August 14, 2017 | Grain Hedge Insights | Kevin McNew | Views: 99

Grains Trade Lower in Sunday Overnight Session

Weekend Rains or Southern Half of N Dakota and Parts of Western Minnesota

In the Sunday overnight session the grains traded lower with December corn down 4 ¼ cents, November soybeans down 9 3/4 cents and December wheat down 7 cents. Weekend rains in the southern half of North Dakota, parts of western Minnesota and eastern Nebraska are pressuring the market along with a positive weather forecast that shows a couple more good chances for precipitation over the next two weeks.  

 

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This morning Saudi Arabia’s state grain buyer announced it had purchased 660,000 metric tons of animal feed barley it had recently tendered. The barley purchase was filled at an average price of $203.37.
 

On Friday, Russia’s agriculture consultancy IKAR increased its forecast for Russian wheat production to 77-80 million metric tons from 74-77 million metric tons in its previous forecast. The large crop anticipated in Russia has put pressure their wheat prices making this the second consecutive week that wheat export prices have fallen. Russia FOB export prices now sit at around $192 a metric ton. Russia continues their wheat harvest and is now only two percent behind last year's harvest pace.

 

On Friday, the latest commitment of traders report showed that managed money net long position in corn fell from 84,644 to 67,073. Wheat also lost ground with the biggest change coming from Chicago wheat which went from net long 12,190 to a net short position of -14,101. Kansas City wheat net long position shrunk from 54,187 to 48,935 and Spring wheat held mostly steady at 10,708 from 10,808 the previous week. The managed money net long position in Soybeans also dropped sharply this week from 39,795 to 12,913.


 

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August 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 87

Weekly Cash Comments

Weekly Cash Commentary for week ending 08/11/2017

Grain basis was mixed this week with corn showing little upward strength this week while soybeans posted a 2-cent advance.

 

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Cash markets were mostly stable with some corn markets continue to push higher basis levels over the last few weeks of futures selling pressure. Corn ethanol plants as a group were fractionally higher on the week but there was a number of plants raising bids 5 to 10 cents a bushel to draw out more grain from farmer hands. At river terminals, the basis increased on average at 1.4 cents a bushel.

 

The competitive landscape in the corn market saw markets in IL/IN push to new highs helping to increase their drawing area around neighboring competition. Along the MS River, Roquette Grain and Green Plains showed double-digit gains in spot corn basis while Poet in Indiana upped their bids by 4 cents on the week to significantly expand their drawing region.

 

For soybeans, basis levels showed more buoyancy in the face of steeper losses on the Board. Crush facilities were up 2 cents a bushel while the river terminals were up 3 cents on the week.

 

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August 11, 2017 | Grain Hedge Insights | Kevin McNew | Views: 86

Grains Pause Their Sharp Mover Lower in the Overnight Session

Today's Market will Continue to Digest the WASDE Report

In the overnight session the grains seemed to pause their sharp move lower that was triggered after the USDA’s 17/18 corn, soybeans and wheat production estimates topped analyst forecasts in the latest WASDE report. We should also note, better than expected precipitation last night in western Illinois and the latest weather models show the 6-15 day forecast bringing precipitation and much needed relief in the western corn belt.

 

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Today, the market will continue to digest the surprise in yesterday’s reports.

The most bearish part of this report was the new crop production forecasts which showed corn yield forecast at 169.5 BPA and soybean yield at 49.4 BPA compared to an average analyst expectation of 166.2 and 47.5 BPA respectively. These numbers surprised the markets and caused sharp selling pressure immediately following the report's release.  

 

Ending stock forecasts for 17/18 corn were 270 million bushels higher than the average guess among analysts in the Reuters poll. The smaller than expected revision in corn yield and 25 million bushel decline in both exports and feed and residual caused ending stocks to soar to 2.273 billion bushels, well over analyst forecasts.

 

New crop soybean ending stocks were also higher than analysts were expecting despite lowering old crop carry-out and increasing exports by 75 million bushels. Ending stocks were still higher than the July WASDE by 15 million bushels, primarily due to the larger than expected yield revision from 48 BPA to 49.4 BPA.  

