Grains were mixed overnight as soybeans found modest support while corn and wheat lost ground from Tuesday’s close. Oil added on to Tuesday’s gains, surpassing $48 a barrel while S&P futures also moved into positive territory.
On Tuesday, Informa came out with its latest estimates for 2015 US corn and bean production. Both estimates were higher than USDA’s October forecast as the private analyst firm looks for 170 bushel corn yields and 47.9 soybean yields. This compares to 168 and 47.2, respectively, by USDA in October. Overall production is pegged at 13,718 MB for corn and 3,952 MB for soybeans by Informa and up from USDA’s October estimates of 13,555 MB and 3,888 MB. The next USDA WASDE report is Tuesday, November 10th.
In overnight news, Australia is getting heavy rains on its eastern wheat crop, which has traders concerned about quality deterioration as it nears harvest. Up to 50% of the crop could potentially be impacted. In tender news, US got a rare new deal with the Taiwan Sugar Corp which announced it purchased 23,000 MT of US corn and 12,000 MT of US soybeans.
US spot basis levels continue to increase with harvest nearing completion and farmers holding tight to supplies. Both ADM and Green Plains CEOs said that they are seeing substantially lower farmer sales than normal for this time of year. US average corn basis is up 7 cents a bushel in the past two weeks, and should continue to rise steadily over the remainder of the calendar year baring a big rally in futures.
S&P (ESZ5) futures got above the pivotal 2,100 mark for the first time since July 20th, and has now completely erased the losses after China’s meltdown in late summer. Investors will look to Fed Chief Janet Yellen for clues to the next interest-rate rise as she is scheduled to give a speech today. Also, a report on private-sector employment will be released ahead of the opening bell, offering a fresh sense of the jobs environment ahead of the closely watched nonfarm-payrolls report due Friday.
Crude oil continued its move higher overnight following Tuesday’s impressive 3.8% gain. Gains were tied to a 6% jump in gasoline prices and a strike in Brazil that cut around half a million barrels of output in the first 24 hours and has slowed state-run Petrobras' daily oil output by around 25 percent. EIA will release new inventory data today, with traders looking for a buildup in stocks by 2.8 million barrels.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
