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May 11, 2018 | Grain Hedge Insights | Kevin McNew | Views: 462

Wheat Faces Biggest Weekly Fall Since Mid-March on USDA Forecast

Grains Down in the Overnight

Wheat Faces Biggest Weekly Fall Since Mid-March on USDA Forecast

USDA Report Signals Change in Corn, Status Quo for Wheat/Beans

For corn, USDA came in a bit higher than the trade on NC carryout with USDA pegging it at 1,682 MB versus a trade pre-report average of 1,628 MB. Nonetheless this is a big drop from old-crop carryout at 2,182. Global stocks were a big surprise at a slim 159 MMT. If realized that would be the lowest global cushion since 2012.

 

Beans had a surprisingly low US new-crop carryout at 415 MB, well below trade estimates of 535 thanks to a meteoric rise in US exports of 225 MB on the year that  USDA has penciled in. The soy trade is obviously skeptical of that result given the soy market failed to hold early gains after the announcement. Winter wheat production was higher than expected which led to US stocks only slightly off of this year’s 30-year high carryout relative to use. At 955 MB of new-crop stocks projected for 2018, that means the US still is plagued by nearly a half a year’s worth of use on hand at the end of the year.

 

Brazil Rain Outlook Diminishing

The latest GFS/EC weather models point to some rain potential next Tuesday and then a better total a week out in key growing area of Parana. The 2nd largest state for Safrinha corn has not seen any meaningful rain since April 2nd. USDA lowered their Brazil corn crop forecast to 87 MMT from previous the estimate of 92 MMT. The biggest state of Mato Grosso has seen limited rain since mid-April but has not been as parched as Parana.

Export Tenders

South Korea’s MFG passed on 70,000 MT of corn after receiving offers it said were too high. Taiwan’s MFIG bought 65,000 MT of corn with optional origin from Brazil or the US.


 

The risk of trading futures, hedging, and speculating can be substantial.

May 10, 2018 | Grain Hedge Insights | Kevin McNew | Views: 439

Export Sales Miss the Mark This Week

Wheat, corn and soymeal all missed analyst estimates

Export Sales Miss the Mark This Week

Headlines

  • Grains mixed in the overnight
  • Ethanol production climbs as stocks fall
  • Export sales miss the mark this week
  • WASDE

Weekly Ethanol Production Climbs

Ethanol production increased this week to 1.040 million bpd, up from 1.032 million bpd LW. TW production was 3.4% above last year during the same week, while cumulative YTD ethanol production has averaged 2.3% above LY. U.S. Ethanol stocks declined to 21.964 million barrels from 22.142 million barrels LW. Stocks remain below LY by 4.7%.

 

Export Sales

Wheat, corn and soymeal all missed analyst estimates when it came to export sales this morning.  Old crop wheat sales were down 85% from LW. Old crop corn sales were down 32% from LW. Soymeal reported a marketing year low, down 63% from LW.

 

 

Actual

   Estimated

   Last Week

Wheat-OC

  35

   0-350

   234

Wheat-NC

  48

   200-350

   210

Corn-OC

  695

   700-1,000

   1,019

Corn-NC  

  90

   50-300

   49

Soybeans-OC

  354

   300-600

   416

Soybeans-NC

  278

   100-300

   469

Soymeal-OC

  90

   100-400

   246

Soymeal-NC

  -6

       -

   61

 


 

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

May 09, 2018 | Grain Hedge Insights | Kevin McNew | Views: 602

Corn, Soybeans Steady to Slightly Higher as Rains Slow Planting

Grains flat to down in the overnight session

Corn, Soybeans Steady to Slightly Higher as Rains Slow Planting

Headlines

Grains slightly lower in the overnight. Argentina weather damages soybean quality. China ramps up inspections on U.S. pork imports.

 

Weather

Additional precipitation is expected across NE, IA, S. MN, WI, N. IL and MI over the next 1-5 days, bringing 2-3 inches across the central and northern midwest. The 6-10 day forecast shows additional precipitation is expected in MO, E. KS,  W. OK and parts of the TX panhandle which will benefit the winter wheat crop.

 

South American Weather

Rains in 6-15 day forecast for central and southern Brazil will help late pollinating corn. Heavy rains recently in Argentina has bogged down harvest and damaged crop quality. Rosario grains exchange said that in some areas waterlogged soybean pods have sprout or burst before being harvested which will lower Argentina soybean prices. Rains are expected to ease in 6-15 day forecast which will help with harvest progress.