 

The WASDE report held the old crop corn balance sheet steady keeping ending stocks at 2.37 billion bushels surprising many analysts that expected to see a revision lower in corn used for ethanol. Old crop soybean ending stocks were revised lower than the average analyst expectations.The revision was a result of reducing crushings by 10 million bushels and increasing exports by 40 million bushels.

 

US wheat ending stocks also surprised traders after yield was revised lower by only .6 BPA leaving new crop stocks at 933 million bushels compared to the 907 million bushels expected.


 

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August 10, 2017 | Grain Hedge Insights | Kevin McNew | Views: 171

USDA WASDE Report Out Today at 11 CST

Grains Were Up in the Overnight Session

In the overnight session December corn up ¼ cent,  November soybeans is up 4 ¾ cents and December wheat is up 1 ¼ cent. Traders have been positioning before the August WASDE report which is scheduled for release at 11 CST.

 

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Brazil’s agricultural statistics agency released its 16/17 corn and soybean forecast which showed a revision higher for both. Brazil’s 16/17 corn crop forecast increased 1.2 MMT to 97.2 while their soybean crop was revised only slightly, up .08 MMT to 114 in the same marketing year.

 

Ethanol production increased by 10 thousand BPD to 1.012 million BPD according to the EIA report on Wednesday. Despite the increase, weekly ethanol production was down nearly 1 percent compared to the same week last year. With July ethanol production numbers in the books, we will need to see roughly a 6 percent increase in ethanol production throughout the remainder of the marketing season to meet the USDA’s corn used for ethanol projection. Although this is possible, it is unlikely and may be reason enough to see the USDA revise their ethanol forecasts lower on the old crop balance sheet in today’s report.

 

Ethanol stocks increased to 21.347 million barrels from 20.852 million barrels last week. Although ethanol stocks have seen a drawdown since March when they peaked for the year, they remain at record highs when comparing on a same week basis.

 

Old crop export sales for both corn and soybeans missed expectations with soybeans actually recording a marketing year low, down 83 percent from the prior four week average. All new crop sales were strong however, with corn and soybeans both beating analyst expectations.  

 

Weekly Export Sales-

 

 

Actual

Estimated

Wheat

464

250-450

Corn - OC

52

100-300

Corn - NC

628

400-600

Soybeans - OC

45

100-300

Soybeans - NC

639

250-450


 

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August 09, 2017 | Grain Hedge Insights | Kevin McNew | Views: 219

Corn Yield Looks to Be Reduced in Tomorrow’s WASDE Report

Grains Trade Higher in the Overnight Session

In the overnight session the grains traded slightly higher with December corn up ½ a cent, November soybeans up 1 ¾ cents and Chicago wheat up 2 ¼ cents. The cool and dry weather forecast across key growing regions continues to fan the uncertainty surrounding this year's crop and anticipation for the USDA WASDE report to be released on Thursday seems to support the market.

 

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Thursday’s WASDE report will be released at 11 AM CST and will include the USDA’s first survey based production forecasts for 2017. In the latest poll by Reuters, the average trade guess is for corn yield to be reduced to 166.2 BPA from 170.7 in the July report. Analysts are expecting corn production to be revised to 13.855 billion bushels, down from 14.255 billion bushels last month.

 

For soybeans, the average analyst guess is looking for yield to be revised lower by .5 BPA to 47.5 BPA and for production to slip from 4.26 billion bushels in July to 4.212 billion bushels.  

 

Analysts polls show wheat production is likely to be revised lower as well with all wheat production expected to fall from 1.76 billion bushels in July to 1.711 billion bushels in August. The largest revisions are expected to be made to the spring wheat crop which has suffered from drought and heat in the western Dakotas into Montana for the majority of the growing season.

The Japanese Ministry of Agriculture sought 120,000 metric tons of feed wheat and 200,000 metric tons of feed barley in a tender this morning. It was also reported that Taiwan’s MFIG rejected all offers in a tender to buy 130,000 metric tons of corn.

 

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August 08, 2017 | Grain Hedge Insights | Kevin McNew | Views: 121

National Soybean Crop Condition Revised Higher This Week

Market Continued Higher in the Overnight Session

The market continued higher in the overnight session with December corn up ¾ cent, November soybeans up 8 cents and wheat up 2 cents. The market will digest the latest updates in the crop conditions report, but most attention will be directed toward the August USDA WASDE report scheduled for release on Thursday.  

