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March 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 316

Quiet Overnight Trade Session

Grains were quiet overnight with mixed trade ahead of the USDA crop report this morning at 11 am CDT.

Quiet Overnight Trade Session

Grains were quiet overnight with mixed trade ahead of the USDA crop report this morning at 11 am CDT. Crude oil and S&P futures were up trying to get back some of yesterday’s steep losses.

Not much is expected out of the USDA report, with expectations for a modest bump in US corn and wheat carry-out due to slower than usual exports, and a potential uptick in world corn and bean carry-outs on improved production forecasts out of South America.

 

US Ending Stocks (in million bushels)

                     Expected           Range           USDA Feb

Corn                  1,854       1,812-1,887           1,837

Soybeans              452            440-466              450

Wheat                  975            951-991              966

 

World Stocks (in million metric tons)

                           Expected          Range        USDA Feb

Corn                       209.1       207.2-210.0        208.8

Soybeans                 80.9            80-80               80.4

Wheat                   238.7          236-240            238.8

 

Yesterday saw steep losses in crude oil and after the close API showed another week of building crude stocks. API data showed a third week in a row of higher than expected crude stock inventories with this week coming in 4 million barrels more than last week, versus a forecast of only a 3 million barrel build. EIA will release their official estimates at 9:30 am CDT this morning with traders looking for a 3.86 million barrel build versus last week’s huge build of over 10 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)

March 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 626
March 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 294

Grains Weak in the Overnight Trade Session

Weekly crop reports from a few key wheat states showed mostly deteriorating conditions in the face of unseasonably warm & dry weather

Grains were weaker overnight with soybeans leading the complex lower. In outside markets, crude oil pushed back from earlier losses following yesterday’s $2 a barrel rally while S&P futures fell off the 2,000 point mark in overnight trade.

 

Weekly crop reports from a few key wheat states showed mostly deteriorating conditions in the face of unseasonably warm & dry weather. The Kansas office of USDA/NASS pegged 56% of the wheat crop as good/excellent. Texas showed an increase in ratings from 40% to 42%, but still sits well off of normal for this time of year.

 

The European Commission on Tuesday forecast that EU soft wheat stocks would rise further in 2016/17 despite an expected drop in production, adding to large inventories that it already sees reaching a seven-year high in the current 2015/16 season. In its first crop forecasts for 2016/17, the Commission projected soft wheat end-of-season stocks in the European Union of 17.4 MMT, up slightly from 17.2 MMT forecast for 2015/16.

 

On Monday, USDA’s export inspections were slightly better than expectations for corn and wheat, while soybeans were at the high end of expectations. UDA will release its monthly crop forecast on Wednesday, with the consensus of analysts expecting little change in US grains carryout.

 

Crude oil continues to find strength as prices get closer to the $40 a barrel range. Oil prices surged Monday on hopes that declines in oil drilling around the world and an output deal among major producers would shrink the global glut of crude.

 

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

March 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 705
March 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 385

Grains Start the Week on Positive Ground

Wheat led the advances with dry, warm weather over the weekend in the Plains.

Grains Start the Week on Positive Ground

Grains started the week in positive territory, jumping higher on the open Sunday night and holding those gains throughout the overnight session.

 

Wheat led the advances with dry, warm weather over the weekend in the Plains. From North Dakota to Texas, high temps over the weekend were in the mid-70s, with no precipitation falling. There will be at least some rain in a part of the region daily through Thursday. However, the western portions of the region are not likely to get much “meaningful” moisture. A few hundredths of an inch to 0.25 inch with local totals to 0.50 inch is all that can be expected from southwestern Nebraska and eastern Colorado southward into the Texas Panhandle. Much of the moisture will not be enough to seriously lift topsoil moisture. Areas to the east will do much better with parts of central and eastern Oklahoma and northern Texas to receive 0.50 to nearly 2.00 inches of rain. All of the precipitation will be welcome, but more will be needed to seriously lift soil moisture in the central Plains.

 

CFTC Commitment of Traders after the close on Friday showed much larger-than-expected fund selling in both corn and soybeans.  The Supplemental report found large spec traders net sellers of 64,000 corn contracts through March 1st.  That is roughly 25,000 contracts more than estimated, and would put them net short 247,000 corn contracts heading into Wed March 2nd.  Even when assuming modest purchases the past three sessions, that would still leave them net short close to 235,000 contracts, including option deltas.  The “modern era” record high is 255,000, though they did drift close to the current level coming into the USDA’s January crop report.  This may force more waves of short-covering and higher prices.

 

Wednesday will bring USDA monthly report.  Other than more adjustments to the South American stats, only modest balance sheet tweaks are likely for US grains.  Conditions in both Brazil & Argentina remain supportive for higher production forecasts. Firming currencies in both Brazil & Argentina are giving a short-run boost to US export competitiveness.  This is probably more pertinent for beans than corn, though, as the Brazilians will be focusing nearly all of their attention on bean shipments over the next three months. 

