Tuesday, April 22, 2014

Grain Market Comments 4-22-14

Grain markets are called mixed to better this a.m. following a mixed to firmer overnight session.  A little bounce after yesterdays weak price action; some of the strength came from crop progress update that came out yesterday afternoon.

When the grain markets did end the overnight session we had corn up 4, KC wheat up 3, MPLS wheat up 1, old crop beans up 6, and new crop beans up 3.  At 8:00 outside markets have crude off a buck, the DOW mini futures pointing towards around an unchanged open, gold about unchanged a slightly weaker US dollar with the cash index at 79.820.

Yesterdays weakness seemed to come from a couple different things with wheat leading the pressure.  First off was some radar action in parts of HRW growing areas.  Now was it enough to help the crop?  To me  it still looks like the western part of the HRW growing area is plenty dry and the forecast maps I am looking at don’t show much relief. 

Another thing that lead to some weakness for wheat yesterday was the fact that we just haven’t seen any actual increase in US Wheat business because of the issues in the black sea.  That isn’t to say that at some point we won’t but so far we haven’t.

I also thought wheat had a weak close with reversal type action last week; so I thought maybe we seen some additional technical selling pressure yesterday.  All three of the grains now have charts that could be leading to some selling; and we still have the funds long corn and beans.   Here is CHS Hedging Recap of CFTC. 


One thing that I think we need to consider is the position the funds have in corn now versus a year ago as well as how short they got at one time last harvest.  It’s about 400,000 contracts difference right now; and if we don’t see headlines that are positive or a balance sheet that is positive we have to realize that we have risk that the funds decide to pitch length and maybe even go back to the short side.  If we have a 14 billion bushel crop or so do you think the funds will want to be long corn????  I realize that is a big IF, but my point is it could really be scary for prices should the cards end up laying on the table wrong.  As mentioned numerous times should all those cars end up being aces the upside potential remains very strong as well.  Bottom line that I am trying to communicate is the fact that we have plenty of risk and potential reward; so the recommendation is to use good risk management and find a comfort level in your marketing plan which should be unique to you and your operation.

Railroads continue to struggle; but it does feel like they have picked up a little with the warmer weather.  But to offset that I have seen some birdseed buyers actually cancel some car orders they have had on.  It seems that business has slowed down.  To me it feels like things could continue to be very volatile.  We likely continue to see the car back log hit when we really don’t want it to hit as producers get very busy and some demand slows down on the other end. 

Overall many have thought that basis would improve as car costs go down and it should; but what if we missed the demand?  What if there is simply too much supply to move at the wrong time?  I guess we need to realize that we have so many unknowns that I wouldn’t want to guarantee much in this market place.


Some where a little surprised on the lack of corn planting progress.  We are still about ½ of the last 5 year average; many where looking for a little bigger number then we got.  Overall most look at the weather forecasts and think that plenty of progress will be done; but maybe it is a little more debatable then that?

As mentioned above birdseed business feels like it has slowed down a little bit.  I think some buyers still need coverage but the bids have slipped a little the past couple days.  I did think that crush sunflowers only down 10 cents a cwt yesterday was a moral victory; but the overall market pressure didn’t lead to many calling to buy birdseed products.

Here is more market info from CHS Hedging Morning Highlights


Morning Highlights

By Jack Willbrand

Highlights
  • Grain markets responded positively overnight after the weekly Crop progress report showed that we are possibly farther behind than what most traders originally thought.  Corn planting completion is at 6%, which is 8% behind the 5 year average of 14%. Despite the lack of movement so far this spring, there is optimism to catch up this week after rainfall was limited to under 1/10 of an inch in major corn growing areas during the last 18 hours.
  • As of 6:32 AM CT: The Dow Jones Index is up 16 points to 16,387, the S&P 500 is still at 1,865 and NASDAQ is up 7 points at 3,559. The US dollar slightly weaker.
  • Reports Today: Existing Home Sales will be released at 9:00 AM CT, Cold Storage will be out at 2:00 PM CT and API Energy Stocks will be released at 3:30 this afternoon.
  • Today is first notice on May ICE Coffee futures and last trading day on May NY Crude Lt.

