January 19, 2016 | Grain Hedge Insights | Kevin McNew | Views: 216

Grains Start the Week Higher

Outside markets were recovering overnight with oil trying to claw its way back to $30 a barrel

Grains were higher to start the week with solid advances by soybeans of 7 cents and corn and wheat were up 3 to 5. Outside markets were recovering overnight with oil trying to claw its way back to $30 a barrel and S&P futures posted a better than 12% advance.

 

South Korea's Major Feedmill Group (MFG) purchased 55,000 MT of feed wheat to be sourced from Argentina in a deal on Tuesday, European traders said. Low priced Argentine wheat has made a strong reappearance in world markets after the country relaxed export restrictions, with rare sales of Argentine feed wheat to the United States also reported.

 

In Russia, wheat export prices fell further last week as the rouble dropped close to a record low against the dollar on weak oil prices. Black Sea prices for Russian wheat with 12.5 percent protein content were at $181-182 a MT at the end of last week, down $2-$3 from a week earlier, Russian agricultural consultancy IKAR said in a note. The rouble is down 6% against the dollar since the start of 2016.

 

Soybeans found support as rains in Matto Grasso, Brazil will limit harvest for the next few weeks. Also, some concerns of dryness in parts of Argentina; although the outlook does call for rain.

 

Oil prices rose more than 5 percent on Tuesday as investors viewed bullish Chinese oil demand data as a buying trigger, but contracts remained near 12-year lows as the IEA said the market should stay oversupplied this year. Traders said prices drew support from strong oil demand in China. Preliminary Reuters calculations based on government figures showed record oil consumption of 10.32 million barrels per day (bpd), up 2.5% from 2014, defying slowing growth in the world's second-largest economy.

 

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

January 15, 2016 | Grain Hedge Insights | Kevin McNew | Views: 648

Weekly Cash Comments

Weekly Cash Commentary for week ending 01/15/2016

Grain basis levels continued to remain flat this week even after the USDA report gave a spark to futures prices. Corn was up half a cent a bushel on average across the US while soybean basis was unchanged.

 

For both corn and soybeans, the only bright spot in basis this week was at river terminals. As flood waters receded this helped bring back buying interest from river terminals. Corn basis at river terminals was up 2.75 cents a bushel on average while soybean basis posted a 2.25 cent advance.

 

For end users, margins continue to be pressured which has kept basis levels in check. Ethanol basis did manage to be unchanged for the week but lagged the broader market, while soybean crushing plants dropped basis by 1-cent a bushel on average.

 

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

January 15, 2016 | Grain Hedge Insights | Kevin McNew | Views: 293

Grains Were Mixed Overnight as Soybeans Found Some Selling Pressure

Outside equity markets came under pressure overnight as crude oil fell below $30 a barrel.

Grains were mixed overnight as soybeans found some selling pressure, falling below $8.80, while corn and wheat had some modest gains in the overnights session. Outside equity markets came under pressure overnight as crude oil fell below $30 a barrel.

 

Moisture has returned to Ukraine and Russia after a very dry fall got the winter wheat crop off to a poor start. A couple of impressive storms moved from Ukraine into parts of Russia with moisture totals varied from 0.3 to 1.3 inches and where it came as snow accumulations were substantial at times with 3 to 8 inches and local totals to 15 occurring from last weekend’s storm bringing snow depths at that time up around 2 feet in a few areas.

 

On Thursday, the monthly El Nino/La Nina report from NOAA's U.S. Climate Prediction Center stated "A strong El Niño is expected to gradually weaken through spring 2016, and to transition to ENSO-neutral during late spring or early summer.” La Nina events tend to be associated with US droughts in the Midwest, so a forecast that pushes the La Nina to after the summer of 2016 would suggest a lower likelihood of drought this growing season.

 

Oil is sliding for a third week on signs Iranian exports may add to a global supply glut. Commodity producers led losses in European stocks and US equity futures suffered sharp losses overnight. Crude’s drop to a 12-year low is sending shock waves around the world. Norway sees a crisis in its industry, energy firms are laying off workers and currency markets from commodity-producing countries are in turmoil. The slump is also denting the outlook for inflation around the world, causing traders to curb bets on how far the Federal Reserve will raise interest rates this year.

 

International sanctions on Iran may be lifted Monday, allowing for a boost in oil shipments from the fifth-biggest member of the Organization of Petroleum Exporting Countries. Iran is trying to regain lost market share and doesn’t intend to pressure prices with an export increase once sanctions are removed, officials from its petroleum ministry and national oil company said this month.

 

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

January 14, 2016 | Grain Hedge Insights | Kevin McNew | Views: 575
January 14, 2016 | Grain Hedge Insights | Kevin McNew | Views: 215

Wheat Leads the Downside in the Overnight

In outside markets, crude oil and equity futures posted modest gains.

Grains were lower overnight with wheat leading to the downside and soybeans only off 1 cent from yesterday’s settlement. In outside markets, crude oil and equity futures posted modest gains.

