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 12, 2012
Overnight Highlights from Country Hedging's Tregg Cronin 6-12-2012 USDA Report day!
Below are Overnight Highlights from Country Hedging's Tregg Cronin
Outside Markets: Dollar Index
down 0.101 at 82.414; NYMEX-WTI down $0.19 at $82.53; Brent Crude down $0.43 at
$97.57; Heating Oil up $0.0058 at $2.6415; Livestock markets are mostly firmer;
Gold down $5.70 at $1589.80; Copper down $0.0135 at $3.3315; The Yen is weaker
but all other major commodities are firmer; Cocoa, Milk and Cotton are all
firmer; S&P’s are up 3.50 at 1310.50, Dow futures are up 49.00 at 12,431.00
and Treasuries are softer.
Asian stocks were weaker while
European indices are stabilizing this morning following yesterday’s meltdown in
the US. Heading into the 4:15 close yesterday, the Dow posted a huge
outside reversal lower to settle off 142 points. Bond yields for both
Spain and Italy continue to quietly work higher, creeping near or above the
6.5% mark, but still below the unsustainable 7.0% level. Overnight, UK
industrial production posted its 14th monthly fall, down 1% in April
compared to the same month a year ago, while it was unchanged from March.
In the US today, we’ll get May import prices followed by the Federal Budget at
2:00 EDT. The Dollar Index is still in a short term downtrend, but the
intermediate and long terms trends are arguably still up.
Rainfall in the last 24 hours
was heaviest in MO/AR/MS/AK/GA/SC which all had areas receiving
0.50-1.0”. The heart of the corn belt also saw rains with IL seeing a
general 0.25-0.50” although a few spots in SC-IL did see 1.0”. IN was
almost completely dry while OH saw anywhere from a trace to 0.50”. Storms
are moving across the southern plains and Dixieland this AM. 5-day
forecasted precip maps are showing heavy rains impacting places NW of a line
from Kansas City to Green Bay with areas in IA/NE/MN seeing as much as 2.9” the
next several days. The southern plains will also be seeing sizable
chances of rain, but everything SE of that line will be dry, including
MO/IL/IN/OH/MI. The European model is holding out chances for
0.50-1.00” to fall in the OH-River Valley towards the beginning of next week,
but other models are more timid. Temps should mainly be in the 70’s and
80’s with a few 90’s. The 11-15 is putting a disturbance in the central/southern
corn belt, but a bit far out to get much confidence. Weather remains
unsettled for the central belt.
Grains are trading in similar fashion to the way they closed
yesterday with corn weaker, soybeans and wheat firmer. This is definitely
the feeling in the trade heading into the USDA reports that we could get
something bearish on corn (even though the average estimates point towards cuts
to carryout), while soybeans and wheat could receive supportive numbers.
The breakdown in the outside markets late yesterday helped knock us off our
intra-day highs as did the storms which rolled through the central and western
corn belt. When IA gets rain, people assume the entire crop just got
better. Last night’s FOB comparative (attached) does illustrate some
concern on the corn side of the ledger. Without freight, our corn price
is $30-40/MT over Argy and Brazil, and probably worse on Ukraine.
Fortunately, our soybean prices remain very competitive with Brazil, and while
Argentina is better by $4-9/MT, their ongoing labor disputes make the issue
much less black and white and is currently slowing grain to the ports.
Data from Australia continues to confirm a robust export
program, as the Australian Bureau of Statistics said the country shipped
2.36MMT in April, the second largest amount of wheat moved in a single month
over the last nine years. This was up 15% from March and 40% y/y.
Dryness in W-Australia is still a concern for winter grains being seeded at
present. South Korean mills bought 23,800MT of US-DNS, SW and HRW for Aug
15-Sep 15 shipment from LD. Prices were $247-324/MT FOB. From
Beijing, China’s 2012 wheat output is expected to fall 1.63% from last year to
109.5MMT as rainfall during flowering and disease cut yields. This is in
stark contrast to the CNGOIC which said output would rise 2.02% to
120.3MMT. Crop conditions fell much more than analysts expected last
night in the US.
Open interest changes saw liquidation in about everything
with wheat down 2,010, corn down 10,270, soybeans down 130, meal off 1,730 and
oil down 7,260. Soybeans continue to show very little open interest
change which would suggest ownership is continuing to change hands. While
weaker yesterday, spreads have been on a firming trend and basis remains above
delivery equivalence, implying commercials have a reason to own soybeans.
FWIW, crop scout Dr. Michael Cordonnier cut his national corn and soybean
yields last night thanks to sharper than expected declines in the national
condition ratings. He is now 161bpa on corn and 43.0bpa on soybeans.
He also made the comment soils are drier now than they usually are the 3rd
week of August based on an 11-year soil moisture index.
Average estimates for this morning’s report are 11/12
carryout on corn at 828mbu, soybeans 197mbu and wheat at 757mbu. 12/13
ending stocks are seen at 1,740mbu (down 140mbu) on corn, 147mbu on soybeans
and 728mbu on wheat (down 7mbu). Winter wheat production is seen being
trimmed slightly. Argentine production should see cuts on both corn and beans
while Brazil is expected to rise a bit. Trade will be open at 7:30
in both the pit and electronic when the numbers are released.
More at 7:30 CDT.
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