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.
Monday, July 23, 2012
Overnight Highlight's from Country Hedging's Tregg Cronin 7-23-2012
Below is from Country Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.176 at 83.654; NYMEX-WTI down $2.61 at $89.20; Brent Crude down $2.90 at
$103.93; Heating Oil down $0.0676 at $2.8567; Gold down $10.80 at $1571.70;
Copper down $0.0915 at $3.3570; The Yen is firmer, but all other major currencies
are weaker; Most all of the softs are weaker; S&P’s are down 15.50 at
1343.00, Dow futures are down 151.00 at 12,622.00 and Treasuries are firmer.
Financial markets are getting rocked
this morning as investors grow weary of Spain’s worsening economic picture and
as their borrowing costs push to new Eurozone records over 7.50% on the
10-year. Six more Spanish banks are said to be getting ready to tap
bailout facilities in coming days. RBC Capital Markets said in a
statement they have advocated staying away from Spanish and Italian markets and
they see no reason to change this view. This will push borrowing costs
higher and increase the likelihood of an emergency EU-Summit and further
bailout funding. Energy markets are responding in kind as well, slashing
off significant premium following the strong runs they had last week. The
CRB-Index should trade sharply lower today after hitting the highest levels
Rain totals over the weekend
were heaviest in SD/MN/MT and more rain fell south east of the Ohio
river. Totals were heaviest in S-SD where the southern part of the state
saw localized totals up to 2.5”. This rain was needed very badly,
especially ahead of the extreme heat the next 3-days. More rain is
falling across SD this morning. 5-day forecasted precip maps show much of
the northern corn belt to receive a good soaker the next 1-3 days.
Heaviest totals should be in MN/WI/N-IL/N-IN/MI/OH. Temps the next 3-days
will be over 100* for almost everyone south of I-80. 6-10 days maps show
chances of scattered precip around, but no soaking event. The 11-15 has
some rain in the WCB and in WI, but again no concentrated event. Temps
are expected to remain normal/above, but nothing extreme like this week.
90’s will be common place in the WCB. The 11-15 sees some additional
ridging to occur bringing average rains to MT, the Dakotas and north of I-80,
but dry to the south. Less than ideal, but the rains this week should
help stabilize things.
Some pretty heavy profit taking hitting our space overnight,
thanks in large part to the outside markets and a general sell mentality, but
the maps taking on a bit more favorable tone is probably also
contributing. As many have said, rains cans till help the soybeans at
this point and the corn in the west, but the temps the next 3-days will do
their best to push things backwards further. Condition ratings are
expected to drop another 3-5% on both corn and beans. The constant talk
of demand destruction already taking place isn’t making anyone happy
either. These crops are still in the discovering phase, however, and
until we discover how small this crop is, it will be difficult to take prices
considerably lower to where end users are willing to step up. Big ranges
last night: corn 33c, beans 56c, wheat 37c.
In headlines, JP Morgan said July rain has improved yield
prospects across eastern Australian canola and wheat areas. JP is
estimating total winter crop production in the three eastern states is now
estimated at 19.7MMT vs. ABARES latest guess at 18.4MMT. Western
Australia is equally as important, however, as the majority of the exporting
facilities are located on the west side of the island. The Chinese
Customers Administration said June soybean imports were up 31% y/y to 5.62MMT.
June corn imports were 528,647MT and wheat imports were 216,742MT. Jordan
finally bought the 100,000MT of wheat they retendered for twice at $343/MT from
Ukraine for Aug/Sept delivery. Also, Ukraine was reported to have
harvested 15.86MMT of grain as of July 20th, about 72% of the total
are seeded. Yields were 2.22MT/ha. This compares with 19.33MMT last
year and a yield of 2.89MT/ha. Spring planted acres were up 17.1%.
The Financial Times carried a story about US meat companies importing Brazilian
maize due to its competitiveness. Link below.
Open interest changes during Friday’s session included an
increase of 4,400 wheat, corn up 9,780, beans up 680, meal up 180, and soy oil
down 5,260. Chinese markets were mixed with beans up 9.25c, meal down
$3.80, soy oil down 122c, corn up 0.25c and wheat down 11c. Malaysian
palm oil was down 52 ringgits, Paris Milling wheat is currently down 19c,
Rapeseed down 16c and UK feed wheat is off 19.0c. There was some heavy
length added by the speculative funds in corn and wheat last week, and I’ll
have a better breakdown in tonight’s comments. Also worth noting spec
funds are now long natural gas, something which hasn’t been the case since
Things are likely to be weaker the majority of today, and
then we’ll get a look at crop conditions after the close and see if this crop
is still slipping. There are some very good looking fields in the upper
corn belt, and the weekend’s rains as well as those forecasted should go a long
way to stabilizing some of those. The more confidence a guy has in his
crop, the more aggressive he should be taking advantage of these record
prices. The market is not going to pay you to store the crop this year,
so keep that in mind.