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March 24, 2016 | Grain Hedge Insights | Kevin McNew | Views: 232

Grain Prices Drift Lower

Crude Oil again fell sharply lower

Grain prices drifted lower to start the day while crude oil again fell sharply lower and stock futures were weaker in overnight trade.

 

Russia is set to become the world's second largest wheat exporter in the 2015/16 marketing year, eating into Canadian and the U.S. market share, owing to a weak rouble and a decline in supplies from its main rivals, the SovEcon consultancy said. Russian wheat exports are running at a historically record pace this season, which lasts until June 30, thanks to a large crop of 61 million tonnes in 2015 and the weaker rouble.

 

Yesterday, EIA crude oil inventories were shockingly higher for the week, gaining 9.1 million barrels versus trade estimates of only a 3.1 million barrel increase. That sent crude prices tumbling lower by $1.60 a barrel, and that selling continued into today with another $1 a barrel loss. The US dollar kept up its winning ways, seeing its advances hold up for 6 days in a row in weakness.

 

 

                        OC Actual          OC Expected            NC Actual           NC Expected

Corn                     803.2               900-1100                   99.9                      0-200

Soybeans              410.8                 400-600                   29.3                    75-300

Wheat                  368.9                 150-350                 118.8                    75-250

 

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

March 23, 2016 | Grain Hedge Insights | Kevin McNew | Views: 243
March 23, 2016 | Grain Hedge Insights | Kevin McNew | Views: 230

Grains were Weak in the Overnight

Soybeans got a big boost on Tuesday as the rally moved up to the highs set back in early December.

Grains were weaker overnight as soybeans took a dip below their highest prices since December. In outside markets, crude oil was lower while the US dollar continued to add to its winning streak, posting positive gains for the 5th day in a row.

 

Soybeans got a big boost on Tuesday as the rally moved up to the highs set back in early December.  Stimulus is coming from the strength in the Brazilian Real, making Brazil soybeans more expensive in global markets, and talk of lower soybean acres by US farmers this spring. The Brazilian Real is up 12% since March 1 and reached fresh highs yesterday, but is trading lower this morning. US farmers were active sellers of cash soybeans yesterday. Basis levels for spot delivery were off quite readily in many locations yesterday.

 

In weather, cool temps for this weekend in the Plains are not expected to be as severe as last weekend.  Also, rains are starting to appear in the forecast for OK & KS over the next few weeks which might give the wheat market a reason to turn lower.

 

Market attention is also turning towards the U.S. planted area forecasts and quarterly grain stocks estimates from the U.S. Department of Agriculture on March 31. The reports could inject volatility into markets generally burdened by record-large global grain stocks. Analyst forecasts are showing 1.5 to 2.5 million more acres of corn in 2016, while soybean forecasts are somewhere between slightly lower to slightly higher than 2015. As a result, soybean prices have strengthened relative to corn on this move higher.

 

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

March 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 482
March 22, 2016 | Grain Hedge Insights | Kevin McNew | Views: 207

Grains were Higher in the Overnight

On Monday, state USDA agency’s gave an update on HRW wheat conditions

Grains were higher overnight, while outside markets turned lower on news of a terrorist attack in Belgium.

 

On Monday, state USDA agency’s gave an update on HRW wheat conditions, which showed a mixed bag with Kansas and Texas each having a modest 1% improvement in the crop rating for good-to-excellent (TX 47% TW vs 46% LW and KS 57% TW vs 56% LW). But Oklahoma dropped a significant 4% with the crop going from 67% last week to 63% this week. Colorado released their first ratings of the season, showing only 43% of the crop good-to-excellent, well below 55% this time last year.

 

In overnight news, Japan's Ministry of Agriculture is seeking to buy a total of 126,190 MT of food quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday. Lebanon's public health ministry referred a case concerning contaminated Russian wheat imports to a branch of the public prosecutor's office on Tuesday, the state news agency said, following a dispute with the economy ministry over test results showing unacceptable levels of a toxin. The Lebanese Public Health Minister has said that tests carried out by his ministry in February showed unacceptable levels of a carcinogenic substance, ochratoxin, in wheat imports from Russia.

 

Twin blasts hit Brussels airport early Tuesday. They were followed by an explosion in a subway station in the city. At least 26 people were killed, according to Belgian media, 15 at a subway station and at least 11 at the airport. France and Germany’s stock markets were down 1% on the news but pared losses going into the close. US equity futures followed in sympathy.

 

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

March 21, 2016 | Grain Hedge Insights | Kevin McNew | Views: 217

Wheat Finds Buying Interest on Sunday

In outside markets crude was modestly lower while stock futures were up going into the morning session

Wheat found buying interest on Sunday as cold weather in the Plains put a premium on prices, while corn and soybeans drifted lower to start the week.  In outside markets crude was modestly lower while stock futures were up going into the morning session.