 

Trump Renewable Fuel Meeting

Following a closed door meeting in the White House, sources say that Trump will NOT implement a cap on renewable fuel credits. The President expressed that he is considering letting exported ethanol count towards the RFS mandate. He also seeks to make E15 available all year long.  Senator Cruz considers the meeting a win-win while Senator Grassley was supportive of the efforts to increase higher ethanol blends but expressed caution on the ethanol export plan. Ethanol RINs sold off following the White House meeting.

China Increases Checks on U.S. Pork Imports

WH Group Ltd Director said “ports are opening and inspecting every cargo that arrives.” This compares to “random” checks in the past. The checks increase the amount of time that the products sit in the port from just days up to two weeks. USDA attache in Beijing noted in an April 30th report that inspection and sampling efforts were increased.

This news comes after China announced it was stepping up quarantine checks on apples and logs from the U.S. after “detecting pests in the imports”.  Many see these efforts as a warning after trade tensions between the U.S and China have increased.

 

 

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

May 08, 2018 | Grain Hedge Insights | Kevin McNew | Views: 499

Corn Planting Picks Up the Pace

Corn planting in the U.S. exceeds trade expectations

Corn Planting Picks Up the Pace

Headlines:

  • White House biofuels meeting
  • Corn plantings surge to 39%
  • Brazil rains to bring relief?
  • Summer weather drier bias

 

Trump to Outline Biofuels Plan

President Trump will hold a closed door meeting with senators on Tuesday and outline his plans for biofuels policy reform. In previous dialogue the President has put his endorsement behind capping the RIN prices to stave off expenses for oil companies, while at the same time suggesting he would support expanding sales of higher ethanol blends of gasoline, a concession to the corn industry, but a drawback for the oil industry.

 

Planting Progress

U.S. corn at 39%, a solid jump from last week’s 17% and above trade estimates at 37%. There are some problem areas. MN/ND & SD are 6 to 9% planted versus 25/30% normally. Those areas are also expected to see 3 to 4 inches of rain over the next 5 days which could limit planting. For soybeans planting pace hit 15% that was up 5% from last week.

 

Brazil Rain

Rain is starting to appear in the weather models for Brazil which could salvage some of their 2nd season corn crop. The latest GFS run shows rains starting 10 days out and could bring 3 inches of rain. Of course, long range weather models are risky and those forecasts will likely change.


U.S. Summer Weather

Soil moisture deficits across the Western & Central Plains are likely to see some relief but it may not be enough to alleviate drought concerns especially in the Western Plains. Dryness may become apparent again once July comes with dry conditions forecasted from Western NE to TX. There is some risk of a much drier growing season for the Western Corn Belt

 

China Soy Imports Slip in April

Imports for April were at 6.9 MMT vs 8.09 MMT in the previous April. This was despite good crushing margins of late. Shipments were slowed by changes in an import tax reduction which encouraged Chinese buyers to postpone arrivals to take advantage of a 1% reduction in the VAT tax.  

 

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

May 07, 2018 | Grain Hedge Insights | Kevin McNew | Views: 392

WASDE Report Out This Thursday

Grains were Down in the Overnight Session

WASDE Report Out This Thursday

Headlines

Grains lower in the overnight. Weather to slow planting progress in central and northern Midwest. WASDE report scheduled for Thursday.

 

U.S Weather

Showers slowed planting progress over the weekend in the southeastern Midwest and Delta. Weekend planting conditions were favorable in central and western Midwest.

1-5 day forecast brings moisture into the central and northern Midwest; slowing planting progress. 1-5 day forecast will be drier in southern Midwest favoring planting in that region. Continued dryness in Kansas and Northern Texas will add stress to the wheat crop in that region.

 

South American Weather

Weekend weather was mostly dry in Brazil with some light scattered rains in Rio Grande do Sul, Santa Catarina, north central Sao Paulo, western Mato Grosso and eastern Bahia. Dryness is expected to persist in the corn growing regions of Brazil this week which will continue to stress the crop during a critical development phase. Heavier rains are expected in Argentina this week which will stall fieldwork. Drier weather in Argentina is expected in the 6-10 day forecast favoring harvest.

 

Commitment of Traders- Week ending May 1

Net long positions in the category of managed money increased for corn and soybeans in the latest CFTC Commitment of Traders report released on Friday. Net long positions in corn increased to 220,874, up 68,648 from LW. Net long positions in soybeans increased to 149,355, up 10,402 from LW. Net short position in wheat declined to 46,825, down 23,832 from LW.   

China Trade Delegation

The trade delegation that met with China last week arrived back in the U.S and met with Trump on Saturday to “seek his decision on next steps.” There continues to be “significant disagreement” over certain issues according to the Xinhua News Agency.

