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Grains Mildly Lower in the Overnight

Rate Hikes possible in December

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Grains were mildly lower overnight as the markets continue to hold steady to price levels seen over the past two months. In outside markets, crude oil was hovering around the unchanged mark from Wednesday’s trade, while S&P futures posted positive gains to get it back above the 2,100 mark.

Corn found some strength in demand yesterday as EIA reported a sharply higher weekly ethanol production figure of 969,000 BPD versus last week’s 944,000 BPD and the highest mark for the current corn marketing year. In South Africa, planting has been deterred by dry weather. Rainfall in the past 30 days has only been 37% of normal and the outlook for the next week or so is for dry conditions to persist and temperatures are expected to be well above normal.

In wheat, prices were off their 4-week high as forecasts for more rain relief in dry U.S. growing belts offset concerns about adverse harvest weather in Australia, and turned attention back towards large global supply. Overnight, Egypt announced policy plans to subside domestic farmers in attempt to curb wheat imports and costs. Iraq also announced it was cancelling its tender to buy 50,000 MT of hard wheat. Meanwhile, Japan bought 129,663 MT of food wheat, with about one-third of the deal going to US suppliers and the rest going to Canada and Australia.

Looking ahead to Tuesday’s USDA crop report, a poll of analyst shows the average guess for US corn production at 13,579 MB versus USDA’s October forecast of 13,555 MB while for soybeans the expectation is for a slight bump 3,915 MB from the October USDA forecast of 3,888 MB.

In S&P futures (ESZ5), better-than-expected services industry data and comments yesterday from Fed Chair Janet Yellen that the economy is performing well enough to possibly raise rates in December put the brakes on a rally that had carried the S&P 500 to within 1 percent of its record. Fed Bank of New York President William Dudley backed Yellen’s stance, while Fed Vice Chairman Stanley Fischer expressed confidence that inflation isn’t too far below the central bank’s goal. Fed Bank of Atlanta President Dennis Lockhart is among central bank officials speaking today.

For crude oil (GCLZ5 / QMZ5), prices fell sharply on Wednesday as a strong dollar, tumbling gasoline prices and rising U.S. crude inventories bore down on the market. Adding to bearish sentiment was an internal OPEC document published by Reuters that showed weaker demand in the next few years for oil from the producer group, even as Saudi Arabia pumped near record levels to protect its market share. U.S. crude inventories rose for the sixth consecutive week, adding 2.85 million barrels last week, in line with forecasts, in spite of a drop in imports to the lowest level since 1991, the U.S. Energy Information Administration (EIA) said.


Actual Expected

Corn 556 450-650

Soybeans 655.6 1,400-1,800

Wheat 84.6 300-500

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

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