Grains were higher overnight with soybeans leading the advance, reaching its highest point since early November. In outside markets, the US dollar eased slightly while S&P futures advanced following Monday’s losses. Crude oil was narrowly traded.
In soybeans, the market continues to trade higher as short-covering and technical indicators turn higher. Monday’s export inspections were above trade estimates and continue to show a brisk pace for US business.
For wheat, Australia’s crop forecasting agency ABERES pegged the wheat crop there at 23.98 MMT, versus their previous estimate in September of 25.28 MMT. The latest forecast is well below USDA’s forecast in November of 26 MMT. In Russia, conditions have taken a turn for the better this fall, as SovEcon pegs the overall grain crop there at 100 MMT. Russian officials have yet to issue their estimate for the 2016 crop, but the country's winter grains are currently in a better condition than last year, a state weather forecaster Hydrometcentre said on Monday, easing concerns over the next year's harvest. Meanwhile in Ukraine, rain in November did little to improve the wheat crop there as crop conditions worsened throughout the month. Planting progressed in the meantime, though not significantly, but now the planting window has more or less closed. This all but confirms the significant area reduction for the 2016 wheat harvest. Even with optimistic spring wheat area forecasts, the 10 percent cut in planned winter wheat area will likely lead to the smallest wheat harvest since 2012 and a consequential slash in exports. Even with normal yields, it seems likely that Ukraine’s wheat crop will fall below 21 MMT, off from 27 MMT this year.
On Monday, the US EPA announced their renewable fuels standard, and put annual ethanol use at 14.5 billion gallons per year for 2016. This is higher than what they originally proposed in May of 14 billion gallons. This is mildly supportive for corn, but will have little noticeable impact on the corn balance sheet as the increase from 14 to 14.5 billion gallons is only a 178 MB increase in corn use.
Crude oil prices steadied on Tuesday as the dollar eased, but with OPEC widely expected to stick to its output target this week, concern about oversupply remained in focus. The European Central Bank will announce its latest policy decision on Thursday, OPEC's decision on output is due on Friday along with U.S. monthly jobs numbers, meaning oil prices have been hemmed into a range of no more than $4 for the last week.
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