January 13, 2017 | Grain Hedge Insights | Kevin McNew | Views: 281

USDA Caught the Trade By Surprise Yesterday

Grains Resume their Slump in the Overnight

Grains resumed their slump overnight following yesterday’s sharp rally in beans and modest bump in wheat prices buoyed by USDA data. In outside markets, crude oil and the US dollar fell in the night session while US equity futures were trying to hold on to slim gains.


USDA caught the trade by surprise yesterday when it trimmed US soy output on lower acres and yield forecasts. The net result was a 54 MB drop in production which cut ending stocks from 480 MB last month to 420 MB this month. USDA also dropped their US corn yield and acres forecast, helping lower production by a slim 78 MB.


However, on the bearish side, the Quarterly stocks report showed bigger than expected corn and wheat inventories, which implied lower feed use than what USDA had been projecting. Dec 1 stocks implied 1st quarter (Sept-Nov) U.S. corn feed/residual usage at 2.280 billion bushels, up just 4.6% from last year’s 2.179 billion. Corn for feed use was dropped by 50 MB to 5,600 which still reflects a 9.1% annual increase over 2015, while Q1 feed use was up only 4.6%.  Wheat feed use was also lowered by 35 MB to 225.

The only bright spot on wheat was the steeper than expected drop in US winter wheat plantings, plunging 3.8 million acres over last year while the trade expected only a 2 million acre cut. This would be the lowest plantings in 107 years. Nonetheless, global supplies continued to mount with world carry-out ballooning to 252 MMT up from 251 MMT last month on increased production in Russia and Argentina.  


Going forward, the trade will continue to focus on SA’s growing season. Portions of central Argentina will still be affected by heavy rain this
weekend and more flooding is probable. But, Brazil continues to see nearly ideal conditions. Also, with wheat plantings “known” traders will start to conjecture about US spring acres, with farmers believed to be heavily biased towards 4 to 6 million more acres of soybeans in 2017.


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

January 12, 2017 | Kevin McNew | Views: 123
January 12, 2017 | Tech Talk | Charlie Trauger | Views: 287

Rural Broadband Issues – Slow and Bumpy Digital Roads!

Rural America still has major connectivity problems as it trys to participate in the modern age

Rural Broadband Issues – Slow and Bumpy Digital Roads!

I moved from Omaha, NE, to the small town that I grew up in four years ago. I work in the software industry and had hoped that technology today would provide me with a good solid Internet connection allowing me to live where I want to and be connected. I wonder if I am not alone with this wish as things are not that great here.

While in a larger city, we rarely experienced any interruptions or degraded Internet service. I realize that our neighborhood had fiber optics up to our house, so one would expect things to be fast and work. Not quite the case in rural America.

Our digital needs today touch most every aspect of our personal and business lives, like it or not, we need to be connected. Lately, my Internet provider has experienced many down days due to equipment issues. We are always a few days out on the service schedule as I assume tech teams come from a larger city, which is frustrating.

When things do work, connections seem to always be too slow. Rural providers have oversold the local network with too small of a backhaul or the pipe that connects all of us back to the Internet. I realize that the population is less in small towns and the country, but we rely on being connected just as much as anyone else does and deserve much better service!

Economic development in rural America, in my opinion, depends on decent Internet connectivity. If we want to attract more young folks, they certainly won’t put up with slow and spotty connections. We are nowhere close to what our friends in the city have for connectivity. Pretty hard to cut the cable or satellite TV and stream content when the pipes are slow and full!

The Ag Department’s $3 Billion Rural Broadband Initiative’s Program has fallen short — great idea, but poor execution. http://www.informationweek.com/government/mobile-and-wireless/federal-broadband-program-falls-short/d/d-id/1278662


So, what can we expect down the road for those of us that are in rural areas? I realize there are satellite options, and I have tried them. They limit or charge more for the amount of data used and there tends to be some keyboard delays. I realize your requests are traveling some 26K miles up and back again to the bird. If there are no other solutions, then you settle.

The small town I live in does have dark fiber (not lit up, but could be), but requires several thousand per month to crank it up. Just a bit above my budget for gigabit speeds! There are companies that are working on solutions, such as ViaSat – you can check out a nice video at this link; https://www.youtube.com/watch?v=pIdn5RmUwWs&feature=youtu.be and others as well I am sure.