The U.S. delegation intends to meet with China every quarter to review progress. Chinese negotiators may visit the U.S at the end of May or June for further discussion.  

 

Shipping Delays in Argentina

On Thursday, a cargo ship ran aground and along the Parana River in Argentina. The accident caused shipping delays over the weekend with around 60 shipps delayed on Friday. The vessel was freed over the weekend and traffic is returning to normal.

 

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

May 04, 2018 | Grain Hedge Insights | Kevin McNew | Views: 596

US-China Talks Offer No Quick Fixes

Chinese and American diplomats have found common ground but remain far apart on key issues

US-China Talks Offer No Quick Fixes

-US/China Talks Bring No Immediate Fixes  

-Wheat Tour Wraps Up with Low Crop Yield Estimate

-US Weather looks mostly Favorable

 

US/China Trade Talks

China and the United States have reached a consensus on some areas of their trade dispute but are still relatively far apart on other issues, China's official Xinhua news agency said on Friday.

The U.S. trade delegation asked China to cut a bilateral trade imbalance immediately and to stop subsidising advanced technology, a Wall Street Journal reporter wrote on Twitter, citing a document issued to the Chinese before talks.

Paul Burke from US Soy Export Council in Beijing said if no agreements are reached which move away from the direction of tariffs, then the status quo will lead to lost sales for US farmers.  

China said it would actively consider information provided by US firms on ongoing US sorghum anti-dumping investigation.

 

 

Day 3 Wheat Tour

The 3-day armada of over 600 KS wheat field samples returned a 37.0 bushels per acre average for the state, while pegging production at 243.3 MB. Last year’s tour put yield at 46.1 bushels per acre.

The KS crop tour tends to overestimate yield as compared to USDA’s forecast in May. On average over the last 18 years, the KS Crop Tour has exceeded USDA’s May Yield forecast (which comes next Thursday, May 10th) by 1.5 bushels per acre, and they have only been lower than USDA in about ⅓ of the years.

Their bias has been worse of late. In each of the last 7 years they have come in higher than USDA’s May forecast, missing the mark by 4 bushels per acre on average.

 

US Weather

Parts of IA/MN/WI saw 1 to 2 inches of rain in the last day likely slowing planting.

After this storm blows thru IA should see 4 days of no rain into mid next week and temps in the 70s this weekend

Temps in ND/SD/MN should be trending warmer than normal in the next 5 days helping kick start planting.

The latest GFS model has some rain potential in key growing areas in KS on May 12 with an inch or more of rain projected.

 

 

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

May 03, 2018 | Grain Hedge Insights | Kevin McNew | Views: 417

Wheat and Soybeans Met Expectations on Weekly Export Sales

Ethanol Production Increases This Week

Wheat and Soybeans Met Expectations on Weekly Export Sales

Headlines

Day 2 Wheat tour yield estimates are smallest since 2015. Ethanol production increases this week. S. Brazil weather expected to stay dry through the week. Strong corn export sales with wheat and soybeans meeting expectations.  

 

Day 2 Wheat Tour

The second day of the Wheat Quality Council focused on fields in western, central and southern areas of Kansas. The yield estimate from day 2 was 35.2 bpa which was down sharply from 46.9 bpa estimated LY and the smallest since 2015. Scouts traveled into parts of Oklahoma as well and noted a higher percentage of fields being grazed by cattle. Scouts will travel central and eastern Kansas today and release their final yield estimate this afternoon.

 

Ethanol Production Jumps

Ethanol production jumped to 1.032 million bpd, up from 985k bpd LW. TW ethanol production was 4.7% above the same week LY. Ethanol stocks increased to 930 million gallons, up from 911 million gallons LW. This weeks stocks are 45 million gallons below LY at this time.

 

Brazil Weather

Rains met expectations in northwestern Mato Grosso and southeastern Rio Grande do Sul yesterday. Forecast is mostly unchanged with dryness through next week increasing stress on the crop during a critical stage of growth. Minor relief may arrive in 11-15 day forecast but confidence is low.  

 

Trade Delegation Goes to China

Treasury secretary Steven Mnuchin arrived in China to talk tariffs. Talk results could provide additional Ag market volatility if progress cannot be made. U.S. tariffs could go into effect in June after the 60-day consultation period. A breakthrough deal is viewed by most as highly unlikely.

Weekly Export Sales

Wheat and soybeans met expectations within the range of analyst estimates. Corn sales beat expectations and were up 46 percent from last week with the largest sales to Mexico, Columbia and South Korea. Soybean sales were primarily to Mexico, Vietnam, Taiwan, Argentina. Reductions were primarily reported from China (-133,700 MT).