Corn
  • Yesterday’s rains have moved east without causing too much concern for further field work delays.  The precipitation will benefit newly planted seeds.
  • The latest extended forecast shows windows for planting headway in the 1-5 day, then a wetter overall southeastern Midwest in the 6-10 day.
  • South Korea purchased 60,000 MT of US or South American corn.
  • Barge availably out of Savage/St. Paul will increase this week as empty boats push north. (Bid 485% for the Balance of April)
  • CK/CN is weaker overnight, trading at a 5 ¾ carry.
  • First notice day on May futures is April 30th.
 Outlook: Corn traders will primarily monitor the newest weather forecast and planting chatter this week. Opening calls 3-4 cents higher.

Oilseeds
  • The trade remains focused on short domestic stocks and Asian demand.
  • Yesterday there were articles written on possibly more widespread Chinese credit defaults. Processors are losing the equivalent of $100/ton on product handled.
  • Trade will watch for overbought Chinese cancellations and more defaulted purchases from processors.
  • The SK/SN is steady, trading at a 12 cent inverse.
Outlook: Opening calls 6-7 higher

 Wheat
  • Violence was limited yesterday in eastern Ukraine as Vice President Biden visited in attempt to develop a peaceful reconciliation. 
  • Iraq passed up on a chance to buy 50,000+ MT of wheat.
  • Japan is in the market for 108,789 MT of wheat in its weekly purchase.
  • Yesterday’s reversal is speculated to have been a result of freeze damage being less apparent than first thought.  The CCI ratings were mixed yesterday.  HRW dropped 3 points to 290/500 and SRW improved 2 points to 354/500.
 Outlook: Opening calls are mixed. Outsiders will continue to watch for flared disputes in Ukraine and shifts in exports.







Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)



CHS Midwest Cooperatives Logo



This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

Wednesday, April 16, 2014

Grain Market Comments 4-16-14

Grain markets are called mixed this morning after a mixed overnight session that when ended saw corn unchanged on old crop while new crop corn was off a penny, KC wheat was up a penny, MPLS wheat was up a penny, CBOT wheat was up 3, old crop beans were up 17, and new crop beans were up 8 cents a bushel.  At 8:00 outside markets have a US Dollar about unchanged, crude is up about 95 cents a barrel, gold is up 4 bucks an ounce, and the DOW mini futures are pointing towards a positive start of about 70 points on the DOW.

Yesterday we had a couple headlines that gave the grains some strength.  First off was the NOPA crush which above estimates and brought back up the headline that we need to ration demand; which we really haven’t.

This is from CHS Hedging in regard to the crush numbers 
“The March crush reported by NOPA members was 153.8 mb, well ahead of the average estimate of 146.1. Looking at the year on year comparison, crush for the first seven months of the soybean marketing year is up 2.1%. We estimate the NOPA crush will need to be a cumulative -4.8% year/year over the remaining 5 months of the year to hit the WASDE-based estimate of 1,685 mb. Oil stocks were up 129.6 million pounds to 2.022 billion.”

Bottom line is that demand for beans has been very strong.  We do need to keep in mind that it was just last week when the headline was China defaulting on beans that had hit their ports.  The bean market should remain volatile; strong up moves on days when focus is on our very tight situation but if we see a headline that indicates demand has slipped or that end users have found a replacement then we have a lot of downside risk.  The fund position also gives us some risk as they own plenty of beans; if the charts turn because of some catalyst it could really open up down side; but until then enjoy the ride.

The other big headline I seen yesterday was the escalated violence in Russia/Ukraine.  Most thought this lead to the wheat strength.  So far we have yet to see any more actual business come this way because of the situation over there.  So I would consider this a fear rally; just a few days ago new business went to the Black Sea area. 

The birdseed market has firmed a little bit and we also have buyers looking for Hi Oleic sunflowers.  Both old and new crop so make sure to call us if you have any offers.

No real changes to the rail situation.  It is still a struggle and helps keep our markets a little extra volatile. 

I did see this come across from Thune’s Office. 

