January 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 100

Markets in a Wait and See Ahead of Tomorrow’s New Crop Estimates

Crude Oil Moves Higher in the Overnight

Grains moved lower overnight with wheat leading the complex lower while losses in corn and beans were more muted. In outside markets, crude oil moved higher as did the US dollar.

 

China has increased punitive tariffs on imports of a US DDGs from levels first proposed last year. In a final ruling, the Commerce Ministry said on Wednesday that anti-dumping duties will range from 42.2 percent to 53.7 percent, up from 33.8 percent in its preliminary decision in September. Anti-subsidy tariffs will range from 11.2 percent to 12 percent, up from 10 percent to 10.7 percent.

 

Markets are mostly in a wait-and-see stance ahead of tomorrow’s flurry of new crop estimates. Quarterly stocks will be a key report to watch with USDA factoring in heavy feed use for wheat and corn in their demand estimates. USDA has a 9% increase in corn used for feed meanwhile cattle on feed was flat for the last quarter compared to the previous year, while hogs & poultry were up only 3% year on year.

 

Dry conditions are in the cards for Argentina over the next few days before widespread rains return the middle of next week. Slight improvement in wettest 1/3 of Arg. corn/soy next 10 days, but very wet 11-30 day suggests ongoing concerns. In Brazil, next 10 days will bring rains to help ease corn/soy stress in Northeast.

Oil rose on Wednesday, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers. EIA crude stocks data is out later this morning with traders looking for a 1.1 million barrel build from last week.

 

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

January 10, 2017 | Kevin McNew | Views: 145
January 10, 2017 | Grain Hedge Insights | Kevin McNew | Views: 160

Soybeans Lead the Decline in the Overnight

Grain Futures were Lower

Grain futures were lower overnight with soybeans leading the decline on a 7 cent loss, giving up much of yesterday’s 10-cent advance. In outside markets, crude oil tried to stabilize after yesterday’s $2 a barrel slide while US equity futures and the dollar were eaking out small gains to start the day.

 

USDA announced a 130,000 MT sale of corn to Taiwan, and a 241,600 MT sale of corn to Unknown of which 91,300 MT is for 2016/2017 delivery and  150,300 for 2017/2018.

 

This morning Brazil’s forecasting agency Conab pegged the bean crop to a record large 103.8 MB, up from their previous forecast of 102.45. They also boosted their corn forecast to 84.5 MB from their last estimate of 83.8 MB.

 

Crush margins in China have started to erode sharply and are now at their lowest point since September. Soybean crushers in China have slowed bean buying as profits are cut and stockpiles have surged. With the Chinese New Year at the end of this month, there is growing beliefs that China will curb its buying and turn to South America after the week-long Lunar New Year.

 

USDA will release their own forecasts on Thursday for US & global grains. Traders look for a modest drop in US corn and bean carry-outs with corn expected to fall to 2,385 MB from last month's forecast of 2,403, and soybeans are expected to fall to 468 MB from 480 in December. The Quarterly Stocks report will shed some light on corn for feed demand in the 1st quarter of the marketing year. USDA has a 9% increase in feed use year on year which seems like a stretch. Cattle on Feed numbers for Q1 were essentially unchanged vs last year, while hogs and broiler numbers were up roughly 3% for the quarter vs last year.

 

US Southern Plains are expected to see some beneficial rains on the horizon. Argentina continues to be aggressive players in the wheat markets as their export prices have stayed flat in response to the CBT rally in recent weeks. In the past week export prices for corn have risen in foreign countries relative to the US, while SA bean prices have gotten cheaper relative to the US.

 

US Export Prices Relative to Foreign Competitors (in USD/MT)

 

                                    This Week      Last Week

Corn-ARG                         $23.40          $22.48

Corn-BRZ                         $16.90          $15.34

Corn-EUR                          $5.05            $3.81

Beans-ARG                    -$14.10            -$8.16

Beans-BRZ                       $2.70             $3.22

 

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

January 09, 2017 | Kevin McNew | Views: 156
January 09, 2017 | Grain Hedge Insights | Kevin McNew | Views: 115

Beans Flat in Overnight Trade

Wheat and Corn Start the Week in Positive Territory

Wheat and corn started the week in positive territory while beans were flat in overnight trade. In outside markets, crude oil gave up a $1 a barrel in overnight trade while the US dollar and equities were mostly quiet in the night session.

 

Argentina weekend rain was most significant from Cordoba and San Luis to northeastern Buenos Aires where 0.60 to 1.59 inches were recorded. Heavy rains are expected Monday across the interior north. But conditions across the nation’s crop areas will likely improve over time this week and next week.

 

Brazil remains very good for the bulk of its production region. A few areas of dryness will continue, but they will eventually receive rain and subsoil moisture should be sufficient to carry on normal crop development until better rain evolves. Rain in Tocantins, northeastern Goias and western Bahia later this week will bring some much needed relief to drying, but follow up rain will be very important to continue the improving trend.

