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, March 1, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.328 at 82.285; NYMEX-WTI down $1.23 at $90.81; Brent Crude down $0.88 at
$110.48; Heating Oil down $0.0225 at $2.9378; Livestock markets are firmer;
Softs are weaker; Gold down $6.50 at $1571.60; Copper down $0.0630 at $3.4845;
Silver down $0.257 at $28.175; S&P’s are down 8.00 at 1505.50, Dow futures
are down 58.00 at 13,980.00 and Treasuries are firmer.
Markets are in somewhat of a
meltdown mode this morning on weaker than expected economic data as well as the
Sequestration which is slated to go into effect later today when the President
signs the order to slash spending. Asian shares were mixed, but Europe is
lower with the FTSE MIB -1.62%, the IBEX -0.93% and the Euro Stoxx
-1.15%. China’s manufacturing PMI fell to 50.1 in February from 50.4
in January and lower than estimates. A separate gauge also fell.
In addition, unemployment rose in the Eurozone to 11.9% from 11.8% in
December. The Eurozone PMI held at 47.9 in February, but the UK PMI fell
to 47.9 from 50.5 in January, highlighting the fact the global economy is still
in very rough shape. UK 10-yr treasuries are off 7.5bp @ 1.897% as
investors fly to safety. Currencies are also in risk-off mode with the
GBPUSD -0.958%, JPYUSD +0.597%, EURGBP +0.623%. As noted in the email
earlier, Argentina is also in focus. Lots of economic data today
including personal income, the US-PMI and the University of Michigan
Standard and Poor’s downgraded the Canadian Wheat
Board to BBB- from AA yesterday, a seven level cut. They said the
downgrade reflects the loss of monopoly status, the subsequent weakening of
CWB’s business risk profile, diminished federal government support and intermediate
financial risk profile.
No precip for the Midwest in the
last 24 hours. Next chance of precip looks like Monday, for ND with most
of the state looking at 0.25-0.88” of moisture shown. Otherwise fairly
quiet through March 8th. Extended maps from NOAA look wet
during the 6-10 and 8-14 with almost the entire Midwest seeing above normal
precip. Temperatures are also expected to be below normal throughout, so
should be another sizable blizzard. Pattern is certainly much more
favorable this year than last. Dry weather in SAM yesterday,
while the forecast is still calling for 0.50-1.50” in Argentina on 85-90% of
their growing regions. They should then be quiet until the end of next
weekend. Brazil will see rains of 0.50-1.00” Sunday/Monday. Hard to
argue with current weather. The port of Santos was hit by a landslide due
to rains over the weekend, temporarily suspending rail service and
loading. Both are said to have resumed today, however.
Mostly weaker trade overnight, led by soybeans and meal after
sizable rallies the past two sessions. Despite their solid effort,
soybeans are currently down 6c on the week. A big anchor around the neck
of the complex has been the plunge in World Veg Oil prices, thanks in large
part to Malaysian Palm Oil which closed down for a eighth straight session
this morning, the longest since March of 2006. It is down 8.3% since 2/20.
Their exports have slowed, and stockpiles remain near records as importers want
protein meal, not vegetable oil. Otherwise, we did see some grain move
this week, and cash is a bit weaker on corn and soybeans because of it.
Lastly, soy crush margins have been under big pressure this week thanks to weak
bean oil, and this has pressure basis.
In addition to the weak veg oils, China said overnight they
would release 100,000MT of rapeseed from state reserves on March 8th
as part of plans to auction 1MMT ahead of harvest. This looks
routine in nature, but will accompany 1.285MMT of wheat to be released as
well. Trying to keep domestic prices down until Brazilian supplies
arrive. Buenos Aries Grain Exchange became the latest Argentine estimate
to dip below 50MMT yesterday, dropping to 48.5MMT on their soy crop
number. It seemed with the upturn in rainfall, crop estimates would stabilize
near 50MMT, but it looks like estimates need to be angled a bit lower.
Still a big jump in production y/y. Sounds like Russia’s cut on its grain
import duty won’t take effect for at least another month, but officials are
calling it insignificant anyway. The UK’s winter crop planting is said to
be 20% below a year ago according to the Ag & Horticulture Development
Board. “Slug infestations and saturated soils are also problems.”
Brazil is preparing tax breaks to channel more sugar cane into ethanol.
Deliveries overnight included 1,437 soybean oil, 471 wheat
and 2 oats. Louis Dreyfus is said to be stopping Chicago Wheat futures
in Toledo with the intention of loading them out via the Lakes for European
feeding programs. Overnight they stopped 58. There were no
deliveries in corn, beans or KC wheat. Minneapolis saw 296 redeliveries
and 22 fresh deliveries. JP Morgan was the biggest stopped which
should be Cargill. MWH/MWK hanging near even money.
Open interest changes yesterday included corn down 10,020 contracts,
wheat up 3,220, beans down 1,470, meal up 5,070 and soyoil down 490
contracts. There are 22,651 left in the March corn, 14,971 in March
beans, 3,400 Chicago Wheat, 5,143 HRW and 1,548 Minneapolis Wheat. Could
still be some fireworks in Minneapolis. Chinese markets were mixed/weaker
overnight with beans up 0.75c, meal up $2.70, soyoil down 44c, corn down 0.25c,
palm down 48c and wheat down 3c. Malaysian Palm Oil closed down 29
ringgit at 2,368, 1.21%. Paris Milling Wheat is down 0.10%, Rapeseed down
0.53%, Corn up 0.22%, UK feed wheat up 0.40% and Canola is down 0.25%.
Looks like things should be weaker today, but it doesn’t
look like it’s all on the grains today. The Dollar Index strength, equity
selloff and constant barrage of “Sequestration” talk should keep things under
pressure today. Cash markets were a bit weaker going home overnight, but
feels like we need more movement yet. Charts on corn look like we’ve got
another 15-20c up before we run into significant resistance.