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.
Thursday, January 3, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.305 at 80.155; NYMEX-WTI down $0.36 at $92.76; Brent Crude down $0.28 at
$112.19; Heating Oil down $0.0208 at $3.0255; Livestock markets are
steady/better; Gold down $10.10 at $1678.70; Copper is down $0.0180 at $3.7180;
Silver down $0.157 at $30.840; S&P’s are down 4.25 at 1452.75, Dow futures
are down 29.00 at 13,302.00 and Treasuries are slightly better.
A little bit of profit taking
evident in the overnight trade with Asian equities closing firmer, but European
equities under pressure as the IBEX-35 drops 1.10%. The Shanghai
Composite (China) rose to its highest level last night since June 20th.
Also worth noting, The Bloomberg Financial Condition Index, which ranks things
like equity levels, bond yields, volatility and corporate spreads, rose to its
highest level since April of 2007. Their proprietary Economic Surprise
Index is at its highest level since April of 2012. In other news, it
looks increasingly likely Speaker Boehner will retain his position in the
House. China’s service industries expanded at their fastest level in four
months, while manufacturing expanded at its fastest level in 19-months.
Mortgage Applications fell 10.4% in the latest week. Later this morning
we will get the ADP Private Payroll data for December which is seen +140,000.
Initial jobless claims are seen at 360,000, up 10,000, and the New York ISM is
up at 9:45 (52.5 prev).
precip in the last 24 hours pretty much anywhere in the continental US.
Virtually nothing seen for the Midwest the next 5-days, although by the middle
of next week a better system is seen impacting the southern plains. Total
guesses at this point are seen around 0.7-1.4” for the vast majority of TX, a
good chunk of OK/AR/LA and scattered areas in MO/KS. Things dry up a bit
more in the 8-14, and temperatures are seen above normal for the central/east
belt throughout. Late in the period, temps moderate to normal/below in
the west. The forecast sees things to be fairly quiet in most of the
Argentine growing regions for the 5-7 days. Some rains will fall in the far
northeast (far northern BA, most of Entre Rios and Corrientes) for Friday and
the weekend, with totals of .25- .75”, isolated to 1”+. By the middle of next
week, a front looks to bring rains of .40-1” to all of the Argentine growing
regions. Things will be fairly quiet in the S. Brazil growing regions for the
rest of this week and by the weekend rains look to start up and bring totals of
.40-1”, isolated to 1”+. More rains are seen for next week in the S. Brazil
growing regions as well, early estimates running in the .50-1”+ range. The
tropical rainfall in the northern Brazil growing regions looks to run close to
average for the next week to 10-days.” –John Dee
Follow through selling in the
grains overnight with soybeans down the worst. The exception is of course
wheat, but it shouldn’t come as that much of a surprise. What was probably more
surprising was the sharp sell off yesterday. Wheat was competitive before
the selloff, and is even more so this morning. FOB offers out of the
Gulf on US-SRW are seen at $306.90/MT vs. French dlvd Rouen offers at
$325.46/MT FOB. What’s not supportive to wheat is the lack of tender
business showing up. Syria is in for 100,000MT, Iraq is in for 50,000MT,
but that’s about it. In fact, Egypt once again took to the wires last
night proclaiming they have enough wheat for domestic use until June 17th,
with their harvest beginning in May. Soybeans seem to be about SAM
weather and index rebalancing.
Pretty thin newswires overnight,
which should further highlight the selling pressure is coming from managed
money players. Scattered headlines included Credit Suisse saying corn
prices have peaked for the marketing year and wheat has the most upside of any
farm commodities. “High corn prices have rationed demand.” The
USDA’s Foreign Ag Service raised Brazil’s soybean output to 83MMT vs. USDA’s
last official guess at 81MMT. They see exports climbing to 39MMT from
32.1MMT a year ago. Farmers in Argentina have sown 80% of the soybean
area and 75% of the corn area. Concerns exist about the delayed planting
and eventual yield potential. Deutsche Bank AG said the US hog supply is
signaling the USDA may have to raise its domestic use assumptions for corn and
meal use as animal feed. One other story said Australia is facing its
most wide-ranging heat wave in more than a decade as 80% of the continent is
hit by temps above 104 degrees. Harvest is obviously complete down there,
but noteworthy nonetheless.
Open interest changes yesterday
included wheat up 6,220 contracts, corn up 16,400, beans up 2,860, meal
down 80 and soy oil down 3. Not delicious to see wheat, corn and soybean
open interest pop that much with futures down as hard as they were.
Likely we saw fresh shorts enter the market. The lack of open interest
changes yesterday in meal and oil show unwinding of spreads, and a fair amount
putting oil/meal spreads on instead of meal/oil. Deliveries overnight
included 9 meal and 2,754 soy oil. Chinese markets were once again
closed, but will re-open tomorrow. Malaysian Palm Oil was down 27 ringgit
to 2,474. Paris Milling Wheat is down 0.10%, Rapeseed down 0.11%, Corn
down 0.52%, UK feed wheat down 0.48% and Canola down 1.12%.
Lower to start, but wouldn’t be
surprised to see some intra-day pop. Ethanol and exports will be delayed
until tomorrow morning, and will be released concurrently with the monthly
employment report. The Dollar Index strength is a pressure point as is
the ongoing index fund rebalance (including front-running and
tail-running). Demand has become stale, and weather in South America
looks about as good as one can ask for with early beans already being harvested
in northern Brazil. The Bulls’ next hope has to be the Jan 11 reports, and
those feel like they’re a month away.