January 08, 2016 | Grain Hedge Insights | Kevin McNew | Views: 339

Grains Post Modest Gains Overnight

Outside markets were trying to recover some of the week’s losses with S&P futures

Grains posted modest gains overnight with soybeans and wheat up 3 while corn was up one cent Outside markets were trying to recover some of the week’s losses with S&P futures and crude oil bouncing higher in night trade.

 

Overnight, South Korean firms bought US wheat and US soybeans, although the soybeans were for delivery in 2017. China, the world's top soy buyer, will import 2 MMT more in the 2015/16 marketing year at 80 MMT, an official grains think tank said in a revised forecast, due to higher-than-expected crushing demand.

 

Yesterday’s export sales report from USDA showed very disappointing totals for corn and wheat. And although it was a holiday week, the year-to-date totals corn and wheat are well behind the pace needed to reach USDA’s forecast.  Corn export commitments are off 25% from the same time last year, but USDA sees only a 6% drop in exports for the year. If these levels of sluggish exports continue, it will mean the export target for USDA will fall by 300 MB and cause old-crop carryout to balloon to over 2 billion bushels.

 

U.S. stock-index futures rose as China’s move to shore up markets stemmed a sell-off from global equities this week. Gains in Standard & Poor’s 500 Index futures signaled the gauge will rebound from the worst-ever start to a year. The Shanghai Composite Index climbed 2 percent as Chinese authorities suspended a circuit-breaker system, set a higher yuan reference rate and directed state-controlled funds to buy shares. Treasuries and the yen headed for their first declines this week and gold dropped.

 

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

January 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 524
January 07, 2016 | Grain Hedge Insights | Kevin McNew | Views: 285

Stock Markets Roil in the Overnight

Grains grinded lower with nearby corn hovering around support at $3.50.

Stock markets roiled again overnight as China’s market fell another 7% before hitting circuit breakers. Crude oil also plummeted to new 15 year lows with front-month January contracts near $32 a barrel. Meanwhile, grains grinded lower with nearby corn hovering around support at $3.50.

 

Soy harvesting has started in Brazil's top two growing states Mato Grosso and Parana, with farmers concerned over irregular rains causing damage in the center-west soy belt. Harvesting is probably less than 1% complete in top growing state Mato Grosso, behind this time last year, said Endrigo Dalcin, president of state growers' association Aprosoja.

 

Japan's Ministry of Agriculture bought a total of 131,031 MT of food quality wheat from the United States, Canada and Australia in a regular tender that closed late on Thursday. Japan, the world's sixth-biggest wheat importer, keeps a tight grip on imports of the country's second most important staple after rice and buys the majority of the grain for milling via tenders typically issued three times a month.

 

China clobbered global equity markets yet again, sending U.S. equity futures into freefall. In China, the trading day was over just as it began thanks to a swift selloff. For the second time this week, Chinese equity markets tripped their newly-installed “circuit breaker,” or mechanism used to prevent panic selling, just 30 minutes into the start of trade. The moves led to an accelerated pace of selling across the world as the Chinese yuan slipped further, hitting a five-month low.

 

WEEKLY EXPORT SALES

 

                          ACTUAL            EXPECTED

Corn                     252.9               400-600

Soybeans              638.7               400-700

Wheat                    76.5               200-400

 

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

January 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 445
January 06, 2016 | Grain Hedge Insights | Kevin McNew | Views: 240

Grains Drift Lower in the Overnight

In outside markets, S&P futures and crude oil were off sharply on continued economic fears in China.

Grain prices continued to drift lower overnight after turn around Tuesday failed to produce much upside movement in prices.  In outside markets, S&P futures and crude oil were off sharply on continued economic fears in China.

 

Weather in South America continues to show favorable growing conditions. Plenty of rain will fall in Brazil crop areas during the next two weeks, although southern Brazil may dry down for a while next week, which is a welcome change from prolonged wetness. The change to wetter conditions in center west and the far north and drier weather in far southern Brazil will be ideal. Argentina is expecting rainfall Sunday through Tuesday after net drying over the next few days. However, soil conditions in Argentina today are plenty moist and the alternating dry/wet patterns are pointing to excellent yield potentials.

 

In South Africa, there are more concerns mounting about the effects of the drought.  A CEO of Grain SA said overnight that the corn crop in South Africa is a disaster and may lead the country to being a net importer of 5 MMT of corn this versus a net exporter of the same amount.

 

In corn, US export competitiveness continues to struggle as Argentina’s plummeting currency value and newly eliminated export taxes make Argentina corn extremely cheap. Current FOB export prices for US corn are $7 per MT (or 18 cents a bushel) higher than Argentina. This time last year, US corn was cheaper than Argentinean corn by $13 a MT.