 

Weather in Oklahoma and Kansas was colder than expected over the weekend. Extreme low temperatures down into the range of 5 to 16 degrees Fahrenheit from eastern Colorado and far western Kansas to western Nebraska might have been cold enough for permanent crop damage if wheat had reached the more advanced joint stage. Similar conditions were suspected for crops from the northern Texas Panhandle through southwestern Kansas to west-central Kansas where low temperatures were in the teens. After warming up to the 80s this week in that area, another cold spell is expected going into next weekend and some modest precip is expected in Western KS, Eastern CO and Western NE.

 

CFTC report on Friday showed active hedge fund buying in the past week to cover record large shorts. They were net buyers of 37K contracts of corn and wheat, and 61K contracts soybeans. This has the potential to limit buying interest going into this week with some of the pressure off of the large short positions.

 

In overnight news, buyers from Israel and Taiwan were in the market for corn. Brazil dockworkers were going on a strike Monday morning, demanding wage hike adjustments for inflation as the country's main commodity markets gear up for the export season. The strike will last for a full day but could extend the strike indefinitely, union President Rodnei Oliveira da Silva said.

 

Oil prices slid for a second day on Monday, under pressure from signs that some of the nimbler U.S. producers increased drilling last week and from uncertainty surrounding a meeting of the world's major exporters next month to discuss freezing output. U.S. energy firms last week added one oil rig after 12 weeks of cuts, according to data from industry firm Baker Hughes. Oil rigs have fallen by two-thirds over the past year to their lowest since 2009, and this surprise addition suggested the drop-off in crude drilling may be stabilizing after the oil price's 50-percent rally since February.

 

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

March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 279
March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 312

Weekly Cash Comments

Weekly Cash Commentary for week ending 3/18/2016

Grain basis levels were stagnant yet again this week with the average corn basis across the country unchanged, while soybeans slipped 1-cent a bushel.

 

Basis levels since harvest have remained incredibly flat. For corn, the overall change in US average basis in the past 3.5 months has been only about 2-cents a bushel. Generally speaking we get at least some modest left-to-right movement in basis during the post-harvest season. In the last 5 years, only 2013 saw a drop in basis levels from December into early spring.

 

This week the Gulf saw mixed movement in basis levels with corn slipping 2 cents a bushel, while soybeans advanced 3 cents a bushel. Ethanol plants were mostly steady this week although Western Cornbelt plants did see some uptick in basis, with a few plants boosting basis by 3 to 5 cents a bushel. Soy plants on the other hand were off 1-cent a bushel on average and Western Plants were more susceptible to weakness than the East.

 

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

March 18, 2016 | Grain Hedge Insights | Kevin McNew | Views: 223

Grains were Subdued in the Overnight Trade Session

Crude oil added to its winning streak overnight trying to make a third-day in a row of gains

Grains were subdued overnight as corn and wheat were mostly unchanged, while soybeans recovered to above $9 a bushel on front month May.  Crude oil added to its winning streak overnight trying to make a third-day in a row of gains, and up $11 a barrel since its low on Feb 11. The US dollar index also found some modest support after two days of an intense sell off.

 

The slide in the US dollar is starting to have a noticeable impact on FOB grain price comparisons around the globe. Yesterday, the US soybean FOB price dropped below Brazil’s price for the first time since the US harvest in October. For most of the US post-harvest season, the strong dollar has put US soybeans at a $0.40 a bushel premium to Brazil, but that quickly reversed in the last week thanks to the falling US dollar and strengthening Brazilian Real.

 

In wheat yesterday, markets sold off sharply in Kansas City with somewhat of an improved outlook this weekend’s weather. Forecasters see temperatures not as cold as originally expected in the Plains. Previous forecasts of a hard freeze in Kansas and Colorado had put a bit of a weather premium into wheat in recent days.

 

The corn market came close to overhead resistance early Thursday at $3.73 and quickly turned lower on wheat’s sharp retreat. However, there is still gap support at $3.65 which is the key to shifting this pattern back down. Right now, it looks like that will be our near term range.

 

In oil, anticipation has grown that major oil producers, including countries outside the Organization of the Petroleum Exporting Countries, will join a production freeze at January levels. A meeting is set in Qatar on April 17 to discuss an output freeze. Many analysts say the market needs to see more a definitive reduction in supply in order for crude to continue its rally. Some countries indicated that participation by Iran wasn’t required for a deal. Iran is set to ramp up output following the removal of international sanctions.

 

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

March 17, 2016 | Grain Hedge Insights | Kevin McNew | Views: 224

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