Facebook’s CEO, Mark Zuckerberg is working on providing connectivity world-wide as well. The site https://info.internet.org/en/ show’s some pictures assumed to be in third-world countries, but I would really like good solid access in Nebraska! Usually, big problems get fixed, but with lower populations, we are apparently second or third in line for help.

Here is a great read regarding high-speed Internet access by Sara Kubik – pretty much says it all; http://www.lawtechnologytoday.org/2016/07/high-speed-internet-access-not-basic-right-2/

Here is a map showing the connectivity holes in the U.S. https://www.inverse.com/article/14248-will-cheap-broadband-actually-make-it-to-rural-america-here-s-how-it-might-happen

I will keep an eye open for potential solutions and report back. In the mean-time, I wait somewhat, OK completely impatiently! Drop us an email if you have found a great solution provider for us rural folks and I will check into it and add to a future blog. 


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

January 12, 2017 | Grain Hedge Insights | Kevin McNew | Views: 101

Grains Drift Lower While Awaiting Fresh Data from USDA

Crude Oil Moved Higher in the Night Session

Grains drifted lower overnight ahead of fresh data from USDA at 11 am CDT. Meanwhile, crude oil moved higher while the US dollar was sharply lower in the night session.


USDA announced a 110,000 MT of of corn to Japan, and another 253,488 MT to unknown destinations.


Following yesterday’s announcement that China would impose high tariffs on US DDGs imports, a think tank there has said it expects purchasing of the feedstuffs to slow. Imports for 2016/17 were previously seen at 2 MMT, said the China National Grain and Oils Information Center. They expect that number to slide to below 1 MMT, but that will likely boost soymeal and soybean demand.


In wheat, the 2017 rally took a hit yesterday as prices slid for a third session on improved weather in the US Plains and Black Sea region. Wheat is being pressured by expectations that weekend storms would help recharge soil moisture in Oklahoma and Kansas, where dry conditions have stressed dormant hard red winter wheat crops. Also, a substantial snow layer has protected Ukrainian and Russian winter crops from severe frosts which came this weekend.

South Korea's Major Feedmill Group has rejected all offers and made no purchase in an international tender to buy up to 70,000 tonnes of corn from optional origins, sighting prices that were too high. The lowest offer in the tender was $189.95 a tonne c&f on a flat price basis.


The US Dollar hit a 5-week low as President-elect Donald Trump’s first press conference was ambiguous on the direction of new policy initiatives, disappointing the trade on the Trumponomic bullish bet that has been in play since the election.


Weekly Export Sales-

                                     Actual         Expected

Corn                                603             500-800

Soybeans                         349             500-800

Wheat                             391             250-450


Oil rose on Wednesday, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers. EIA crude stocks data is out later this morning with traders looking for a 1.1 million barrel build from last week.


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

January 11, 2017 | Kevin McNew | Views: 76
January 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 97

Markets in a Wait and See Ahead of Tomorrow’s New Crop Estimates

Crude Oil Moves Higher in the Overnight

Grains moved lower overnight with wheat leading the complex lower while losses in corn and beans were more muted. In outside markets, crude oil moved higher as did the US dollar.


China has increased punitive tariffs on imports of a US DDGs from levels first proposed last year. In a final ruling, the Commerce Ministry said on Wednesday that anti-dumping duties will range from 42.2 percent to 53.7 percent, up from 33.8 percent in its preliminary decision in September. Anti-subsidy tariffs will range from 11.2 percent to 12 percent, up from 10 percent to 10.7 percent.


Markets are mostly in a wait-and-see stance ahead of tomorrow’s flurry of new crop estimates. Quarterly stocks will be a key report to watch with USDA factoring in heavy feed use for wheat and corn in their demand estimates. USDA has a 9% increase in corn used for feed meanwhile cattle on feed was flat for the last quarter compared to the previous year, while hogs & poultry were up only 3% year on year.


Dry conditions are in the cards for Argentina over the next few days before widespread rains return the middle of next week. Slight improvement in wettest 1/3 of Arg. corn/soy next 10 days, but very wet 11-30 day suggests ongoing concerns. In Brazil, next 10 days will bring rains to help ease corn/soy stress in Northeast.

