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February 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 298

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: 961
February 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 256

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)

February 01, 2016 | Grain Hedge Insights | Kevin McNew | Views: 459
February 01, 2016 | Grain Hedge Insights | Kevin McNew | Views: 280

Grains Lost Ground in the Overnight

Oil found itself on the defensive as economic data from China showed the manufacturing sector contracted at the fastest pace since 2012.

Grains lost ground overnight after closing sharply higher on Friday. Likewise, crude oil and S&P futures were deep in negative territory to start the week.

 

On Friday the CFTC showed non-commercials slashed their net short position in CBOT corn by 74,000 contracts in the week ending Jan. 26, to 129,051.   Non-commercials cut their net short in CBOT wheat by 19,000 contracts, to 91,973, and expanded their net short in soybeans by 5,400 contracts, to 82,286.

 

In overnight news, Algeria was in the market, issuing a tender for optional-origin milling wheat, and a group in Israel is tendering for a 100,000 MT shipment of optional origin corn. Russian wheat export prices rose last week as the rouble strengthened, making grain less competitive on dollar-denominated global markets. Black Sea prices for Russian wheat with 12.5 percent protein content were at $182 a MT, up $2 from a week earlier.

 

Argentina’s weather outlook is wetter today relative to that of Sunday. Rains are expected late in the week with scattered showers over the weekend, and more significant rain early to mid-week next week. Brazil is still seeing areas of heavy rain to slow harvest, but areas of the center south and northeast had some dryness.  

 

Oil found itself on the defensive as economic data from China showed the manufacturing sector contracted at the fastest pace since 2012. Also, last week’s price rally was driven by talks of an output reduction deal among OPEC and Russia, but that action seems less likely to happen. A senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries. OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts. Partly because of Iran's return, OPEC output has jumped to 32.6 million barrels per day (bpd), its highest in years, adding to supply of more than 1 million bpd in excess of demand which has pulled prices down 70 percent since mid-2014.

 

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

January 29, 2016 | Grain Hedge Insights | Kevin McNew | Views: 280

Weekly Cash Comments

Weekly Cash Commentary for week ending 01/29/2016

Grain basis moved lower this week as a two-week recovery in the futures market seemed to run into headwinds. Farmer selling, especially in the Western Cornbelt has put basis on the defensive.

 

Corn basis was off 0.6 cents a bushel on average this week across the US thanks to increased farmer sales. Ethanol plants saw the biggest losses with a 1.6 cent a bushel drop with losses of 3 to 5 cents a bushel fairly common across IA, NE & MN. Meanwhile, river terminals had some stability this week as basis at the Gulf bids posted a 2 cent advance.

 

For soybeans, average basis levels were off 1-cent a bushel and unlike corn, is starting to see some weakness in the export market. Gulf bids were off 1 cent a bushel and upstream river terminals backed off on basis by 1.5 cents this week. Soy plants, which had been weaker the previous week, were mostly unchanged this week.

 

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

January 28, 2016 | Grain Hedge Insights | Kevin McNew | Views: 289

EIA Report Shows Decline in Ethanol Production

Grains moved lower overnight as the lack of fresh news keeps a lid on this rally off of Jan 12th lows.

Grains moved lower overnight as the lack of fresh news keeps a lid on this rally off of Jan 12th lows. In outside markets, S&P futures were on a positive trajectory to start the day following yesterday’s 1% loss while crude oil was also in positive territory with modest gains.

 

The EIA ethanol report on Wednesday showed ethanol production declined -2.2% to a 961,000 bbl/day. Ethanol margins are likely in a 10-15 cents a bushel loss when including all costs, although this figure is up since the start of the year with ethanol prices rebounding. Abengoa Energy announced they would sell their 6 first generation grain ethanol plants in the US as part of a bankruptcy deal with creditors. Corn is trading in a narrow range with $3.72 overhead resistance and the gap at $3.64 providing support.

 

In beans, Brazil’s harvest will begin in the next few weeks although weather delays are an issue right now. Mato Grosso Brazil is still wet for three days then the rain moves south where it could disrupt early harvest in Parana. The southeastern 20% of Argentina to be dry over the next two weeks. Soybeans moved off of yesterday’s higher close, but the range of $8.88 and $8.70 should be viewed as key resistance and support.

 

Wheat came under pressure yesterday as Russia said they would be considering reductions in wheat export taxes. Russia plans to hold a meeting on Friday to further discuss export controls for ag and a decision is expected early next week. Support is around $4.66 and overhead resistance at $4.88.

 

Stocks came under pressure yesterday following the Fed announcement of no interest rate change (not surprising), but they also suggested they have not ruled out an interest rate hike in March. Crude oil continues to try to move higher, as it has posted a $4 a barrel advance off of the 13-year lows set last week. However, it faces a stuff headwind with economic data continuing to purport growing inventories of crude.

 

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

January 27, 2016 | Grain Hedge Insights | Kevin McNew | Views: 725
January 27, 2016 | Grain Hedge Insights | Kevin McNew | Views: 273

Grains Sluggish Yet Again

Grains were sluggish yet again overnight with wheat falling after solid advances in the past four days. Corn also drifted lower while soybeans posted a slight advance.

Grains were sluggish yet again overnight with wheat falling after solid advances in the past four days. Corn also drifted lower while soybeans posted a slight advance. In outside markets, the see-saw patterns continued with S&P and crude oil futures making relatively big declines before morning trade opened.

 

In Argentina, concerns over dry weather are starting to mount. An analyst for the Rosario Grain Exchange said parts of the Buenos Aires province is burning up and yield loss is possible. Two weeks ago, the Rosario exchange estimated the corn harvest for 2015/16 would be 23.8 MMT, up from 20.2 MMT in the previous season, due to a larger planting area and higher yields. The area hit by drought represented 8% of the main agricultural area of the country, which is also a top global exporter of soy and wheat. Looking ahead, World Weather Inc sees another ten days to two weeks of net drying in Argentina in the provinces of Buenos Aires, Sante Fe and Entre Rios.

 

Wheat was pressured overnight as Russia’s ag minister proposed to policymakers that the wheat export tax be eliminated or reduced, but would impose taxes on corn and barley exports. This is a seemingly different policy stance when earlier in the week Russia wanted to restrict all grain exports to curb inflation.

 

Oil prices bounced higher on Tuesday after senior OPEC and Russian officials stepped up vague talk of possible joint action to eliminate one of the largest surpluses in modern times, but any resolution seems unlikely. Meanwhile, U.S. crude stocks rose by 11.4 million barrels last week to 496.6 million, the American Petroleum Institute said, topping analyst expectations for an increase of 3.3 million barrels. That said, oil bulls are gradually starting to emerge, with this month's drop below $30. The options market shows traders are buying up protection against a rise to at least $40 by the end of the year, and speculators have increased their bullish bets on the price through the futures market.

 

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

January 26, 2016 | Grain Hedge Insights | Kevin McNew | Views: 516

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