 

 

Actual

  Estimated

  Last Week

Wheat-OC

234

  0-300

  297.2

Wheat-NC

210

  100-300

  280.7

Corn-OC

1,019

  700-1,000

  697.1

Corn-NC

49

  -50-150

  -76.6

Soybeans-OC  

416   300-600

  371.3

Soybeans-NC

469

  150-350

  166.5

Soymeal-OC

246

  150-350

  223.7

Soymeal-NC

61

 

   40.8

 

 

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

May 02, 2018 | Grain Hedge Insights | Kevin McNew | Views: 394

USDA March Soy Crush Numbers Released

Grains Down in the Overnight Session

USDA March Soy Crush Numbers Released

Headlines

Corn pauses in the overnight with soybeans and wheat lower.

Kansas tour releases day 1 yield estimates well below last year.

FCStone revised Brazil corn production estimates lower.

 

FC Stone Revises Brazil Estimates

INTL FC Stone revised Brazil soybean production estimates up to 117 MMT from 115.9 MMT last month. The company revised its corn estimates lower to 83.9 MMT from 86.46 last month.

 

Kansas Wheat Tour Day One

The Wheat Quality Council’s annual Kansas wheat tour started yesterday and toured 317 fields between Manhattan and Colby. The tour will continue today and finish on Thursday when they release their final yield forecast. Day one wheat yield was estimated at 38.2 bpa compared to 43 bpa in 2017. Justin Gilpin, CEO of the Kansas Wheat Commission expressed that yield calculations are tough because the crop is 2-3 weeks behind and the tour happened a bit earlier.

 

Oklahoma Grain and Feed Association Meeting

In the annual meeting held on Tuesday, estimates are that Oklahoma could harvest 25.6 bpa with total production around 63.32 million bu. The association estimated OK wheat production at 100 mbu in 2017. Crop scouts across the state are concerned that many wheat acres will be grazed out and thousands of acres will be shifted into cotton. Crop scouts that toured the panhandle were the most pessimistic.  

Dry planting conditions in Australia

Australian wheat farmers are dealing with extremely dry soils as they plant wheat. Australian wheat production in 2017/18 fell to 21.2 MMT from 35.13 MMT in 2016/17 due to dry conditions.

Australian Bureau of Agriculture’s March wheat production estimate for this year was 23.7 MMT. April provided little moisture for farmers looking to plant wheat. The weather forecast is for drier than average conditions from May through July.   

 

March Oilseed Crushings

USDA March soy crush numbers were released on Tuesday after the close of trade. USDA reported 5.47 million tons of U.S. soybeans were crushed in March, just below the average trade guess of 5.497 million tons. March 2018 soy crush was well above 4.82 million tons crushed in March 2017.


 

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

May 02, 2018 | Coach’s Corner | Greg Martinelli | Views: 1005

Selling the Invisible — Part 2

Sell the sizzle, not the steak!

Selling the Invisible — Part 2

If you went to a sales meeting at any point in the 70’s, 80’s or 90’s, you routinely heard that classic sales advice, “Sell the sizzle, not the steak”. This of course was referring to sell the benefits, not the features. After all, people don’t need a drill, they need a hole.  They don’t need feed, they need healthy growing animals. They don’t need fertilizer, they need healthy growing crops. 

Every ag based sales person knows in order to sell more and sell better, they have to differentiate. This is a commodity business by design and by name. This means we struggle everyday to differentiate our products so we don’t get price shopped. To achieve this differentiation, we need to continue our journey of selling the invisible by understanding two concepts: The Buyer’s Ladder and Story Telling.

The Buyer’s Ladder

The simple graphic below depicts the rungs of the Buyer’s Ladder. In most marketing material, you will see this ladder called the Value Ladder. However, I call it the Customer Ladder because I never want you to forget who’s value we are talking about. It will also help your research and marketing departments understand, the customer only cares about their value ladder. So, if you add features and benefits the customer doesn’t value, your ladder goes to nowhere. Customer’s are only willing to pay for what they value.

Most sales people, company research people and even the marketing teams in agribusiness get caught up in the first two rungs of the ladder. It’s, “Here’s our benefits and here’s the features that achieve those benefits.” For example, “Our technology achieves an extra half pound of gain per calf per day. …” Or “Our soil additive unleashes that last burst of micronutrients in your soil to get an extra 4 bushels per acre.”

