November 06, 2015 | Grain Hedge Insights | Cody Bills | Views: 231

Weekly Cash Comments

Weekly Cash Commentary for week ending 11/06/2015

Basis levels continued to ascend higher this week all the while futures markets came under selling pressure.  For the week ending Thursday, Nov 5th, US average corn basis was up 3 cents a bushel while bean basis posted a nearly 5-cent advance on the week.


Basis levels in corn and beans both continued to be supported by plummeting barge rates. On the week, IL River barge rates gave up 5 cents a bushel, which helped push terminal corn bids higher by 4.4 cents a bushel and soy bids up by 7 cents a bushel. At the Gulf, it was a mixed week as export terminal bids were off 2 cents on corn and up 3 cents on beans.


For end users, basis levels were up at corn ethanol plants gaining 4 cents a bushel versus 3 cents a bushel on the US average.  Weekly ethanol production was up sharply according to EIA gaining to 969,000 BP versus 944,000 BPD in the previous week. Likewise, soybean crushing plants posted better than normal results with a 5.3 cent advance.


Look for basis levels for both corn and beans to continue to capitulate in the next two months on slow farmer selling and weak to lower futures markets.


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

November 06, 2015 | Grain Hedge Insights | Cody Bills | Views: 215

Grains Lower on Follow-Through Weakness

Stock futures get a jolt this morning

Grains were lower on follow through weakness from Thursday’s losses In outside markets, S&P futures and crude oil were higher.


Soybeans suffered a 20-cent loss on Thursday after news from USDA showed significantly below expectations on export sales the past week. Sales of soybeans were only 655,600 MT versus trade expectations of 1,400,000 to 1,800,000 MT. Wheat was also substantially below expectations with an anemic 87,000 MT of sales as compared to 300- to 500,000 MT expected by the trade.


Trade estimates ahead of USDA’s supply and demand report on Tuesday show analysts expect USDA to bump up production and carryout estimates. Ending stocks of corn are expected to go to 1,597 MB from 1,561 MB in October while for soybeans the stocks figure is expected to go from 425 MB in October to 436 MB in November.


In international weather, Brazil continues to see beneficial rains as planting progress moves ahead. Central and Southern Brazil are expected to see rains return by mid-November which should help in crop development.


Stock futures got a jolt this morning as better than expected labor data showed unemployment shrinking. This caused traders to put more weight on the likelihood of a potential interest rate hike by the Fed in their December meeting. The news sent the US dollar hit a 6 month higher on the news which was bearish for US commodities like oil. 


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

November 05, 2015 | Grain Hedge Insights | Kevin McNew | Views: 225
November 05, 2015 | Grain Hedge Insights | Cody Bills | Views: 205

Grains Mildly Lower in the Overnight

Rate Hikes possible in December

Grains were mildly lower overnight as the markets continue to hold steady to price levels seen over the past two months. In outside markets, crude oil was hovering around the unchanged mark from Wednesday’s trade, while S&P futures posted positive gains to get it back above the 2,100 mark.


Corn found some strength in demand yesterday as EIA reported a sharply higher weekly ethanol production figure of 969,000 BPD versus last week’s 944,000 BPD and the highest mark for the current corn marketing year.  In South Africa, planting has been deterred by dry weather. Rainfall in the past 30 days has only been 37% of normal and the outlook for the next week or so is for dry conditions to persist and temperatures are expected to be well above normal.


In wheat, prices were off their 4-week high as forecasts for more rain relief in dry U.S. growing belts offset concerns about adverse harvest weather in Australia, and turned attention back towards large global supply. Overnight, Egypt announced policy plans to subside domestic farmers in attempt to curb wheat imports and costs. Iraq also announced it was cancelling its tender to buy 50,000 MT of hard wheat. Meanwhile, Japan bought 129,663 MT of food wheat, with about one-third of the deal going to US suppliers and the rest going to Canada and Australia.


