March 30, 2016 | Grain Hedge Insights | Kevin McNew | Views: 325

USDA Crop Intentions Report Due Out Tomorrow

Crude oil reversed course posting a nearly $1 a barrel gain and stock futures are higher.

Grains were lower overnight leading up to tomorrow’s USDA report as gains over the past two trade sessions were met with some selling pressure. In outside markets, crude oil reversed course posting a nearly $1 a barrel gain and stock futures are higher.

 

Grain traders worried on Tuesday about the risk for reduced demand from China after the government said it would scrap its corn stockpiling program at a time when global markets are awash with excess supplies. Traders said importers in China would likely reduce purchases of farm products used to feed livestock, including sorghum and the ethanol byproduct distiller’s dried grains (DDGs). They said the policy shift is expected to bring domestic corn prices in line with cheaper foreign supplies. Last year, China imported about 40 million tonnes of substitutes for corn, including sorghum, DDGs and barley, from the United States and other countries, said Fred Gale, a senior economist for the U.S. Department of Agriculture. At times, corn prices in China were double those of the import.

 

Thursday, USDA is expected to report higher corn acres for 2016 with expectations running at 90 million acres planted versus 88 million in 2015. For soybeans average estimates look for a 83.1 million acre planting, which is a modest 400,000 acre increase over last year. However, the variance in the estimates is quite large, ranging from 81.6 to 84.2. USDA will also release their quarterly stocks report next week.

 

In crude oil, prices found support late yesterday as API crude stocks estimates were only modestly higher than expected at 2.6 million barrels higher versus an expectation of a 2.0 million barrel build on the week. This was off sharply from last week’s build of 8.8 million barrels.  IA will release official government data later this morning at 9:30 CDT and traders look for a 3.3 million barrel increase in stocks compared to last week’s 9.3 million barrel increase.

 

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

March 29, 2016 | Grain Hedge Insights | Kevin McNew | Views: 289
March 29, 2016 | Grain Hedge Insights | Kevin McNew | Views: 239

Corn Slightly Weaker in the Overnight

Crude sinks nearly $1 a barrel

Grains were mixed in the overnight trade with corn slightly weaker and soybeans posting modest gains. Wheat managed to add to yesterday’s rally in the overnight session. In outside markets, crude oil sunk nearly $1 a barrel and stock futures were lower as well.

 

Crop condition reports released on Monday from key winter wheat states showed little change in the crop’s quality. Number 1 producing state Kansas slipped from 57% to 56% good-to-excellent while Oklahoma was unchanged on the week at 63%. Texas inched higher to 48% versus 47% last week. Colorado showed a bigger bump going from 43% last week to 51% this week.

In corn, prices are getting closer to short term highs of $3.73 ½ against May futures set back on Feb 22. Yesterday, Mexico hedge accounts were noted as active buyers of corn calls for July, suggesting there are looking to shore up price protection on purchases.

 

Crude oil came under sharp selling pressure as the two-month rally has left traders wondering if it is overdone. Crude stock numbers from API will be released at 3:35 PM CDT today. Last week’s estimate showed a huge weekly build of 8.8 million barrels with traders only expecting a 2.7 million barrel build.

 

Fed chair Yellen is giving a speech today which will be monitored by investors. Most experts expect Yellen to re-emphasize on Tuesday her previous insistence that all meetings were “live”, meaning that rate decisions could happen at any point in time, though markets place low odds on any action happening in April.

 

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

March 28, 2016 | Grain Hedge Insights | Kevin McNew | Views: 256
March 28, 2016 | Grain Hedge Insights | Kevin McNew | Views: 394

Grains were Mixed in the Overnight

Outside markets for crude oil and stock indices were higher

Grains were Mixed in the Overnight

Grains were mixed overnight as soybeans and corn drifted lower while wheat posted modest advances to start the week. Outside markets for crude oil and stock indices were higher while the US dollar fell modestly.

 

Thursday March 31 brings news inputs from USDA as they will release their quarterly grain stocks report and spring planting intentions report. The average estimate for March 1 corn stocks was 7.801 billion bushels, with a range of 7.700 to 7.975 billion. That average would represent the largest March 1 corn stocks since 1987, and the second-most in records dating to the 1920s. For soybeans, the average March 1 stocks estimate was 1.556 billion bushels, with a range of 1.425 to 1.615 billion. For wheat, the average was 1.356 billion, with a range of 1.325 to 1.460 billion. For U.S. planting intentions, the average estimate for corn was 89.972 million acres (range 89.0-91.0), up from 88.0 million in 2015. For soybeans the average was 83.057 million acres (range 81.6-84.2), up from 82.7 million in 2015. The average estimate of all-wheat plantings was 51.702 million acres (range 50.669-54.845), down from 54.6 million in 2015.

 

China, the world's second-largest corn consumer, will let the market decide domestic corn prices and scrap its nine-year old stockpiling scheme, according to a regional television report over the weekend.  Instead of propping up prices by buying up corn, Beijing will directly subsidize farmers and stop stockpiling the grain from autumn this year, state-owned Inner Mongolia Television reported over the weekend.

