December 09, 2015 | Grain Hedge Insights | Cody Bills | Views: 176

USDA Supply and Demand Report to be Issued Later Today

This report should be a non-event as no production survey based data will be included

Grains were higher overnight going into the December USDA Supply and Demand Report. In outside markets, the US dollar sunk to its lowest level in three trade sessions, lifting crude oil futures. S&P futures were modestly lower.

 

Today’s USDA report is expected to be a non-event as there are no production survey based data in this report. The final US production numbers will come in the January report.  Ending stocks are expected to be revised slightly higher in corn and wheat as some cut in export forecasts could be in the cards.

 

US Ending Stocks (in million bushels)

                                                              Expected               Range            Nov USDA

Corn                                                         1,768              1,640-1,810            1,760

Soybeans                                                      462                 445-478                 465

Wheat                                                          918                 910-936                 911

 

Overnight, Ukraine's agriculture ministry has raised its forecast for the 2016 grain harvest to more than 61 MMT compared with an earlier forecast of 60.5 MMT. He pointed to improved weather supporting the wheat crop. “A few weeks ago more than 30 percent of the crop was in a poor state while now the acreage of poor crop is not more than 17 percent," he said.

 

The US dollar reversed direction from the previous two sessions, hitting a 3-session low following Thursday’s major sell off. Crude oil was moving higher overnight as Chinese CPI surprised to the upside, but deflationary pressures persist with producer prices falling for a 45th consecutive month, weighing on shares in Asia. A much stronger than expected jump in machinery orders out of Japan also supported crude.

 

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

December 08, 2015 | Grain Hedge Insights | Kevin McNew | Views: 251
December 08, 2015 | Grain Hedge Insights | | Views: 174

Grains were Mixed in the Overnight

Soybeans and Wheat inched lower

In grains, yesterday’s meltdown was largely triggered by the destruction of oil prices that sent crude to a 7-year low on Monday. Corn did have some positive news on Monday as USDA announced Mexico bought 115,000 MT of US corn. But, other news was mostly neutral as weekly export inspections showed corn and wheat in line with trader expectations while soybeans was at the high end of expectations.

Jan soybeans ran right to the 9.00 to 9.10 resistance area. Then turned tail selling off 24 cents on the day creating an ugly outside day down reversal. Look for support at 8.80 to 8.75. The 50% retracement of the last rally is 8.77.

 

Analysts expect USDA to raise its forecasts of U.S. 2015/16 wheat and corn ending stocks, according to Reuters poll. Average estimate of what USDA will show for U.S. ending stocks of wheat: 918 million bu (range 0.910-0.936; Nov 0.911).  Corn: 1.768 bln bu (range 1.640-1.810 bln; Nov 1.760 bln).  Soybeans: 0.462 bln bu (range 0.445-0.478; Nov 0.465 bln).

 

China's total grain output rose by 2.4 percent in 2015 to 621 MMT from last year, the country's statistics bureau said on Tuesday. The combined output of grains including rice, corn and wheat increased 2.7 percent to 572 MMT, it said. The corn crop came to 224.6 MMT, showed the data, with average yields of 5,892 kg per hectare. Output is up 4 percent from 215.67 MMT last year.

 

Oil prices temporarily rallied on Tuesday with news that China's appetite for cheap oil was helping to support prices as the government looks to build up strategic reserves. China's crude oil imports for the first 11 months of the year rose 8.7 percent to 6.61 million barrels per day, with November crude imports growing 7.6 percent from the same month a year ago. But, OPEC has lost control of the oil market and unless something fundamental changes that causes demand to overtake the oversupply in the market, the path of least resistance is the 2008 lows in the mid-$30 range.

 

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

December 07, 2015 | Grain Hedge Insights | Kevin McNew | Views: 313
December 07, 2015 | | Views: 212

Wheat Climbed Higher in the Overnight

Soybeans fell 3 cents a bushel

Soybeans fell 3 cents a bushel in the night session after see-sawing between positive and negative territory in the overnight session.  In Brazil, little has changed in the forecast since Friday. Most of Brazil will get rain at one time or another during the next two weeks. Far southern Rio Grande do Sul, eastern Bahia, northern Espirito Santo and northeastern Minas Gerais may be driest and will experience some net drying conditions. Overall, the situation will be favorable for summer crop development. Some pockets of dryness will be possible in each of these next two weeks, but the drier areas will move around from one week to the next and that is what will maintain the very good production potentials. Late soybean and early season corn planting may lead to reduced second season corn planting in 2016, but the main season soybean crop and early corn crop will still yield well if conditions remain as good as they have been lately.

 

In corn, Argentina weather will remain favorable for a while, but limited rain and warm temperatures will slowly deplete topsoil moisture and that might eventually slow planting, germination and emergence. Mid-month rain will be very important for the nation to sustain the best possible crop development potential.  Rain in northwestern parts of the nation was welcome and brought some temporary, but immediate relief from dryness.  South Africa is still too dry with weekend rainfall still too light to change soil or crop conditions. Rainfall will continue erratic and mostly light each day over the next two weeks. Localized areas of improvement are expected periodically, but most of the nation will remain much too dry.

 

U.S. equity markets looked to kick off the week on a muted note after a hefty rally on Friday fueled by a better-than-expected November jobs report. The Labor Department’s report of 211,000 new jobs created last month still hung with Wall Street on Monday after a blockbuster rally on Friday, which tacked on more than 300 points, as traders bet the data helped give the Federal Reserve more confidence to hike short-term rates this month.

