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March 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 299

Grains Continue their Rally Overnight

The US Dollar also firmed after yesterday's steep slide with S&P futures and crude also finding strength

Grains continued their rally overnight with soybeans leading the complex higher on a 4-cent advance reaching its highest mark since December. The US dollar also firmed after yesterday’s steep slide with S&P futures and crude oil also finding strength in early trade.


Brazilian soybean export premiums surged over the past week even as the lineup of vessels waiting to load soybeans at local ports swelled, raising demurrage costs as the harvest peaks, shipping agents and traders said on Thursday.  Prompt export premiums increased to 38/41 cents/bushel (buy/sell) over May futures in Chicago, from 24/28 cnt/bu a week ago, price discovery agency Certo said on Thursday. The increase in spot free onboard export prices was similarly reflected in later deliveries until August.


SRW acres across the delta and mid-south have had 10 inches of rain over a broad area this week. Some areas have had much more. This opens the door to another poor quality SRW crop but also puts some delays in corn planting in these states. The hard wheat states have a cold weather threat that starts to show in longer term forecast near the end of March. The weather to date has pushed wheat well ahead of normal development so this timing could damage wheat if the forecast comes true.


Corn had solid exports on Thursday coming in at the high end of expectations. As the US dollar continues to come under pressure in recent months, this sets the stage for a more competitive position for US exports, which should be especially beneficial to wheat and corn.

 

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

March 10, 2016 | Grain Hedge Insights | Kevin McNew | Views: 580
March 10, 2016 | Grain Hedge Insights | Kevin McNew | Views: 325

Grains Were Modestly Lower Overnight Following A Lackluster USDA Report

Weather continues to be an issue in the Plains wheat area as the latest models show a mostly dry bias.

Grains Were Modestly Lower Overnight Following A Lackluster USDA Report

Grains were modestly lower overnight following yesterday’s lackluster USDA supply and demand report. In outside markets, equity futures were higher as S&P futures took a run at the 2,000 mark again while crude oil was modestly lower, but managed to come back from steeper losses in the night session.

 

Yesterday’s USDA report showed few changes to the supply and demand tables. US corn and wheat carryout was unchanged from February after traders had been expecting an increase in stocks on weaker exports. Soybean carryout was higher thanks to a 10 MB decrease in domestic crush. In the global situation, India’s wheat crop was reduced 2.5 MMT which brought world carryout down more than expected, while USDA kept corn and soybean production unchanged for both Brazil and South America. After the close yesterday, the Rosario Grain Exchanged bumped up its forecast for Argentina’s soybean crop to 59 MMT and 24.5 MMT for corn. USDA has the crops there pegged at 58.5 and 27.0, respectively.

 

Weather continues to be an issue in the Plains wheat area as the latest models show a mostly dry bias. The forecast model run continues to suggest restricted precipitation in hard red winter wheat county over the next week to ten days which leaves a small amount of concern about the long range outlook. There is some chance of precipitation March 17-24, but it appears to be fairly light. Meanwhile flooding rain will continue into Friday in the Delta and in a part of the lowermost Midwest. Follow up precipitation during mid- to late-week next week will likely aggravate the situation. A prolonged period of dry weather will be needed before spring fieldwork can resume. Some replanting of early corn will be needed and a small portion of wheat produced in the Delta will be damaged by this week’s flooding rain.

 

Oil prices dipped on Thursday after U.S. crude hit 2016 highs the day before and Brent shot back over $40 per barrel, with analysts warning that larger gains would be unwarranted as a global glut continues to outweigh strong demand.  Expectations of more stimulus from the European Central Bank (ECB) this week, which would strengthen the dollar against the euro and potentially hamper dollar-traded oil imports, also weighed on markets. "The ECB will cut deposit rates by 20 bps (basis points) and extend its bond buying program by one year. This could be bullish for the dollar and bearish for oil," French bank Societe Generale said.

 

WEEKLY EXPORT SALES

 

                         Actual         Expected

Corn                1,192.3         800-1,200

Soybeans            478.4            400-700

Wheat                433.5            200-500

 

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

March 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 597
March 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 297

Quiet Overnight Trade Session

Grains were quiet overnight with mixed trade ahead of the USDA crop report this morning at 11 am CDT.

Quiet Overnight Trade Session

Grains were quiet overnight with mixed trade ahead of the USDA crop report this morning at 11 am CDT. Crude oil and S&P futures were up trying to get back some of yesterday’s steep losses.

Not much is expected out of the USDA report, with expectations for a modest bump in US corn and wheat carry-out due to slower than usual exports, and a potential uptick in world corn and bean carry-outs on improved production forecasts out of South America.

