January 14, 2016 | Grain Hedge Insights | Kevin McNew | Views: 219

Wheat Leads the Downside in the Overnight

In outside markets, crude oil and equity futures posted modest gains.

Grains were lower overnight with wheat leading to the downside and soybeans only off 1 cent from yesterday’s settlement. In outside markets, crude oil and equity futures posted modest gains.

 

Argentina will harvest an estimated 23.8 MMT of corn in the 2015-16 season, the Rosario grains exchange said on Wednesday, hiking its forecast from a previous estimate of 20.2 MMT.  This is quite lower than USDA’s estimate on Tuesday at 25.6 MMT. The exchange maintained its estimates for 2015-16 soy and wheat harvests of 55 million and 9.6 MMT, respectively. USDA pegs Argentina’s bean crop at 57 and wheat at 10.5.

 

Overnight, Japan's Ministry of Agriculture bought a total of 140,729 MT of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday.

 

The export sales were in-line with expectations for wheat and soybeans, and slightly above expectations for corn. However, all three grains are lagging behind last year’s pace to achieve USDA’s export forecast for the year. The worst is corn where YTD sales are 25% below the same period last year, and even with USDA’s newly lowered forecast for US corn exports on Tuesday to 1,700 MB this would imply only a 9% drop in exports between last year and this year. Based on corn’s current pace, export sales could end up at 1,400 MB. For wheat, likewise export sales YTD are lagging behind last year’s mark by 15% while USDA only expects a 6$ drop. In soybeans, the disparity is better with an 11% drop YTD in actual sales and USDA projecting a 8% decline.

 

USDA WEEKLY EXPORT SALES

 

                          Actual        Expected

Corn                      669           400-650

Soybeans            1,127        900-1,300

Wheat          274 (+16NC)       150-350

 

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

January 13, 2016 | Grain Hedge Insights | Kevin McNew | Views: 502
January 13, 2016 | Grain Hedge Insights | Kevin McNew | Views: 257

Yesterday’s USDA Data caused a Rally

Grains were tempered overnight following yesterday’s rally on new USDA data

Grains were tempered overnight following yesterday’s rally on new USDA data. Meanwhile, equity markets and crude oil pushed higher trying to form a bottom after the steep sell-off that started the year.

 

Overall, USDA’s fresh data was mostly neutral in terms of its content, but it elicited a bullish reaction thanks to large spec & hedge funds that had been heavily short going into the report. Without fresh bearish news, the shorts exited positions and pushed the market higher, but the bullish response was muted in the day session with corn closing at the mid-point of the day’s range and soybeans closing 30% below the day’s highs. For soybeans, we need to see March clear $8.81 and March corn to clear $3.64 to see another round of short-covering.

 

In wheat, traders got at least one bullish number, which was a much smaller than expected US winter wheat seedings estimated. USDA pegged 2016 winter wheat acres at 36.61 MA versus an expectation of 39.32. This would be the smallest number of acres to winter wheat since 2010, and plantings of one class, hard red winter wheat, were the lowest in at least 30 years. But, as per usual, wheat has many overhanging negatives still in place as world carry-out increased from 229.86 MMT to 232.04 MMT. Also, overnight French officials pegged soft wheat stocks at 5.8 MMT, up from 5.2 last month and 2.5 last season.

 

Oil prices rose for the first time in eight days on Wednesday as positive Chinese trade data and an unexpected draw in weekly U.S. crude oil inventories gave investors reasons to buy crude futures. Crude inventories fell by 3.9 million barrels in the week to 480.071 million, compared with analysts' expectations for an increase of 2.5 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub fell by 302,000 barrels, the API said. China reported exports dipped just 1.4 percent in U.S. dollar terms in December, compared to forecasts of an 8 percent drop, positively surprising world markets.

 

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

January 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 742
January 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 218

Grains Listless Overnight Awaiting Today’s USDA Report

Oil prices hit fresh lows overnight, but managed to claw back to nearly unchanged on the session.

Grains were listless overnight, marking time until this morning’s USDA report at 11 am CDT. In outside markets, S&P futures were trying to climb out of the hole that had been made by China and caused an 8% slide in equity markets in the last 2 weeks. Oil prices hit fresh lows overnight, but managed to claw back to nearly unchanged on the session.

 

Overnight, Brazil’s Mato Grosso Farm Institute estimates 30% of the soybean crop in the state is in bad or terrible condition, which is down from 43% in December. Rains are starting to pick up and become heavy in Northern Brazil which had been dry for much of December.  There is mild concern that the extreme turnaround in rainfall could cause some flooding and cause some crop problems.

