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, March 14, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin 3-14-2013
Outside Markets: Dollar Index up
0.243 at 83.132; NYMEX-WTI down $0.29 at $92.23; Brent Crude up $0.02 at
$108.26; Heating Oil down $0.0130 at $2.9110; Cattle markets are better, hogs
weaker; Softs are weaker; Gold down $9.70 at $1578.60; Copper up $0.0105 at
$3.5355; Silver down $0.323 at $28.630; S&P futures are up 4.00 at 1554.00,
Dow futures are up 20.00 at 14,418.00 and Treasuries are weaker.
After the Dow Jones Industrial
Average hit new all-time record highs earlier this month, and the S&P 500
has moved within 11 points of its all-time highs, European shares are now
nearing 5-yr highs as all seems to be well around the globe. Overnight,
the NIKKEI rallied 1.16%, and European shares are being paced by the FTSE MIB,
up 1.0%. A fair amount of economic data today including weekly jobless
claims which are seen at 350,000. The Producer Price Index is seen up
0.7%, but ex food & energy is up 0.1%. In forex, the Norwegian Krone
and Swedish Krona are getting pounded with the former down well over 1.0%
against almost all major trading partners as Norway’s Central Bank signals they
may cut rates. The EURNOK is up 0.927% and the USDNOK is up 1.200%.
Snow moving across the northern
plains overnight with light snowfall accumulating in the Twin Cities this
morning. Several locations have received 1-2” in MN. System is
moving into IA/WI/IL later today, but chances of snow remain high for the
northern plains the next 7-days. 5-day moisture totals are calling fir
0.50-1.00” amounts across ND/MN/WI/MI while a separate system should bring
0.25-0.40” across KS and MO/IL/IN/KY/OH should see 0.50-1.7” in total with the
majority falling tonight and tomorrow for the North and Sunday for the
mid-South. Patterns remain the same in the 6-10 & 8-14 with above
normal precip and below normal temps seen for most of the Midwest.
Favorable pattern remains in place, although early planting might not be an
option this year.
***At 83.126, the Dollar Index traded to the highest
level since August 3rd. This matters.***
Continuation of lower prices overnight in the soy complex
while grains continue to try and press higher led by wheat. There is
certainly some inter-market spreading taking place with a lot of the long
soy/short grain spreads being unwound following the disappointing WASDE for soy
bulls. In addition, the technical crowd is beginning to jump on the
deteriorating soybean chart picture, calling for lower prices. Export
sales will be the feature today, but it could be the last big week of bean and
meal sales before starting the seasonal decline. The wheat export total
will be watched closely, although the details of where the wheat is going could
be just as important. Corn basis is on the defensive in Hereford, TX and
at the Gulf and is undermining spread potential at least for now.
Overnight, Vietnam bought 15,000MT of Indian corn at $290/MT
C&F. More importantly, India reportedly sold 13,700MT of corn to China
for April delivery at a price of $275/MT FOB and $320/MT C&F. This
was said to be a test run cargo, but it’s clear China is looking to diversify
its corn needs outside of just the US. Japan bought their 130,533MT
of milling wheat from the US, Canada and Australia with around 64,000MT coming
from the US. Malaysia announced they are deferring the purchase of wheat
import deals totaling 350,000MT to July-Sept on the anticipation of a rapid
decline in prices. Malaysia mainly buys from Australia. Strategie
Grains cut their EU-27 soft wheat estimate by 0.7MMT to 130.5MMT, but raised
corn production by 0.4MMT to 64.1MMT. Goldman Sachs was ranked No. 1 in
commodities revenue in 2012 according to Coalition. JP Morgan was ranked
second and Morgan Stanley third. The U.K. pig herd shrank to the smallest
since 2000 as costs rise for feed, but the number of cattle and sheep
Research group IKAR said Russia may purchase as much as 6MMT
of grains for government stockpiles following their new crop harvest.
Russia has been aggressively selling grain from government reserves to cool
domestic prices following their severe drought in 2012. This could end up
hampering exports depending on crop size in 2013. Crude Palm Oil in
Malaysia fell another 1.38% overnight, its fourth straight lower close.
This due in part to rising Indian cooking oil stocks, and the record amount of
product waiting to be loaded at Brazilian ports, most of which is headed for
Asia. This is obviously weighing on Soybean Oil, and that chart has a
Head and Shoulders Continuation Pattern forming, a particularly bad formation.
The wheat/corn spread and demand topic has received a lot of
discussion in recent days. Overnight, corn bids fell again in TX with
shuttle values for spot trains indicated at +98K while April is +100K.
These are down 2-6c from yesterday, and down 5-8c from week ago values.
Feeders are actively taking wheat, and canceling or pitching out corn length
where they can. Along with CIF corn bids down 2-4c, this is having a
pressuring effect on the CK/CN and a supportive feature to WK/WN. Funds
short a lot of WK, and could be forced to cover should this keep inverting
Open interest changes yesterday included wheat down 4,320
contracts, corn up 5,200, beans down 4,050, meal down 2,150 and soyoil up 4,100
contracts. Let the short-covering rally begin in Wheat. Chinese
markets were soft with beans down 4c, meal down $7.80, soyoil down 29c, corn
down 1.25c, palm down 77c and wheat up 1.25c. Paris Milling Wheat is up
0.43%, Rapeseed down 0.27%, UK Feed wheat up 0.64%, corn up 0.56% and Canola is
down 0.37%. Deliveries overnight included 7 Chicago Wheat, 1 meal and 23
bean oil. Worth noting, someone (thought to be LDC) canceled 545 March
Chicago Wheat receipts in Toledo last night. The total bushels would be
2.72mbu which is roughly 3 laker sized vessels. This is probably headed
for Europe, and remains supporting WK/WN.
Call things mixed to weaker to start, although we aren’t
likely to keep wheat down for long if recent days are any guide. Corn has
somewhat of a bearspread bias at current which doesn’t bode well for continued
futures’ gains. Soybeans are developing a weak technical picture at the
same time beans are leaving Brazil as they pass the 50% mark. Domestic
demand remains strong, but with reduced exports the $15.00 mark will be
difficult to push through.