January 26, 2016 | Grain Hedge Insights | Kevin McNew | Views: 158

Grains were Modestly Weaker in the Overnight

Outside markets for the S&P and crude oil were modestly higher following Monday’s sell-off.

Grains were modestly weaker overnight, while outside markets for the S&P and crude oil were modestly higher following Monday’s sell-off.

 

In weather, showers exited southeast Buenos Aires, northeast Cordoba, northern Santa Fe, northern Entre Rios, and minor production areas in northeast Argentina in the past day, with additional showers late Wednesday into Friday and next Wednesday/Thursday. While each of these events has the chance to reach up to 1/2 of the corn/soy, the best rain chances are likely to remain in northern/western areas. As a result, dryness concerns (focused on 20 to 25% of corn/soy) in central Cordoba and bordering sections of Santa Fe as well as central/northeast Buenos Aires should continue and potentially threaten minor reductions in yield potential, although heat has subsided.

 

China imported a record volume of corn and corn substitutes, including distillers' dried grains (DDGS) and sorghum, in 2015 driven by cheap overseas prices, but imports this year could fall by more than 50 percent, traders and analysts said. China shipped in a record 6.82 MMT of distillers' dried grains (DDGS) in 2015, a rise of 26 percent from the year before, official customs data showed on Tuesday, as feed mills replaced expensive domestic corn with the cheaper dried grains. However, DDGS imports to China, the world's top buyer of the grain, a by-product of corn-based ethanol, are expected to decrease by more than 50 percent this year. If so, this could have important implications for US DDGS and resulting ethanol margins, as China accounts for half of all US DDGS exports.

 

Outside markets were relatively stable following Monday’s sell-off in crude oil and stocks. The Federal Reserve's two-day policy meeting begins later in the day.   Investors will be parsing the U.S central bank's message to determine what, if any, effect volatile global markets, plummeting oil prices and heightened fears of a Chinese slowdown will have on the Fed's previously stated intentions to continue raising rates this year.

 

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

January 25, 2016 | Kevin McNew | Views: 478
January 25, 2016 | Grain Hedge Insights | Kevin McNew | Views: 277

Grains Were Mixed in the Overnight

For crude oil, prices started the week on a down

Grains were mixed overnight as wheat found modest support advancing 3 cents, while soybeans were off 3 cents. Corn drifted lower in relatively stable trade in the night session. In outside markets, crude oil started the week with a $1 a barrel loss while S&P futures were modestly lower.

 

Soybeans saw pressure from good weather prospects in South America. Dry weather across N Argentina (hot too) and S Brazil will give way to wetter conditions over the next 5-14 days. N and NE Brazil have meanwhile seen 125-300+% normal rains with drying beginning next week. Last week (ending Jan 21) saw vegetation deteriorate across much of Argentina and parts of S Brazil. Improvement was seen in Northern Center-West and much of Northeast and parts of Southeast Brazil. Widespread moisture during the next 7-10 days will help numerous areas.

 

For wheat, prices found support from a cold weather snap in Russia and Ukraine. However, with most areas seeing adequate snow cover the risk to the crop seems limited. Also providing support is a report that Russia’s Ag Minister may be considering limiting grain exports over concern about the country’s inflation and declining rouble.

 

In corn, India bought 250,000 MT of corn from Ukraine. Technically, the corn market seems to be holding up on the recovery from the $3.50 area. The corn market held its gap last week at $3.64 as we try to push through the $3.70 area. This should give us a bit more strength with a test of the December trade from $3.75 to $3.80. Expect that to satisfy this recovery. Weekly charts also show the $3.75 area key overhead. However, we need a close under $3.63 to shift back down.said oil output had reached a record high in December. Its fields in the central and southern regions produced as much as 4.13 million barrels a day, the government said.

 

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

January 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 571
January 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 335

Weekly Cash Comments

Weekly Cash Commentary for week ending 01/22/2016

Cash grain basis continued to be at a stalemate this week as basis levels around the country for corn and soybeans were generally unchanged.

 

In corn, futures prices continued to creep higher but this seemed to have little impact on basis levels. Although, Western Cornbelt basis seemed to have a bit more pressure with a few cent losses on basis being reported at some buyers. Farmers in the Western Cornbelt had a better year on average versus Eastern Cornbelt which should keep basis levels in the West in check for some time. Ethanol plants on average were off 1-cent a bushel this week with 3 to 7-cent losses fairly common at Western Cornbelt plants. River terminals were flat for the week.

 

For soybeans, river terminals were also unchanged for the week as were soy crushing facilities. As in the case of corn, there was a bit of weakness in soy crushing plants in the Western Cornbelt with losses of 2 cents fairly common at key buyers. 

 

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

January 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 223

Grains Firmed in the Overnight

Outside markets were firm as well with oil bouncing off its lows.

Grains firmed in the overnight session with soybeans leading the complex higher on 4 cent advances in early morning trade. Outside markets were firm as well with oil bouncing off its lows on a $1.50 a barrel advance and S&P futures were up 1.3%.

