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.
Wednesday, January 23, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin 1-23-13
Outside Markets: Dollar Index
down 0.140 at 79.734; NYMEX-WTI up $0.08 at $96.76; Brent Crude up $0.16 at
$112.60; Heating Oil up $0.0040 at $3.0722; Livestock markets are all trading a
bit weaker this morning; Softs are mixed; Gold is down $0.20 at $1693.00;
Copper is up $0.0050 at $3.7090; Silver up $0.108 at $32.285; S&P’s are
down 3.25 at 1486.50, Dow futures are down 13.00 at 13,683.00 and Treasuries
are firming as I write.
Quiet equity markets around the
globe overnight, although the NIKKEI did drop over 2.0%. The Japanese
government hit back against critics who say they are trying to revive their
economy at the expense of the nation’s trading partners. At current, the
JPYUSD is down 0.18% at 88.5425. There will be some big earnings
announcements today including Apple, McDonald’s, WellPoint, Motorola and
Coach. Apple will report after the close and is expected to announce
47.8 million iPhones sold. MBA Mortgage Applications rose 7.0% last
week after a 15.2% jump the week prior. Today we’ll get the FHFA House
Price Index which is expected to be up 0.7% m/m. Secretary of State
Clinton will testify before the Senate Foreign Relations committee on Benghazi.
Some light snow falling in the
upper-Midwest overnight and that system will work East over the Great Lakes
later today. 5-day forecasted precip maps don’t amount to much with the
heaviest moisture in E-KS to the tune of 0.60”. The PNW will continue receiving
rain on the coastal side. Extended maps from NOAA look cool and wet
during the 6-10 and 8-14. Odds look good for some additional snow
accumulation. TX and most of the southern plains will see normal/above
temps, but normal/below precip. Overnight maps from South America don’t
looks a whole lot changed with dry and hot in the 1-5 days for Argentina,
although the 6-10 looks a bit wetter for southern Argy. Not so much for
the dry northern areas. A change in the long-range maps will be critical come
February 1. N-Brazil looks to continue receiving rainfall as harvest
tries to progress. As noted in yesterday’s emails, lineups are building
for both corn and soybeans in Brazil, and weather will become an increasingly
important factor for logistics, not just crop development.
Slightly firmer trade overnight in all of the major Ag
markets as wheat stabilizes and recovers a couple cents of yesterday’s dime
losses. Would really like to be able to point at some specific news or
market development this morning, but newswires are notably absent, and
overnight hedging activity was limited to a handful of contracts. The
drivers of price seem to be pretty clear: South American weather, US domestic
corn demand, the overall health of the ethanol industry, wheat/corn exports (or
lack thereof), and the financial stability of the US farmer which could be
impacting grain movement. From now until our next Quarterly Stocks report
when we get a clue about Q2 corn feed demand, these will be the drivers of price.
The February insurance pricing period is just 8-days away.
Headlines of note overnight included a rehash of yesterday’s
news that Oil World had become the first major analyst to reduce the Argentine
soybean production estimate. They cut their guess by 1MMT to 52MMT vs.
the USDA at 54MMT. One respected analyst said the world can afford a
2-4MMT decline in SAM production as y/y production is currently forecast up
32MMT. What we can’t afford is a 5MMT+ reduction. That will
require additional risk premium. Palm oil in Malaysia advanced to the
highest level in three weeks on speculation a rally in soybean oil will boost
demand for the cheaper vegetable oil. Also of note, Brazilian soybean
basis continues to appreciate. Feb slots continue to be no offer against
+55H bid. LH-Feb/FH-Mar is now +50/60H vs. +52/60H a week ago. Full
March slots are now +43/46H vs. +40/43H a week ago. Most slots through
July are up 2-3c w/w. Corn basis did ease in the latest week in
Paranagua and is now +10/25H for Jan, +10/25H for Feb vs. +15/35H a week
ago. Meal basis is firmer w/w by 2-8c.
Open interest changes yesterday included wheat down 3,000
contracts, corn up 5,320 contracts, beans up 8,330, meal up 4,310 and soy
oil up 2,200. Nice to see decent increases in open interest in corn
and the soy complex on the rally yesterday. Funds have definitely changed
their tune and appear to be coming back in our space. Chinese markets
were mixed overnight with beans up 0.25c, meal up $3.20, soy oil down 6c, corn
down 0.25c, palm up 26c and wheat up 0.25c. Malaysian palm Oil was up 16
ringgit at 2,481. Paris Milling wheat is down 0.40%, Rapeseed up 0.32%,
corn down 0.31%, UK feed wheat down 0.35% and Canola is up 0.26%.
Calendar spreads are mostly weaker overnight.
Call things slightly better today, but don’t be surprised to
see some two-sided trade as there isn’t a lot of fresh news today specifically
to make this market really want to rally. Today could see some
consolidation after the rally, but corn needs to take out last week’s high of
$7.35 in order to keep the post-crop report trend as up and the money flowing
in. Wheat will continue to be handicapped by a lack of export business
and a lag until we start focusing on the crop breaking dormancy and conditions.