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January 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 264

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: 542
January 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 397

Grains Continue to Grind Lower

In outside markets, S&P futures posted solid gains while crude oil continued to sink.

Grains grinded lower overnight with losses of 2 to 3 cents in light trading ahead of Tuesday’s USDA crop report. In outside markets, S&P futures posted solid gains while crude oil continued to sink.

 

Rain fell in much of Brazil at one time or another over the weekend Rains ranged from 0.6 inches in several areas in northern and eastern Minas Gerais, Goias and Mato Grosso, which led to net drying. Rain fell more significantly in other areas with nearly 2.00 inches in south-central Bahia where moderate to heavy rain occurred late last week and from Sao Paulo to Mato Grosso do Sul and Parana where 1.00 to 2.50 inches resulted. The next two weeks shows a drier bias in southern Brazil during the next couple of weeks while frequent bouts of rain occur in northern parts of the nation. This overall patterns is favorable for crop growth as the South has seen excessive rain, while northern regions have been dry.

 

Argentina saw sporadic rainfall over the weekend but is expected to see more rain on Monday and Tuesday. Most of the nation is in good shape for crop development during the next couple of weeks.

Overnight there was some tender news with Jordan in the market fort 100,000 MT of milling wheat, and a South Korea feed group looking for 130,000 MT of corn of optional origin.

 

Tuesday brings USDA’s latest supply and demand report, its final US corn and soybean production forecast for 2015, and the winter wheat seeding report for 2016. Analyst expectations show very little change in previously held estimates with only modest upticks in US wheat and soybean carryout expected, and US corn carryout expected to be unchanged. The reports will be released at 11 am CDT on Tuesday, Jan 12.

 

Oil prices fell for a sixth session to trade at almost 12-year lows on Monday as slowing growth in China rattled investors' hopes for demand this year and traders increased bets against any near-term recovery.  Morgan Stanley said on Monday that oil prices in the $20s were possible, especially if the dollar surges more against other currencies. "A 15 percent CNY (Chinese yuan) depreciation alone could send oil into the $20s," the bank said.

 

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

January 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 584
January 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 435

Grains Post Modest Gains Overnight

Outside markets were trying to recover some of the week’s losses with S&P futures

Grains posted modest gains overnight with soybeans and wheat up 3 while corn was up one cent Outside markets were trying to recover some of the week’s losses with S&P futures and crude oil bouncing higher in night trade.

 

Overnight, South Korean firms bought US wheat and US soybeans, although the soybeans were for delivery in 2017. China, the world's top soy buyer, will import 2 MMT more in the 2015/16 marketing year at 80 MMT, an official grains think tank said in a revised forecast, due to higher-than-expected crushing demand.

 

Yesterday’s export sales report from USDA showed very disappointing totals for corn and wheat. And although it was a holiday week, the year-to-date totals corn and wheat are well behind the pace needed to reach USDA’s forecast.  Corn export commitments are off 25% from the same time last year, but USDA sees only a 6% drop in exports for the year. If these levels of sluggish exports continue, it will mean the export target for USDA will fall by 300 MB and cause old-crop carryout to balloon to over 2 billion bushels.

 

U.S. stock-index futures rose as China’s move to shore up markets stemmed a sell-off from global equities this week. Gains in Standard & Poor’s 500 Index futures signaled the gauge will rebound from the worst-ever start to a year. The Shanghai Composite Index climbed 2 percent as Chinese authorities suspended a circuit-breaker system, set a higher yuan reference rate and directed state-controlled funds to buy shares. Treasuries and the yen headed for their first declines this week and gold dropped.

 

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

January 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 591
January 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 346

Stock Markets Roil in the Overnight

Grains grinded lower with nearby corn hovering around support at $3.50.

Stock markets roiled again overnight as China’s market fell another 7% before hitting circuit breakers. Crude oil also plummeted to new 15 year lows with front-month January contracts near $32 a barrel. Meanwhile, grains grinded lower with nearby corn hovering around support at $3.50.

 

Soy harvesting has started in Brazil's top two growing states Mato Grosso and Parana, with farmers concerned over irregular rains causing damage in the center-west soy belt. Harvesting is probably less than 1% complete in top growing state Mato Grosso, behind this time last year, said Endrigo Dalcin, president of state growers' association Aprosoja.

 

Japan's Ministry of Agriculture bought a total of 131,031 MT of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday. Japan, the world's sixth-biggest wheat importer, keeps a tight grip on imports of the country's second most important staple after rice and buys the majority of the grain for milling via tenders typically issued three times a month.

 

China clobbered global equity markets yet again, sending U.S. equity futures into freefall. In China, the trading day was over just as it began thanks to a swift selloff. For the second time this week, Chinese equity markets tripped their newly-installed “circuit breaker,” or mechanism used to prevent panic selling, just 30 minutes into the start of trade. The moves led to an accelerated pace of selling across the world as the Chinese yuan slipped further, hitting a five-month low.

 

WEEKLY EXPORT SALES

 

                          ACTUAL            EXPECTED

Corn                     252.9               400-600

Soybeans              638.7               400-700

Wheat                    76.5               200-400

 

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

January 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 490
January 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 301

Grains Drift Lower in the Overnight

In outside markets, S&P futures and crude oil were off sharply on continued economic fears in China.

Grain prices continued to drift lower overnight after turn around Tuesday failed to produce much upside movement in prices.  In outside markets, S&P futures and crude oil were off sharply on continued economic fears in China.

 

Weather in South America continues to show favorable growing conditions. Plenty of rain will fall in Brazil crop areas during the next two weeks, although southern Brazil may dry down for a while next week, which is a welcome change from prolonged wetness. The change to wetter conditions in center west and the far north and drier weather in far southern Brazil will be ideal. Argentina is expecting rainfall Sunday through Tuesday after net drying over the next few days. However, soil conditions in Argentina today are plenty moist and the alternating dry/wet patterns are pointing to excellent yield potentials.

 

In South Africa, there are more concerns mounting about the effects of the drought.  A CEO of Grain SA said overnight that the corn crop in South Africa is a disaster and may lead the country to being a net importer of 5 MMT of corn this versus a net exporter of the same amount.

 

In corn, US export competitiveness continues to struggle as Argentina’s plummeting currency value and newly eliminated export taxes make Argentina corn extremely cheap. Current FOB export prices for US corn are $7 per MT (or 18 cents a bushel) higher than Argentina. This time last year, US corn was cheaper than Argentinean corn by $13 a MT.

 

World stocks fell for a fifth day on Wednesday as China fueled fears about its economy by allowing the yuan to weaken further. Traders and economists fear the yuan's depreciation may mean the world's second-biggest economy is even weaker than had been expected and that it could trigger another wave of competitive devaluations around Asia and in other key economies. The People's Bank of China surprised on Wednesday by setting the yuan's official midpoint rate at its weakest level in 4-1/2 years at 6.5314 per dollar.

 

Adding to the risk-off mood, crude oil prices hit new 11-year lows as the face-off between Saudi Arabia and Iran over Riyadh's execution of a Shi'ite cleric was seen extinguishing any chance of major producers cooperating to cut production. Concerns over mounting stock levels added pressure to prices. EIA data released later today is expected to show an increase in US crude inventories by 439,000 barrels according to a Reuters poll.

 

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

January 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 577

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Grains Weaker Overnight

April 27, 2016 | Grain Hedge Insights | Kevin McNew

Grains were weaker overnight but seemed to finding some pullback heading into the morning break. Meanwhile, crude oil continues to hit fresh highs on this rally, posting a $1 a barrel gains going into the day while equity futures were sharply lower.

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