December 02, 2015 | Grain Hedge Insights | Cody Bills | Views: 251

Grains were Mixed in the Overnight as Soybeans Continue to Rally

Crude oil continued to lose ground in the overnight session.

Grains were mixed overnight as soybeans continued to add to its latest rally while corn and wheat were slightly lower. In outside markets, S&P futures held above the critical 2,100 benchmark after closing above it for the first time in a month. Crude oil continued to lose ground in the overnight session.

 

Soybeans have added nearly 30 cents a bushel in the past week following last Monday’s key reversal. Short-covering continues to be the dominant drivers as technical based fund traders’ move to the sidelines. The latest CFTC report showed a near-record net short position by fund traders. Brazil’s soy plantings are near 80% completed vs 70% last week and an 89% average.

 

Corn continues to be mostly flat although technical indicators are starting to turn higher. Monday’s bullish outside day reversal for March corn is a positive note. This sets up a test of downtrend resistance at 376 today and with underlying support at 367.

 

In wheat, prices continue to search for a bottom as delivery pressure on Chicago wheat continues to widen spreads. On Friday, Stats Canada is expected to bump their wheat crop forecast to 26.7 MMT versus 26.1 MMT previously.

 

Crude oil futures (GCLF6 / QMF6) continued to be pressured overnight. Russia’s oil production is at a post-Soviet record of 10.78 million barrels per day (bpd) in November despite low oil prices, Energy Ministry data showed on Wednesday. Data from the American Petroleum Institute (API) showed a 1.6 million-barrel rise in U.S. crude inventories last week to 489.9 million barrels. The U.S. government's Energy Information Administration's inventory report will be published this morning.

 

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

December 01, 2015 | Grain Hedge Insights | Kevin McNew | Views: 283
December 01, 2015 | Grain Hedge Insights | Cody Bills | Views: 275

Grains were Higher in the Overnight Soybeans Lead the Advance

Monday's export inspections were above trade estimates

Grains were higher overnight with soybeans leading the advance, reaching its highest point since early November. In outside markets, the US dollar eased slightly while S&P futures advanced following Monday’s losses. Crude oil was narrowly traded.

 

In soybeans, the market continues to trade higher as short-covering and technical indicators turn higher. Monday’s export inspections were above trade estimates and continue to show a brisk pace for US business.

 

For wheat, Australia’s crop forecasting agency ABERES pegged the wheat crop there at 23.98 MMT, versus their previous estimate in September of 25.28 MMT. The latest forecast is well below USDA’s forecast in November of 26 MMT. In Russia, conditions have taken a turn for the better this fall, as SovEcon pegs the overall grain crop there at 100 MMT. Russian officials have yet to issue their estimate for the 2016 crop, but the country's winter grains are currently in a better condition than last year, a state weather forecaster Hydrometcentre said on Monday, easing concerns over the next year's harvest. Meanwhile in Ukraine, rain in November did little to improve the wheat crop there as crop conditions worsened throughout the month. Planting progressed in the meantime, though not significantly, but now the planting window has more or less closed. This all but confirms the significant area reduction for the 2016 wheat harvest. Even with optimistic spring wheat area forecasts, the 10 percent cut in planned winter wheat area will likely lead to the smallest wheat harvest since 2012 and a consequential slash in exports. Even with normal yields, it seems likely that Ukraine’s wheat crop will fall below 21 MMT, off from 27 MMT this year.

 

On Monday, the US EPA announced their renewable fuels standard, and put annual ethanol use at 14.5 billion gallons per year for 2016. This is higher than what they originally proposed in May of 14 billion gallons. This is mildly supportive for corn, but will have little noticeable impact on the corn balance sheet as the increase from 14 to 14.5 billion gallons is only a 178 MB increase in corn use.

 

Crude oil prices steadied on Tuesday as the dollar eased, but with OPEC widely expected to stick to its output target this week, concern about oversupply remained in focus. The European Central Bank will announce its latest policy decision on Thursday, OPEC's decision on output is due on Friday along with U.S. monthly jobs numbers, meaning oil prices have been hemmed into a range of no more than $4 for the last week.

 

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

November 30, 2015 | Grain Hedge Insights | Kevin McNew | Views: 508
November 30, 2015 | Grain Hedge Insights | Cody Bills | Views: 243

Grains Showed Limited Activity in the Overnight

US Dollar Index Continues to Rise to a Contract High

Grains showed limited activity overnight as markets held mostly fractional gains coming out of the overnight session. In outside markets, the US dollar index continued to rise to a contract high on the Dec futures, while S&P futures and crude oil were modestly higher.

 

Analyst UkrAgroConsult said on Monday that warm temperatures and rain has slightly improved the condition of Ukrainian winter grain crops, but a significant portion remains in a poor state. A severe drought in the summer and autumn in half of Ukrainian regions has forced farmers to stop sowing of winter grains, leaving concerns of a poor grain harvest in 2016. The share of crops in good condition accounts for 28.1 percent as of Nov. 26 compared with 40.6 percent at the same date in 2014, UkrAgroConsult said in a statement. It said that the share of poor crops rose to 35.6 percent this year from 18.1 percent in 2014.  UkrAgroConsult this month cut its forecast for Ukraine's 2016 wheat harvest by about 8 percent to 17.5 MMT.