 

Argentina will harvest an estimated 23.8 MMT of corn in the 2015-16 season, the Rosario grains exchange said on Wednesday, hiking its forecast from a previous estimate of 20.2 MMT.  This is quite lower than USDA’s estimate on Tuesday at 25.6 MMT. The exchange maintained its estimates for 2015-16 soy and wheat harvests of 55 million and 9.6 MMT, respectively. USDA pegs Argentina’s bean crop at 57 and wheat at 10.5.

 

Overnight, Japan's Ministry of Agriculture bought a total of 140,729 MT of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday.

 

The export sales were in-line with expectations for wheat and soybeans, and slightly above expectations for corn. However, all three grains are lagging behind last year’s pace to achieve USDA’s export forecast for the year. The worst is corn where YTD sales are 25% below the same period last year, and even with USDA’s newly lowered forecast for US corn exports on Tuesday to 1,700 MB this would imply only a 9% drop in exports between last year and this year. Based on corn’s current pace, export sales could end up at 1,400 MB. For wheat, likewise export sales YTD are lagging behind last year’s mark by 15% while USDA only expects a 6$ drop. In soybeans, the disparity is better with an 11% drop YTD in actual sales and USDA projecting a 8% decline.

 

USDA WEEKLY EXPORT SALES

 

                          Actual        Expected

Corn                      669           400-650

Soybeans            1,127        900-1,300

Wheat          274 (+16NC)       150-350

 

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

January 13, 2016 | Grain Hedge Insights | Kevin McNew | Views: 493
January 13, 2016 | Grain Hedge Insights | Kevin McNew | Views: 254

Yesterday’s USDA Data caused a Rally

Grains were tempered overnight following yesterday’s rally on new USDA data

Grains were tempered overnight following yesterday’s rally on new USDA data. Meanwhile, equity markets and crude oil pushed higher trying to form a bottom after the steep sell-off that started the year.

 

Overall, USDA’s fresh data was mostly neutral in terms of its content, but it elicited a bullish reaction thanks to large spec & hedge funds that had been heavily short going into the report. Without fresh bearish news, the shorts exited positions and pushed the market higher, but the bullish response was muted in the day session with corn closing at the mid-point of the day’s range and soybeans closing 30% below the day’s highs. For soybeans, we need to see March clear $8.81 and March corn to clear $3.64 to see another round of short-covering.

 

In wheat, traders got at least one bullish number, which was a much smaller than expected US winter wheat seedings estimated. USDA pegged 2016 winter wheat acres at 36.61 MA versus an expectation of 39.32. This would be the smallest number of acres to winter wheat since 2010, and plantings of one class, hard red winter wheat, were the lowest in at least 30 years. But, as per usual, wheat has many overhanging negatives still in place as world carry-out increased from 229.86 MMT to 232.04 MMT. Also, overnight French officials pegged soft wheat stocks at 5.8 MMT, up from 5.2 last month and 2.5 last season.

 

Oil prices rose for the first time in eight days on Wednesday as positive Chinese trade data and an unexpected draw in weekly U.S. crude oil inventories gave investors reasons to buy crude futures. Crude inventories fell by 3.9 million barrels in the week to 480.071 million, compared with analysts' expectations for an increase of 2.5 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub fell by 302,000 barrels, the API said. China reported exports dipped just 1.4 percent in U.S. dollar terms in December, compared to forecasts of an 8 percent drop, positively surprising world markets.

 

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

January 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 738
January 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 214

Grains Listless Overnight Awaiting Today’s USDA Report

Oil prices hit fresh lows overnight, but managed to claw back to nearly unchanged on the session.

Grains were listless overnight, marking time until this morning’s USDA report at 11 am CDT. In outside markets, S&P futures were trying to climb out of the hole that had been made by China and caused an 8% slide in equity markets in the last 2 weeks. Oil prices hit fresh lows overnight, but managed to claw back to nearly unchanged on the session.

 

Overnight, Brazil’s Mato Grosso Farm Institute estimates 30% of the soybean crop in the state is in bad or terrible condition, which is down from 43% in December. Rains are starting to pick up and become heavy in Northern Brazil which had been dry for much of December.  There is mild concern that the extreme turnaround in rainfall could cause some flooding and cause some crop problems.

 

Japan's Ministry of Agriculture is seeking to buy a total of 140,729 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. In Russia, the wheat crop appears to be stabilizing after a dry fall planting season. Snow and mild temperatures are improving the condition of the crop. Around 89 percent was in good or satisfactory condition and 11 percent was in a poor condition. The country's winter grains were in a better condition than last year but in a worse state than the average of the last five years.

 

Today’s reports from USDA are expected to see little changes by USDA, but nonetheless the trade is on edge for any potential curveballs in the numbers, as well as the large short position by funds and spec traders. Even if the reports are benign, it has the potential to push shorts to exit positions and cause a short-covering rally.

 

Follow us on Twitter @GrainTV to get immediate reaction to the reports

 

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

January 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 486

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