Looking ahead to Tuesday’s USDA crop report, a poll of analyst shows the average guess for US corn production at 13,579 MB versus USDA’s October forecast of 13,555 MB while for soybeans the expectation is for a slight bump 3,915 MB from the October USDA forecast of 3,888 MB.


In S&P futures (ESZ5), better-than-expected services industry data and comments yesterday from Fed Chair Janet Yellen that the economy is performing well enough to possibly raise rates in December put the brakes on a rally that had carried the S&P 500 to within 1 percent of its record. Fed Bank of New York President William Dudley backed Yellen’s stance, while Fed Vice Chairman Stanley Fischer expressed confidence that inflation isn’t too far below the central bank’s goal. Fed Bank of Atlanta President Dennis Lockhart is among central bank officials speaking today.


For crude oil (GCLZ5 / QMZ5), prices fell sharply on Wednesday as a strong dollar, tumbling gasoline prices and rising U.S. crude inventories bore down on the market. Adding to bearish sentiment was an internal OPEC document published by Reuters that showed weaker demand in the next few years for oil from the producer group, even as Saudi Arabia pumped near record levels to protect its market share. U.S. crude inventories rose for the sixth consecutive week, adding 2.85 million barrels last week, in line with forecasts, in spite of a drop in imports to the lowest level since 1991, the U.S. Energy Information Administration (EIA) said.




                                         Actual           Expected

Corn                                     556              450-650

Soybeans                            655.6        1,400-1,800

Wheat                                 84.6              300-500


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

November 04, 2015 | Grain Hedge Insights | Kevin McNew | Views: 175
November 04, 2015 | Grain Hedge Insights | Cody Bills | Views: 174

Soybeans Find Support in the Overnight

On Tuesday, Informa came out with its latest estimates for 2015 US corn and bean production. Both estimates were higher than USDA’s October forecast

Grains were mixed overnight as soybeans found modest support while corn and wheat lost ground from Tuesday’s close. Oil added on to Tuesday’s gains, surpassing $48 a barrel while S&P futures also moved into positive territory.


On Tuesday, Informa came out with its latest estimates for 2015 US corn and bean production. Both estimates were higher than USDA’s October forecast as the private analyst firm looks for 170 bushel corn yields and 47.9 soybean yields. This compares to 168 and 47.2, respectively, by USDA in October. Overall production is pegged at 13,718 MB for corn and 3,952 MB for soybeans by Informa and up from USDA’s October estimates of 13,555 MB and 3,888 MB. The next USDA WASDE report is Tuesday, November 10th.


In overnight news, Australia is getting heavy rains on its eastern wheat crop, which has traders concerned about quality deterioration as it nears harvest.  Up to 50% of the crop could potentially be impacted. In tender news, US got a rare new deal with the Taiwan Sugar Corp which announced it purchased 23,000 MT of US corn and 12,000 MT of US soybeans.


US spot basis levels continue to increase with harvest nearing completion and farmers holding tight to supplies. Both ADM and Green Plains CEOs said that they are seeing substantially lower farmer sales than normal for this time of year. US average corn basis is up 7 cents a bushel in the past two weeks, and should continue to rise steadily over the remainder of the calendar year baring a big rally in futures.


S&P (ESZ5) futures got above the pivotal 2,100 mark for the first time since July 20th, and has now completely erased the losses after China’s meltdown in late summer. Investors will look to Fed Chief Janet Yellen for clues to the next interest-rate rise as she is scheduled to give a speech today. Also, a report on private-sector employment will be released ahead of the opening bell, offering a fresh sense of the jobs environment ahead of the closely watched nonfarm-payrolls report due Friday.


Crude oil continued its move higher overnight following Tuesday’s impressive 3.8% gain. Gains were tied to a 6% jump in gasoline prices and a strike in Brazil that cut around half a million barrels of output in the first 24 hours and has slowed state-run Petrobras' daily oil output by around 25 percent. EIA will release new inventory data today, with traders looking for a buildup in stocks by 2.8 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)

November 03, 2015 | Grain Hedge Insights | Kevin McNew | Views: 217

Corn Basis Continues to Rally

After rallying this morning and in the overnight beans took a dive lower to close the day. Informa numbers were also released today.