FOR IMMEDIATE RELEASE

Contact: Andi Fouberg (202) 228-5381
April 15, 2014
Rachel Millard (202) 228-5939

Thune Commends STB on Fertilizer Decision

WASHINGTON, D.C.—U.S. Senator John Thune (R-S.D.), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, issued the following statement after the Surface Transportation Board (STB) announced tonight that it will direct the Canadian Pacific Railway Company and BNSF Railway Company to report by April 18, 2014, their plans to ensure delivery of fertilizer shipments for spring planting and provide weekly status reports beginning April 25, 2014, regarding the delivery of fertilizer on their respective networks:

“This is a step in the right direction for the STB and I am pleased that they acted so quickly after last week’s hearing to address some of the ongoing rail service issues in South Dakota and the surrounding region,” said Thune. “I will continue to press the STB and the railroads to do all they can to improve service across South Dakota during this critical time of year for our farmers. Continued rail service disruptions are not only having a direct impact on agriculture producers, grain handlers, and the ethanol industry, but also on manufacturers and main street businesses across our state.”

Last week, Thune addressed the STB at their public hearing on U.S. Rail Service Issues. The Senate Commerce, Science, and Transportation Committee has jurisdiction over freight railroads and the STB. Thune is also a member of the Senate Agriculture Committee.

Here is CHS Hedging Weather link for today. 
https://www.chshedging.com/UserFiles/Documents/2014/Research/Weather/4.16.14%20ag_trader_brief_usa_country_hedging%20(6).pdf
And here is more market info from CHS Hedging Morning Highlights

Morning Highlights

By Chris Steinhoff

 
Highlights
  • Ukraine military forces clash with pro-Russia militia in eastern Ukraine.
  • As of 6:45am CDT: Gold is up $4.00, crude oil is up 90 cents, US$ index is 0.080 weaker.  Dow futures are up 65 points and Nikkei is up 3.01%.
  • Friday, April 18th is an exchange holiday with grain and energy markets closed. CHS Hedging will be closed as well.
Corn
  • Subdued overnight trading with very little fresh news.
  • France’s parliament adopts a law prohibiting the cultivation on any GMO maize.
  • South Africa imports YC from Russia for the first time since 2003. They also bought some from Ukraine in March.
  • CK/CN is quietly firm at a 5 ¾ carry.
  • Following record production, exports from Russia and Ukraine become more important. Political tensions may impact world corn trade. .
  • The NWS 6 to 10 day forecast has mainly above normal temps across the center US with IA, ILL, IN, OH, WI and NE forecast to see normal precipitation.
  • Weekly ethanol production will be released this morning. 
Outlook: trading 1 to 2 lower….weather forecasts look pretty good
Oilseeds
  • After opening on session lows, buying continued in overnight trade as SMK and SK blast to a new contract high.
  • The US crush pace runs well ahead of the needed pace to reach the current USDA annual estimate of 1.685bb. A nearly unprecedented slowdown will need to be seen in the next 5 months to resolve the US balance sheet.
  • The SK/SN is slightly weaker at a 12 ½ inverse. SK/SX is 11 firmer at a 283 ¼ inverse
  • WCB crushers have ample truck supplies of soybeans moving toward them while rail from the WCB heads east.
  • News from China is quiet and Dalian beans were slightly better in overnight trading.
  • Malaysian palm oil is up 37 ringgits.
Outlook: trading sharply better
Wheat
  • Ukraine/Russia political tension has traders worried about executing exports.
  • Damage from Sunday and Monday night freezing temperatures is still being assessed.
  • India’s official government procurement of the new crop is expected to begin soon as they buy for domestic reserves and food programs.
  • China’s National Bureau of Statistics says wheat seeding will decline 0.56%, mainly in favor of corn and rice.
Outlook: trading steady to slightly better




Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)



CHS Midwest Cooperatives Logo


This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.


Tuesday, April 15, 2014

Grain Market Comments 4-15-14

Grain markets are called mixed this a.m. after a mixed overnight session; that saw corn down 3 ¼ on old crop, new crop DEC corn was off 1 ¾, KC wheat was down 2 ½, MPLS wheat was down ¾ of a penny, CBOT wheat was down ½ of a cent, old crop beans up 8 ¼, and new crop beans down ¾ of a cent.  At 7:50 outside markets have the US dollar up slightly with the cash index at 78.838, the DOW Mini futures pointing towards a positive start of about 20 points, crude down around a buck at 103.04 on the May crude oil contract, and gold down 35 bucks an ounce on the May Gold Contract at 1291.90.

Three big things driving the market lately, weather being the biggest.  But demand and the Russia Ukraine situation also grabbing some headlines.

