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, January 11, 2013
Report Day Overnight Highlights 1-11-13 from CHS Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.066 at 79.806; NYMEX-WTI down $0.77 at $93.05; Brent Crude down $1.57 at
$110.32; Heating Oil down $0.0370 at $3.0173; Livestock markets are mixed with
lower cattle and higher hogs; Gold down $11.20 at $1666.80; Copper down $0.0345
at $3.6755; Silver down $0.293 at $30.625; Softs quietly mixed; S&P’s up
0.75 at 1467.75, Dow futures are down 4.00 at 13,402.00 and Treasuries are
Mixed equities in Asia overnight,
while Europe is quietly better. The NIKKEI was up another 1.40% last
night after the new Prime Minister announced a Y10.3 trillion ($116 billion)
economic stimulus package that the government expects to lift GDP by 2.0% and
create 600,000 jobs. The Yen has sold off promptly and is trading above
90.00. The big data point from overnight was the Chinese Consumer Price
Index which rose to 2.5% y/y from 2.0% in November and vs. a consensus of
2.3%. This pushed the Shanghai Composite down 1.78% to the lowest close
since 12/28, and could limit stimulus efforts by the government. Argentina’s
Credit Default Swaps are spiking this morning with the 5-yr CDS up 118bp to
1,914bp, the highest since 12/4. Wells Fargo reports earnings
before the bell this AM.
Some decent moisture the past 24
hours along the Mississippi River and Great Lakes Region with rain falling in
most of the upper-Midwest. This storm continues to dump precip in the ECB
this morning. Going to be some moisture around the next 5-days with the
heaviest in the central and eastern corn belt. Cold temps forecast by
NOAA the next 6-10 days across the entire Midwest. Two swaths of above
normal precip will hit TX and then the upper-Midwest including SD/ND/MN/WI/MI,
but below normal precip cuts the country in half and will leave CO/OK/KS/NE/MO/S-IL/TN/KY
dry. South American weather is attached and looks nearly ideal.
Only area of concern seems to be some heat and dryness in Argentina, but not
yet a problem according to forecasters.
Feature of the overnight session would have to be the
selling pressure witnessed in the soybean and products market. At the
lows, March soybeans were down 20c, but have pared around half of those
losses. Corn is content around $7.00, and probably should remain close to
their until report time at 11:00 CDT. The general expectation of the
market is a friendly corn report which could benefit wheat, but larger
production in the US/Brazil/Argy are expected to hinder soybeans.
Convenience table attached. Limit moves have been achieved each of the
last 6-years, but it wouldn’t surprise me one bit to see this be the one year
which is close to “normal.” Export business has been healthy this week
and on wheat and beans, but corn remains notably absent.
A little bit of tender business overnight with Japan buying
121,188MT of Australian wheat for the first time in six weeks. There was
no US or Canadian wheat. This follows GASC’s tender in which they bought
1 cargo each of US and Canadian SRW, disappointing to most analysts.
Still rumors of China buying US and Canadian wheat, although split ideas about
whether its HRS or SRW. Indonesian mills also bought a cargo Aussie wheat
at $351/MT C&F. South Korea’s KFA bought 55,000MT of optional origin
feed wheat from Cargill at $328.35/MT C&F for April. South Korea’s
Mills bought 39,500MT of Aussie hard wheat at $360/MT C&F for April
shipment. Taiwan’s MIPA is tendering for 60,000MT of optional origin corn
next week. Lots of export business, but very little US
participation. Indonesia is planning to cut their palm oil export tax,
matching Malaysia and remaining competitive. Palm Oil stocks rose to a
record 2.63MMT last month, putting pressure on the global Veg Oil market.
Chicken wing prices are at new record highs just in time for the playoffs
and Super Bowl. See chart below.
Open interest changes during yesterday’s session included
wheat down 5,520 contracts, corn up 6,090, beans up 110, meal up 2,750 and soy
oil up 5,580. Index fund rebalancing seems to be continuing as scheduled.
Interestingly, since January 4th, corn open interest is up 27,439
contracts, despite the fact funds are supposed to be selling corn.
Chinese markets were mixed with beans up 8.75c, meal down $1.70, soy oil down
58c, corn down 0.25c, palm down 77c and wheat down 3.50c. Malaysian Palm
Oil was down 19 ringgit to 2,368. Paris Milling Wheat down 1.12%,
Rapeseed is down 0.22%, Corn is down 0.11%, UK feed wheat is down 0.72% and
Canola is down 0.31%.
Not much matters until we get the report out in four
hours. We’ve got the pre-report expectations. We’ve got the index
fund rebalance on the downhill slide. Now we just have to get the
numbers. A little discouraging we still aren’t mopping up export business
left and right, but we are getting more competitive and the funds are still big
shorts. More fun later this morning.