February 27, 2017 | Grain Hedge Insights | Kevin McNew | Views: 65

POTUS Economic Agenda speech set for Tuesday

Grain Markets Show Little Direction to Start the Week

Grain markets continued to show little direction to start the week as soybeans were higher while wheat was lower. Corn spent most of the night session fractionally higher. In outside markets crude oil was higher.

 

On Friday, USDA’s cattle on feed numbers matched closely what analysts had been expecting. The February Cattle on Feed inventory was reported at 10 Million head, 101% of a year earlier while January placements were 111% of a year earlier.
 

Palm oil continued to sell-off overnight as did China’s soybeans. On Friday, January soybean imports into China were reported at 7.66 MMT That’s off from 9.0 last month but above the 5.6 imports of January 2016. Marketing year-to-date China's soy imports are up 5.5% over the same 5-month period last year while USDA has penciled in a 3.3% advance for the year.

 

South America weather was yet again favorable over the weekend. Weekend rains favored north 1/2 Brazil corn/soy. Center-West Brazil rains are expected this week to support safrinha corn. The 6-15 day rains cause minor fieldwork interruptions farther south. In Argentina, weekend showers favored S. & far W. The 6-10 day shows a break in rain which should allow wet spots in NW Buenos Aires to ease.

The dollar edged up from a 2-1/2-week low on Monday but traders await guidance from U.S. President Trump on his economic agenda. Trump is set make his first major policy address to the U.S. Congress on Tuesday, and is expected to give some details on his planned infrastructure spending and tax reform.  Traders will look for action plans vs vague ideas in the speech after 3 months of banking on Trump’s economic stimulus trade.

 

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

February 24, 2017 | Kevin McNew | Views: 59
February 24, 2017 | Grain Hedge Insights | Kevin McNew | Views: 46

Weekly Cash Comments

Weekly Cash Commentary for week ending 02/24/2017

Grain basis was mostly flat this week even with a sharp sell-off in futures prices.

 

In corn, there was some modest strength in Western Cornbelt processors. River terminals however saw more strength as basis levels improved 2 cents a bushel on average.

 

Conversely, soybean basis slipped by 1 cent a bushel while soybean plants were mostly unchanged for the week.

 

First notice day for grain is on Tuesday which will see grain buyers rolling out of March contracts.  With little need for extra pipeline supplies it seems likely that buyers may use the roll to reduce basis.

 

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

February 24, 2017 | Grain Hedge Insights | Kevin McNew | Views: 139

Grains Mixed in the Overnight with Soybeans Turning Higher

Crude Oil and the US Dollar were Lower

Grains were mixed overnight with soybeans turning higher for the first time in 6 days while wheat and corn dipped lower. In outside markets, crude oil and the US dollar were lower in early trade.

 

USDA’s Ag Outlook Forum released carryout estimates for the 2017 US crops. Yesterday, USDA forecasted corn plantings at only 90 million acres, off 4 million from last year but this morning’s carryout projections show only a slim 105 MB drop in ending stocks to 2,215 MB from the current year forecast of 2,320. In soybeans USDA keep ending stocks the same year-on-year at 420 MB even with a 4.7 million acre increase as they expect soy yields to average 48 vs 52 last year. Wheat did see a sharp drop in carryout which USDA pegs at 905 MB for next year vs 1,138 this year.

 

In South America, rains favored central and southern Brazil yesterday benefiting drier corn/soy areas with harvest interruptions very limited. This weekend rains will shift to the drier NE. Central and west Brazil should have limited rains until mid next week aiding corn/soy harvest and safrinha seeding. Showers were isolated in Arg. corn/soy yesterday but late next week should see new moisture aiding corn/soy filling but raising risk of early harvest delays.

Export sales were disappointing for both corn and beans as old- and new-crop deals were below trade expectations.  

 

Weekly Export Sales-

 

Actual

Expected

Wheat - OC

451

350-550

Wheat - NC

256

0-50

Corn - OC

743

800-1,100

Corn - NC

264

300-500

Soybeans-OC

413

550-850

Soybeans-NC

28

100-300

 

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

February 23, 2017 | Kevin McNew | Views: 135
February 23, 2017 | Grain Hedge Insights | Kevin McNew | Views: 114

Grains Dipped Lower in the Overnight

Crude Oil Rallies into the mid-$54 Mark

Grains Dipped Lower in the Overnight

Grains dipped lower overnight as the prospect of a big South American harvest looms over the complex. In outside markets, crude oil rallied into the mid-$54 mark ahead of fresh data from EIA on crude stocks.

 

Yesterday after the market close Agroconsult pegged the Brazil soybean harvest at 107.8 MMT vs its previous forecast of 105.3 MMT and above the latest USDA figure of 104. Likewise, the boosted corn output to 93 MMT well above USDA at 86.5 MMT.

