October 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 163

Wheat Continues to Climb Higher

USDA’s weekly export sales report was for the first time above expectations for all three commodities.

Grains were higher overnight with wheat and soybeans posting the biggest gains of 4 cents a bushel, while corn was fractionally higher. In outside markets, crude oil & S&P futures were higher while the US dollar index was weaker.


Wheat continues to climb higher, taking out the 100-day moving average overnight. Weather concerns in Ukraine, Russia, and Australia continue to be supportive of wheat. After the close yesterday, Argentina’s wheat crop was pegged at 9.5 MMT by the exchange there, putting it below USDA’s latest forecast of 10.5 MMT and last year’s production of 11.75 MMT. In Australia, the wheat crop could face quality downgrades as parts of the country's eastern grain belt are forecast to receive heavy rains in the days ahead, potentially damaging the crop which is ready for harvest. Dry weather in September and above average temperatures this month have already curbed yields of high-protein Australian prime hard wheat in the world's fourth largest exporter of the grain.

USDA’s weekly export sales report was for the first time above expectations for all three commodities. However, corn continues significantly lag behind the pace needed to reach USDA’s annual forecast by 250 MB. Export business for US corn is expected to pick up as competition from South America wains in the coming months, but given the extent of the deficit, it seems likely USDA will need to lower their forecast for corn exports.


S&P futures (ESZ5) are closing in on the 2,100 mark, which would be a full recovery from the sell-off triggered by China’s weakness in August. A report on personal spending today will help investors assess the strength of the economy, as will a continuation of company earnings reports.


Crude futures (GCLZ5 / QMZ5) held steady overnight, poised to post the first weekly gain in three weeks despite a supply glut that has tested storage capacity and hammered company results. The potential gain, driven by smaller-than-expected builds in U.S. oil stocks, was widely viewed as a temporary boost in a market that is awash with oil and staring down sluggish economic growth in key markets such as the United States and China.


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

October 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 245
October 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 158

Grains Mostly Steady Overnight

Fed announced no change in interest rates yesterday.

Grains were mostly steady overnight as corn and wheat were gravitating towards unchanged while soybeans was up a penny.  Stock futures and crude oil were lower giving back some of yesterday’s gains.


Yesterday, EIA showed a drop in ethanol production for the week of 7,000 barrels per day, down to 944,000 barrels per day. At this time of year production levels for ethanol generally increase until the end of the year so seeing even a one-week drop is problematic for demand bulls.


In overnight news, Egypt tendered for more wheat and although the results have not been announced the lowest offer was from Poland at $195.84 FOB. The last Egypt wheat deal went to Russia and Romania. Jordan also announced a tender to buy hard milling wheat but that deal is expected to go to Europe. And the Korea Feed Association rejected all offers on a tender to buy corn, stating that prices were too high.


In outside markets, the Fed announced no change in interest rates yesterday, but said economic indicators on housing and business investment were improving, helping to offset employment issues and global weakness. As such, analysts are leaning more to a rate hike in December as a result of the Fed’s guidance, versus Q1 in 2016 prior to yesterday’s announcement. S&P futures (ESZ5) initially sold off following the announcement but recovered to close the day higher.


The cost of crude oil (GCLZ5 / QMZ5) fell on Thursday as traders took profits after prices rallied in the previous session, driven by smaller-than-expected crude stockpile growth in the US. On Wednesday, the EIA said the nation's crude stockpile grew by 3.4 million barrels last week, below the estimate of a 4.1 million-barrel increase by the industry group API. However, US oil output, whose booming growth in the past few years has fueled the global glut of crude, rose slightly last week. While US production peaked in April at 9.6 million barrels a day, it has remained stable around 9.1 million for the past few weeks.


USDA WEEKLY EXPORT SALES (in thousand metric tons)


                                    Actual            Expected

Corn                               708.8             300-500

Soybeans                         2,156       1,600-2,000

Wheat                               550             350-550


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

October 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 192
October 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 190

Grains Drifted Lower in the Overnight

In S&P futures, traders await clues on timing of a U.S. interest rate increase.

Grains drifted lower overnight as ample supplies and limited demand news kept prices listless. In outside markets, S&P futures were marginally higher as was crude oil, while the US dollar was down.


An outlook for rain in OK/KS and into the soft red wheat territory of the Midwest has eased fears of dry weather for the winter wheat crop. In Australia, hot and dry weather is expected to take its toll on the wheat crop there as it goes through filling stage. USDA’s Ag Attaché pegged the Australia wheat crop at 24 MMT, below USDA’s forecast of 27 MMT. Forecasters look for little relief in the El Nino induced weather pattern as the next 10 days show spotty chances for moisture.


In Brazil, soybean planting continues to be running without significant problems. Farmers in southern Brazil have had heavy rains but that has reportedly had little impact on crop development so far. In central Brazil where it has been dry, forecasters are looking for 2 to 6 inches of rain over the next two weeks, which should be beneficial for planting.


Overnight, Russia’s ag minister announced that if the Russian Rouble stabilized, the government would remove the export tax on wheat leaving the country for global markets.  News also suggested that Chinese buyers would stop buying US DDGS amid worries that Beijing may launch another anti-dumping probe into imports of the feed ingredient. China is the world's top buyer of DDGS, a by-product of corn ethanol that is used by feed mills as a substitute for corn and soymeal. China imports almost all of its needs from the United States.


In S&P futures (ESZ5), traders await clues from the Federal Reserve about the timing of a U.S. interest rate increase. A rate hike at the Fed's two-day policy meeting which ends later on Wednesday is virtually priced out due to underlying concerns over a slowdown in China and the broader impact on global growth.