Oil rose on Wednesday, lifted by reports of Saudi supply cuts to Asia, but gains were capped by a lack of detail about the reductions and because of signs of rising supplies from other producers. EIA crude stocks data is out later this morning with traders looking for a 1.1 million barrel build from last week.


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

January 10, 2017 | Kevin McNew | Views: 140
January 10, 2017 | Grain Hedge Insights | Kevin McNew | Views: 155

Soybeans Lead the Decline in the Overnight

Grain Futures were Lower

Grain futures were lower overnight with soybeans leading the decline on a 7 cent loss, giving up much of yesterday’s 10-cent advance. In outside markets, crude oil tried to stabilize after yesterday’s $2 a barrel slide while US equity futures and the dollar were eaking out small gains to start the day.


USDA announced a 130,000 MT sale of corn to Taiwan, and a 241,600 MT sale of corn to Unknown of which 91,300 MT is for 2016/2017 delivery and  150,300 for 2017/2018.


This morning Brazil’s forecasting agency Conab pegged the bean crop to a record large 103.8 MB, up from their previous forecast of 102.45. They also boosted their corn forecast to 84.5 MB from their last estimate of 83.8 MB.


Crush margins in China have started to erode sharply and are now at their lowest point since September. Soybean crushers in China have slowed bean buying as profits are cut and stockpiles have surged. With the Chinese New Year at the end of this month, there is growing beliefs that China will curb its buying and turn to South America after the week-long Lunar New Year.


USDA will release their own forecasts on Thursday for US & global grains. Traders look for a modest drop in US corn and bean carry-outs with corn expected to fall to 2,385 MB from last month's forecast of 2,403, and soybeans are expected to fall to 468 MB from 480 in December. The Quarterly Stocks report will shed some light on corn for feed demand in the 1st quarter of the marketing year. USDA has a 9% increase in feed use year on year which seems like a stretch. Cattle on Feed numbers for Q1 were essentially unchanged vs last year, while hogs and broiler numbers were up roughly 3% for the quarter vs last year.


US Southern Plains are expected to see some beneficial rains on the horizon. Argentina continues to be aggressive players in the wheat markets as their export prices have stayed flat in response to the CBT rally in recent weeks. In the past week export prices for corn have risen in foreign countries relative to the US, while SA bean prices have gotten cheaper relative to the US.


US Export Prices Relative to Foreign Competitors (in USD/MT)


                                    This Week      Last Week

Corn-ARG                         $23.40          $22.48

Corn-BRZ                         $16.90          $15.34

Corn-EUR                          $5.05            $3.81

Beans-ARG                    -$14.10            -$8.16

Beans-BRZ                       $2.70             $3.22


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

January 09, 2017 | Kevin McNew | Views: 147
January 09, 2017 | Grain Hedge Insights | Kevin McNew | Views: 109

Beans Flat in Overnight Trade

Wheat and Corn Start the Week in Positive Territory

Wheat and corn started the week in positive territory while beans were flat in overnight trade. In outside markets, crude oil gave up a $1 a barrel in overnight trade while the US dollar and equities were mostly quiet in the night session.


Argentina weekend rain was most significant from Cordoba and San Luis to northeastern Buenos Aires where 0.60 to 1.59 inches were recorded. Heavy rains are expected Monday across the interior north. But conditions across the nation’s crop areas will likely improve over time this week and next week.


Brazil remains very good for the bulk of its production region. A few areas of dryness will continue, but they will eventually receive rain and subsoil moisture should be sufficient to carry on normal crop development until better rain evolves. Rain in Tocantins, northeastern Goias and western Bahia later this week will bring some much needed relief to drying, but follow up rain will be very important to continue the improving trend.


On Friday, CFTC data showed managed funds cut corn short by 17K to -96K, soy long down 13K to +94K, wheat short down 5K to -104K. Thursday marks the next USDA crop report with wheat acres being of special interest. Analysts expect US winter wheat plantings to be off 2 million acres from 2016.

Oil fell by $1 a barrel on Monday as growing U.S. production outweighed optimism that many other producers were sticking to a deal to cut supplies in a bid to bolster the market. On Friday, Baker Hughes data showed an 8th week in a row of rising US rig counts.Rising exports from Iran also added to bearish sentiment. Iran has sold more than 13 million barrels of oil held on tankers at sea, capitalizing on its exemption from a global deal to cut production in order to regain market share and court new buyers.


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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