 

In oil, Dennis Gartman, noted commodity analyst, called for the bear market to continue. He believes there is a lot of crude oil that has been capped and, on the rally, those caps are coming off that production. In terms of U.S. crude, Gartman sees the near-term high-range spot at $42 per barrel. At this range, he feels that consumers will be happy as gas would remain at $2 per gallon heading into the summer. In the long-term, he feels crude will trade at a maximum price of $47. "Those are reasonably good profitable levels" for producers, he noted.

 

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

March 24, 2016 | Grain Hedge Insights | Kevin McNew | Views: 293

Grain Prices Drift Lower

Crude Oil again fell sharply lower

Grain prices drifted lower to start the day while crude oil again fell sharply lower and stock futures were weaker in overnight trade.

 

Russia is set to become the world's second largest wheat exporter in the 2015/16 marketing year, eating into Canadian and the U.S. market share, owing to a weak rouble and a decline in supplies from its main rivals, the SovEcon consultancy said. Russian wheat exports are running at a historically record pace this season, which lasts until June 30, thanks to a large crop of 61 million tonnes in 2015 and the weaker rouble.

 

Yesterday, EIA crude oil inventories were shockingly higher for the week, gaining 9.1 million barrels versus trade estimates of only a 3.1 million barrel increase. That sent crude prices tumbling lower by $1.60 a barrel, and that selling continued into today with another $1 a barrel loss. The US dollar kept up its winning ways, seeing its advances hold up for 6 days in a row in weakness.

 

 

                        OC Actual          OC Expected            NC Actual           NC Expected

Corn                     803.2               900-1100                   99.9                      0-200

Soybeans              410.8                 400-600                   29.3                    75-300

Wheat                  368.9                 150-350                 118.8                    75-250

 

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

March 23, 2016 | Grain Hedge Insights | Kevin McNew | Views: 302
March 23, 2016 | Grain Hedge Insights | Kevin McNew | Views: 286

Grains were Weak in the Overnight

Soybeans got a big boost on Tuesday as the rally moved up to the highs set back in early December.

Grains were weaker overnight as soybeans took a dip below their highest prices since December. In outside markets, crude oil was lower while the US dollar continued to add to its winning streak, posting positive gains for the 5th day in a row.

 

Soybeans got a big boost on Tuesday as the rally moved up to the highs set back in early December.  Stimulus is coming from the strength in the Brazilian Real, making Brazil soybeans more expensive in global markets, and talk of lower soybean acres by US farmers this spring. The Brazilian Real is up 12% since March 1 and reached fresh highs yesterday, but is trading lower this morning. US farmers were active sellers of cash soybeans yesterday. Basis levels for spot delivery were off quite readily in many locations yesterday.

 

In weather, cool temps for this weekend in the Plains are not expected to be as severe as last weekend.  Also, rains are starting to appear in the forecast for OK & KS over the next few weeks which might give the wheat market a reason to turn lower.

 

Market attention is also turning towards the U.S. planted area forecasts and quarterly grain stocks estimates from the U.S. Department of Agriculture on March 31. The reports could inject volatility into markets generally burdened by record-large global grain stocks. Analyst forecasts are showing 1.5 to 2.5 million more acres of corn in 2016, while soybean forecasts are somewhere between slightly lower to slightly higher than 2015. As a result, soybean prices have strengthened relative to corn on this move higher.

 

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

March 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 541
March 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 260

Grains were Higher in the Overnight

On Monday, state USDA agency’s gave an update on HRW wheat conditions

Grains were higher overnight, while outside markets turned lower on news of a terrorist attack in Belgium.

 

On Monday, state USDA agency’s gave an update on HRW wheat conditions, which showed a mixed bag with Kansas and Texas each having a modest 1% improvement in the crop rating for good-to-excellent (TX 47% TW vs 46% LW and KS 57% TW vs 56% LW). But Oklahoma dropped a significant 4% with the crop going from 67% last week to 63% this week. Colorado released their first ratings of the season, showing only 43% of the crop good-to-excellent, well below 55% this time last year.

 

In overnight news, Japan's Ministry of Agriculture is seeking to buy a total of 126,190 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. Lebanon's public health ministry referred a case concerning contaminated Russian wheat imports to a branch of the public prosecutor's office on Tuesday, the state news agency said, following a dispute with the economy ministry over test results showing unacceptable levels of a toxin. The Lebanese Public Health Minister has said that tests carried out by his ministry in February showed unacceptable levels of a carcinogenic substance, ochratoxin, in wheat imports from Russia.

 

Twin blasts hit Brussels airport early Tuesday. They were followed by an explosion in a subway station in the city. At least 26 people were killed, according to Belgian media, 15 at a subway station and at least 11 at the airport. France and Germany’s stock markets were down 1% on the news but pared losses going into the close. US equity futures followed in sympathy.

 

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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