As for weather; mother nature remains very challenging in efforts of producing crops.  The western winter wheat areas remain very dry and now they have also seen some cold weather hit.  Low twenties in some areas as far south as parts of Texas have been reported.  Big debate as to what damage if any has and will happen because of the stage of the crop; many report it is 2-3 weeks behind.  But this did help the wheat market bounce yesterday.

Here is CHS Hedging Crop Progress report link. 


The Russia – Ukraine situation appears to have escalated a little bit and anytime that happens our markets can add some premium in a hurry.  Same thing here will it lead to any actual increase in business for the US?  Still unknown.

Lastly is the debate for demand and supply.  We had a friendly USDA report last week; but headlines lately are questioning if the demand that is now penciled in can actually happen.  Another big unknown.

Bottom line is our markets have added some fear premium because of the unknowns.   Could this unknowns all end up positive and push our prices much higher.  Without a doubt; but they also could also end up just being fear’s that don’t turn out. 

The rail situation remains a big struggle.   My elevators continue to be very far behind; it is so challenging that last week our general manager testified before the STB in Washington DC.  Who knows how this will shake out; some indications are that these struggles could continue for some time to come?  But that is really an unknown; too many factors to know as everyone is working on improvements and maybe a little help in the form of warmer weather can go a long way to helping the railroads catch up?

The one thing that the rail movement does do is effect basis; as trading grain is not easy to do when you don’t know for sure when you can ship it.  When producers ask when can I get a grain in it is hard for us to give an honest answer because we just don’t know how the rail will shake out.  Same thing when we try to sell a grain; it is hard to determine when we can honestly tell a buyer he will receive his product.  This makes things challenging and volatile. 

My only recommendation as to marketing is to have offers out; so if we get fortunate enough to get some cars that maybe we can hit some spot sales and pass on some good values. 

Longer term I have to wonder if the rail situation will add to our carryout?  I know of some ethanol plants that haven’t been able to run at full speed because they couldn’t get empty ethanol tankers back fast enough.  What about export business?  Was there some that we missed because we didn’t get the product out fast enough or when the demand was there?  I know of a couple birdseed plants that have had to pause production because they couldn’t get the product in.  Will any of this lead to a bigger carryout in any of the different grains????

Below is some more market info from CHS Hedging’s morning highlights.


Morning Highlights

By Christopher Steinhoff

Highlights
  • Ukraine begins a military backed “anti – terrorist” operation in its eastern region where pro-Russian militants have seized buildings.
  • As of 7:00am CDT: Gold is down $22.00, crude oil is down 80 cents, US$ index is 0.087 firmer. Hang Seng was down 1.6% and Nikkei is up .6%.
Corn
  • USDA reported corn planting at 3% complete vs 6% on average but ahead of last year’s 2%. LA, MS, GA and AR are the leading states, followed by TX, NC and KS. ILL and NE are 1% planted.
  • Weather is to remain cold for a few days before a return to more seasonable temperatures.
  • Russia declares Ukraine on the brink of civil war. Political uncertainty and economic sanctions could lead to a disruption in exports from Ukraine and/or Russia.
  • CK/CN carry trades in 6 x 6 ¼ overnight range. 
Outlook: trading 2 to 4 lower
Oilseeds
  • CONAB’s recent upward revision of Brazil production to 86mmt was a result of a lower yield but an increase in safrinha soybean acres.
  • Recent heavy rains/flooding in Argentina may lead to a production decrease of 1 to 3mmt. USDA is currently at 54mmt while other guesses range as low as 52mmt.
  • Spreads: K/N is firm near a 13 ½ inverse, with an overnight range of 14 ¾ to 13. The N/X is 6 ½ firmer.
  • News about China defaults/imports is quiet.
  • Malaysian palm oil is up 29 ringgits.
Outlook: mixed trade with old crop firm and new crop weaker
Wheat
  • Ukraine/Russia situation causes uncertainty for Black Sea export capabilities.
  • As of 6:00am CDT, temps across KS and OK were mainly in the high 20s to low 30s. KS reported 31% of the crop jointed vs 47% average.
  • USDA pegged winter wheat conditions at 34% g/e vs 35% last week. They rate the p/vp at 32% vs 29% last week. Winter wheat headed was at 5% and spring wheat seeding was estimated at 6% complete.
  • Japan seeks 136tmt in its weekly tender. 
Outlook: trading steady to weaker



Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)



CHS Midwest Cooperatives Logo



This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

Tuesday, February 25, 2014

Opening Grain Market Comments 2-25-14

Grain markets are called mixed this morning after a choppy overnight session that saw corn unchanged to up ½ cent a bushel, KC wheat unchanged (basis May), MPLS wheat up ¼ of a cent, CBOT wheat unchanged, and soybean down ½ to 2 ½ cents a bushel.  At 8:00 outside markets have DOW futures pointing towards a softer start of about 10 points, crude is down 1.05 a barrel with the April contract at $101.69, the US dollar index is off 115 points with the cash index at 80.079, and gold is down a buck an ounce at 1337.00.