 

On Friday, CFTC data showed managed funds cut corn short by 17K to -96K, soy long down 13K to +94K, wheat short down 5K to -104K. Thursday marks the next USDA crop report with wheat acres being of special interest. Analysts expect US winter wheat plantings to be off 2 million acres from 2016.

Oil fell by $1 a barrel on Monday as growing U.S. production outweighed optimism that many other producers were sticking to a deal to cut supplies in a bid to bolster the market. On Friday, Baker Hughes data showed an 8th week in a row of rising US rig counts.Rising exports from Iran also added to bearish sentiment. Iran has sold more than 13 million barrels of oil held on tankers at sea, capitalizing on its exemption from a global deal to cut production in order to regain market share and court new buyers.

 

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

January 06, 2017 | Grain Hedge Insights | Kevin McNew | Views: 109
January 06, 2017 | Grain Hedge Insights | Kevin McNew | Views: 88

Weekly Cash Comments

Weekly Cash Commentary for week ending 01/06/2017

Cash markets saw positive movement to start the year. On average corn was up 1 cent, rising higher for the third week in a row. Ethanol plants moved 1 cent per bushel higher as well. Weekly ethanol production is still ahead of last year’s pace and USDA demand estimates. Last week production hit just above 300 million gallons, well ahead of the USDA demand estimate of 285 million gallons. Corn along the river also continued higher from last week, gaining 2 1/4 cents.

 

Soybeans saw upward movement as well, gaining 3 1/2 cents per bushel. Crush facilities made up for last week’s dip by gaining 7 1/4 cents. Monthly crush data from USDA showed November soy crush at 170.7 MB, slightly below trade estimates of 170.9 MB. USDA pegged corn used for fuel alcohol at 451.9 MB in November, and that's up from 433.9 MB a year ago. Soybeans along the river kept with the upward trend gaining 1 1/4 cents. 

 

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

January 06, 2017 | Grain Hedge Insights | Kevin McNew | Views: 190

Soybeans Firmly in Negative Territory Overnight

Corn and Wheat Add to their Gains for 2017

Corn and wheat continued to add to their gains of 2017 while soybeans was firmly in negative territory for much of the night session. In outside markets crude oil was higher while equities and the US dollar were little unchanged.

 

Wheat continues to find strength from poor US winter wheat conditions and concerns about winter kill in Ukraine. An expected sharp fall in temperatures in Ukraine could damage the country's winter grain crops because of a lack of snow cover on the fields, analyst UkrAgroConsult said on Thursday. Meteorologists forecast a cold snap starting on Jan. 6 and predict that air temperatures will fall on average to 13-17 degrees Celsius below zero, perhaps even to minus 20 degrees.

 

In South America, rains continue to plague the last of the Argentine planting season. Estimates put overall soy planting at 90% done while corn is said to be only 80% planted. Argentina showers return through Monday and the latest models increased the rain coverage. More rains are also expected next Thu./Fri. & two more in 11-15 day, which keeps wetness concerns in place across Argentina corn/soy. In Northern Brazil, 6-10 day rains aid moisture for corn/soy/coffee/sugar, limits dryness to no more than NE 10% corn/soy.

 

The dollar clawed back ground on Friday but was heading for a second straight weekly loss, having tumbled the previous day on a rare piece of poor U.S. data and apparent action by Chinese authorities to shore up the yuan.

 

Weekly export sales were disastrous with soybeans coming in with a cargo and a half of new business at only 87,500 MT.

 

Weekly Export Sales-

                                      Actual       Expected

Corn                                429.3         650-950

Soybeans                           87.5      800-1,200

Wheat                             183.6         200-500


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

January 05, 2017 | Kevin McNew | Views: 243
January 05, 2017 | Grain Hedge Insights | Kevin McNew | Views: 128

Beans Come Under Pressure

US Dollar was Weaker Going into Morning Trade

Grains were lower as beans came under pressure and wheat and corn were fractionally weaker. In outside markets, the US Dollar was weaker while crude oil was in positive territory going into the morning trade.

 

Weather models are showing rains are expected to hit northern Brazil in the coming 10 days with 65% coverage expected. Also, Argentina is not expected to be as wet. However, it is still very wet and rains will be prominent into the weekend. Rains are expected to hamper some late season planting in Argentina.

 

The latest Drought Monitor conditions in the US showed dry conditions eased in the SE US in the last week, but intensified in OK. Little change was noted in other areas of the US Plains.

Stocks of soybeans at Chinese ports are reportedly down. Soy crush demand is still robust with crush margins still seasonally high, but import shipments have been slowed a bit by logistics issues.

Crude oil will get fresh news this morning from EIA on crude oil inventories. Expectations are for a 2.15 million barrel decline in stocks versus last week. However, the past two weeks have seen oil inventories build, contrary to expectations which have been for inventory draw-downs.

 

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

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