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January 03, 2017 | Grain Hedge Insights | Kevin McNew | Views: 268

First Day of Trade Year Saw US Dollar Shooting Higher

Grains Languish and Soybeans Move Lower

The first trade day of the new year saw a continuation of last year’s trend with equities, the US dollar, and crude oil shooting higher, while grains languished and soybeans moved lower.

 

Soybeans at one time was as much as 8 cents higher before turning lower going into the break.  Brazil is likely to see some rains to help limit dryness in Brazil, while Argentina has seen widespread rains. More rain is expected in Argentina for the next week to add to the 10 inches of rain that has fallen in the last two weeks. Argentina still has some acres not planted which may put those acres at risk.

 

In Asia, palm oil, and China soy and meal futures were off sharply overnight. Argentina will start cutting its soybean export tax by 0.5 percentage point every month for two years starting in January 2018, resulting in a 12-point reduction to 18 percent by the end of 2019, the government said in a decree on Monday. When free-market proponent Mauricio Macri became president in December 2015, he cut the tax to 30 percent from 35 percent. He promised at the time that he would keep chopping the levy by 5 percentage points per year every year of his administration. But budget concerns have put that plan on hold.

Taiwan's MFIG purchasing group has issued an international tender to buy 40,000 to 65,000 tonnes of corn which can be sourced from the United States, Argentina, Brazil or South Africa. Algeria's state grains agency OAIC has issued an international tender to buy optional-origin soft milling wheat.
The tender sought a nominal 50,000 tonnes but Algeria often buys considerably more in its tenders than the nominal volume sought.

 

Global equity markets were up sharply which helped push US equity futures. Chinese PMI was up better than expected suggesting manufacturing was running strong.

 

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


 

December 30, 2016 | Kevin McNew | Views: 193

Weekly Cash Comments

Cash markets saw positive movement as the 2016 year nears a close.

On average corn was up 1 3/4 cents, building on last week’s gains. Ethanol plants moved higher as well up 1 1/2 cents per bushel. Corn along the river broke its downward trend gaining 3 1/2 cents this week. Pork producer Smithfield Food Inc. has begun buyer grain elevators and purchasing grain directly from handlers. Last September Smithfield bought two Ohio grain elevators and now buys about 65% of its feed directly from farmers. The long term effects on cash prices if any are yet to be know.

 

Soybeans saw upward movement as well this week gaining 1 1/4 cents per bushel. Crush facilities lost the momentum built over the past two weeks and lost 1/4 cents. Soybeans along the river moved higher, gaining 2 cents. Soybean exports were below expectations this week with only 974,000 MT of beans exported. USDA pegged expectations between 1 million MT and 1.5 million MT.

Corn_2016_12_29

Soy_2016_12_29

 

 

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

December 30, 2016 | Grain Hedge Insights | Kevin McNew | Views: 262

Record Highs and Lows to Close the Year

Grains saw mixed movement leaving the overnight with only slight changes from the last session.

Record Highs and Lows to Close the Year

Wheat futures are poised for an annual decline of 13%. Record global supplies have continued to drive prices lower. Corn is set to finish the year down nearly 3% after a huge US harvest. This will be the fourth year of annual declines for corn and wheat. Soybeans are expected to break their three year declines and gain 17% over last year.

 

Pork producer Smithfield Food Inc. has begun buying grain elevators and purchasing grain directly from handlers. Last September Smithfield bought two Ohio grain elevators and now buys about 65% of its feed directly from farmers. Large grain handlers have not commented specifically on Smithfield.

 

Egypt's state grain buyer GASC bought 235,000 tonnes of wheat in a tender on Thursday. The total purchase comprised 175,00 tonnes of Russian wheat and 60,000 tonnes from Ukraine, traders said.

 

China's Ministry of Agriculture said on Friday the recent outbreaks of bird flu have been handled in a "timely and effective" manner without spreading and have not affected chicken products or prices. China has culled more than 170,000 birds in four provinces since October and closed some live poultry markets after people and birds were infected by strains of the bird flu. South Korea and neighboring countries still battle outbreaks of various strains.

