May 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 386

Weekly Cash Comments

Weekly Cash Commentary for week ending 05/06/2016

Basis levels were generally firmer this week, although variability in basis movement has picked up on a fast-moving futures market. For the week, US average corn basis was up 1.5 cents while soybean basis bounced up 2 cents.

 

Bean basis showed the most volatility this week as there was a distinct difference on basis movement by end user. Soy plants as a group moved basis higher by 4 cents a bushel as crush margins improved although soymeal cash offerings are still running weak. At river terminals, however, basis levels were off 4 cents a bushel with losses of 5 to 10 cents fairly typical in some regions. Gulf basis has been weakening suggesting a potential slowdown in export movement.

 

For corn, basis levels were generally firmer this week. Ethanol plants as a group were up 2.3 cents a bushel as farmer selling is non-existent on recent price weakness and busy planting activities.  At river terminals, basis was up 1.5 cents although the Gulf was slightly weaker on the week.

 

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

May 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 360

Grains Take a Breather in the Overnight Session

Crude Oil Dips Lower

Grains took a breather from yesterday’s sharp selloff to recover a few cents in overnight trade. In outside markets, crude oil dipped lower and equities were trading down on weak employment data this morning.

 

Yesterday started with strong export sales for soybeans with old-crop of 800,000 MT and new-crop of 443,000 MT, but prices quickly turned lower yesterday as rumors of the Chinese government releasing 5 MMT of soybeans from reserves to auction into the domestic market. If confirmed, the 5 MMT figure is ironically about the magnitude of the crop loss in Argentina that is currently being projected by most analysts.

 

In wheat, the Kansas wheat tour wrapped up pointing to a bumper Kansas crop in spite of lower acres there. They pegged the state’s crop at 382.4 MB, up from 321.9 MB. In news this morning, Stats Canada pegged all wheat stocks there at 13.8 MMT, in line with analyst expectations going into the report.

 

Stock markets slid sharply on Friday and the dollar fell after U.S. non-farm payrolls numbers came in well short of forecast, adding to concerns over the pace of economic growth that have weakened investors' appetite for risk globally. Futures prices showed Wall Street set to open as much as half a percent lower while stock markets in Europe deepened morning falls, sending global indices towards their worst weekly losses since early February.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

May 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 315
May 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 320

Grains Posted Gains in the Overnight Session

US Dollar Continues to Recover

Grains posted gains in the overnight session with soybeans leading the complex higher. Corn and wheat were mostly flat in the night session with listless trade.

 

On Wednesday, soybeans saw an early morning run into the $10.45 territory that was previous highs before heading lower into the $10.30 mark. The market continues to mark time waiting for more bullish news on Argentina’s soy crop but nothing has materialized of yet. In Brazil, currency values there have reversed higher in the last two trade sessions after moving 3% lower at the start of the week. Meanwhile, the US dollar continues to recover from its week of losses, now in its third day of recovery. The basis at the US Gulf was off 6 cents yesterday.

 

In wheat, news from the Kansas crop tour continues to show a solid wheat crop. Tour participants continue to see average yields in the 45 bushel per acre range, well above last year. Wheat is suffering from a lack of solid export business and even with decline in the US dollar, US wheat continues to trade  continues to trade at a $32/MT premium to French wheat, only slightly off the highs of a $35/MT premium when the US dollar was 6% higher.

 

WEEKLY EXPORT SALES

 

                OC-Act       OC-Exp      NC-Act      NC-Exp

Corn          769.3      750-1,100      60.5       150-350

Soybeans   815.8         400-60         430       200-400

Wheat       178.9           0-300         140       200-400

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

May 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 359
May 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 329

Corn Hit Fresh Weekly Lows

Crude Oil posted modest gains

Grains continued to move lower following yesterday’s sharp selloff. Corn hit fresh weekly lows, while soybeans got closer to short-term support in the $10.18 to $10.20 area. In outside markets, crude oil posted modest gains after yesterday’s steep slide while the US dollar index continued to drift lower.

 

Yesterday brought heavy selling to soybeans as a sharp drop in the Brazilian Real and Argentina crop estimates that were not as bad as expected. Informa on Tuesday pegged the Argentina soybean crop at 55 MMT. Early in the week Argentina’s state weather agency suggested a crop of 51 MMT.  Another analyst, Dr Cordier who specializes in South America, said the crop could come in at 53 to 54 MMT but it is still too early to tell.

