February 21, 2017 | Grain Hedge Insights | Kevin McNew | Views: 230

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: 545

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: 364
February 17, 2017 | Grain Hedge Insights | Kevin McNew | Views: 222

Weekly Cash Comments

Weekly Cash Commentary for week ending 02/17/2017

Grain basis was mixed this week as corn basis came under some modest pressure giving up 0.5 a cent a bushel on average across the U.S. Soybeans posted a nearly 1-cent gain on the week.

 

This week, there was clear dichotomy between end users and river terminals. End corn users were clearly lower this week especially in the Western Cornbelt. Corn basis at ethanol plants across the US averaged a 2 cent slide. Losses of 4 to 6 cents were typical in the Western Cornbelt. Meanwhile, river terminals firmed as strong export demand and approaching First Notice Day for March futures pushes basis levels to converge at river markets. For the week, corn river terminals gained 3 cents a bushel.

 

For soybeans, similar forces were at play with river terminals up nearly 5 cents on average for the week, while crush plants as a group were unchanged. The Northern Plains and Upper Midwest continues to be plagued by weak basis levels as rail delays in the PNW regions put load-outs behind schedule and keep basis levels on the defensive. 

 

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

February 17, 2017 | Grain Hedge Insights | Kevin McNew | Views: 141

USDA Releases their Baseline 10 Year Projections

Grains Continue to Slide

Grains continued to slide heading into the last day of trade before the weekend.

 

USDA reported this morning exporters sell 119,112 metric tons of corn for delivery to Japan, of which 60,000 MT is for 2016/2017 delivery; 134,112 MT is for 2017/2018 delivery.

 

Palm Oil continues to sink hitting a fresh 3-month low overnight. Production levels continue to move higher as exports remain unclear with increased veg oil supplies from South America.

 

On Thursday, USDA released their baseline 10-year projections ahead of their outlook conference next week. USDA shows a 2.2 billion carry-out for next year’s crop, not hugely different from 2.3 billion for the current year. This is assumed from a 90 million acre crop next year with a 170 bu yield. For soybeans, they look for carry-out to shrink to under 400 MB but that is based on assumed 1.8 million acre increase in soybean plantings this spring to 85.5 million. Most analysts are looking for a soy acreage in the 87 to 89 range.

In export news, Egypt’s GASC is in the market for wheat again overnight. The lowest offer was from Russia at $195 a ton. US wheat was also offered up at $208 per ton. The results of the tender will be announced later today.


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

February 16, 2017 | Kevin McNew | Views: 181
February 16, 2017 | Grain Hedge Insights | Kevin McNew | Views: 430

Corn Has Rallied to Fresh Highs

In Outside Markets, US Dollar Correcting Lower

Grains faltered in early trade after solid advances posted on Wednesday, although export sales ahead of the morning break added some buying strength to wheat and soybeans. Outside markets showed the US dollar correcting lower on steady gains in the last week while crude oil was in positive territory.

 

Corn has rallied to fresh highs on this move with March hitting $3.79 in yesterday’s trade, the highest market since July. Funds were buyers of 13,000 contracts on Wednesday and seemed to be the main culprit behind the bullish momentum with an estimated net long of 43,000 contracts.

 

Heavy rains are expected in Southern Argentina over the next 7-10 days with Buenos Aires, Entre Rios, Southern Santa Fe and Northern La Pampa getting the most moisture. In Brazil, weather looks to improve harvest targets as expected rainfall totals decrease from Parana to Bahia. In Mato Grosso however, the conditions are wet and looks to stay wet over the next few days, however rains should back off and give the area time to dry next week.

Consultancy Strategie Grains on Thursday raised its forecast for this year's corn crop in the European Union but left its soft wheat crop forecast unchanged as it estimated that cold weather had caused no additional damage from last month. Strategie Grains pegged the 2017 soft wheat crop at 143.8 million tonnes, a forecast that would be 6 percent above estimated production of 135.7 million tonnes last year when output was curbed by a very poor harvest in top EU wheat grower France.