Fairly quiet on the news front today.  The past few days the big headlines have been the USDA outlook conference last week; that left a major negative headline for the funds to trade; even though it probably wasn’t realistic. 

Here is just one of the stories that the conference lead to getting printed.  http://www.agrimoney.com/news/us-corn-stocks-to-soar-43percent-to-10-year-high---usda--6782.html  As you can see the headline of US  corn stocks to soar 43 % to a 10-year high isn’t something to get money flow buying corn.  The reality is that what type of carryout we will have for 2014/15 is up to many factors including acres, yield, and demand.  On the yield side of things if you take the past 4-5 years you will notice a huge swing in yields.   Bottom line is yields that the USDA used last week probably do leave us with a big carryout; but it is probably a little early in the game to assume that we can hit that type of yield.  The reality should be that yields of 160-170 or higher take our carryout very big and thus lower prices, but in my opinion it is a coin flip if we are above or below 160; and if we happen to come in closer to a 150 yield or less the carryout gets tight in a hurry while the prices could bounce in a hurry as well.

The other thing that has been talked about the last few days has been the lack of bean cancellations.  Every week we need to cancel some bean exports not to go over what the USDA has us pegged at; yet every week we have continued to sell beans.  Yesterday we had shipments in line with estimates for all three of the grains.

Yesterday we also had March soybean contract close at its highest level since September of 2012.  Very strong technical market; with a strong looking chart.  We are overdone and we are seeing sell signals from advisors but right now the chart looks like a run away train.

We also seen wheat and corn maybe develop some trading ranges yesterday with the strong up tick from the lows.  If we can hold the lows charts look real positive; and would look even more positive if we take out last week’s highs.

Railroads continue to struggle and that is making basis and cash price bids rather choppy.  I do like having offers out on basis for wheat and flat price items like sunflowers; but whether offers get booked or not probably depends largely on the rail road and it is kind of a catch 22.  Because if we get a lot of cars then offers probably trade high; but if we get cars and everyone gets cars then the mills might be double bought and so may end users like birdseed plants. 

Basically nearly every mill and birdseed plant has had to order 2-3 times (maybe more) then what they actually need.  Same thing with us and rail cars; because the railroad is so far behind it has lead to ordering more cars then perhaps are actually needed.  Because us as an elevator or an end user such as a mill can’t afford cars not to show up.  The mills and birdseed plants can’t afford to have to shut down because they don’t have product to process.  While us as an elevator don’t want to make every producer in the world mad if we don’t have any cars.  Things will eventually turn around but right now all the hype and bad performance leads to more pressure put on the rail lines.

I have had many asked why rail performance is so bad.  First off the demand for oil in ND seems to have switched some focus from grain to oil and that has created more rail demand for grain on other lines.  Next you have had a cold and snow filled winter.  Then you also have the fact that we have a 14 billion bushel corn crop; versus 10-12 the past couple years; 2 billion bushels more is about 500,000 more rail cars.  So maybe South America isn’t the only one that has outgrown their infrastructure????

I just seen this pop up on screen for morning export announcements. 

Export Sale, Cancellation     02/25 08:11

   USDA: Sale of Soybeans to China, Cancellation of SRW Wheat to Egypt  

   Private exporters reported to the U.S. Department of Agriculture export
sales of soybeans for delivery to China during the 2013-14 marketing year and a
cancellation of a soft red winter wheat sale to Egypt during the 2013-14
marketing year.

   WASHINGTON (Dow Jones) -- Private exporters reported to the U.S. Department
of Agriculture the following sales activity:

   - Export sales of 568,000 metric tons of soybeans for delivery to China
during the 2013-14 marketing year.

   - Cancellation of 110,000 metric tons of soft red winter wheat sale to Egypt
during the 2013-14 marketing year.

