Information about grain markets and info to help producers to market crops. See how various grain marketing strategies can effect ones average price. We will be posting various potential trade and option strategies along with marketing decisions made on our mock farms.
Tuesday, June 26, 2012
Overnight Highlights for 6-26-2012 from Country Hedging's Tregg Cronin
Below are overnight highlights from Country Hedging's Tregg Cronin
Outside Markets: Dollar Index
down 0.121 at 82.376; NYMEX-WTI up $0.17 at $79.39; Brent Crude up $0.72 at
$91.73; Heating Oil up $0.0153 at $2.5538; Livestock markets are mostly weaker;
Gold down $3.00 at $1584.50; Copper down $0.0040 at $3.3215; The Euro and Franc
are softer, but the other major currencies are firmer; Cotton and Lumber are
weaker; S&P’s are up 4.50 at 1311.00, Dow futures are up 37.00 at 12,468.00
and Treasuries are weaker.
Asian equities ended lower, but
European and US stocks and futures are mostly better ahead of some key economic
data here in the US. Pressuring to trade was a selloff in European debt
and a rather poor bond auction for Spain. While watching its borrowing
costs drop most of last week, Spain’s 10-year treasury yield is up 7.6bp to
6.633% this morning. Even Germany’s borrowing costs are up this morning
with her 10-year yield at 1.515%, up 5.3bp. None of the aforementioned
have given energy traders much to crow about, and crude continues to languish
below $80/bbl. Later this morning we’ll get the Case-Shiller home-price
index for April and later consumer-confidence data for June.
Rainfall in the last 24 hours
consisted of some very light, scattered showers in west river SD and some
additional rain along the MT/Canadian border. The current radar is clear
aside from some rain off the PNW and more heading up the East Coast. The
5-day forecasted precip map shows the best chances from Sioux Falls to the Quad
Cities with the potential for up to an inch to fall in SE-SD. The rest of
the Midwest will be quiet as Debby looks to move up the Eastern Sea Board.
The 6-10 day maps were mostly clear with the exception of a decent storm across
NE. Yesterday afternoon’s maps showed rain in the ECB during the 11-15,
and the overnight maps are once again putting rain there. Again this is a
bit far off to have much confidence.
Grain and oilseed markets were mostly choppy overnight,
although both did open sharply better at 5:00 last evening following the worse
than expected condition ratings from the USDA. It seems we have a serious
supply issue brewing with several analysts dropping their national average
yield to 156bpa with some already talking of yields angled towards 150.
While we have the buffer of more acres this year, which probably go up on
Friday, we can’t afford to have a repeat of last year in terms of yields in the
major production states. Even more salient is the fact soybean yields are
probably headed lower, the one commodity which absolutely had to have trend
yields to prevent serious rationing. Wheat markets are leading losses
this morning as it has the most comfortable balance sheet.
Overnight headlines included one from Cairo which said
Egypt’s state wheat buyer has enough supplies for at least 7-months and is
looking at a new tender for delivery in August. There was another
headline which said both Koreas are suffering their worst drought in a century,
with one major cooperative farm saying they would lose half their corn without
imminent rain. South Korea is a major buyer of US grains. On
yesterday’s crop progress report, thought it worth pointing out IN lost another
10% G/E on corn to put them at just 27% G/E vs. 57% last year. IL was
down 13% to 37% G/E vs. 64% last year. CO/TN/KY/TX also saw double digit
corn declines. Conditions are now the worst for late June since
1993. The soybean condition rating is also the lowest since 1993.
Noted crop scout Dr. Cordonnier traveled throughout Indiana, Ohio and E-IL over
the weekend with his trip summary stating conditions looked like late August,
and were worse than he expected. “Most crops have already suffered yield
loss and will continue to with current weather.”
Open interest changes during yesterday’s session saw mostly
short covering with Chicago wheat down 3,550, corn down 4,920, beans down 2,750
and oil down 6,430. Meal was up 5,990 contracts. There are still
120,000 contracts remaining in July corn. China’s markets were mixed
overnight including beans down 7.75c, meal down $2.10, oil down 47c, corn up
1.25c and wheat up 2.50c. There were more articles overnight talking
about the lack of profitability in ethanol production. Unfortunately, the
lack of production appears to be rolling forward into new crop. Remember,
we have millions of gallons of RIN’s which can be used in place of actual
ethanol production should margins remain negative or corn become hard to
source. Declining crude and rallying corn can’t continue forever.
Call things mixed to start, although corn and beans are both
pushing positive as we cross 7:00. If outside markets can stabilize and
even rally, our markets could tack on additional premium. Producers want
contracts with a “6” on them, although that didn’t offer a great deal of
resistance overnight. Demand is iffy on corn, but supplies are
declining. Soybeans have both, and wheat has the potential for higher
exports if conditions continue to decline in the Black Sea and Australia.
Protect margins and take profits.
Trade as of 7:05
Corn up 1-5
Soy up 1-3
Wheat down 11-12 WW/ up 2 SW
Tregg Cronin Market Analyst 800-328-6530 651-355-6538 651-355-3723 fax www.countryhedging.com Country Hedging, Inc. The Right Decisions for the Right Reasons