 

Argentina's incoming government will abolish export taxes on corn and wheat the day after it assumes office and reduce the export tax on soybeans by 5%, designated Agriculture Minister Ricardo Buryaile confirmed over the weekend. President-elect Mauricio Macri won the election last Sunday on a platform of wholesale change. He has vowed to end interventionist measures like these taxes that have hobbled growth in Latin America's third largest economy. “The wheat and corn taxes will be eliminated from the first day, in line with what we promised," Buryaile was cited as saying. "The tax on soy will drop by 5% percent from the start of Mauricio Macri's term," he added.

 

S&P futures (ESZ5) was modestly higher overnight. The lull in the stock market is continuing after light trading amid the Thanksgiving holiday left share prices little changed every single day last week. Investors are awaiting reports from pending home sales today to manufacturing data tomorrow and the monthly Labor Department jobs update on Friday. Federal Reserve Chair Janet Yellen will speak to Congress on Thursday and the European Central Bank will hold its last policy meeting of the year.

 

Crude oil prices (GCLF6 / QMF6) gained ground on Monday, but the overall trend remains bearish on oversupply issued and a strong US dollar. Oil prices have been sliding for over a year since the OPEC opted to keep production high to protect market share and bump out rivals in the U.S. and those outside the cartel. Although there has been rhetoric of late by Saudi Arabia to “stabilize prices”, the general view is that OPEC will maintain the “no-cut” policy. Any changes would be likely determined until after the effect of Iranian oil returning to the market become more apparent in coming months, analysts say.

 

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

November 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 308

Weekly Cash Comments

Weekly Cash Commentary for the week ending 11/27/15

Cash grain basis levels were mostly flat this week on average with the US soybean basis unchanged, while corn posted a modest 1-cent advance.

 

The recovery in soybean futures prices took their toll on some basis levels this week as soybean plants were down 2 cents a bushel on increased farmer deliveries. River terminals as a group were unchanged for the week, while Gulf basis bids were off 3 cents a bushel.

 

For corn, the strength here was fairly muted. While ethanol production was up sharply on the week, there seems to be little incentive for plants to push basis levels higher with plant-average basis levels mostly steady on the week. At river terminals, basis levels were off by 2 cents a bushel.

 

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

November 27, 2015 | Grain Hedge Insights | Cody Bills | Views: 285

Futures were modestly higher

Corn came in as the shining star

Grains were closed overnight due to the Thanksgiving Holiday and will open at 8:30 AM CDT for trading. S&P futures were modestly higher while crude oil was down in early trade.

 

Friday morning, USDA’s export sales report proved to be a mixed bag of news. For once, corn came in as the shining star with over 2 MMT of sales on the week. Wheat was below expectations and soybeans were within expectations.

 

WEEKLY EXPORT SALES

  Actual Expected 
Corn  303.7 400-600
Soybeans 1,173.6 1,000-1,500
Wheat 2,036.3 900-1,300

 

In South America, rains fell in Mato Grasso over the past 2 days but are expected to diminish going into the weekend. Argentina got less rain than expected but dry spots are limited for now.

 

China’s stock market plunged 5.5% overnight on probes of the country’s two largest brokerages, but US and European markets were mostly unfazed. Oil prices were trending down Friday, pressured by a stronger dollar and the global oversupply of crude still clouding the outlook for the industry. Earlier this week, the U.S. Energy Department said crude stockpiles ticked up by 1 million barrels last week, bringing the total tally to 488.2 million barrels, around a level not seen in the last eight decades. U.S. oil output has also held stable, around 9.2 million barrels a day, but down from a peak of 9.6 million barrels a day in April.

November 25, 2015 | Grain Hedge Insights | Kevin McNew | Views: 627
November 25, 2015 | Grain Hedge Insights | Cody Bills | Views: 322

Grains were higher overnight

In outside markets, crude oil gave up most of its gains from Tuesday

Grains were modestly higher overnight trying to rebound from Tuesday losses. In outside markets, crude oil gave up most of its gains from Tuesday to move lower in Wednesday, while S&P futures were up in overnight trade,

 

In overnight news, Egypt’s GASC was tendering for wheat, with the lowest offer coming in at $195.54 per MT from France origin. Russia and Romania also offered wheat in the latest deal, with the US not offered in the deal.

 

The EPA is widely expected to increase requirements for biofuels use through 2016 due to higher total fuel. The EPA in late May proposed requiring 17.4 billion gallons of renewable fuels to be blended into motor fuels next year, up from 16.3 billion gallons this year.

 

The head of the company that led the breakneck expansion of Argentine soy cultivation over the last two decades said on Tuesday the country's grains output could climb by 50 percent over the next three years thanks to a change of government. Opposition leader Mauricio Macri beat ruling party candidate Daniel Scioli in Sunday's election, effectively ending an eight-year, production-sapping feud between farmers and outgoing President Cristina Fernandez, who clamped down on wheat and corn exports in a bid to curb double-digit inflation.

 

S&P futures (ESZ5) rose Wednesday as investors shrugged off concerns over an escalation in geopolitical tensions. Investors are likely to bet there won't be a further flare up in geopolitical tensions as long as NATO stands with Turkey. Instead, markets are more focused on the prospect of further monetary stimulus--also known as quantitative easing, or QE--at the European Central Bank's meeting next week and whether the Federal Reserve will raise interest rates in December.

 

Crude oil (GCLF6 / QMF6) was lower on a de-escalation of fears about the Turkey-Russia incident on Tuesday.  Also, data from industry group the American Petroleum Institute on Tuesday showed that U.S. crude inventories rose by 2.6 million barrels in the week to Nov. 20 to 488.3 million, compared with analyst expectations for an increase of 1.2 million barrels.

 

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

November 24, 2015 | Grain Hedge Insights | Kevin McNew | Views: 329

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