 

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The weekly crop progress report showed a continued deterioration in the national corn crop. In the 18 states that make up over 90 percent of our acres, corn rated good-to-excellent slid to 60 percent from 61 percent the previous week. Good-to-excellent ratings declined by 5 percent in Illinois to 58, down 1 percent in Iowa to 64, down 1 percent in Minnesota to 80 and down 1 percent in Nebraska to 59. The decline in good-to-excellent ratings was partially offset by a 3 percent increase in Indiana to 52, a 2 percent increase in Missouri to 63 and a 1 percent increase in North Dakota to 40.   

 

The national soybean crop condition was revised higher this week to 60 from 59 percent last week with some of the largest increases coming from North Carolina, Ohio, North Dakota, South Dakota and Indiana this week. Spring wheat conditions improved by 1 percent this week to 32.

Precipitation is expected in the Southern Plains and Lower Mississippi Valley in both the 1-5 and 6-10 day weather forecast. The Midwest is expected to stay cool, but the mild and dry pattern is expected to cause some moisture stress to the corn and soybean crop.    

 

Figures from from the General Administration of Customs of China showed that soybean volumes imported during July increased by 31.1 percent to 10.08 million metric tons. According to one analyst, the strong increase can be explained by delayed arrivals from the previous month coupled with a change in taxes. Either way, the large supply in the cash market is likely to continue putting pressure on Chinese crush margins which have been in the red since February. Just yesterday it was reported that a Chinese soybean buyer resold more than 500,000 metric tons of soybeans.

 

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August 07, 2017 | Grain Hedge Insights | Kevin McNew | Views: 96

Crop Progress Report due out Later Today

Grains Higher in Overnight Session

In the overnight session the grains are trading higher with Dec Corn up 3 ¾ cents, Nov Soybeans up 8 ¾ cents and Dec Wheat up 3 ¼ cents. The grains are finding some bargain buying at technically supportive levels after a week of strong selling pressure. The 6-10 day weather outlook is favorable for crops with cooler than normal weather and precipitation expected throughout the majority of the central US.

 

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Key support levels have held at least for the time being as traders anticipate the Crop Conditions report. Following the crop conditions report due out later today, traders will turn their focus to the USDA Supply and Demand report released on Thursday where the USDA will including the first data from field surveys.   

 

According to the commitment of traders reports released on Friday for the week ending August 1st, hedge funds cut their corn futures and options positions by 22,171 contracts to 84,644 contracts. Speculative soybean longs were reduced by 11,090 contracts to 39,795.

 

In the wheat complex speculative long positions held by hedge funds and money managers in Chicago Wheat were reduced by 15,660 contracts last week to 12,190. Kansas City Wheat net long positions shrunk by 6,468 to 54,187 and Minneapolis wheat positions were held mostly unchanged at 10,808 compared to 10,705 the previous week.  

 

Over the weekend two major Chinese soybean buyers resold more than 500,000 metric tons of soybeans. There has been some speculation that the resale of soybean cargoes could have been caused from a tightening of credit. The headline will likely cause some concerns that lackluster Chinese crush margins, congestion at the ports and a tightening of credit all may have an impact on future Chinese demand.    


 

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

August 03, 2017 | Grain Hedge Insights | Kevin McNew | Views: 155

Market Traded Lower in the Overnight Session

Midwest Trending Wetter over next 10 Days

The market is trading lower in the overnight session as the weather outlook shows the Midwest trending wetter over the next 10 days with the second half of that forecast favoring showers in the northern Midwest. The forecast also shows a slightly wetter Iowa forecast over the next 10 days. Yesterday, there were some scattered showers that touched North Dakota and North East South Dakota.  

 

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On Wednesday the EIA announced that weekly ethanol output was 1.0 million barrels per day, a decline of 10,000 BPD from the previous week. This is the second time in three weeks that production has fallen below last year's levels. Ethanol stocks also declined, falling 677,000 barrels to 20.85 million barrels. Current ethanol production is running only slightly above last year's levels for the last five weeks which means our current pace is most likely not enough to meet the USDA’s forecast of 5.4 billion bushels of corn used for ethanol. We will keep a close watch on ethanol production in the coming weeks.  

