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March 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 218

Grains were Higher in the Overnight

On Monday, state USDA agency’s gave an update on HRW wheat conditions

Grains were higher overnight, while outside markets turned lower on news of a terrorist attack in Belgium.

 

On Monday, state USDA agency’s gave an update on HRW wheat conditions, which showed a mixed bag with Kansas and Texas each having a modest 1% improvement in the crop rating for good-to-excellent (TX 47% TW vs 46% LW and KS 57% TW vs 56% LW). But Oklahoma dropped a significant 4% with the crop going from 67% last week to 63% this week. Colorado released their first ratings of the season, showing only 43% of the crop good-to-excellent, well below 55% this time last year.

 

In overnight news, Japan's Ministry of Agriculture is seeking to buy a total of 126,190 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. Lebanon's public health ministry referred a case concerning contaminated Russian wheat imports to a branch of the public prosecutor's office on Tuesday, the state news agency said, following a dispute with the economy ministry over test results showing unacceptable levels of a toxin. The Lebanese Public Health Minister has said that tests carried out by his ministry in February showed unacceptable levels of a carcinogenic substance, ochratoxin, in wheat imports from Russia.

 

Twin blasts hit Brussels airport early Tuesday. They were followed by an explosion in a subway station in the city. At least 26 people were killed, according to Belgian media, 15 at a subway station and at least 11 at the airport. France and Germany’s stock markets were down 1% on the news but pared losses going into the close. US equity futures followed in sympathy.

 

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

March 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 230

Wheat Finds Buying Interest on Sunday

In outside markets crude was modestly lower while stock futures were up going into the morning session

Wheat found buying interest on Sunday as cold weather in the Plains put a premium on prices, while corn and soybeans drifted lower to start the week.  In outside markets crude was modestly lower while stock futures were up going into the morning session.

 

Weather in Oklahoma and Kansas was colder than expected over the weekend. Extreme low temperatures down into the range of 5 to 16 degrees Fahrenheit from eastern Colorado and far western Kansas to western Nebraska might have been cold enough for permanent crop damage if wheat had reached the more advanced joint stage. Similar conditions were suspected for crops from the northern Texas Panhandle through southwestern Kansas to west-central Kansas where low temperatures were in the teens. After warming up to the 80s this week in that area, another cold spell is expected going into next weekend and some modest precip is expected in Western KS, Eastern CO and Western NE.

 

CFTC report on Friday showed active hedge fund buying in the past week to cover record large shorts. They were net buyers of 37K contracts of corn and wheat, and 61K contracts soybeans. This has the potential to limit buying interest going into this week with some of the pressure off of the large short positions.

 

In overnight news, buyers from Israel and Taiwan were in the market for corn. Brazil dockworkers were going on a strike Monday morning, demanding wage hike adjustments for inflation as the country's main commodity markets gear up for the export season. The strike will last for a full day but could extend the strike indefinitely, union President Rodnei Oliveira da Silva said.

 

Oil prices slid for a second day on Monday, under pressure from signs that some of the nimbler U.S. producers increased drilling last week and from uncertainty surrounding a meeting of the world's major exporters next month to discuss freezing output. U.S. energy firms last week added one oil rig after 12 weeks of cuts, according to data from industry firm Baker Hughes. Oil rigs have fallen by two-thirds over the past year to their lowest since 2009, and this surprise addition suggested the drop-off in crude drilling may be stabilizing after the oil price's 50-percent rally since February.

 

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

March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 298
March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 325

Weekly Cash Comments

Weekly Cash Commentary for week ending 3/18/2016

Grain basis levels were stagnant yet again this week with the average corn basis across the country unchanged, while soybeans slipped 1-cent a bushel.

 

Basis levels since harvest have remained incredibly flat. For corn, the overall change in US average basis in the past 3.5 months has been only about 2-cents a bushel. Generally speaking we get at least some modest left-to-right movement in basis during the post-harvest season. In the last 5 years, only 2013 saw a drop in basis levels from December into early spring.

 

This week the Gulf saw mixed movement in basis levels with corn slipping 2 cents a bushel, while soybeans advanced 3 cents a bushel. Ethanol plants were mostly steady this week although Western Cornbelt plants did see some uptick in basis, with a few plants boosting basis by 3 to 5 cents a bushel. Soy plants on the other hand were off 1-cent a bushel on average and Western Plants were more susceptible to weakness than the East.

 

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

March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 233

Grains were Subdued in the Overnight Trade Session

Crude oil added to its winning streak overnight trying to make a third-day in a row of gains

Grains were subdued overnight as corn and wheat were mostly unchanged, while soybeans recovered to above $9 a bushel on front month May.  Crude oil added to its winning streak overnight trying to make a third-day in a row of gains, and up $11 a barrel since its low on Feb 11. The US dollar index also found some modest support after two days of an intense sell off.