 

Japan's Ministry of Agriculture is seeking to buy a total of 140,729 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. In Russia, the wheat crop appears to be stabilizing after a dry fall planting season. Snow and mild temperatures are improving the condition of the crop. Around 89 percent was in good or satisfactory condition and 11 percent was in a poor condition. The country's winter grains were in a better condition than last year but in a worse state than the average of the last five years.

 

Today’s reports from USDA are expected to see little changes by USDA, but nonetheless the trade is on edge for any potential curveballs in the numbers, as well as the large short position by funds and spec traders. Even if the reports are benign, it has the potential to push shorts to exit positions and cause a short-covering rally.

 

Follow us on Twitter @GrainTV to get immediate reaction to the reports

 

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

January 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 491
January 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 340

Grains Continue to Grind Lower

In outside markets, S&P futures posted solid gains while crude oil continued to sink.

Grains grinded lower overnight with losses of 2 to 3 cents in light trading ahead of Tuesday’s USDA crop report. In outside markets, S&P futures posted solid gains while crude oil continued to sink.

 

Rain fell in much of Brazil at one time or another over the weekend Rains ranged from 0.6 inches in several areas in northern and eastern Minas Gerais, Goias and Mato Grosso, which led to net drying. Rain fell more significantly in other areas with nearly 2.00 inches in south-central Bahia where moderate to heavy rain occurred late last week and from Sao Paulo to Mato Grosso do Sul and Parana where 1.00 to 2.50 inches resulted. The next two weeks shows a drier bias in southern Brazil during the next couple of weeks while frequent bouts of rain occur in northern parts of the nation. This overall patterns is favorable for crop growth as the South has seen excessive rain, while northern regions have been dry.

 

Argentina saw sporadic rainfall over the weekend but is expected to see more rain on Monday and Tuesday. Most of the nation is in good shape for crop development during the next couple of weeks.

Overnight there was some tender news with Jordan in the market fort 100,000 MT of milling wheat, and a South Korea feed group looking for 130,000 MT of corn of optional origin.

 

Tuesday brings USDA’s latest supply and demand report, its final US corn and soybean production forecast for 2015, and the winter wheat seeding report for 2016. Analyst expectations show very little change in previously held estimates with only modest upticks in US wheat and soybean carryout expected, and US corn carryout expected to be unchanged. The reports will be released at 11 am CDT on Tuesday, Jan 12.

 

Oil prices fell for a sixth session to trade at almost 12-year lows on Monday as slowing growth in China rattled investors' hopes for demand this year and traders increased bets against any near-term recovery.  Morgan Stanley said on Monday that oil prices in the $20s were possible, especially if the dollar surges more against other currencies. "A 15 percent CNY (Chinese yuan) depreciation alone could send oil into the $20s," the bank 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 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 528
January 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 351

Grains Post Modest Gains Overnight

Outside markets were trying to recover some of the week’s losses with S&P futures

Grains posted modest gains overnight with soybeans and wheat up 3 while corn was up one cent Outside markets were trying to recover some of the week’s losses with S&P futures and crude oil bouncing higher in night trade.

 

Overnight, South Korean firms bought US wheat and US soybeans, although the soybeans were for delivery in 2017. China, the world's top soy buyer, will import 2 MMT more in the 2015/16 marketing year at 80 MMT, an official grains think tank said in a revised forecast, due to higher-than-expected crushing demand.

 

Yesterday’s export sales report from USDA showed very disappointing totals for corn and wheat. And although it was a holiday week, the year-to-date totals corn and wheat are well behind the pace needed to reach USDA’s forecast.  Corn export commitments are off 25% from the same time last year, but USDA sees only a 6% drop in exports for the year. If these levels of sluggish exports continue, it will mean the export target for USDA will fall by 300 MB and cause old-crop carryout to balloon to over 2 billion bushels.

 

U.S. stock-index futures rose as China’s move to shore up markets stemmed a sell-off from global equities this week. Gains in Standard & Poor’s 500 Index futures signaled the gauge will rebound from the worst-ever start to a year. The Shanghai Composite Index climbed 2 percent as Chinese authorities suspended a circuit-breaker system, set a higher yuan reference rate and directed state-controlled funds to buy shares. Treasuries and the yen headed for their first declines this week and gold dropped.

 

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

January 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 532

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