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May 16, 2016 | Grain Hedge Insights | Kevin McNew | Views: 323

Is There a Shift From Corn to Beans?

Grains were Lower in the Overnight

Grains were lower overnight while crude oil continued to reach fresh highs since its low in January.


Rains were fairly common over the US grain belt over the weekend as a quarter to a half inch of rain hit most of the key growing regions. After a cold start to the week (record cold for some) temperatures will warm across the Plains, Corn Belt and East and moisture will remain plentiful.  Temperatures are expected to surge to above normal later this week and continue “warm” next week too across the Plains and Corn Belt.


A one-day strike at the Rosario grains export hub in Argentina ended on Friday after the government compelled union and company officials to enter into wage negotiations for 15 days, a union leader said. The strike began at midnight local time and ended around noon after the union agreed to the government mandate for a "reconciliation" period to settle the dispute.


Soybean prices have floundered in recent sessions as expectations that farmers are switching planting intentions to beans and away from corn. There are expectations the USDA's June 30 acreage report could show a shift of 1-2 million acres from corn into soybeans, compared with the government's March 31 planting intentions report.


Crude oil prices are on the upswing to start the trading week as markets shrug off initial negativity in the wake of soft data from China reported over the weekend. China’s domestic oil production dropped 5.6 percent from a year ago to 16.59 million metric tons in April, the steepest slide since November 2011, according to government data released Saturday. The trend is likely to worsen in the months ahead and, along with U.S. production declines, will help re-balance the global oil market later this year.


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

May 12, 2016 | Grain Hedge Insights | Kevin McNew | Views: 272

Soybeans Lead the Overnight

Oil also continue to climb

Grains were higher overnight with soybeans leading the complex. Oil also continued to climb hitting fresh 6-month highs.


Brazil's Senate voted on Thursday to put President Dilma Rousseff on trial in a historic decision brought on by a deep recession and a corruption scandal that will now confront her successor, Vice President Michel Temer.   With Rousseff to be suspended during the Senate trial for allegedly breaking budget rules, the centrist Temer will take the helm of a country. The Brazilian Real is up 12% against the US dollar since March 1 on the potential removal of Rousseff from office.


This morning’s export sales from USDA was a real disappointment for soybeans. Combined old- and new-crop sales were 219K MT versus expectations at the low end of 675K. So far for 2016 new-crop soybean sales are at 3.26 MMT versus the same time last year of over 4.4 MMT. This week’s wheat sales were strong, with bold old- and new-crop deliveries besting expectations. At 8 AM CDT USDA announced a flash sales of 210,000 MT of corn to Saudi Arabia for old-crop delivery.


Weekly Export Sales


                 OC-Act      OC-Exp        NC-Act      NC-Exp

Corn           1,105     900-1,200        150.4     175-325

Soybeans    212.4       350-500            6.9      325-450

Wheat        294.9         50-175        387.9      200-350


In crude oil. EIA data on Wednesday pointed to a significant draw-down in US crude stocks. Inventories were off 3.4 million barrels versus expectations of a 0.7 million barrel build.


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

May 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 310
May 11, 2016 | Grain Hedge Insights | Kevin McNew | Views: 342

Grains Continue their Climb Overnight

US Dollar and equity futures were weaker

Grains Continue their Climb Overnight

Grains continued to move higher overnight as soybeans led the complex following Tuesday’s surprise USDA report. Meanwhile, in outside markets the US dollar and equity futures were weaker while crude oil posted modest gains.


Yesterday bought a bullish surprise to the soybean market as USDA’s first glance at the new-crop 2016 supply and demand situation showed only 300 MB of carryout versus 400 MB that had been expected by most of the trade. This lower than expected inventory number was driven largely by a 140 MB increase in exports over this year, representing an 8% year-on-year increase.


For corn, carryout was lower than expected for new-crop 2016 at 2.1 billion bushels versus 2.3 expected. But it still represents a sizable increase over 1.8 billion bushels of stocks at the end of the current year. In wheat, the news was mostly bearish with bigger yields offsetting lower in acres for 2016. Overall USDA sees production only off about 50 MB from last year and ending stocks to increase to 1,029 MV versus this year’s carryout of 978 MB.


In other news, Farm office FranceAgriMer on Wednesday cut sharply its forecast for French soft wheat stocks at the end of the 2015/16 season as it revised downwards supply from last year's harvest and raised exports outside the European Union. The office put soft wheat stocks available to the market at 3.9 million tonnes against 5.45 million seen last month.

Crude oil was up slightly this morning but looking for direction from today’s EIA inventory data. Traders look for a 0.7 million barrel increase in stocks as compared to last week’s 2.7 million barrel build. API crude data on Tuesday was up 3.45 versus a trade estimate of only 0.3.


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

May 10, 2016 | Grain Hedge Insights | Kevin McNew | Views: 456
May 10, 2016 | Grain Hedge Insights | Kevin McNew | Views: 334

Soybeans Post Solid Gains Overnight

Crude oil firmer as was the US Dollar

Soybeans Post Solid Gains Overnight

Grains were mixed overnight with soybeans posting solid gains, while corn and wheat hovered around the unchanged mark. Crude oil and equities were slightly firmer as was the US dollar.