Those are standard and certainly important pieces of information. However, I ask you to go look at any TV, radio or print ad that is successful and you will see the focus is not on the features or benefits, but on the emotion those benefits will give you. Insurance companies are classic for this strategy. In a 30 second ad, there’s maybe 3 seconds on features or benefits, and 27 seconds on the emotion of safety, security and no-worries. In my training workshops with sales teams, I ask each sales person to come up with the emotion their customer will have when they buy their products. If they struggle, I ask them to think of their best customer and how that person feels when buying this product. For that one moment, I ask them to forget the features and benefits. In some cases, there are 8-10 competitors offering similar features and benefits. So, barraging a customer with more features and benefits just overloads them. It makes you sound like every other sales person they meet.

 

 

The Power of Stories

Once you have established the emotion that your customer desires more than anything else from your products, now use the power of story telling to convey that emotion. We think customers are analytical in their decisions because they often use price as a resistance. The truth is people don’t think in numbers and charts. They think in pictures, video stories and emotions. How does this tie into selling? Well, we think customers want us to come out and explain all the data and research on why our products are better.  Why do we think that?  Because that’s what customers say or what we’ve always done.  We sell technical products. So, we take the slide deck our research department put together and dump it on our customer until they can’t tolerate another slide. What the customer really wants to know? How happy, safe, secure or heroic will I feel after buying your products? 

Several weeks ago, in Coach’s Corner” we covered The Hero’s Journey,” which described how Hollywood has successfully used storytelling to get us to the movies. You can refer to it for story structure. You are not just sharing an amusing anecdote. Stories we use when selling have structure and purpose.

Another effective storytelling technique when selling is called:

Situation, Solution, Success”

Situation: Describe another customer or scenario that is very common to your customer. For example: bean fields full of water hemp and you can’t kill the weeds, sick animals dying and you can’t stem the disease, etc.

Solution: This is where you very briefly introduce your solution. This is where most salespeople get stuck and drone on. The customer doesn’t care and they expect every salesperson to get stuck here. So, they mentally check out when you do get stuck here. I used to have one customer who would jokingly reach over and start hitting the forward button to advance my PowerPoint slides when he got tired of seeing how highly available our amino acids were. It would lock up the program for a few minutes as we laughed and I continued to tell him how great our products were. I’m pretty sure I drew the Krebs Cycle on a napkin at one point.

Success: Finally, you are to the part of the story the customer was waiting for. “How will I feel when I buy this product?” and “How will it help me achieve my unique goals in my business and my life?” Focus and stay in this section as long as you like because you are now talking about the customer’s favorite topic: himself!

By connecting emotions to your customer’s most pressing problems through the use of storytelling, every ag sales professional can differentiate themselves in the eyes of their customer. This differentiation is what allows us to bring the invisible to life for our customers.

Join us at coach’s corner every other week, where Greg Martinelli offers sales coaching tips for the Ag Sales Professional.

May 01, 2018 | Grain Hedge Insights | Kevin McNew | Views: 358

US Dollar Up This Morning

Grains Down in the Overnight Session

US Dollar Up This Morning

Planting Progress

USDA pegged corn planting at 17%, that is up from only 5% planted last week but below trade guesstimates of around 18% to 23%. Illinois and Missouri were the standouts, planting 28% and 36% of their crop, respectively, in one week’s time. For soybeans, 5% of the crop is planted, which is on par with the 5-year average. Winter wheat crop conditions upticked to 33% GE vs 31% last week. Not much movement though in KS/OK/TX after last weekend’s rain.

 

Export Sales

Private exporters reported to the U.S. Department of Agriculture export sales of 120,000 metric tons of soybeans for delivery to Argentina during the 2018/2019 marketing year.

 

May Weather

Rains are in W IA this morning and move into IA/IL/WI/MI this week potentially slowing planting. But longer term weather points to few significant planting problems. During the month of May, the western U.S. will be warmer than usual and the east will be mild in the north and warm south. Precipitation during May will be a little greater than usual in the upper Midwest and southeastern states with a small region from eastern Texas to southern Missouri also a little wetter biased. The southwestern U.S. will be drier than usual and so might a part of the Delta, Tennessee River Basin ad lower eastern Midwest. West Texas and the southwestern Plains will still struggle for moisture.

 

March Crush Expectations

USDA will release monthly soy crush estimate after the close today. Expectations are for 183.2 MB after NOPA numbers for March were record large. USDA soy crush in February was 165 MB and March ’17 was 160 MB.

USD Bull Continues

The Dollar is up again this morning reaching 92.25. That’s up 3.1% since its recent low 2 weeks ago. Fed meets Tues/Wed with no interest rate changes expected. But the rate setters could signal they are ready to hike in June or change their estimate of two more rate hikes in total this year. Strength in USD is tied to strong interest rates abroad versus deteriorating rates in other major countries. A string of disappointing U.K. economic data has markets expecting rates there to stay flat.

 

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

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