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 31, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin 1-31-2013
Outside Markets: Dollar Index
Dollar Index up 0.019 at 79.300; NYMEX-WTI down $0.34 at $97.59; Cattle markets
are firmer; Gold down $9.10 at $1672.40; S&P’s down 3.00 at 1492.25.
Mixed financial markets around the
globe overnight with equities in Asia near unchanged, but Europe is under
pressure this morning. The IBEX-35 is down 1.81%, FTSE MIB -0.80% and the
CAC-40 is -0.94%. The Portuguese 10-yr treasury yield is up 16.4bp to
6.081%, and Forex markets are fairly quiet. Headlines of note include
Germany’s unemployment rate falling to 6.8% from 6.9%, Shell and Deutsche Bank
missing earnings estimates. A big day for earnings with AM reports coming
from Potash of Saskatchewan, Time Warner, Dunkin’ Brands, Dow Chemical and Xcel
Energy. Economic data on tap includes Initial Jobless Claims (350,000),
Employment Cost index (0.5%), Personal Income & Spending (+0.8% &
+0.3%) and the Chicago Purchasing Managers Index (50.5).
Precip the last 24 hours pushed
East into Appalachia and the East coast where totals of 0.50-3.00” fell.
Parts of the ECB picked up additional moisture to the tune of 0.10-0.50” in
OH/IN/IL. Most of the central and WCB were dry. Snow is falling in
the ECB this morning while the WCB and southern plains are dry. Nothing
doing on the 5-day forecasted precip map aside from 0.40” seen in the Northern
RR-Valley. Warm up still seen beginning Feb 5th through the 9th
with above normal temps in the entire Midwest, while above normal precip is
seen for the majority of the corn belt including East River SD/ND/NE.
Plains are seen normal, but better chances for TX in the 8-14. See
link. River should also be in good shape. Second link. The
attachment details the next 48-hours in SAM which is the best chance for
rainfall the next 10-days in the dry areas of Argentina. Best totals look
like 0.50”. Forecasters talking rains at the tail end of next week, but
little confidence is being given. Map below shows yesterday’s
highs. 90’s in Argentina.
A little bit of profit-taking overnight as would be expected
after the impressive gains witnessed yesterday. The overnight headlines
don’t offer a lot of market moving information, aside from the fact US exports
of corn and wheat continue to be outdone by other origins. Weekly sales
this morning could prove interesting. Not much expected from corn
(120-400) or wheat (300-625), although beans have quite the estimate range
(250-900). The main focus is still South American weather, and great
attention will be given to Sunday night and Monday morning weather maps.
The highs for the week are probably in until more weather detail is
released. The poor ethanol data released yesterday grabbed a lot of
headlines. The slowdown might be working, however, as estimated margins
have improved to +$0.10 vs. +$0.06, and are said to be the highest since
Other headlines of note overnight included Iraq issuing a
tender for 50,000MT of wheat with a bidding deadline of February 17th.
All major exporters were included and results will be scrutinized closely.
South Korea bought 110,000MT of feed wheat from India overnight, and was also
said to have bought 55,000MT of European origin corn. That is an unusual
connection, but NGMO specs were said to have been a consideration. Also
of interest, the Russian Ag Minister was quoted as saying Russia should move to
lower the grain duty in imports. Russian domestic milling wheat prices
rose to new record last week, above 2008 records. Not much change to SAM
weather maps to speak of. A lot of corn and soybeans were sold yesterday,
and it was evident in basis and spreads yesterday. Export bids on both
fell, as did several crush plants. $7.40/50 and $15.00 will prove
difficult levels to trade above with eager producer selling. Palm Oil
rose to its highest level in 3-months on speculation Malaysian stocks will ease
from record levels in coming weeks.
Big jump in open interest yesterday in corn of 21,010
contracts, which makes over 50,000 contracts in the last 5-sessions.
Wheat was up 1,580 contracts, beans up 13,690, meal up 7,720 and soy oil was up
7,320 contracts. These are huge jumps in the soy products and confirms
the trend followers are getting on board and fresh speculative money is
entering our market. Chinese markets were better with beans up 0.25c, meal
up $7.20, soy oil up 69c, corn up 0.75c, palm up 61c, and wheat up 3.50c.
Malaysian Palm Oil was up 47 ringgit (1.87%) to 2,557. Paris Milling
Wheat is up 0.10%, Rapeseed up 0.78%, Corn up 0.21%, UK Feed wheat unchanged
and Canola is down 0.21%.
Look for weaker trade today as we consolidate the recent
gains. Farmers leaned into the market in a big way yesterday, and cash
and spreads should buckle a little bit in response. How the market
swallows up what moved will tell us a lot about the expectations for a
continued rally. Open interest is signaling markets want to go
higher. Weekend weather maps will be key.