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)