 

Export tender activity has heated up of late although many of the deals seem to be getting done without US participation. Notably, Egypt’s wheat deal yesterday for 235,000 MT was won by Romania, France and Russia. Prices between US and French wheat have been diverging this week thanks to the Euro’s slide against the US dollar. Current FOB prices in France are $32/MT cheaper than the US, which compares to only a $25/MT discount this time last month. India also announced the results of its corn tender which ended up going to a South Korea trading firm.

 

In South America, the next 7 days look to bring excessive moisture in parts of Northern Brazil while Argentina will see warm and dry weather. For the 7 to 14 day forecast rain should return to northeastern Argentina and southern Brazil boosting soil moisture and ending recent drying.

 

U.S. oil prices rebounded more than $1 a barrel from 12-year lows on Thursday, posting their biggest daily gain this year as rallying financial markets gave some bearish traders reason to take profits on record short positions. U.S. crude briefly vaulted back to $30 as hopes for easier monetary policy from Europe fueled a recovery in European and U.S. stock markets. Even bearish EIA crude inventory data which showed a 3.8 million barrel increase in stocks versus a 2.8 increase expected didn’t stymie the rally. Instead, the report triggered buying among traders who had feared the figures could be even worse. Still, few traders expected a quick recovery from this year's 20 percent slump, with oil under pressure from a deepening supply glut and signs of economic weakness in China.

 

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

January 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 548
January 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 272

Grains Posted Modest Gains Overnight

Outside markets saw S&P futures up.

Grains posted modest gains overnight while outside markets saw S&P futures up following yesterday’s near collapse while crude oil was hovering in unchanged territory.

 

In Argentina there are growing concerns about dryness. Net drying occurred in quite a few areas and warmer temperatures have begun to accelerate drying rates. Very warm to hot temperatures into the weekend with restricted rainfall may bring on greater dryness and some crop stress for a little while, but rain late in the weekend and more again late next week will offer a chance for relief – at least in some areas. Another week or two of dry weather could seriously impact plant development for several summer crops, but weekend rainfall and cooling temperatures should be sufficient for a little relief.

 

Consultancy Strategie Grains on Thursday, forecast a rise in the European Union's soft wheat exports next season, helped by reduced competition from rival Black Sea origins, mainly Ukraine. In its first estimate for next season's exports, the consultancy put EU exports in 2016/17 at 28.9 MMT, up from 28.1 in 2015/2016.

 

Russia's grain exports in December hit a record high of 3.8 MMT, owing to a weak rouble making Russian grain more competitive on global dollar-denominated markets, SovEcon agriculture consultancy said in a note. Due to seasonally lower demand, grain exports will decline to 1.4-1.5 MMT in January, of which between 1.1-1.2 MMT will be wheat. Grain shipments are likely to gain pace in February and March when many forward contracts signed by traders in December and January must be fulfilled, SovEcon said.

 

S&P futures were finding support early on, but yesterday’s 3.5% collapse at one-point during the trade session is sending fear throughout the financial markets. Investment managers are warning that the S&P 500, which has lost 9 percent this year, could drop another 10 percent and oil could fall as low as $20 a barrel. Jeffrey Rottinghaus, whose T. Rowe Price mutual fund beat 99 percent of rivals over the past year, also said the U.S. economy may slip into a mild recession.

 

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

January 20, 2016 | Grain Hedge Insights | Kevin McNew | Views: 823
January 20, 2016 | Grain Hedge Insights | Kevin McNew | Views: 190

Grains Were Weaker to Unchanged in The Overnight

U.S. soybeans lost ground on Wednesday, giving up some of last session's gains

Grains were weaker to unchanged overnight with soybeans giving up nearly 6 cents and wheat down 3. Going into the morning pause in trading, corn was trying to hold onto a fractional gain. In outside markets, S&P futures were off sharply, losing almost 2% of their value while crude oil was off over a $1 a barrel.

 

U.S. soybeans lost ground on Wednesday, giving up some of last session's gains as South American supply was seen hitting records despite concerns over wet harvest weather in Brazil. Yesterday, Brazil consultant Agro Consult expected a 99.2 MMT soybean crop which although slightly lower than USDA’s estimate of 100 MMT is still up from last year’s tally of 96.2 MMT. However, Agro Consult pegs Brazil’s corn crop at 85.6, well above USDA at 81.5.

 

In other news yesterday, Informa came out with forecasts for 2016 US crop acreage. They pegged corn acres at 88.9 MA which is up from 2015 acres of 88.0, while soybeans they suggest will be sharply higher at 85.2 in 2016 versus 82.7 in 2015.

 

In overnight news, there was some modest tender activity for corn and feed wheat although the deals were announced as optional-origin. Most expect the business ultimately to go to South America on the basis of lower prices.

 

Global stocks resumed their recent sell-off Wednesday as oil prices sank to a 12-year low and resurgent concerns about global growth snapped a brief bout of stabilization in financial markets. Shares in Asia and Europe were sharply lower and investors favored perceived havens such as the yen, gold and U.S. Treasury’s. Analysts said investors were spooked by further declines in oil prices and a lack of stimulus announcements from Beijing in the wake of data released Tuesday showing slowing growth.

 

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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