 

US Ending Stocks (in million bushels)

                     Expected           Range           USDA Feb

Corn                  1,854       1,812-1,887           1,837

Soybeans              452            440-466              450

Wheat                  975            951-991              966

 

World Stocks (in million metric tons)

                           Expected          Range        USDA Feb

Corn                       209.1       207.2-210.0        208.8

Soybeans                 80.9            80-80               80.4

Wheat                   238.7          236-240            238.8

 

Yesterday saw steep losses in crude oil and after the close API showed another week of building crude stocks. API data showed a third week in a row of higher than expected crude stock inventories with this week coming in 4 million barrels more than last week, versus a forecast of only a 3 million barrel build. EIA will release their official estimates at 9:30 am CDT this morning with traders looking for a 3.86 million barrel build versus last week’s huge build of over 10 million barrels.  

 

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

March 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 606
March 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 276

Grains Weak in the Overnight Trade Session

Weekly crop reports from a few key wheat states showed mostly deteriorating conditions in the face of unseasonably warm & dry weather

Grains were weaker overnight with soybeans leading the complex lower. In outside markets, crude oil pushed back from earlier losses following yesterday’s $2 a barrel rally while S&P futures fell off the 2,000 point mark in overnight trade.

 

Weekly crop reports from a few key wheat states showed mostly deteriorating conditions in the face of unseasonably warm & dry weather. The Kansas office of USDA/NASS pegged 56% of the wheat crop as good/excellent. Texas showed an increase in ratings from 40% to 42%, but still sits well off of normal for this time of year.

 

The European Commission on Tuesday forecast that EU soft wheat stocks would rise further in 2016/17 despite an expected drop in production, adding to large inventories that it already sees reaching a seven-year high in the current 2015/16 season. In its first crop forecasts for 2016/17, the Commission projected soft wheat end-of-season stocks in the European Union of 17.4 MMT, up slightly from 17.2 MMT forecast for 2015/16.

 

On Monday, USDA’s export inspections were slightly better than expectations for corn and wheat, while soybeans were at the high end of expectations. UDA will release its monthly crop forecast on Wednesday, with the consensus of analysts expecting little change in US grains carryout.

 

Crude oil continues to find strength as prices get closer to the $40 a barrel range. Oil prices surged Monday on hopes that declines in oil drilling around the world and an output deal among major producers would shrink the global glut 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)

March 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 684
March 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 363

Grains Start the Week on Positive Ground

Wheat led the advances with dry, warm weather over the weekend in the Plains.

Grains Start the Week on Positive Ground

Grains started the week in positive territory, jumping higher on the open Sunday night and holding those gains throughout the overnight session.

 

Wheat led the advances with dry, warm weather over the weekend in the Plains. From North Dakota to Texas, high temps over the weekend were in the mid-70s, with no precipitation falling. There will be at least some rain in a part of the region daily through Thursday. However, the western portions of the region are not likely to get much “meaningful” moisture. A few hundredths of an inch to 0.25 inch with local totals to 0.50 inch is all that can be expected from southwestern Nebraska and eastern Colorado southward into the Texas Panhandle. Much of the moisture will not be enough to seriously lift topsoil moisture. Areas to the east will do much better with parts of central and eastern Oklahoma and northern Texas to receive 0.50 to nearly 2.00 inches of rain. All of the precipitation will be welcome, but more will be needed to seriously lift soil moisture in the central Plains.

 

CFTC Commitment of Traders after the close on Friday showed much larger-than-expected fund selling in both corn and soybeans.  The Supplemental report found large spec traders net sellers of 64,000 corn contracts through March 1st.  That is roughly 25,000 contracts more than estimated, and would put them net short 247,000 corn contracts heading into Wed March 2nd.  Even when assuming modest purchases the past three sessions, that would still leave them net short close to 235,000 contracts, including option deltas.  The “modern era” record high is 255,000, though they did drift close to the current level coming into the USDA’s January crop report.  This may force more waves of short-covering and higher prices.

 

Wednesday will bring USDA monthly report.  Other than more adjustments to the South American stats, only modest balance sheet tweaks are likely for US grains.  Conditions in both Brazil & Argentina remain supportive for higher production forecasts. Firming currencies in both Brazil & Argentina are giving a short-run boost to US export competitiveness.  This is probably more pertinent for beans than corn, though, as the Brazilians will be focusing nearly all of their attention on bean shipments over the next three months. 

 

Crude-oil prices extended gains in early Asia trade Monday as the market turned more bullish on expectations of smaller supply and growing demand. Last week, the number of rigs drilling for crude in the U.S. dropped by eight to 392, to the lowest level since 2009, according to industry group Baker Hughes. The combined number of oil and natural-gas rigs fell by 13 to 489, just above the record low of 488 rigs in 1999, the group said. U.S. shale production has also ebbed from its peak level in April of last year, emphasizing the financial struggles seen across the energy sector.

 

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

March 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 867

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