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 15, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin 3-15-2013
Outside Markets: Dollar Index
down 0.334 at 82.272; NYMEX-WTI up $0.57 at $93.60; Brent Crude up $1.14 at
$110.11; Heating Oil up $0.0314 at $2.9609; Livestock markets are weaker; Softs
are a bit firmer this morning; Gold up $0.90 at $1591.60; Copper up $00.80 at
$3.5445; Silver up $0.068 at $28.875; S&P’s are up 0.25 at 1556.25, Dow
futures are unchanged and Treasuries are lightly mixed.
Flat US futures this morning in what
looks to be a fairly quiet close to the week. If the Dow closes up today
it will be 11 sessions in a row which would be the longest streak since
1991. Asian shares were firm last night, but Europe is weaker this morning
led by the IBEX-35 which is down 0.78%. All appears to be well as the
Volatility Index, or VIX, dropped to a fresh low for the move of 11.30%, the
lowest since March 2007. Seems like there is a growing sense of
complacency out there, but we have been getting better economic data to support
it. Currency moves overnight are highlighted by the Aussie Dollar
weakness as the GBPAUD is up 0.640% and the SEKAUD is up 0.713%. Yen,
Euro and Dollar are flat. A few economic data points today including the
Empire Manufacturing (prior 10.04), CPI (+0.5%) and Industrial Production
(+0.4%). JP Morgan is back in the news for trading losses.
More snow in the upper-Midwest
overnight impacting MN/ND/SD/NE/WI and continuing to fall in ND/MN/WI this
morning. A winter storm watch is in effect for portions of MN through
tomorrow morning. The next 3-days’ worth of moisture will bring
0.25-0.70” to the Dakotas and MN, while 0.50-2.00” amounts will drop in
MO/S-IL/S-IN/KY/S-OH. Moisture is not an issue East of the MS-River, and
could soon be bordering on excessive but I won’t be the first to say
that. The 6-10 and 8-14 still look cold and wet for much of the Midwest,
but concentrated East of the MS-River. Coldest temps will be in
ND/SD/MT/MN. Private forecasters aren’t really latching onto the cold in
the south, or frost conditions, like they were yesterday. I’ll try and
follow up with more later today.
Mixed trade overnight with strength led by soybeans and
weakness by wheat. Looks like a bit of inter-market spreading, but in the
opposite direction it has been most of the week. Oilseed markets were
firm around the globe overnight with Malaysian Palm Oil up 2.12%, Dalian
soybeans up 1.10%, Rapeseed up 0.76% and Bean Oil up 0.93%. Palm Oil
experienced a sharp rally overnight after four days of losses after Malaysia
decided to not implement a higher tax on palm oil exports as originally
intended. Inventories there remain burdensomely large, so makes
sense. Otherwise grains are taking a bit of a breather, although few
would be surprised to see wheat return to its winning ways by the close
considering the positive demand story, short fund position and mixed weather
Very light news overnight aside from the aforementioned
Malaysian tax situation. The Paraguayan Finance Minister said soy exports
from that country will double this year as farms recover from drought.
Output there is seen as high as 9MMT vs. 4MMT last year. Soybean
production accounts for 12% of GDP, highlighting their vulnerability to weather.
New Zealand is experiencing its most widespread drought in 30 years according
to Bloomberg, causing global milk prices to rise. Russia’s Ag Minister
said their target for the 13/14 wheat harvest is 40-45MMT vs. 12/13 at
37.7MMT. They also intend on buying 5MMT of grain for state reserves,
with wheat obviously being the highest. Their 5-yr average wheat
production is 52.2MMT highlighting poor wheat conditions going into
dormancy. The priority to rebuild state reserves could limit an expansion
of their export program. Stay tuned. The much anticipated port
strike in Brazil has been postponed.
There were some deliveries against the March overnight on
the last day able with 1 meal, 203 soy oil, 99 corn, 16 beans and 21 Chicago
wheat. 0 Minneapolis wheat. Not too surprising to see 99 corn
actually delivered considering CIF bids of +71K are actually +55H which come in
right at delivery equivalence, and some bids were weaker, most likely putting a
margin in. Doesn’t seem to be impacting the CK/CN too terribly much this
Open interest changes were interesting with corn up a huge
23,260 contracts but only on volume of around 200,000 contracts which is rather
light. Somewhat conflicting signals. Wheat dropped 6,210
contracts which isn’t surprising considering the large spec which is being
forced to cover. Beans were up 950, meal up 940 and soy oil up 2,990
contracts. Malaysian Palm closed up 50 ringgit (2.12%) at 2,414.
Chinese markets were sharply better with beans up 22.75c, meal up $1.00, soyoil
up 42c, corn up 3.25c, palm up 22c and wheat up 0.25c. Paris Milling
wheat is up 0.11%, Rapeseed is up 0.71%, UK feed wheat up 0.25%, Corn up 0.11%
and Canola up 0.15%.
Call things mixed to start, but I’m not going to rule out positive
trade in the grains by day’s end. Spreads remain firm in wheat overnight,
and it doesn’t feel like we’ve priced in the renewed export and feed demand of
SRW to the fullest extent yet. We obviously haven’t seen the
short-covering rally which could be in the offing. Otherwise we will
slowly begin out March 28th reports’ vigil, so expect the light
volume to continue. Weather will begin taking on increased importance the
next several weeks.