On Monday, USDA’s crop progress report showed continued strength in potential US crop conditions. Winter wheat conditions improved 1% on the week to reach 62% good-to-excellent. Meanwhile corn and soybean plantings continued to move along with 64% of the US corn crop planted and 23% of the US soybean crop planted. Expectations going into the report were for 62% and 22% respectively so farmers managed to boost plantings quicker than expected.


This morning, Brazil’s official government forecaster Conab pegged the corn crop there at 79.96 MMTY, off from a previous forecast of 84.66. Meanwhile, the soybean crop projection also slipped to 96.91 MMT as compared to 98.98 MMT previously. In Brazil, the lower house was considering a new impeachment vote against the current President after the leader of the lower house had thrown out the impeachment on Monday. News of a new impeachment vote helped support the Brazilian Real this morning after yesterday’s sharp selloff.


This morning at 11 am CDT USDA will release their monthly supply and demand estimates report. Traders look for a drop in old-crop stocks for corn and soybeans, underpinned by better exports, while old-crop wheat stocks are expected to be higher. USDA will also release their first forecast of the new-crop 2016-17 year with corn stocks expected to balloon to 2.3 billion bushels and wheat stocks expected to come in at 1 billion bushels. Soybeans are expected to see a drop in stocks with traders expecting about a 400 million bushel carryout.


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

May 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 341
May 09, 2016 | Grain Hedge Insights | Kevin McNew | Views: 253

Grains Start the Week with Modest Gains

Crude was higher as was the US Dollar

Grains started the week with modest gains, but had been higher in Sunday night’s session before retreating into the morning break. In outside markets, crude oil was higher as were equities and the US dollar.

Traders will be focused on Tuesday’s USDA crop report which will show the first official estimates for the new-crop 2016/17 marketing year. Overall, analysts look for new-crop ending stocks to be higher than old-crop carryout for corn and wheat. But soybeans are expected to see ending stocks slip slightly but still come in over 400 MB.


U.S. Midwest outlook remains wet over the next two weeks with a frequent occurrence of rainfall expected across the region. Upper Portions of the Midwest will actually have the best planting with little to no rain from Thursday of this week to Thursday next week. Best Windows for fieldwork in Lower Midwest will be Thursday and Friday in the western Corn Belt, although some showers will impact the central and lower western belt Friday into Monday, May 16 in the eastern Midwest.


Wheat sourced from the United States was offered at the lowest price of $234.50 a tonne c&f free out in a tender from Iraq’s state grains board to buy at least 50,000 tonnes of hard wheat, European traders said on Monday. The tender closed on Sunday. No purchase had yet been made and offers are still being considered, they said. The tender seeks wheat sourced optionally from the United States, Canada or Australia.


Oil prices were higher on Monday, boosted by strong crude imports from China and wildfires in Canada, amid market uncertainty generated by the removal of Saudi Arabia’s long-serving oil minister Ali al-Naimi. To some, the removal of Mr. Naimi is a reaffirmation that 31-year-old Deputy Crown Prince Mohammed bin Salman is the person driving Saudi Arabia’s energy policy. Some officials at the Organization of the Petroleum Exporting Countries said that could mean a deeper politicization of oil-production strategy as the kingdom looks to outmaneuver its rival Iran, which is trying to come back from years of Western sanctions with a surge in output. That could make coordinating oil-production curbs harder.


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

May 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 316

Weekly Cash Comments

Weekly Cash Commentary for week ending 05/06/2016

Basis levels were generally firmer this week, although variability in basis movement has picked up on a fast-moving futures market. For the week, US average corn basis was up 1.5 cents while soybean basis bounced up 2 cents.


Bean basis showed the most volatility this week as there was a distinct difference on basis movement by end user. Soy plants as a group moved basis higher by 4 cents a bushel as crush margins improved although soymeal cash offerings are still running weak. At river terminals, however, basis levels were off 4 cents a bushel with losses of 5 to 10 cents fairly typical in some regions. Gulf basis has been weakening suggesting a potential slowdown in export movement.


For corn, basis levels were generally firmer this week. Ethanol plants as a group were up 2.3 cents a bushel as farmer selling is non-existent on recent price weakness and busy planting activities.  At river terminals, basis was up 1.5 cents although the Gulf was slightly weaker on the week.


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

May 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 290

Grains Take a Breather in the Overnight Session

Crude Oil Dips Lower

Grains took a breather from yesterday’s sharp selloff to recover a few cents in overnight trade. In outside markets, crude oil dipped lower and equities were trading down on weak employment data this morning.


Yesterday started with strong export sales for soybeans with old-crop of 800,000 MT and new-crop of 443,000 MT, but prices quickly turned lower yesterday as rumors of the Chinese government releasing 5 MMT of soybeans from reserves to auction into the domestic market. If confirmed, the 5 MMT figure is ironically about the magnitude of the crop loss in Argentina that is currently being projected by most analysts.


In wheat, the Kansas wheat tour wrapped up pointing to a bumper Kansas crop in spite of lower acres there. They pegged the state’s crop at 382.4 MB, up from 321.9 MB. In news this morning, Stats Canada pegged all wheat stocks there at 13.8 MMT, in line with analyst expectations going into the report.


Stock markets slid sharply on Friday and the dollar fell after U.S. non-farm payrolls numbers came in well short of forecast, adding to concerns over the pace of economic growth that have weakened investors' appetite for risk globally. Futures prices showed Wall Street set to open as much as half a percent lower while stock markets in Europe deepened morning falls, sending global indices towards their worst weekly losses since early February.


The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 030793

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