November 03, 2015 | Grain Hedge Insights | Cody Bills | Views: 200

Grains Continue to Drift Lower

EIA report due out tomorrow.

Grains continued to drift lower overnight, while stock futures gave up some on Monday’s gains and crude oil reversed its selloff from the previous trade session.

 

In soybeans, Jan 16 bean futures drifted down to $8.76 pushing lower for a second consecutive trade session. Improving rains over the weekend in Brazil helped alleviate fears of dryness as planting season is in full swing there. On Monday, USDA reported yet another flash sale of soybeans to China for 120,000 MT. Also, USDA’s weekly export inspections came in at 2.5 MMT, well above trade expectations of 1.9 to 2.3 MMT.

 

For corn and wheat, export business continues to be lackluster. Monday’s USDA report showed corn exports at only 447,000 MT, below trade expectations of 475- to 625,000 MT and wheat was at a paltry 170,900 versus 275- to 400,000 MT expected.

 

Weather in Ukraine and Russia continues to show little signs of improvement for the wheat crop there. Russian Agriculture Minister Alexander Tkachev says 25% of the country’s winter crops are in poor condition as planting nears completion. In Ukraine, almost a third of winter wheat was weak and thinned, according to data from UkrAgroConsult. That’s comparable to conditions in 2011, which resulted in a 29% drop in output.  Most of Ukraine and western Russia received less than 80%, and in some cases less than 20% of normal rainfall in the 90 days through Oct. 31.

 

S&P futures (ESZ5) were lower following Monday’s solid advance. Earnings reports this week from Time Warner Inc., Allergan Plc and Facebook Inc. are among more than 100 S&P 500 companies releasing results this week.

 

Crude oil futures (GCLZ5 / QMZ5) rose slightly overnight. An Energy Information Administration report Wednesday will probably show inventories rose for a sixth week. While the supply glut continues to be an issue, a mild start to the US winter has traders looking for soft demand in the form of heating oil.

 

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

November 02, 2015 | Grain Hedge Insights | Cody Bills | Views: 238
November 02, 2015 | Grain Hedge Insights | Cody Bills | Views: 240

Grain Hedge Overnight Highlights

Grains were mostly quiet overnight with little news or volatility to change prices.

Grains were mostly quiet overnight with little news or volatility to change prices. In outside markets, S&P futures were fractionally higher while crude oil dipped in early trade.

 

For soybeans, there was mild support to start the week from planting delays in Brazil. Soybean planting in Brazil remained behind the historical average even after isolated rainfall hit the mid-section of the country. Planting in Brazil stands at 31% compared to the 42% five-year average and 20% last week.

 

For wheat, Ukraine continues to struggle with dry conditions for the winter wheat crop. A senior weather forecaster there said the driest winter in 50 years could potentially lead to a 20% reduction in wheat output.  In other wheat news, Japan is seeking to buy food quality wheat in its normal tender to the US, Canada and Australia with the deals expected to be announced on Thursday.

 

In outside markets, Asia sold off overnight as slow Chinese factory data took its toll. S&P futures (ESZ5) had been lower overnight but managed to fight its way back to positive territory heading into the morning opening bell. The US dollar index (DX-MZ5) was slightly weaker as well in overnight trade, but still remains up 3.2% in the last two weeks.

 

Oil prices (GCLZ5 / QMZ5) fell on Monday as weak Chinese economic data fueled concerns about demand slowing in one of the world's largest oil-consuming nations, while record-high production in Russia exacerbated the global supply glut. China's factory activity fell for an eighth straight month in October, a survey showed, pointing at continued sluggishness in the world's second-largest economy. The global oil supply glut, which has more than halved oil prices since a peak in June last year, was underscored on Monday when Russia reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.

 

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

October 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 263
October 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 218

Weekly Cash Comments

Weekly Cash Commentary for week ending 10/30/2015

Grain basis got a big boost this week as harvest nears completion and barge rates continue to sink lower. On the week, US average corn basis was up 3 cents a bushel while soybeans advanced 4 cents a bushel.

 

River terminals were big gainers this week as barge freight costs continued to come down. On the week, barge rates along the IL River slipped 8 cents a bushel and are off nearly 40 cents a bushel from their seasonal high set back at the end of September. As a result, corn basis along the river terminals climbed 8 cents a bushel, while soybeans was up nearly 7 cents a bushel.

 

Harvest for corn and beans is reaching the final stages, with corn in the Upper Midwest still left to cut. Areas of MN & WI saw little strength this week as harvest pressure still exerts some localized pressure in these areas. Likewise, bean cutting is causing some pressure in the Upper Midwest and the Mid-Atlantic as double crop beans get cut there.

 

For end users, corn plants were up a robust 4 cents a bushel on average as a group. In Ohio, 4 of the 7 corn plants there had better than 10 cent basis advances on the week. For soy plants, basis levels were solidly higher as end users bid up from the harvest lows. Gains on average were 6 cents a bushel for soy crush plants on the week.

 

Look for basis levels to continue to improve rapidly over the next 6 weeks as harvest wains and flat to lower futures prices keep farmers on the cash market sideline. 

 

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

October 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 212

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: 300
October 29, 2015 | Grain Hedge Insights | Cody Bills | Views: 214

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: 249
October 28, 2015 | Grain Hedge Insights | Cody Bills | Views: 240

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) 

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