In crude oil (GCLZ5 / QMZ5), prices were off sharply on Tuesday after US congressional leaders proposed to sell 58 million barrels of oil from US emergency reserves over 6 years starting in fiscal year 2018 to help pay for mandatory budget spending cuts.  API crude stocks released late Tuesday showed inventories at the Cushing, OK delivery hub fell 748,000 barrels, but official estimates from EIA will be released later this morning.


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

October 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 263

Wheat Up Against a Strong Ceiling

Many global and local factors are hindering wheat. Kevin breaks down these as well as what to expect for corn basis over the next month.

Wheat Up Against a Strong Ceiling
October 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 186

Harvest is Moving Fast

Corn is showing 75% harvested and soybeans have reached 87% harvested

Wheat and corn gave back some of their gains overnight from yesterday’s rally, while soybeans recovered some of the losses from Monday’s session.  Crude oil continued to fall, reaching its lowest price since August 27 while S&P futures were modestly lower.


Wheat posted an 18-cent gain in Monday’s trade, fueled by concerns of flooding in Texas, and dry weather in the US Plains. After the close, USDA’s crop progress report showed 47% of the winter wheat crop was in good-to-excellent condition, which was lower than last year’s reading of 59%.  USDA also showed harvest was moving fast, with corn at 75% harvested while soybeans reached 87% harvested. 


Weekly export inspections were impressive for soybeans this week, coming in at 2.6 MMT versus trade expectations of 1.8 to 2.1 MMT. Meanwhile corn and wheat exports continue to come in at the low end or below expectations. YTD exports for corn are 26% behind last year’s pace and wheat is 18% off. USDA expects both crops to see exports roughly unchanged year-on-year, so a lagging trend is problematic.

S&P futures (ESZ5) and the US Dollar index (DX-MZ5) dipped on Tuesday, as investors locked in some of the sharp gains seen over the last month ahead of the Federal Reserve's policy meeting and results from Apple. The Fed begins their two-day to discuss the need for an interest rate hike. Markets are pricing in only around a 7% chance of a rate hike this week, but will be watching be for clues to whether "lift-off" could come at its next meeting in December.


Crude oil (GCLZ5 / QMz5) continued to be pressured falling below $44 a barrel for the first time since late August. API will release their inventory report this afternoon while EIA will release their report Wednesday morning. Analysts look for a 5th straight week of higher stocks with the average estimate pointing to a 3 million barrel increase in crude oil inventories.


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

October 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 408
October 26, 2015 | Grain Hedge Insights | Cody Bills | Views: 200

Grains were Mixed in the Overnight

Global markets are mixed, with some green being seen in Asia, and Europe modestly lower.

Grains were mixed overnight with wheat posting the biggest gains, advancing 6 cents overnight while corn was fractionally higher. Soybeans gave up 3 cents in the night session.  In outside markets, stock index futures were mildly weaker while crude oil showed a small advance.


Wheat was buoyed by missed rain forecasts in the Plains.  While Texas is likely to see significant precipitation over the next week, areas to the North are not.  Dry weather also is persisting in Russia. In international deals, overnight Ethiopia announced it was tendering for 1 MMT. The deal is expected to go to Black Sea or EU markets.


In corn and beans, remnants of Hurricane Patricia are expected to hit the Midwest in coming days which could slow the tail end of the harvest season. The path is projected to put rains of 2 to 4 inches in the Mississippi River and Ohio River regions. USDA will announce the latest harvest progress numbers after the close of trade today. Last week corn was 59% harvested while soybeans stood at 77% harvested.

Global markets are mixed, with some green being seen in Asia, and Europe modestly lower. After a major rally at the end of last week, S&P index futures (ESZ5) are taking a breather on Monday morning, down about 0.15%.The FOMC meets this week, with very few expecting the central bank to hike rates.


Crude oil (GCZ5 / QMZ5) were modestly higher in night trade but still below $45 a barrel. Goldman Sachs said crude oil prices could drop sharply lower as refined product storage sites come close to maximum capacity, further adding to a glut that has already seen crude prices fall by more than half since June 2014.  Goldman said that inventories were already "too close for comfort", bearing the potential for a sharp fall in crude prices.

October 23, 2015 | Grain Hedge Insights | Cody Bills | Views: 172

Weekly Cash Comments

Weekly Cash Commentary for week ending 10/23/2015

Grain basis was mostly muted this week as average corn and soybean basis posted fractional increases on the week.


Harvest continued to keep a lid on basis levels as last week farmers harvested another 15% of the corn and soybean crop in a 7-day period. Soybean harvest should be reaching the tail end of the season, while corn still has a few more solid weeks of cutting to go. Weather looks good for much of the Midwest, but forecasters look for Hurricane Patricia, currently off the coast of Mexico, to filter into the Upper Midwest by early next week which could stall corn harvest. The rain may not be welcome for farmers, but river depths are at low levels and are causing barge delays. Early in the week, a barge blockage north of Quincy, IL on the MS River put traffic there on hold for two days. Since being cleared, barge rates have come down precipitously in the later part of the week.


At the Gulf, export basis bids for beans were off 6 cents this week which pushed bean basis lower at river terminals by 4 cents a bushel. Conversely, basis bids for corn along the river were up nearly 6 cents a bushel. End users were mostly flat this week with both corn and soybean plants mostly unchanged on basis. Look for basis levels to start improving as we enter the later stages of harvest and farmer sales dry up on overall price weakness.

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