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, October 29, 2012
Overnight Highlights from Country Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.151 at 80.229; NYMEX-WTI down $0.73 at $85.55; Brent Crude down $0.38 at
$109.17; Gold down $1.90 at $1709.00; Copper is down $0.0480 at $3.5020; The Yen
is firmer, but all other major currencies are firmer; Cotton and Cocoa are
firmer, but the other softs are weaker; S&P’s are down 9.50 at 1398.00, Dow
futures are down 91.00 at 12,963.00 and Treasuries are firmer.
Hard to say there is any news
more pressing than Hurricane Sandy and the standstill it is causing along the
East Coast. Floor trading at the NYSE and the NYMEX has been canceled
today, although electronic trading will occur as normal. Analysts are
already forecasting as much as $15 billion in damages, although $8 billion was
thought to be insured losses. In other market news, Italy’s borrowing
costs dropped as the country sold $10.3 billion in 6-month T-bills at an
average yield of 1.347%, down from 1.503% in September and the lowest since
March 28th. Economic data in the US today will include
Personal Income (+0.4%), Personal Spending (+0.6%) and the PCE Deflator
(+0.4%). The USDA crop progress report is being delayed until
tomorrow due to the Hurricane.
The Midwest was quiet over the
weekend in terms of moisture, although there was a band stretching from E-TX to
OH which dumped over an 1.0” in most of OH. The next 5-days will see a
dry, cool Midwest, although the 48-hour forecasted precip map below shows the
coverage along the East Coast as Sandy makes landfall. The below normal
precip should continue in the 6-15 for the Midwest, but temps do look to warm
up to above normal from the current normal/below. The next 48-hours in
South America should see decent rains in the central and southern growing
areas. Northern areas along the coast have decent chances of
0.25-0.50”. But the 3-7 day outlook has below average rainfall
forecasted. The 6-10 and 11-15 day forecast maps are below for South
Mixed trade overnight as the soy complex falls and grains
stabilize and move higher. Malaysia’s Palm Oil resumed trading after a
holiday Friday, and that combined with weak Chinese markets seem to be the onus
behind the selling pressure. Several analysts are also making note of the
favorable conditions in South America. Going home Friday, there were some
interesting basis moves, especially when considered week over week. St.
Louis saw heavy weakness over the last week in both corn and soybeans with spot
bids dropping from -5Z to -22Z and beans from -1X to -12X. The
majority of the weakness was escalating barge freight between St. Louis and
Cairo. Peoria, IL was also down quite hard on bean basis, but Council
Bluffs, NE was firmer. Corn and Soy spreads firmer overnight.
Japan bought a little food wheat and barley in an SBS tender
overnight. Russian wheat prices continue to inch higher according to
SovEcon. Third grade milling wheat was up 0.8% w/w, and feed wheat is up
1.1%. Russia’s grain intervention sales will be expanded to all regions
of the country on November 6th. Interfax said the price of
wheat bread in Russia is up 9.5% since the start of the year. Russia has
exported 9.322MMT of grain since July 1 vs. 11.247MMT last year.
Commentary overnight made note of palm oil exports from Indonesia, the largest
producer, dropped 2.1% in September to the lowest level in 3-months. This
continues to stoke rising stockpile flames and fears. Weighs on the world
veg oil market. There was a story on Bloomberg overnight about
Australia’s Parliament working to abolish wheat export levies which amount to
about 22c/tonne. Funds were sizable buyers in the week ended Tuesday of
CGO wheat, KC wheat and corn. Funds also bought beans and meal, and sold
more soy oil. More detailed comments tonight.
Open interest changes during Friday’s session included wheat
down 1,650, corn up 6,370, beans down 10,200, meal up 3,680 and soy oil down
1,510. The big drop in open interest on beans was more than likely tied
to November option expiration. The decent jump in corn with the lower
close looks a bit ominous. As noted above, Chinese markets were soft with
beans down 11.25c, meal down $5.90, soy oil down 70c, corn down 2.5c, palm down
60c and wheat down 1.75c. Malaysian Palm Oil was down 63 ringgits at
2,540. Paris Milling wheat is up 0.09%, Rapeseed is down 0.36%, corn up
0.50%, UK feed wheat down 0.19% and Canola is down 0.23%.
Call things mixed to start, but expect volume to be
incredibly thin as most of New York gets the day off to prepare for the
storm. With little in the way of marketing moving news, a disengaged
farmer at current prices and what appears to be patient end users of corn and
wheat, this week could be a slow one. We get private crop estimates from Stone
and Informa this week ahead of the USDA’s next update November 9th.
Basis levels are historically high and will continue to have to shoulder a lot
of weight in the rationing process.
Trade as of 7:05
Corn up 2-5
Soy down 11-16
Wheat up 2-5
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