 

World stocks fell for a fifth day on Wednesday as China fueled fears about its economy by allowing the yuan to weaken further. Traders and economists fear the yuan's depreciation may mean the world's second-biggest economy is even weaker than had been expected and that it could trigger another wave of competitive devaluations around Asia and in other key economies. The People's Bank of China surprised on Wednesday by setting the yuan's official midpoint rate at its weakest level in 4-1/2 years at 6.5314 per dollar.

 

Adding to the risk-off mood, crude oil prices hit new 11-year lows as the face-off between Saudi Arabia and Iran over Riyadh's execution of a Shi'ite cleric was seen extinguishing any chance of major producers cooperating to cut production. Concerns over mounting stock levels added pressure to prices. EIA data released later today is expected to show an increase in US crude inventories by 439,000 barrels according to a Reuters poll.

 

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

January 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 520
January 05, 2016 | Grain Hedge Insights | Kevin McNew | Views: 388

Overnight Trading Saw Grains Posting Advances

The US dollar index continued to rally overnight, up nearly half-a-percent in value.

Overnight trading saw grains posting advances as they tried to recover from Monday’s steep sell off. In outside markets, S&P futures were modestly lower while crude oil was mildly lower. The US dollar index continued to rally overnight, up nearly half-a-percent in value.

 

Yesterday saw new monthly usage data from USDA which showed subpar performances for both corn and soybean demand.  Corn used for milling in November was 484.5 MB, off from 494.2 MB in October, while soybean crushing for November was 165.8 MB versus 170.1 MB in October.  With soy crushing margins continuing to slide, future crush usage could be lower as well.

 

In international news, Zimbabwe plans to import up to 700,000 MT of corn this year to avert hunger as the El Nino weather pattern brings poor rains and affects crops in the Southern African nation, the state-owned Herald newspaper reported on Tuesday. Last year the government imported only 100,000 MT. The UkrAgroConsult consultancy raised its forecast for Ukraine's 2015/16 wheat exports to 14 MMT from 13 MMT on Tuesday citing a higher harvest and a fall in ending stocks.

 

Japan's Ministry of Agriculture is seeking to buy a total of 131,031 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday.  In wheat, yesterday’s steep price decline came with the largest daily increase in open interest in over a decade, as open positions grew an astonishing 25,000 contracts suggesting players were increasing their bets in the new year.

 

U.S. stock futures pared declines, while European equities resumed advances as equities sought to rebound from one of the worst starts to a year. The turbulence comes even after China moved to support its stock market with state-controlled funds buying equities and regulators signaling a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter. A 7% slump in China shares on Monday triggered a trading halt, and the rout spread throughout Asia, Europe and the U.S. as a report showing the fastest contraction in U.S. manufacturing in six years.

 

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

January 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 580
January 04, 2016 | Grain Hedge Insights | Kevin McNew | Views: 362

Grains are Weak to Begin the New Year

S&P futures plunge lower

Grains were weaker to begin the New Year with beans leading to the downside, falling below $8.60 for the first time in two weeks.  In outside markets, S&P futures plunged lower giving up nearly 1.5% on the heels of a 7% drawdown in Chinese stocks and the US dollar fell by 0.5%. Crude oil was up slightly trying to bounce off of its recent lows.

 

Weather in Brazil was mostly favorable over the long holiday weekend and some areas of Northern Brazil received rains. However, the driest areas are expected to get the most rain in the coming days to weeks. The precipitation will be sufficient in the north through Friday of this week to improve topsoil moisture in most crop areas and to reduce concern over further declines in production potential.

 

In wheat, there was a cold snap over the weekend in parts of Russia and Ukraine with temperatures falling below zero Fahrenheit, but most areas of the wheat belt had at least some partial snow cover to insulate against crop damage. Overnight, buyers seemed eager to find wheat with three different wheat tenders announced:  Ethiopia tendering for 70,000 MT, Taiwan Flour Millers tendering for 88,750 MT of US wheat and South Korea's largest feed-maker tendering to purchase up to 60,000 MT of feed wheat.

 

In South Africa, drought-stricken corn growing areas saw some modest rains over the holiday with localized amounts reaching 0.5 inches. However, the overall drought conditions seem unlikely to reverse course and odds are high that this year’s production will be seriously slashed because of severe drought.  In other news, India will soon ask state-run traders to import 0.5 MMT of corn after a second straight drought cut output, in what would be the country's first overseas purchase in 16 years, two government sources said on Thursday. India has agreed to allow state-run traders such as PEC Ltd to import corn to curb rising prices and avoid shortages, said a government official directly involved in the decision-making process.

 

Stocks crumbled around the world, with emerging markets falling the most since August, as slowing manufacturing triggered a sell-off that halted equity trading in Shanghai. The Shanghai Index lost 6.9% overnight. The Caixin factory index for China came in at 48.2 in December, missing the median analyst estimate of 48.9 in a Bloomberg survey, after the nation’s first official economic report of 2016 on Jan. 1 signaled manufacturing weakened for a fifth month, the longest such streak since 2009.

 

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

December 31, 2015 | Grain Hedge Insights | Kevin McNew | Views: 569

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