 

The slide in the US dollar is starting to have a noticeable impact on FOB grain price comparisons around the globe. Yesterday, the US soybean FOB price dropped below Brazil’s price for the first time since the US harvest in October. For most of the US post-harvest season, the strong dollar has put US soybeans at a $0.40 a bushel premium to Brazil, but that quickly reversed in the last week thanks to the falling US dollar and strengthening Brazilian Real.

 

In wheat yesterday, markets sold off sharply in Kansas City with somewhat of an improved outlook this weekend’s weather. Forecasters see temperatures not as cold as originally expected in the Plains. Previous forecasts of a hard freeze in Kansas and Colorado had put a bit of a weather premium into wheat in recent days.

 

The corn market came close to overhead resistance early Thursday at $3.73 and quickly turned lower on wheat’s sharp retreat. However, there is still gap support at $3.65 which is the key to shifting this pattern back down. Right now, it looks like that will be our near term range.

 

In oil, anticipation has grown that major oil producers, including countries outside the Organization of the Petroleum Exporting Countries, will join a production freeze at January levels. A meeting is set in Qatar on April 17 to discuss an output freeze. Many analysts say the market needs to see more a definitive reduction in supply in order for crude to continue its rally. Some countries indicated that participation by Iran wasn’t required for a deal. Iran is set to ramp up output following the removal of international sanctions.

 

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

March 17, 2016 | Grain Hedge Insights | Kevin McNew | Views: 238
March 17, 2016 | Grain Hedge Insights | Kevin McNew | Views: 225

Grains Find Strength in the Overnight

US Dollar Continues to come under Pressure

Grains found strength overnight with soybeans eclipsing the psychological $9 mark for the first time since December. Outside markets were mixed as the US dollar continued to come under pressure while crude oil added to its gains from Wednesday.

 

Grains continue to see large short positions by managed money, even as this rally has picked up some modest steam.  In corn, spec funds held a record large short position on March 8 of 265,000 contracts, but even with this rally, short positions still likely hover around 245,000, leading to more room to run as we get closer to key acreage report data at the end of the month (watch GrainTV).

 

This morning, USDA’s weekly export sales were also supportive for soybeans and corn. Old-crop corn sales exceeded expectations coming in at 1.2 MMT while soybeans saw old-crop sales at the high end of expectations with 623,700 MT while new-crop sales came in well above expectations at 235,100 MT.

 

                                OC Actual             OC Expected           NC Actual          NC Expected

Corn                             1,227                  700-1,100                  61.4                 0-150

Soybeans                      623.7                    400-700                  235.1                25-75

Wheat                          212.9                    250-450                  159.3                50-100

 

In outside markets, the Fed’s announcement yesterday that the course on interest rate policies for 2016 would likely lead to 2 interest rate hikes instead of 3 sent the US dollar lower. Since the announcement, the US dollar index has plunged 2% and is at its lowest level since mid-October. Crude oil was buoyed yesterday as EIA crude stocks came in below expectations with only a 1.3 million barrel build in inventories versus a 3.4 million build that was expected.

 

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

March 16, 2016 | Grain Hedge Insights | Kevin McNew | Views: 541
March 15, 2016 | Grain Hedge Insights | | Views: 479
March 15, 2016 | Grain Hedge Insights | Kevin McNew | Views: 235

Grains were Lower in Overnight Trade

Grains were lower in overnight trade while crude oil continued to sell off after yesterday’s $1 a barrel slide

Grains were lower in overnight trade while crude oil continued to sell off after yesterday’s $1 a barrel slide.

 

Winter wheat ratings from select states showed steady ratings to improved conditions in Kansas, Oklahoma and Texas. Kansas winter wheat was rated 56 percent good to excellent, unchanged from the previous week. USDA said 6 percent of the crop was jointing, compared with the five-year average of 2 percent. Oklahoma winter wheat was rated 67 percent good to excellent, compared with 66 percent the previous week. USDA said 10 percent of the Oklahoma crop was jointing, compared with 14 percent a year ago and the five-year average of 24 percent. Texas winter wheat was rated 46 percent good to excellent, up from 42 percent in the previous week.

 

In overnight news, Iraq bought 100,000 MT of wheat from Canada, while Syria is using loaned money from Iran to also buy wheat.

 

NOPA's Feb crush report is due at 11 a.m. CDT. The average Feb crush estimate among analysts surveyed by Reuters was 139.942 million bushels; range 136.1 million -144.0 million bushels, median 139.300 million.

 

Crude oil came under more pressure overnight as a meeting proposed by Russia and Saudi Arabia to discuss output limits has been pushed back to April from March 20th after signs some key producing nations do not support the move. Overnight, the Bank of Japan announced it was keeping the reserves deposit rate at minus 0.1%. Stocks are also waiting on a U.S. Federal Reserve interest-rate decision due Wednesday. Economists largely expect the central bank to hold rates steady.

 

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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