 

Argentina is predicted to harvest 15 million tonnes of wheat in the 2016/17 crop year, the Buenos Aires Grains Exchange said on Thursday, up from a prior estimate of 12.5 million tonnes as farmers plant the grain in some areas previously dedicated to soybeans. The 2016/17 crop year is the first since President Mauricio Macri ditched the wheat export curbs and taxes. Argentine growers are expected to plant 20.3 million hectares with soy this crop year, according to the Agriculture Ministry, short of the 20.6 million hectares dedicated to soy in the 2015/16 season.
 

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

December 29, 2016 | Grain Hedge Insights | Kevin McNew | Views: 300

No Tender for US Wheat in Latest GASC

Grains moved higher coming out of the night session and a weakening dollar helps them recoup some of last session’s losses.

Cold patterns in the plains and midwest puts wheat on alert for winterkill in the next 2 weeks according to Commodity Weather Group. However there are no specific threats on their models yet.

 

Argentina is still getting hit with rain with their wettest days expected to be Saturday through Monday this week. Rainfall is expected to be about 3 inches during those three days. Late corn and double-crop seeding will struggle in nearly half of Argentina. Dryness in Brazil is expected to slow over the next 2 weeks with scattered showers on the horizon.

 

Egypt's GASC received offers from ten suppliers in an international tender to purchase wheat earlier today. No purchases have been made yet and results are expected to be out later today. The lowest offer was $186.68 per tonne FOB for Russian sourced wheat. No US wheat was offered despite GASC allowing US HRW this time around.

 

China plans to boost its reserves of farm and arable land over the next three years. China currently has about 124.3 million hectares of arable land and more than 100 million hectares of farmland. The government said it will add 1.3 million hectares of arable land, partially replacing land lost over the past 13 years.

 

A rise in US inventory has helped stall the upward trend in oil prices that has pushed global crude prices to their highest levels since July of last year. Many analysts expect oil prices to continue moving higher in early January.

 

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

December 28, 2016 | Grain Hedge Insights | Kevin McNew | Views: 253

Continued Support for Soybean Prices

Grains moved lower exiting the overnight session while the US dollar continues to find strength.

Even with the slight dip in the overnight, soybeans look to be supported by fear about dry weather in soy production regions in parts of Argentina and Brazil. Wheat and corn are seeing some selling today after their strong rises on Tuesday, with little new news visible immediately to generate more price strength.

 

Chinese city Wuxi will suspend poultry trade amid fears about bird flu. The city plans to close live poultry wholesale markets, restrict vehicles carrying live poultry and temporarily ban the entry of outside poultry. At least seven people in mainland China have been infected with the H7N9 bird flu strain and two have died.

 

A wave of imports has bumped Chinese pork retail prices 10 percent since they hit record levels in June on a domestic supply shortage. Meantime, the price of soymeal has hit a 2-1/2 year high in Sichuan as farmers buy up stock to feed up pigs for the New Year "golden season".

 

In outside markets, imports of crude oil by Iran’s four major buyers in Asia more than doubled from a year ago. Purchases by India and South Korea have been more than four times higher. China, India, South Korea, and Japan imported 1.94 million bpd of Iranian oil in November, an increase of 117% from last year.

 

Oil prices edged up for a fourth consecutive session on Wednesday, close to their peaks since mid-2015, with the market awaiting evidence of OPEC supply reductions in the new year. Oil prices have gained 25 percent since mid-November, helped by expectations for OPEC's supply cut and solid U.S. economic figures that have also bolstered equity prices. Trading is expected to remain thin this week ahead of the New Year holiday.

 

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

December 27, 2016 | Grain Hedge Insights | Kevin McNew | Views: 208

South American Weather Slows Soybeans

Grains saw higher movement coming out out of the holiday weekend. Crude moved higher as well in outside markets.

Heavy rains in Argentina failed to make it Buenos Aires, where dryness is threatening to dent soybean production. The Buenos Aires Grains Exchange forecasts Argentina's soy planting area at 48 million acres. The dry area of southeast Buenos Aires was originally slated for 4 million acres of soy, some of which may be lost. Nationwide, the exchange says about 76 percent of the 2016/17 soy crop has been planted so far.

 

China has culled more than 55,000 birds after an outbreak of bird flu last week. The H5N6 strain was confirmed in Yining and has killed 10,716 birds, according to China’s Ministry of Agriculture. This is the fourth flu outbreak among poultry since October and brings the total cull since then to more than 170,000 birds.

