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.
Friday, November 16, 2012
Overnight Highlights from CHS Hedging Tregg Cronin
Outside Markets: Dollar Index up
0.076 at 81.154; NYMEX-WTI up $0.65 at $86.09; Brent Crude up $0.79 at $108.82;
Heating Oil up $0.0157 at $2.9892; Livestock are quiet; Gold down $6.40 at
$1706.90; Copper is down $0.0235 at $3.4455; Currencies are mixed; Softs are
mixed, but Cocoa is down near 1.0%; S&P’s are up 2.25 at 1353.50, Dow
futures are up 4.00 at 12,526.00 and Treasuries are near unchanged.
Not much for economic news
overnight, but the main feature in the US will be Congressional leaders heading
to the Whitehouse to meet with President Obama for talks on taxes and the
fiscal cliff. One thing is for certain, markets won’t like anything that
comes out of the talks and equities are likely to take it on the chin.
The only real piece of economic data on today’s docket is industrial
production, so the focus will be on the Whitehouse.
Dry in the Midwest the last 24
hours, and expected dry the next 5-days aside from some precip in the PNW over
the weekend. No change to extended maps from NOAA with above normal
temps seen the next 6-15 days, and below normal precip as well. The
southern plains will enter dormancy without any follow up moisture which will
keep conditions under pressure. Forecasts in South America are dry the
next 5-days, but rains move back into Argentina during the 6-10. There
will be wetness concerns in Argy, but Brazil should be in good shape.
There isn’t much confidence in the 11-15 at this point, but maps are showing
pretty widespread moisture across Brazil. The only threat at this point
seems to be wetness in certain areas of Argentina.
The feature from the overnight has been continued
liquidation in the soybean complex as prices trended steadily lower overnight
until a last burst of selling around 3:30am sent things through support and to
new lows for the move. Soybean prices are now at the lowest level since
June 22nd. The main rumor from the overnight according
to Reuters is China canceled 600,000MT of US soybeans due to poor crush
margins. It wouldn’t appear this is the case based on CIF and PNW
basis considering the sharp advances we’ve seen in those values this week.
Still, crush margins have been thought to be rather negative, and with the
large break in the futures board, almost every soybean purchase any importer
has made since June is now more expensive than it is today.
Other headlines last night included word South Korean feed
mill KFA had begun to buy new crop South American soy meal for arrival by
late-April. Prices were said to be around $507/MT C&F. MFG was
said to have bought meal for $505.36/MT C&F for arrival by Apr 25th.
Another article from Bloomberg quoting analysts in Germany also said
China had “scrapped deliveries that were supposed to be dispatched in Dec and
Jan that just a few weeks ago had been agreed at significantly higher prices…
It is likely these shipments will be renegotiated at lower prices.”
Other headlines included articles talking about Egypt moving on US wheat in its
next tender with that rumored to be this weekend. A trader with Venus
said they expect the next tender to be about 50/50 French-US. Also worth
noting, India has continued to sell what from state reserves for use in the
global export market. Headlines said they may tender to export another
500,000MT of wheat for December, and this would continue to displace Australia
and the US.
Open interest changes yesterday included wheat up 1,620
contracts, corn down 1,810, beans up 5,160, meal down 880 and soy oil up
3,180. Soybeans now appear to be adding fresh shorts, although the shorts
would seem to be managed money as opposed to commercials considering the lack
of farmer movement and the firm cash levels being paid. Malaysian Palm
Oil was down 38 ringgit to 2,396 overnight, but was up 80 on the week.
Chinese markets were relatively steady, so not the cause for selling in our
market. Soybeans were down 0.25c, meal down $6.50, soy oil down 74c, corn
up 0.75c, palm down 51c and wheat down 3c. Paris Milling Wheat is up
0.19%, Rapeseed down 0.74%, Corn down 0.39%, UK feed wheat down 0.38% and
Canola down 1.11%.
Export sales this morning which should show big product
sales, decent bean sales, and continued slow exports on corn and wheat.
Possibly stabilizes things near the lows, but I wouldn’t count on anything with
support almost non-existent in this soybean market. Corn basis did firm
at several ethanol plants in the upper-Midwest, at feed lots in Hereford and
off the PNW. It would seem most of our basis strength, on everything, is
lack of farmer movement for the time being, but demand should be being bought