 10 to 15 cents were fairly common at some locations. At soy plants, basis levels were unchanged on average, although plants in the Southeast were up 5 to 10 cents a bushel.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

February 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 188

Grains Quiet in the Overnight Session

In outside markets, the US dollar inched higher after being routed in the last two trade sessions

Grains Quiet in the Overnight Session

Grain markets were mostly quiet overnight with corn and wheat posting fractional changes while soybeans advanced around 3 cents a bushel. In outside markets, the US dollar inched higher after being routed in the last two trade sessions while crude oil and stock futures also were quiet, posting modest gains.

 

Thursday, Stats Canada estimated all wheat stocks there at 20.7 MMT versus expectations of 21.8, while canola stocks were pegged at 12.1 MMT up from expectations of 11.5. Overnight, Egypt had only 4 offers on its wheat tender as their quality restrictions continue to impede grain companies in offering supplies.

 

For South America, weather models point to favorable growing conditions as most of Argentina’s driest areas will get adequate rains next week. Production potentials will likely be restored near normal and the bottom line for Argentina is still a very good production year. In the meantime, Brazil will experience a favorable mix of rain and dry weather during the next two weeks supporting good crop development for nearly all of the nation.

 

The wait for U.S. monthly jobs numbers steadied stock markets on Friday and allowed the dollar to recover after what has so far been its weakest week in more than six years. After posting a strong number of 292,000 in December, January Non Farm Payroll is expected to cool down within the range of 170K to 245K while the unemployment rate is expected to hover in between 4.9% to 5% range. The actual report released at 7:30 am CDT this morning showed weaker than expected payroll numbers of 151,000 but the unemployment rate ticked down to 4.9%. Silver futures continued to inch higher overnight as weakness in the US economy is spurring prices to reach their highest mark since November.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

February 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 384
February 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 156

US Dollar Continues to Move Lower

Grains were higher overnight with corn and wheat up 2 cents while soybeans were up 4 cents.

Grains were higher overnight with corn and wheat up 2 cents while soybeans were up 4 cents. In outside markets, the US dollar continued to move lower giving up 0.5% after losing 1.6% yesterday, which is supportive for grains. Stock futures were drifting lower as was crude oil. Silver and gold futures were still on the rise as economic risk leads to investors turning to safe havens of precious metals.

 

On Wednesday, EIA’s weekly ethanol report showed production off 2,000 BPD to 959,000 bpd, while stocks climbed sharply by almost 1 million barrels to 22.36 million barrels on the week. Overnight, Brazil’s Conab pegged the soy crop at 100.9 MMT, which was lower than their previous estimate of 102.1 in January, but still slightly higher than USDA’s estimate of 100.0. Conab sees Brazil’s corn crop at 83.3 MMT vs 82.3 MMT in January and USDA at 81.5 MMT.

 

Algeria's state grains agency OAIC bought between 450,000 MT and 500,000 MT of optional-origin milling wheat in a tender this week, European traders said on Thursday. OAIC paid around $178 a MT, cost and freight included, for the wheat, which was likely to be sourced in France and also partly in the UK.

 

Crude oil was up sharply on Wednesday gaining $2 a barrel on the US dollar plunge as well as news that Venezuela was looking to enter into talks with other nations to reduce output. However, the warning flag on oversupply continues to get deeper in the red as EIA crude oil stocks showed that weekly US crude oil inventories were up 7.8 million barrels when analysts only expected a 4.8 increase. Likewise, gasoline stocks ballooned by 5.9 million barrels compared to only a 1.7 million barrel increase that was expected.

 

The US dollar was back on the defensive in early trade in Europe after a collapse in expectations of a further rise in U.S. interest rates this year drove its biggest daily fall in over two months on Wednesday. Against a basket of currencies, the greenback fell another 0.5 percent to 96.796, it’s lowest since early November. The euro hit a 3-1/2 month high of $1.1161 EUR=EBS, extending its gains from an explosive sell-off a day earlier.

 

WEEKLY EXPORT SALES

 

                              Actual      Expected     Last Week

Corn                        1,129      800-1,000        817

Soybeans                     -43       400-600         647

Wheat                          66       200-400         294

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

February 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 422
February 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 179

Choppy Trading Continues

S&P futures and crude oil were modestly higher after Tuesday’s sharp sell-off.

Grains dipped lower overnight as the slog thru choppy trading continues. S&P futures and crude oil were modestly higher after Tuesday’s sharp sell-off.

 

Yesterday saw some fresh highs in soybeans with front-month March trading as high as $8.89, its highest price since mid-December, before backing off into the close at $8.85. Weather models overnight increased the chance of rain for Argentina next week. The current week’s weather is expected to be dry, so next week’s rain forecast will be important in preventing crop stress going into mid-month.

 

For corn, trade continues to be extremely limited between $3.73 and $3.64 with most of the volume in the past two weeks around the $3.70 mark. Today’s ethanol report is expected to show a modest recovery in weekly production as well as higher ethanol stocks after last week’s sharp drop in both measures. Ethanol margins have improved in the past few weeks, but are likely hovering below break-even when all costs are considered. Yesterday, ADM posted weaker than expected earnings, blaming ethanol as one of the limiting factors in company profits.

 

In crude oil, yesterday the API reported a +3.8 mil build in crude inventories, +6.6 mil in gasoline, and +0.4 mil in distillate. This morning, U.S. private employers added 205,000 jobs in January, above economists' expectations, a report by a payrolls processor showed giving stock futures a modest lift going into the opening bell.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

February 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 808
February 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 149

Grains Limited in the Overnight

U.S. crude futures were off sharply on Monday, losing $2 a barrel

Grains continued to be tied limited overnight, while outside markets were under pressure yet again.

 

After the close yesterday, USDA’s monthly industrial use reports showed soybeans crushed in December were 167.0 MB versus trade expectations of 167.3 MB. For ethanol, 444.5 MB of corn was used for ethanol in December, up from November’s total of 435 but off from last year’s December use of 455.9.

 

In other news, wheat conditions in key growing states are trending fairly well as compared to last year. States in the Plains to Western Cornbelt are posting better than last year condition ratings with the exception of Nebraska. In Oklahoma, the wheat crop is rated 74% good-to-excellent, which although lower than last month’s reading of 77%, is still highly improved over last year’s condition of only 41%.

 

In other wheat news, Egypt announced a tender to buy more milling wheat yesterday, but overnight they canceled the tender citing a lack of offers in light of their import quality rules. Overnight, Taiwan's maize industry procurement association MFIG purchased 65,000 MT of corn to be sourced from the Unites States in an international tender which closed on Tuesday.

 

Argentina weather is expected to be mostly favorable during the next two weeks with adequate rains easing dryness. The greatest relief is expected Sunday into Monday of next week when rain will be most widespread in the driest areas. Some showers are expected Thursday into Saturday, but they are not likely to be well enough distributed to provide relief for all of the dry region.

 

U.S. crude futures were off sharply on Monday, losing $2 a barrel as weak economic data from China reversed a four-day rally from last week and an OPEC source undermined chances of an emergency meeting to stem the decline. Those same forces continued to push crude lower in the overnight and are weighing on S&P futures.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

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Grains Lower Overnight

February 08, 2016 | Grain Hedge Insights | Kevin McNew

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