 

China has not set import taxes for 2017 yet and expects to do so by the end of January, a customs official said. This comes among speculation that China has ditched tariffs for U.S. and Brazilian importers. The 5% tariff was introduced at the start of this year and is set to expire December 31.


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

December 23, 2016 | Grain Hedge Insights | Kevin McNew | Views: 158

Weekly Cash Comments

Weekly Cash Commentary for week ending 12/23/2016

The cash markets saw mostly higher movement this week with prices continuing to stay in a tight range.

 

On average corn was up 1 cent after moving lower last week. Ethanol plants moved higher as well, up 2 cents per bushel. Weekly EIA report was close to expectations, finding only a small reduction in run times off last week's record high levels.  Production slipped less than one-half percent to a 1.036 mil bbl/day rate.  Carried forward, such a rate would utilize 5.54 billion bushels of corn.  Corn along the river was off again this week, moving 1/4 cent lower.

 

Soybeans saw relatively strong movement this week gaining 2 cents per bushel. Crush facilities were once again the biggest movers gaining 3 1/2 cents. Soybeans along the river also moved higher, gaining 1/4 cents. Yesterday the EU released their official soybean import data. Soybean imports in 2016/17 were reported as having reached 6.2 million tonnes by Dec. 20, down 5 percent from 6.5 million at the same stage last season.

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

December 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 413

Crude Oil on a Downward Trajectory

Grains Continue Their Move Lower

Crude Oil on a Downward Trajectory

Grains continued to move lower with soybeans leading the complex on a 5-cent decline. In outside markets, crude oil also was on a downward trajectory.

 

In South America, the evening GFS model run had no major changes for week 1. In week 2, rainfall amounts were increased for a majority of southern and central Argentina Jan. 1-2. Amounts were also increased from northern Argentina north through Paraguay and west-central Brazil for Jan 3-5.

 

Chinese November customs data showed strong U.S. soybean purchases for November, up 32% versus last year. However, China has found two more cases of human bird flu infection, bringing this week's total to three and stoking fears the deadly virus could spread at a time when other Asian nations are battling to control outbreaks of the disease. Health officials in nearby South Korea and Japan have been scrambling to contain outbreaks of different strains of bird flu, with the poultry industry there bracing for heavy financial losses.

 

Weekly EIA report was close to expectations, finding only a small reduction in run times off last week’s record high levels.  Production slipped less than one-half percent to a 1.036 mil bbl/day rate.  Carried forward, such a rate would utilize 5.54 billion bushels of corn.  Note, though, that the marketing year to date level is closer to 5.35 billion versus USDA at 5.3.  

 

Weekly Export Sales-

                                    Actual           Expected

Corn                              1,251           800-1,100

Soybeans                       1,812         1,100-1,400

Wheat                           297.8             300-500

 

EIA crude oil inventories yesterday showed a 2.25 million barrel build versus a 2.5 million barrel draw-down in stocks, which had been expected. Net imports grew by 1 million barrels to 7.9 million barrels in the period which fueled much f the inventory jump.

 

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

December 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 611
December 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 288

Soybeans Trying to Erase Losses in the Week

Corn and Wheat Drift Lower

Grains were mixed overnight with soybeans trying to erase part of the 30-cent losses in the week. Corn and wheat drifted lower.

 

Brazil analyst AgRural estimated Brazil's 2016/17 winter Corn crop at 59.9 MMT. versus last season's crop of 40.7 MMT. They estimated the total Brazil 2016/17 Corn crop at 88.3 MMT up from last seasons poor crop of 67.0 MMT. Meanwhile Rabobank commodity analysts are forecasting 16/17 Brazil first season corn crop at 28.0 mln mt and the second season 16/17 corn crop at 56 mln mt, with total 16/17 crop at 84.0 mln mt.

 

Overnight, the Taiwan Flour Millers' Association has purchased 93,125 tonnes of milling wheat to be sourced from the United States in an international tender which closed on Wednesday. Importers in the Philippines have issued an international tender to purchase about 25,000 tonnes of milling wheat to be sourced from Australia.

EIA crude oil inventories will be announced later this morning. Traders look for a 2.5 million barrel cut in stocks from last week. If realized, that will be the 5th week of inventory draws.

 

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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