   The marketing year for soybeans began Sept. 1.

   The marketing year for wheat began June 1.

   The USDA issues both daily and weekly export sales to the public. Exporters
are required to report to the USDA any export sales activity of 100,000 metric
tons or more of one commodity made in one day or quantities totaling 200,000
tons or more in any reporting period to one destination, by 3:00 p.m. Eastern
time on the next business day. Export sales of less than these quantities must
be reported to the USDA on a weekly basis.


Here is more market info; from CHS Hedging; their morning highlights

Morning Highlights

By Ryan Stone

Highlights
  • As of 7:00 am CT, the Dollar Index is down .075 at 80.150, crude oil is down $1.32 at $101.50, gold is down $5.00 at $1,333.30, and European stocks are lower.
  • Even with equity futures trading lower this morning, outside market strength is impressive with the S&P reaching an all-time high yesterday.
  • Reminder: First notice day for March grain and oilseed futures is Friday, February 28th.
 
Corn

  • The nearby corn contract continues to hold support at $4.50.
  • Yesterday, another U.S. exporter announced that it will not handle MIR-162 corn. The list of exporters willing to handle this type of GMO is shrinking by the day.
  • As corn export sales continue their impressive pace, river logistics seem to be deteriorating. A return of the “polar vortex” has renewed concerns of ice restricting barge traffic, and an oil spill on the lower Mississippi has export terminals concerned that corn origination for export may slow down significantly.  
Outlook: Mostly unchanged on supportive technicals and limited new fundamental news.

Oilseeds
  • Logistics in South America continue to garner attention after the recent rainfall. Reports of combines and trucks getting stuck in the mud are becoming increasingly common.
  • Mato Grosso, Brazil’s most intense soybean growing region, is being described as 50% harvested.
  • The U.S. continues to export large quantities of soybeans with yesterday’s export inspections reporting another 46.7 million bushels shipped.
  • Domestic soybean processors continue to roll their spot basis from SH to SK, many of which have dropped their basis in the process.
Outlook: 3 to 5 cents weaker as traders take profits after the recent rally.

Wheat
  • The return of cold weather has once again sparked concerns of winter kill.
  • The Ukrainian parliament voted in favor of sending former president Viktor Yanukovich and other high ranking government officials to trial in the International Criminal Court. This continued news of a resolution to the recent Ukrainian crisis has calmed the concerns of wheat traders.
  • A group of millers from Taiwan has agreed to purchase 83 tmt of U.S. wheat.
Outlook: Mostly unchanged with continued export demand supporting the market. 









Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)



CHS Midwest Cooperatives Logo



This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

Monday, February 10, 2014

Closing Grain Market Comments - USDA Report Day 2-10-14

Grain markets closed mixed today; on the heels of a mixed USDA report.

When things closed corn was down a penny, KC wheat was up 11-14, MPLS wheat was up 9-12, beans down 6 cents, the US dollar near unchanged with the cash index at 80.640, and the DOW was up 8 points.

USDA report was out this morning.  Mixed to poor reaction with a mixed report.  Headlines where bullish corn, bullish wheat, and neutral to bearish beans.

Very disappointing for corn as we seen a 150 million bushel cut in the carryout; that typically could be a strong up day.  But not today; perhaps because the strength was just increased exports; which is really old news.  Maybe we can see follow strength in a few days?  Delayed price reaction perhaps?

The one thing that I thought was good was the fact that corn carryout is now around 500 million bushels less than some of the numbers many had out in late December/early January.  The problem is 1.48 billion bushels of corn is still a lot of corn; yes it is much tighter then some thought; but tight enough for us to rally?  Plus we already have rallied some.


In the big picture having a starting spot next year at 2.0 billion bushels or 1.5 billion bushels should make a big difference in regards to the importance of weather and acres.  So even though 1.48 billion bushels is plenty of corn; the trend is going the right direction.  The trend of getting tighter isn’t going to hurt prices. 

As for the bean market; the USDA left things unchanged in the US.  A line in the sand that the USDA simply won’t go past even if they should??  The bottom line on today’s update for beans is we didn’t really change anything.  If demand stays strong we probably need to find a way to ratio demand.  While the crop outlook in SA remains big.  But is that big crop for sale???  If it is why have our exports remained so strong?