 

Weekly Export Sales-

                                          Actual         Expected

Wheat - OC                             569           300-500

Wheat - NC                               20                0-50

Corn - OC                                784        900-1,100

Corn - NC                                285              0-150

Soybeans-OC                           890           500-750

Soybeans-NC                           207             50-150

 

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

February 15, 2017 | Grain Hedge Insights | Kevin McNew | Views: 302

Grains Lower to Start the Day

Bullish Enthusiasm Appears to be Waning

Grains were lower to start the day as the bullish enthusiasm from last week appears to be waning. Meanwhile, the US Dollar continued to exert its strength to the upside while crude oil drifted lower.  

 

The NOPA crush report to be released today at 11:00 AM is expected to show 159.1 million bushels of soybeans in January (ranging from 156.9 million to 162.0 million bushels). The past two months have seen actual NOPA estimates come in below the average trade guess by 2 MB.

 

Argentina hopes to increase its corn exports to Mexico, where it sent less than 100,000 MT last year, as part of its effort to gain market share for its growing corn output, an Agriculture Ministry official said Tuesday. The presidents of Argentina and Brazil, South America's largest economies, said they would seek closer relations with Mexico and other Latin American countries that could be threatened by a more isolated United States.

The Taiwan Flour Millers' Association has issued an international tender to purchase 102,850 MT of grade 1 milling wheat to be sourced from the United States.

 

Crude oil will look to EIA for data on inventories. Traders look for a 3.5 million barrel build in crude stocks on the week. Last week, inventories ballooned by over 13 million barrels and for 5 weeks running stocks data have come in higher than expectations.

 

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

February 14, 2017 | Kevin McNew | Views: 222
February 14, 2017 | Grain Hedge Insights | Kevin McNew | Views: 172

Grains were Weaker to Kick off the Day

Wheat and Soybeans feeling the most pressure

Grains were weaker to kick off the day with wheat and soybeans feeling the most selling pressure in the night session.

 

USDA announced a sale of 229,000 MT of corn to Japan and a 142,500 MT sale of soybeans to Mexico.

 

The NOPA crush report to be released Wednesday is expected to show 159.1 million bushels of soybeans in January (ranging from 156.9 million to 162.0 million bushels); NOPA reported a December crush of 160.176 million bushels; in January 2016, processors crushed 150.453 million bushels. Marketing year-to-date NOPA crush figures are up 2.5% over the same period last year, on par with USDA’s expected increase in annual soy crushings of 2.3%.

 

Yesterday, a Mexican Senator who leads a congressional committee on foreign relations, says he will introduce a bill this week where Mexico will buy corn from Brazil and Argentina instead of the United States.

 

In wheat, prices broke above its 200-day moving average for the first time since June. However, there is no shortage of wheat in the world and competition will be strong. In Australia farmers produced a record amount of wheat during the 2016/17 season, the country's chief commodity forecaster said on Tuesday, as ideal weather pushed the world's fourth largest exporter to production levels of more than 35 million tonnes. That’s up from 24.5 MMT last year and above USDA’s forecast of 33.0 MMT.

 

As wheat has rallied, the US competitive position has started to erode. This week relative to French White Wheat, US prices have gained nearly $5 a MT vs French prices. For corn, US price strength has caused US prices to gain about a $1 a MT vs Brazil and Europe. In beans South America prices have strengthened relative to the US. Farmer selling in Brazil during harvest is reported to be relatively slow.

 

WORLD EXPORT PRICE SPREADS RELATIVE TO US

 

Crop      Country        Today      Last Week     Last Year

CRN           BRZ         -$21.2         -$20.7        -$23.2

CRN           EUR          -$1.4          +$0.0        -$19.4

SBN           ARG          +$4.4          -$6.5        -$18.5

SBN           BRZ          +$2.6          +$1.7        -$11.4

WHT          EUR        -$23.7         -$18.6        -$45.8

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)

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