 

Crude oil prices continue their dramatic decline after a refusal by the Organization of Petroleum Exporting Countries (OPEC) to cut production. Some observers believe, however, that OPEC's production level is now less relevant to controlling oil prices, because burgeoning output from outside the cartel would fill in any cuts it made.

 

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

December 04, 2015 | Grain Hedge Insights | Cody Bills | Views: 261

Weekly Cash Comments

Cash Commentary for week ending 12/04/2015

Grain basis on average across the US was little changed this week as strength in futures prices helped lift farmer selling. On the week, corn basis was up 1 cent a bushel while soybeans was unchanged.

 

In soybeans, the big run-up in futures prices over the past week helped stimulate selling by farmers which in turn put basis levels more on the defensive. Soy crush plants as a group were off 1 cent a bushel on the week with more notable weakness in the Western Cornbelt as key buyers there lost 5 or more cents a bushel. At river terminals, basis levels were unchanged even with the Gulf moving modestly higher by 2 cents a bushel.

 

In corn, basis levels managed to inch higher largely driven by better basis bids at ethanol plants, which were up 2 cents this week. However, bad news from ethanol manufacturer Abengoa Energy that it is facing bankruptcy put the brakes on the Colwich, KS plant which is now idling and the Ravenna, NE which is no longer buying corn. At river terminals, basis levels were up 1 cent a bushel, following a similar gain at the Gulf.

 

With futures markets showing signs of recovering, look for basis levels to be flat to lower as farmers increase sales going into the end of the year.

 

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

December 04, 2015 | Grain Hedge Insights | Cody Bills | Views: 305

Wheat Continued its Climb in the Overnight

For the third day in the row, another flash sale by the USDA.

Wheat continued to move higher overnight following yesterday’s double-digit gains, while soybeans and corn were slightly weaker. In outside markets, S&P futures tried to recover from the huge sell off while crude oil continued to move higher after yesterday’s gains.

 

For the third day in the row, another flash sale by the USDA. Exporters sell 178,000 MT of soybeans for delivery to China during the 2015/2016 marketing year. In an additional sell, exporters sell 249,000 MT of soybeans for delivery to unknown destinations during the 2015/2016 marketing year.

 

Global markets were shook up yesterday after the European Central bank announcement that they wouldn’t lower interest rates nearly as much had been expected. The result was a big swing in currency values as the Euro shot higher while the US dollar plunged, erasing all of the gains in the last 30 days. By the close yesterday, the US dollar Index (DX-MZ5) was off 2.5%. In overnight trade, the dollar has recovered about 0.5 % but still seems likely to continue to move lower.

 

In grains, the downdraft in the dollar spells good news for higher grain prices as a cheaper dollar helps make US exports more competitive. This is especially beneficial for wheat that depends so heavily on competitive pricing to be viable in the world trade.

 

In other news yesterday, Informa released production estimates for South America pegging corn production at 102.3 MMT versus a previous estimate of 100.3 and soybeans at 159.9 versus 160.0 previously. This morning, Stats Canada pegged the 2015 wheat crop at 27.59 MMT, which came in higher than expectations of 26.7 MMT.

 

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

December 03, 2015 | Grain Hedge Insights | Kevin McNew | Views: 300
December 03, 2015 | Grain Hedge Insights | Cody Bills | Views: 248

Corn and Beans were Lower in the Overnight

Oil hit a 7 year low on Wednesday following an EIA report that showed a 10th straight week of climbing crude oil stocks.

Corn and soybeans were lower overnight while wheat was in positive territory, trying to turn around the price slide of the past week. In outside markets, S&P futures recovered some of their losses from yesterday while Crude Oil recovered slightly from yesterday’s $40 a barrel mark.

 

On Wednesday, EIA’s weekly ethanol production report showed output was off 52,000 Barrels per day to 956,000 barrels per day. Even so, year-to-date production is up 4% over this same time last year. Also on Wednesday, USDA announced a flash sale of soybeans to unknown destinations, totaling 124,000 MT.  This morning USDA announced another flash sale of 132,000 MT to China.

 

Overnight, Japan bought 125,000 MT of food quality wheat with 68,000 MT of the deal going to the US and the rest going to Canada. However, wheat prices continue to struggle from lack of competiveness in the world market and an ever-increasing US dollar. The US dollar index has reached its highest point since April 2003, which has helped push wheat prices to their lowest level in 5 ½ years.

 

S&P futures tried to recover from yesterday’s sell-off lead by the energy sector.  Fed chair Yeltsen said yesterday she was "looking forward" to a rate hike that will be seen as a testament to the economy's recovery from recession. The Fed's next policy meeting is Dec 15-16.

 

Oil hit a 7-year low on Wednesday following an EIA report that showed a 10th straight week of climbing crude oil stocks. The U.S. Energy Information Administration reported an increase of 1.2 million barrels in crude supplies for the week ended Nov 27.

 

WEEKLY EXPORT SALES

                                           Actual            Expected

Corn                                        499           500-1,100

Soybeans                                 878           800-1,200

Wheat                                     392              250-500

 

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

December 02, 2015 | Grain Hedge Insights | Kevin McNew | Views: 244

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