April 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 325
April 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 221

Grains Were Mixed in the Overnight

Stock futures were on the defensive giving up nearly 0.75%

Grains were mixed overnight with wheat adding to Monday’s losses while corn and beans started the day in positive territory. Stock futures were on the defensive giving up nearly 0.75% while crude oil was soft as it continues its slide over the past week.

 

Malaysian palm oil futures rose on Tuesday, heading for their third straight session of gains on the back of a weaker ringgit MYR=, outweighing worries that an export tax on crude palm oil would dampen demand. Malaysian palm oil inventories in March are forecast to have dropped below 2 million tonnes, breaching that level for the first time in a year, with production coming in at the weakest for the month since 2007, a Reuters survey showed. Shrinking stockpiles at the world's No.2 palm oil producer as a crop-damaging El Nino weather pattern crimps output could underpin benchmark prices of the tropical oil, which have risen over the past two months and reached a two-year high.

 

Analyst Ukragroconsult raised its forecast for Ukraine's 2016 wheat harvest to 18.5 million tonnes on Tuesday, against a previous estimate of 17.7 million tonnes. The consultancy's Yelizaveta Malyshko told Reuters that very favorable weather this spring and optimal moisture content in soil were the main reason for the improved outlook. Ukraine, the world's third-largest grain exporter, harvested 26.5 million tonnes of wheat in 2015.

 

Weather continues to point to good odds of the Plains getting some moisture between Apr 10-15.  However, weather models of late are showing better rain potential more towards the central Plains and less towards the Western Plains were the most severe drought issues are occurring. KC wheat still has support at $4.60 but needs to find a breakout above $5 to change the choppy patterns of late.

 

Stocks were on shaky ground on Tuesday as the IMF warned of potential risk from developing markets. Major emerging markets, led by China, are increasingly likely to spread fear to financial markets, leading to poor stock performance in the U.S. and other developed countries, the International Monetary Fund said. In oil, prices continue to sink as traders discount any deal to curb production by OPEC in the meeting this month. Recent comments from Saudi Arabia cast doubts about the ability of world oil producers to agree to an output freeze at their meeting in Qatar.

 

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

April 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 352
April 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 413

Soybean Prices Continue to Move Higher

Crude was in Positive Territory after being off as much as 50 cents a barrel

Grains started the Sunday night session in positive territory with soybeans leading the complex higher, but by morning the market began to fade. Wheat and corn were in negative territory while soybeans held on to slim gains. In outside markets, crude was in positive territory after being off as much as $0.50 a barrel while the US dollar and stock futures had small gains.

 

In soybeans, prices continued to move higher hitting their highest mark since August. But, weakness in palm oil overnight kept soybean prices in check. Malaysian palm oil futures slid in early trade on Monday as a stronger ringgit and expectations for a drop in exports as an export tax restarts this month weighed on the market. The palm oil contract fell 0.7%.

 

In export news, three South Korean groups purchased a total 192,000 MT of corn set to be sourced from the United States or South America in private deals on Friday, European traders said on Monday. The deals followed a purchase of some 272,000 MT of corn also likely to be sourced optionally from the United States or South America by South Korea's largest feedmaker Nonghyup Feed Inc. (NOFI) in a tender which closed on Friday, traders said.

 

For wheat, rains looked more likely in key US HRW areas in the coming week with the best chance for rain in the window Apr 10-15. On Friday, Western KS had only about a 20% chance of rain during this time period but by Monday that probability had grown to about 60%.

 

In crude oil, Friday swathe latest US rig counts fall to 362 from 372 in the previous week marking the lowest weekly total since November 2009. However, Iran’s oil minister on Sunday said the country’s oil exports jumped again in March, potentially undermining a global deal to limit crude output and raise prices.

 

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

April 01, 2016 | Grain Hedge Insights | Kevin McNew | Views: 275

Weekly Cash Comments

Weekly Cash Commentary for week ending 04/01/2016

Soybean basis was on the defensive this week as higher futures and a sharp sell-off in corn pushed farmer sales towards cash beans. For the week, US average soybean basis was off 2.3 cents while corn basis was flat.

 

In soybeans, the biggest losses occurred at river terminals with the average decline at 5 cents on the week. Part of the weakness was tied to a 4-cent loss at the Gulf, but higher barge rates and active farmer selling put some losses as much as 8 to 12 cents a bushel on the week for key river terminals. At soy plants, basis was also weaker by 1.9 cents on the week, but the weakness at soy facilities has been muted as crush margins re higher as of late.

 

For corn, basis levels were mostly flat this week although river terminal strengthened slightly on a 1-cent gain out of the Gulf. Ethanol plants were unchanged as a group although there was some noted bidding up by 2 to 4 cents in the Western Cornbelt.