As for wheat; it lead price direction today; and perhaps set the stages for more short covering.  But today was no market changer for wheat;  558 million bushel carryout is tight; but wheat has a history of showing us that it can have good prices with big carryout numbers while we have seen poor prices with tight supplies.  The hardest question for wheat is really determining what is tight.

For the big picture today’s report should show us that our demand has really increased; the low prices helped our exports get increase for corn, wheat, and beans today. 

We will have to really watch the March stocks report; but if that doesn’t show a surprise in quarterly stocks we have set the stages for perhaps a fundamental reason for grains to bounce.  Yes some dry weather and weather scares this spring would help; but today’s carryout numbers are much tighter then some thought they would be several months ago.  They are not bullish; but they could eventually lead to a little bounce. 

Money sitting on the sidelines could easily decide to enter our market wondering if they missed the lows.

As for more info on the USDA report below are couple links; the first is CHS You Tube video with highlights from the report.  The second is more info broke down on the report from the Van Trump Report.






Here is CHS Hedging Report recap.


Here are numbers with info from the Van Trump Report.

February WASDE Supply & Demand Numbers  Just wanted to provide everyone with the latest USDA changes and adjustments.  Below are the specifics and a few thoughts. 
Soybeans - Bearish - Net-net no change in US ending stocks.  Global ending stocks pushed higher on production increases in Brazil 
  • Exports bumped higher by 15 million bushels from 1.495 billion to 1.510 billion. 
  • Crush left unchanged at 1.700 billion
  • Residual was dropped 10 million from 22 million down to 12 million.  
  • Imports raised higher from 25 to 30 million.   
  • Brazilian soybean production was bumped higher from 89 MMTs to 90 MMTs.
  • Argentine soybean production lowered from 54.50 to 54.0 MMTs in conjunction Arg exports were lowered from 9.7 MMTs down to 8.0 MMTs   
Corn - Neutral/Bullish - US ending stocks lowered by 150 million bushels. Global ending stocks also lowered.  Problem is many large traders are thinking "exports" might now be maxed out while a reduction of 300 million bushels plus is still set to come in the "feed/residual" category.    
  • Exports increased by 150 million from 1.450 billion to 1.60 billion
  • Ethanol left "unchanged" at 5.0 billion
  • Feed/Residual left "unchanged" 5.3 billion 
  • Argentine production lowered form 25.0 to 24.0 MMTs in conjunction exports were lowered form 17.0 to 16.0.  
  • Brazil production left "unchanged" at 70 MMTs 
  • Chinese production and imports left "unchanged" 
Wheat - Bullish - USDA moves ending stocks down  50 million bushels from 0.608 million to 0.558 million. Global ending stocks moved lower as well from 185.40 down to 183.73. 
  • Exports raised from 1.125 billion bushels to 1.175 billion 
  • Imports into the USDA increased from 160 million to 170 million 
  • Feed left unchanged at 250 million  
  • Argentine exports from 4.0 million down to 3.0 million 
  • Brazilian wheat imports lowered from 7.7 down to 7.4   
  • Chinese wheat imports left "unchanged" 
  • Kazakhstan wheat production lowered from 15.5 down to 13.94
  • Ukraine wheat production bumped slightly higher from 22.0 to 22.28
US 2013/14 Ending Stocks

Today's #
USDA January
Avg. Guess
Range of Guesses
USDA 2013
Corn
1.481
1.631
1.619
1.570 - 1.748
0.821
Soybeans
0.150
0.150
0.143
0.130 - 0.164
0.141
Wheat
0.558
0.608
0.603
0.574 - 0.653
0.718
World 2013/14 Ending Stocks

Today's #
USDA January
Avg. Guess
Range of Guesses
Corn
157.3
160.23
159.60
156.27 - 163.20
Soybeans
73.01
72.33
72.67
71.00 - 75.35
Wheat
183.73
185.40
184.97
182.80 - 186.00
South American Production 2014

Today's #
USDA January
Avg. Guess
Range of Guesses
Argentina
Corn
24.00
25.00
23.82
19.80 - 25.00
Argentina Soybeans
54.00
54.50
54.13
52.70 - 57.00
Brazil
Corn

70.00
70.00
69.99
66.10 - 74.00
Brazil Soybeans
90.00
89.00
89.76
88.30 - 93.00


Please give us a call if there is anything we can do for you.

Thanks


Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)



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