 

This morning USDA’s Ag Outlook Forum kicked off with USDA forecasting US corn plantings at 90 million acres in 2017 vs 94.0 planted last year. For soybeans, USDA penciled in a 4.6 million acre increase to 88 million while wheat acres are expected to fall to 46.0 vs 50.2 last year. These estimates are not based on surveys but instead on analyst forecasts.

 

Delays in corn shipments from the US appear to be giving China an opportunity to deal corn to Japan and South Korea. One deal is close and talks have begun on two more, sources said, with China benefiting from its close proximity to big Asian customers and bulging stockpiles left over from a now-abandoned farmer support scheme. Although the volumes are small, it still is a bearish development at a time of huge US stockpiles and strong export demand in the past 6 months from the US.

 

EIA crude stocks are expected to grow 3.5 million barrels according to an average of industry analysts. Last week’s inventory was up 9.5 million barrels and 6 weeks in a row stock levels have come in higher than industry expectations.

 

Over the last week US export competitiveness has generally improved. The ongoing strength in the Brazilian Real continues to help the US competitive position in corn and soybeans against Brazil.

 

WORLD EXPORT PRICE SPREADS RELATIVE TO US

 

Crop

Country

Today

Last Week

Last Year

CRN

BRZ

-$20.0

-$20.9

-$21.9

CRN

EUR

+$1.6

-$0.9

-$21.2

SBN

ARG

-$5.2

-$6.4

-$31.3

SBN

BRZ

+$2.5

+$1.3

-$22.1

WHT

EUR

-$11.9

-$20.8

-$45.9

 

Export spreads represent a foreign country price minus US price

at export destinations, in USD per metric ton.  A higher spread indicates

the foreign price has risen relative to US prices, making the foreign country less

competitive and the US more competitive


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

February 22, 2017 | Grain Hedge Insights | Kevin McNew | Views: 137

Traders Await Acreage Forecasts from USDA Forum

US Soybeans edge up on Wednesday

US soybeans, wheat and corn rose on Wednesday as traders took positions ahead of a USDA forum this week which is expected to shed light on what crops US farmers are planting for this summer’s harvest. But, gains were limited by huge new soybean crops expected in South America.

 

US soybeans edged up for the first time in four sessions on Wednesday to move away from a three-week low, though ample global supply capped gains.

 

Traders are awaiting acreage forecasts from the USDA forum to gauge an expected drop in US wheat sowings and a shift from corn towards soybeans. There are very wide ranging ideas about what the changes in US sowings will be this season, with estimates of the switch from corn into soybeans from 2 million acres to as much as 5 to 6 million acres.

 

The US has crushed an unprecedented amount of soybeans since the harvest began last fall, but there have not been as many buyers as processors had hoped for, and this could end up burdensome on domestic soybean supply. Data released by the National Oilseed Processors Association showed that its members crushed 160.621 million bushels last month, which marked the third busiest January on record and edged analyst estimates of 159.141 million.

 

The government report Export Inspections of US wheat in the latest week at 558,252 tonnes, topping a range of trade expectations for 350,000 to 550,000 tonnes. Corn inspections were 1,152,233 and soybeans came in at 1,076,390.


 

A Libyan state grain buying agency has again delayed the offer deadline in an international tender to purchase 100,000 tonnes of milling wheat, 50,000 tonnes of durum wheat and 75,000 tonnes of yellow corn this time to February 28th European traders said on Wednesday. The deadline for the tender, which also seeks 75,000 tonnes of feed barley and 25,000 tonnes of soymeal was February 19.

 

Brazil rain favored Rio Grande do Sol & Mato Grosso yesterday, not excessive but persists through the week; rains increase in C-S Brazil through the weekend and early next week expanding minor harvest delays. Showers expand to ease dryness in NE Brazil; locally heavy rain fell in S Buenos Aires in Argentina yesterday but excessive wetness still very limited.

 

Global stocks hit record highs on Wednesday, topping 2016’s gains just two months into 2017, while the dollar rose before Federal Reserve; minutes that will be scoured for clues about the next US interest rate rise.


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

February 21, 2017 | Grain Hedge Insights | Kevin McNew | Views: 129

Grains Were Mixed in the Overnight Session

US Dollar shoots higher

Grains Were Mixed in the Overnight Session

Grains were mixed overnight with soybeans at one point up 10-cents a bushel before backing off to a 3-cent advance. Corn and wheat were in negative territory to start the week. In outside markets, the US dollar shot higher on weakness in the Euro while crude oil was up a $1 a barrel.

 

Exporters sell 138,650 metric tons of wheat for delivery to unknown destinations, of which 92,650 MT is for 2016/2017 delivery, 46,000 MT is for 2017/2018 delivery.

Exporters sell 111,200 metric tons of corn for delivery to unknown destinations during the 2016/2017 marketing year.