November 03, 2015 | Grain Hedge Insights | Cody Bills | Views: 145

Grains Continue to Drift Lower

EIA report due out tomorrow.

Grains continued to drift lower overnight, while stock futures gave up some on Monday’s gains and crude oil reversed its selloff from the previous trade session.


In soybeans, Jan 16 bean futures drifted down to $8.76 pushing lower for a second consecutive trade session. Improving rains over the weekend in Brazil helped alleviate fears of dryness as planting season is in full swing there. On Monday, USDA reported yet another flash sale of soybeans to China for 120,000 MT. Also, USDA’s weekly export inspections came in at 2.5 MMT, well above trade expectations of 1.9 to 2.3 MMT.


For corn and wheat, export business continues to be lackluster. Monday’s USDA report showed corn exports at only 447,000 MT, below trade expectations of 475- to 625,000 MT and wheat was at a paltry 170,900 versus 275- to 400,000 MT expected.


Weather in Ukraine and Russia continues to show little signs of improvement for the wheat crop there. Russian Agriculture Minister Alexander Tkachev says 25% of the country’s winter crops are in poor condition as planting nears completion. In Ukraine, almost a third of winter wheat was weak and thinned, according to data from UkrAgroConsult. That’s comparable to conditions in 2011, which resulted in a 29% drop in output.  Most of Ukraine and western Russia received less than 80%, and in some cases less than 20% of normal rainfall in the 90 days through Oct. 31.


S&P futures (ESZ5) were lower following Monday’s solid advance. Earnings reports this week from Time Warner Inc., Allergan Plc and Facebook Inc. are among more than 100 S&P 500 companies releasing results this week.


Crude oil futures (GCLZ5 / QMZ5) rose slightly overnight. An Energy Information Administration report Wednesday will probably show inventories rose for a sixth week. While the supply glut continues to be an issue, a mild start to the US winter has traders looking for soft demand in the form of heating oil.


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

November 02, 2015 | Grain Hedge Insights | Cody Bills | Views: 189
November 02, 2015 | Grain Hedge Insights | Cody Bills | Views: 173

Grain Hedge Overnight Highlights

Grains were mostly quiet overnight with little news or volatility to change prices.

Grains were mostly quiet overnight with little news or volatility to change prices. In outside markets, S&P futures were fractionally higher while crude oil dipped in early trade.


For soybeans, there was mild support to start the week from planting delays in Brazil. Soybean planting in Brazil remained behind the historical average even after isolated rainfall hit the mid-section of the country. Planting in Brazil stands at 31% compared to the 42% five-year average and 20% last week.


For wheat, Ukraine continues to struggle with dry conditions for the winter wheat crop. A senior weather forecaster there said the driest winter in 50 years could potentially lead to a 20% reduction in wheat output.  In other wheat news, Japan is seeking to buy food quality wheat in its normal tender to the US, Canada and Australia with the deals expected to be announced on Thursday.


In outside markets, Asia sold off overnight as slow Chinese factory data took its toll. S&P futures (ESZ5) had been lower overnight but managed to fight its way back to positive territory heading into the morning opening bell. The US dollar index (DX-MZ5) was slightly weaker as well in overnight trade, but still remains up 3.2% in the last two weeks.


Oil prices (GCLZ5 / QMZ5) fell on Monday as weak Chinese economic data fueled concerns about demand slowing in one of the world's largest oil-consuming nations, while record-high production in Russia exacerbated the global supply glut. China's factory activity fell for an eighth straight month in October, a survey showed, pointing at continued sluggishness in the world's second-largest economy. The global oil supply glut, which has more than halved oil prices since a peak in June last year, was underscored on Monday when Russia reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.


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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