 

In wheat, the Kansas crop tour on Tuesday found above average yields in much of Northern Kansas. Recent rains have boosted crop prospects following excessively dry weather earlier in the year but also raised the threat of diseases such as the stripe rust that was detected in some fields surveyed by crop scouts.

 

In corn, Brazil saw no rain in the last 18 hours. Brazil rain forecasts remain mixed. Private analyst Celeres trimmed their estimates of Brazil second crop corn production by 10% from prior to 52.8 mmt – a call echoed today by Agroconsult.  A boost in Brazil rain is still needed from Goias into Minas Gerais and northern Sao Paulo.

 

In crude oil, prices were awaiting direction from the weekly EIA crude stocks report later this morning. Analysts expect a 1.2 million barrel build in stocks on the week, which would mark another weekly inventory high. The American Petroleum Institute, an industry group, said late Tuesday that its own data for that week showed a 1.3-million-barrel increase in crude supplies. In addition, a gauge of China’s manufacturing industry reported Tuesday by Caixin Media Company Ltd. and Markit Economics fell in April, marking the 14th straight month of contraction.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

May 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 289
May 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 449

Soybeans Climbed to New Heights Overnight

US Dollar was making a run at 7 days of losses

Soybeans climbed to new heights overnight while corn and wheat posted modest gains. In outside markets, the US dollar index was making a run at 7 days of losses while equity futures and crude oil were also weaker.

 

Soybeans got a boost overnight when news late Monday suggested crop losses in Argentina were going to be around 9 MMT versus previous estimates of 5 MMT.  In other South America news, crops analyst Celeres sharply lowered its forecast on Monday for Brazil's second annual corn crop by 10 percent to 52.8 MMT from the previous month due to bad weather over the main growing areas.

 

However, US early season growing conditions continue to be nearly ideal. Planting progress for both corn and soybeans sped along last week with US corn planting reaching 45% complete as compared to 30% last week, while soybeans are at 8% planted versus only 3% last week. Winter wheat crop ratings also continued their uptrend hitting 61% good-to-excellent versus 59% previously.

 

In currency news, Brazil’s Real took a second day to the downside, giving up nearly 3% from the high’s set on Friday. Monday’s closing prices for Brazil & US port export prices for soybeans showed Brazil at a $10/MT premium to US beans. Two weeks ago US soybeans were $3/MT more expensive than Brazil.

 

Oil futures dropped on Tuesday, with renewed fears of a supply glut hitting investor confidence ahead of weekly inventory data that are expected to show an increase in crude supplies. Reports said on Monday that energy data provider Genscape reported a weekly climb in crude stockpiles of more than 800,000 barrels at Cushing.  API weekly crude stocks will be released this afternoon.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

May 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 337
May 02, 2016 | Grain Hedge Insights | Kevin McNew | Views: 298

Grains Subdued in The Overnight Session

US Dollar hit fresh lows late in the morning session.

Grain markets were subdued overnight with grains showing modest losses in fairly limited trade. In outside markets, the US dollar hit fresh lows late in the morning session while crude oil was weaker on the night but was coming back closer to unchanged.

 

On Friday a number of analysts trimmed the Brazil corn crop estimate as heat stress has taken its toll on the 2nd crop there. Analyst AGR BRASIL reduced its Brazil 2015/16 corn forecast to 79.6 MMT from 85.1 MMT in March. Meanwhile analyst Franca pegged it at 79.5 MMT versus 87.1 MMT in March.

 

Most of this week will be dry in Brazil’s main agricultural areas. Some random showers will occur near the coast from Minas Gerais and Rio de Janeiro to eastern Bahia and a few may occur infrequently from northern Mato Grosso to Tocantins. The impact will be one of net drying for most of the nation and immature second season corn production areas will slowly dry out once again, but many crops will be in favorable condition because of rain that fell last week.

 

In Argentina, A favorable weather pattern is expected through the next ten days with restricted rainfall and mild to warm temperatures. The environment will favor better harvest conditions as time moves along. No meaningful rain is expected through Thursday morning. Some showers will evolve Thursday afternoon and Friday in portions of the nation. Some of the shower activity will linger into early next week.

 

Oil prices edged back from 2016 highs on Monday as rising production in the Middle East outweighed a decline in U.S. output and a sliding dollar. Crude production by the Organization of the Petroleum Exporting Countries rose in April to 32.64 million barrels per day (bpd), close to the highest level in recent history. Iraq's April exports from southern fields increased, as did seaborne exports from Russia, the biggest exporter outside OPEC.

 

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

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