Wheat missed trade expectations in this week's export sales report and was down 71 percent from the previous week. Old crop corn sales were also disappointing, recording a marketing year low and falling 60 percent from last week. New crop corn sales came in on the low side of the trading range. Soybeans met trade expectations for both old and new crop.  

 

Weekly Export Sales-

 

Actual

Estimated

Wheat - NC

145

300-500

Corn - OC

36.7

100-300

Corn - NC

438

400-600

Soybeans - OC

233

100-300

Soybeans - NC

367

250-450

 

 

On Tuesday the Russian agricultural consultancy IKAR said that it increased Russia’s wheat production to 77 million metric tonnes, up from its previous estimate of 74. The consultancy also increased their estimated range of Russian wheat exports by .5 million metric tons.

 

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

August 02, 2017 | Grain Hedge Insights | Kevin McNew | Views: 290

Hard Selling Across the Board in Grains Yesterday

Overnight Session Trades Higher

In the overnight session the market traded higher after hard selling across the board in the grain complex yesterday. Yesterday morning’s GFS weather model showed little change in temperature patterns throughout the US but showed slightly drier conditions are expected in Iowa, Illinois and Indiana with probability leaning toward slightly wetter conditions in Minnesota, Missouri and Wisconsin.

      

The Grain Crushings and Co Products report released yesterday showed that corn consumed for alcohol and other was 490 million bushels in June ‘17, down 4 percent from May but up 2 percent YOY. Corn used for fuel alcohol which is the largest line item in the report showed 437 million bushes were used in June down 3 percent from May but up 2 percent from June 2016.

 

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It was announced yesterday that 154.1 million bushels of soybeans were crushed in June which was outside the range of estimates and well above the average analyst guess of 146.9 million bushels in a Reuters poll.

 

FCStone released their August crop survey results which showed corn at 162.8 bushels per acre compared to the July WASDE estimate of 170.7. Their crop survey pegged soybean yield at 47.7 bpa compared to 48 bpa in the latest WASDE report.

Yesterday’s selling pressure drove December Corn to $3.76 ¾ by the close, leaving the June 23rd low of $3.74 unbroken and still likely to provide support. November Soybeans fell sharply yesterday closing the day at $9.70 ½ which is the high side of the consolidation pattern that formed between April 17th and May 17th. In the short term the $9.70 level could provide support for soybeans but the most notable area in the November soybean chart landscape is the gap in price action between June 30th and July 3rd when prices jumped from $9.52 ½ to $9.63 ½. That gap area should provide some support if prices retrace further.  

 

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

August 01, 2017 | Grain Hedge Insights | Kevin McNew | Views: 186

Grains Trade Lower in the Overnight Session

Grain Crushings Report Out Today at 2 pm

In the overnight session the grains traded lower after the crop progress report showed soybeans and corn conditions slightly above market expectations. Corn condition was reported at 61% good-to-excellent down one percent from last week. Soybeans condition was 59 percent good-to-excellent up two percent from the previous week. Spring wheat conditions deteriorated last week falling to 31 percent good-to-excellent, down 2 percent from last week.

 

At 2 PM today the USDA will release its Grain Crushings report which gives monthly totals for agricultural products consumed in dry and wet mill production. According to a Reuters poll of six analysts the average trade estimate for soybeans processed in June is for 146.9 million bushels with estimates ranging from 146 million bushels to 148 million bushels. If realized this would be a 7 percent decline from May. The reuters poll also estimated June soyoil stocks to be 2.24 billion pounds.

On July 17th, the NOPA crush report estimated that its members, who account for 95% of US soybean crush, processed 138.074 million bushels of soybeans in June, down from 149.246 million in May. The NOPA crush report also showed that soyoil stocks declined to 1.703 billion pounds, down from 1.749 billion in May.      

 

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Weather forecasts in the 1-5 day time frame continues to look cooler which should be supportive of a crop that often times can deal with heat stress during this time of the year. Precipitation will benefit many growing regions this week with the exception of Iowa, the western Dakotas and Montana. Weather in China’s corn growing regions also looks favorable over the next 10 days with temperatures ranging from 1-3 degrees above normal with abundant precipitation in the forecast.   

 

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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