 

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

April 01, 2016 | Grain Hedge Insights | Kevin McNew | Views: 340

Grains Mostly Weaker in the Overnight

In outside markets, stocks were lower on unemployment ticking up

Grains were mostly weaker overnight with corn still feeling the sting from yesterday’s shockingly high corn acre number. In outside markets, stocks were lower on unemployment ticking up slightly to 5% from 4.9%.

 

Yesterday brought news that US farmers intend to plant 93.6 million acres of corn, 5.6 million more acres than in 2015. This was well above average estimates of 90 million acres and above the high end of analyst estimates at 91. The increase was most prominent in the Plains and Delta region which combined added 3.4 million acres, and the states of AR, LA & MS where flooding is a major issue were pegged to increase by 1 million acres combined.

 

Wheat was definitely the benefactor of higher corn acres seeing a 5 million acre drop to 49.6 million. This would be the lowest wheat acres in 45 years if realized.  This has the potential to draw down carryout in 2016 especially if exports recover from their big slump in 2015. With a weakening US dollar it seems likely wheat exports will come back in 2016.

 

For soybeans, acreage estimates of 82.2 million were just below the average estimate of 83.1 and below last year’s plantings of 82.7. However, even with normal yields and usage numbers on par with this year it would still lead to a jump in carryout from 460 MB to over 600 MB. Also, many analysts expect farmers to be more likely to switch out of corn into soybeans as prices have rallied since the March 1 survey of farmer planting intentions.

 

Overall this report was not favorable for the long-term outlook on grains. Even wheat which saw the biggest bullish input faces a big uphill climb to gain more competitiveness in the world market as the global glut keeps prices on the defensive.

 

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

March 31, 2016 | Grain Hedge Insights | Kevin McNew | Views: 303
March 31, 2016 | Grain Hedge Insights | Kevin McNew | Views: 358

Traders Await Results of USDA Report Today

In outside markets, stock futures and crude oil were mildly higher while the US dollar made fresh lows.

Grains were mixed overnight as traders await the results of USDA’s planting and stocks reports at 11 am CDT today. In outside markets, stock futures and crude oil were mildly higher while the US dollar made fresh lows.

 

Join us at 10:30 am CDT in our live trading room to hear Kevin McNew and discuss the reports and trade action. Goto http://grainhedge.com/live.aspx

 

Wheat fell hard on Friday thanks to an outlook for rains in the US Plains. The best chance for rain remains in the 11 to 15 day, and some GFS guidance remains more generous in the southwest Plains than some private weather analyst models. However, the precip still misses the southwest 1/3, although rain chances do still improve in late April for the region.

 

Traders look for USDA’s planting reports to show 90 million acres of corn versus a range of estimates from 89 to 91, while soybean acres are pegged at 83.1 million versus estimates ranging from 81.6-84.2. Wheat is expected to see a 3 million acre drop in plantings and to come in at 51.7 with estimates from 50.7-54.8.

 

WEEKLY EXPORT SALES

 

                         Actual OC            Actual NC          Expected OC        Expected NC

Corn                       790                      70                   800-1,000              0-100

Soybeans                271                      90                      300-600             75-300

Wheat                    317                      86                      150-350             75-200

 

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

March 30, 2016 | Grain Hedge Insights | Kevin McNew | Views: 359
March 30, 2016 | Grain Hedge Insights | Kevin McNew | Views: 324

USDA Crop Intentions Report Due Out Tomorrow

Crude oil reversed course posting a nearly $1 a barrel gain and stock futures are higher.

Grains were lower overnight leading up to tomorrow’s USDA report as gains over the past two trade sessions were met with some selling pressure. In outside markets, crude oil reversed course posting a nearly $1 a barrel gain and stock futures are higher.

 

Grain traders worried on Tuesday about the risk for reduced demand from China after the government said it would scrap its corn stockpiling program at a time when global markets are awash with excess supplies. Traders said importers in China would likely reduce purchases of farm products used to feed livestock, including sorghum and the ethanol byproduct distiller’s dried grains (DDGs). They said the policy shift is expected to bring domestic corn prices in line with cheaper foreign supplies. Last year, China imported about 40 million tonnes of substitutes for corn, including sorghum, DDGs and barley, from the United States and other countries, said Fred Gale, a senior economist for the U.S. Department of Agriculture. At times, corn prices in China were double those of the import.

 

Thursday, USDA is expected to report higher corn acres for 2016 with expectations running at 90 million acres planted versus 88 million in 2015. For soybeans average estimates look for a 83.1 million acre planting, which is a modest 400,000 acre increase over last year. However, the variance in the estimates is quite large, ranging from 81.6 to 84.2. USDA will also release their quarterly stocks report next week.

 

In crude oil, prices found support late yesterday as API crude stocks estimates were only modestly higher than expected at 2.6 million barrels higher versus an expectation of a 2.0 million barrel build on the week. This was off sharply from last week’s build of 8.8 million barrels.  IA will release official government data later this morning at 9:30 CDT and traders look for a 3.3 million barrel increase in stocks compared to last week’s 9.3 million barrel increase.

 

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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