Lastly, exporters sell 269,296 metric tons of corn for delivery to Japan; of which 104,704 MT is for 2016/2017 delivery, 164,592 MT is for 2017/2018 delivery--USDA

 

Rains in Argentina over the weekend were mostly beneficial to some areas in the south of the country's main grains belt that had been dry, while more central regions received lighter rains that were also helpful. Rains will continue to be above normal levels throughout this week. In Brazil, soy harvest continue to speed along at 24.8% harvested, above the five-year average of 17.1% for this time of the year. Weather maps show conditions will remain mostly dry over the next days, allowing farmers in Mato Grosso do Sul, Goiás and Paraná to continue strong.

 

The Korea Feed Association (KFA) purchased about 62,000 tonnes of corn in a tender Tuesday which can be sourced from optional origins including east Europe. Mills in the Philippines bought two cargoes or about 54,000 tonnes of Australian wheat in recent deals for shipment in June and July while Indonesian buyers are in the market to book cargoes of May delivery.
Australian Standard Wheat (ASW) was traded into the Philippines at $205-$210 a tonne, including cost and freight.

Malaysian palm oil futures slid for a fourth consecutive session on Tuesday, hitting their lowest in 15 weeks as expectations of higher production and ample supplies of rival soybean oil weighed on the market. Benchmark palm oil futures for May delivery closed down 1.7%, the weakest since Nov. 8

 

Crude oil hit its highest mark since February 2nd as funds continue to plow into record-long positions. OPEC continues told firm to its November deal to reduce output by 1,8 million barrels per day, but crude stocks continue to balloon. U.S. crude oil and gasoline inventories soared to record highs last week as refineries cut output and gasoline demand softened.


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

February 20, 2017 | Charlie Trauger | Views: 287

Investments Flow Into Agriculture Technology Sector – Please Pass the Seaweed Pasta!

Feeding a growing population

Investments Flow Into Agriculture Technology Sector – Please Pass the Seaweed Pasta!

An article in the Financial Times caught my eye this morning.  The title was ‘Seaweed pasta on the menu as agtech looks to feed world’ www.ft.com – subscription required.  With a global population that is expected to grow to 9bn people by 2050, investment money is flowing into the ag sector and companies like Seamore have attracted funding to ensure we all have a meal on our table in the future.  Even if it’s seaweed pasta, the world has to eat.

It is evident that there is a lot of money being directed at feeding the world.   The Bayer/Monsanto, ChemChina/Syngenta deals, and others in the crop protection space.  Big problems typically get solved I guess.

According to AgFunder https://agfunder.com/ they forecast that around 4.6 Billion will be invested into the agtech sector in 2016. 

I recently attended the Midwest AgTech Conference in Chicago.  If you are interested in what is happening in the investment space, I would highly recommend attending in the future.  There I learned the $4.6bn number is a bit deceiving.  Around half went to food delivery related investments, so direct investments into the ag sector were not the total amount, but still pretty impressive.

How are the investments doing so far in Ag?

The AgTech space is somewhat saturated with 60+ companies each chasing data management and drones respectively.  There really is no clear winner out there.  Farmers (myself included) are heavily marketed to in the data management space, and with consolidation, those numbers continue to shrink. 

Issues that stifle growth is a clear need for an ROI.  When the tractor replaced the horse, that was pretty clear.  Less so on some of the offerings out there today.  Many software data applications require work up front to learn the application and then to upload/enter data.  Then, the big fear is will the company I select last!  If not, then I start over again.  It comes down to a trust issue. 

Other issues with adoption are the seasonality and cyclical world we live in.  If a new technology comes out, producers will want to test it over perhaps a couple of growing seasons.  This takes time and is a reason for the slower adoption in this space.  In the investment world, this is called a ‘long runway’.  If you invest in ag, be prepared to not see results for 2 to 3 years.

What can Feed/Grain companies do here?

So if your suppliers/customers, the farmers out there are not settling with a clear tech winner here, what can you do to help them?  After all, there should be some great trust built up between you.  Here are some areas that were identified as missing from the current tech movement:

  • Data movement – keeping the grower in control!
  • Drone spot spraying
  • Better risk management – help improve margins
  • Grain marketing help (one I have been involved in for over 30 years and have seen only small improvements)
  • Freight logistics – better use of assets – one mentioned an “UBER” for trucks

Perhaps there are some home-grown technologies that will solve the problem of feeding the world.  There is obviously no clear winner from the billions invested so far in the ag sector, but definitely an area to keep watch of. 

This Thanksgiving, I think I would pass the seaweed pasta on down the line and hold out for some turkey and dressing!

 

Charlie

 

Charlie Trauger is Global Director of Agriculture for GlobalView Software, Inc. of Chicago IL.  He received his Bachelor of Science degree from the University of Nebraska and also completed course work in computer science from Metropolitan Technical College in Omaha, NE.  Charlie was raised on a row crop and cow calf operation in Nebraska and is still involved in the family business.  Charlie has spent over 25 years in the agricultural software and data business and recently relocated back to the family farm in Nebraska. Follow him on Twitter @charlietraug

February 17, 2017 | | Views: 211

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