 

Crude-oil prices extended gains in early Asia trade Monday as the market turned more bullish on expectations of smaller supply and growing demand. Last week, the number of rigs drilling for crude in the U.S. dropped by eight to 392, to the lowest level since 2009, according to industry group Baker Hughes. The combined number of oil and natural-gas rigs fell by 13 to 489, just above the record low of 488 rigs in 1999, the group said. U.S. shale production has also ebbed from its peak level in April of last year, emphasizing the financial struggles seen across the energy sector.

 

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

March 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 893
March 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 300

Weekly Cash Comments

Weekly Cash Commentary for week ending 03/04/2016

Grain basis posted positive gains over the week with both corn and soybean basis up over 1-cent a bushel on average.

 

Gulf basis was a key driver this week reversing the trend of falling basis levels in recent weeks. Gulf export basis was up 5 cents for corn and 3 cents for soybeans on the week. River terminals also lifted basis by a wide margin with corn basis at river terminals up 6 cents while soybean basis at river terminals was up 5 cents.

 

End users followed higher as well with corn basis up 2.5 cents a bushel for the week, while soybean plants were up nearly 3 cents on the week.

 

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

March 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 301

Grains were Up in the Overnight Session

Outside markets saw S&P futures getting closer to the psychological 2,000 point

Grains were up in overnight trade after yesterday’s reversal of fortune in the wheat market. Outside markets saw S&P futures getting closer to the psychological 2,000 point market while crude oil held on to slim gains. The US dollar was slightly lower following Thursday’s sharp move lower.

 

Wheat found strength on Thursday gaining nearly 10 cents a bushel. There has been considerable trade in world wheat over the last several weeks with Egypt, Saudis, Taiwan, and Japan active. There is also a round of weather forecasts that look at the hard wheat belt as turning a little dry. Funds are record short in wheat, which could lead to a sparked rally if we can get above $4.80 on KEN6.

 

Soybeans posted modest gains on Thursday, coming off front-month support of $8.55. The Brazilian real is extending has been rallying of late, pushing it to multi-month highs, which creates less incentive for farmer sales in Brazil when the real is firm vs. dollar.

 

The corn market made another attempt at pushing into new low ground, but ultimately came up short and closed higher. Not being able to take out the January lows is a good sign for the bulls. Weekly USDA Export Sales were robust at 1.098 MMT. The break in US corn values has clearly stimulated more interest, and we would not be surprised to see another good sales week in the next report.  Brazil corn export offers are extremely limited until July days.

 

Crude oil met selling pressure yesterday as it got closer to the highs of January around the $35 to $36 range. Traders will look at the Baker Hughes rig count at noon CDT for more signs that US drillers are curtailing production. Last week’s rig count was at 400, off from 413 in the previous week and 498 in the previous month.

 

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

March 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 409
March 03, 2016 | Grain Hedge Insights | Kevin McNew | Views: 270

Grains Posted Gains in the Overnight

S&P futures and crude oil were mostly unchanged

Grains posted modest gains overnight while S&P futures and crude oil were mostly unchanged. The US dollar was off after posting its highest level in over a month on Wednesday.

 

On Wednesday, Egypt’s GASC bought 180,000 MT of wheat from Romania and Ukraine, but overnight Canada announced they had a load of wheat rejected by Egypt because of ergot. The world’s largest wheat buyer continues to impose barriers in its wheat deals which further limits participation by many countries.

 

Also on Wednesday, private analyst Informa increased their projections for the Brazil soybean crop to 101.3 MT from a previous estimate of 100.5 MMT, while they pegged the Argentina corn crop at 27 MMT versus a previous forecast of 26. FC Stone also came out with projections, showing Brazil beans at 98.6 MMT versus a previous estimate of 98, while they put the Brazil corn crop at 84.2 MMT as compared to their past forecast of 81.0 MMT

 

A delay in the onset of the La Nina weather pattern this year is likely to buoy crops across key growing regions in the United States, Australia and India, a leading weather forecaster said on Thursday. Another year of bumper production of crops such as corn, wheat and soybeans would boost global inventories that have risen near record levels following successive large harvests. Some models were showing La Nina developing by July but they have delayed that by a month or two now said Kyle Tapley, senior agricultural meteorologist at U.S.-based MDA Weather Services.

 

                            Actual             Expected

Corn                    1,097.6            700-1,100

Soybeans                442.2               200-600

Wheat                    410.6               200-450

 

Crude oil got more bearish news on Wednesday as inventories jumped 10 million barrels on the week versus trade expectations of only a 2 million barrel increase. Nonetheless, the oil market shrugged off the news to close higher on Wednesday focusing on the low US rig count that traders expect to eventually curtail production.

 

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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