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, November 13, 2012
Overnight Highlights from CHS Heding's Tregg Cronin 11-13-12
Outside Markets: Dollar Index up
0.085 at 81.116; NYMEX-WTI down $0.39 at $85.16; Brent Crude down $0.74 at
$108.33; Heating Oil down $0.0208 at $2.9781; Livestock markets are weaker;
Gold down $9.20 at $1721.10; Gold down $0.0165 at $3.4565; The Pound is firmer
while other major currencies are weaker; Coffee is under pretty solid pressure
this morning; S&P’s are down 6.75 at 1371.50, Dow futures are down 51.00 at
12,729.00 and Treasuries are slightly better.
Equities and credit markets are
fairly quiet overnight as the euro rises from a two-month low against the
dollar after reports said Germany favored combining several aid payments to
Greece into one large tranche. Also interesting to read in several
articles overnight two key Republicans, Columbia Business School Dean (Romney
advisor) Glenn Hubbard and conservative commentator Bill Kristol, appear to be
breaking ranks on the issue of higher taxes for the wealthiest Americans.
Analysts think this will give Republicans more shelter to do the same.
Odds makers put the US going over the fiscal cliff at this point at only
10-15%. Key economic data from Europe overnight saw the ZEW Indicator of
Economic Sentiment for Germany drop 4.2 points in Nov to -15.7, missing
for moisture since midnight, although some lingering showers brought precip to
the soggy Northeast. Still dry the next 5-days in all major growing areas
of the US. The PNW is going to see some additional moisture by Friday.
NOAA maps confirm Sunday’s readings, looking for a warm up in the
6-10 with above normal temps centered over MN. Below normal precip will
also be the law of the land for the entire Midwest the next 15-days. The
rains in Argentina over the weekend likely stalled planting, but with dry
weather for the next 7-8 days, and then just light to moderate totals to occur
the middle of next week, planting of summer crops and ripening and harvest of
winter crops will be able to be done without harassment from the weather.
Things look good in Brazil, with welcomed rains in the north and limited rains
in the south in the next 7-10 days. Hard to find much to argue with in
South America as it slowly dries out. Australia continues to plug away
harvest and dry weather is welcomed.
“Turnaround Tuesday” in the Ag
markets this morning with most commodities bouncing off of yesterday’s lows
which also contained some critical support areas, especially in soybeans.
The highs from September 2011 ($14.00) and the highs in April of 2012 ($13.90)
should offer decent short-term support on any further pull backs. The main
theme from the overnight seems to be the flurry of import tenders which
surfaced on our break. Japan will be in this week for 195,008MT of US
and Canadian milling wheat for Dec 21-Jan 20 delivery with 73% coming from the
US. South Korea’s MFG is seeking 70,000MT of corn for May delivery, and
KFA is looking for 55,000MT of corn for April delivery. China’s
markets stabilized overnight, but no word on possible export interest just yet.
Some scattered headlines o/n:
Ukraine’s grain harvest is about 16% behind last year with 43.3MMT harvested on
95% of the total area. Corn harvest is 85% complete with 17.1MMT reaped,
implying as much as 19.665MMT if yields are unchanged. Export ban chatter
from Ukraine is still making headlines, although its effect is less prominent
now. Most exports are doing additional business past Dec 1.
Interesting to note that sunflower seeds remain the most profitable crop to
produce in Ukraine. Russia sold 63,315MT of grain from intervention
stocks last night. 376,764MT of wheat has been auctioned so far, most of
which is from 2008. Wheat output in South Australia is seen at 3.3MMT vs.
4.4MMT in 2011/12, down 25%. As noted in an email sent late yesterday,
CIF corn basis popped nicely by commercials trying to get nearby logistics
bought and grain sent down the river ahead of a potential MO river
closure. We also saw ADM-Marshall improve bids from -17Z to -11Z, and
Valero in Aurora move to -5Z from -7Z. If corn < $7.30, expect firming
Open interest changes yesterday
included wheat down 9,240 contracts, corn up 8,370, beans up 2,400, meal up
1,500 and oil up 1,060. Heavy fund liquidation/profit taking in wheat
after Friday’s failed breakout. Possibly some new shorts bring added in
corn, and definitely new shorts being added in soybeans. Chinese markets
were mixed o/n with soybeans up 15.75c, meal down $7.70, soy oil up 16c, corn
down 5.75c, palm up 80c and wheat down 15.34c. Rumors of Chinese soy
cancelations were abound yesterday, and the divergence between meal and beans
doesn’t help. Malaysia was closed for holiday. Paris Milling
wheat is up 1.11%, Rapeseed up 0.48%, Corn up 1.28%, UK feed wheat up 1.13% and
Canola is down 0.93%. Canola is the lone weak oilseed, but it was
Call things a bit better to
start today, but be cautious of getting runaway bullish on a one-day
bounce. The two themes from overnight, firm European grain prices and
tender business, are supportive. Yet, severe technical damage was done
the past several sessions, and that does often instigate further chart based
selling. There should be good value down here on corn and wheat from
world importers. Continue to watch basis for clues about soy
demand. These prices should look pretty cheap relative to current ownership.