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.
Wednesday, March 20, 2013
Overnight Highlights from CHS Hedging's Tregg Cronin 3-20-2013
Outside Markets: Dollar Index
down 0.153 at 82.836; NYMEX-WTI up $0.66 at $92.82; Brent Crude up $0.74 at
$108.19; Heating Oil up $0.0232 at $2.8879; Livestock markets are weaker; Softs
are better; Gold down $3.70 at $1607.50; Copper up $0.0310 at $3.4370; Silver
up $0.022 at $28.865; S&P’s are up 8.50 at 1550.75, Dow Jones up 73.00 at
14,461.00 and Treasuries are weaker.
The feature in financial markets
this morning is once again Cyprus and the ongoing drama there. The plan
now seems to be evolving to a one-off levy, not on bank deposits, to be paid by
the Cypriot citizens which accounts for around 30% of the Cyprus GDP. So
gets around simply taking money out of people’s bank accounts, but still might
be met with resistance. It does, however, get the Russian billionaire’s
off the hook. Whew! Otherwise global equity markets are faring
pretty well with the NIKKEI up 2.03%, the Shang Composite up 2.66% and the
IBEX-35 is up 0.77%. The Euro is positive for the first time in three
days with the EURUSD +0.264%. The GBPUSD is also firmer this morning on
BOE comments. The FOMC is out later today with their rate decision.
Mortgage Apps -7.1%.
Not much for moisture the past
24 hours aside from some light precip in KS. Quiet radar in the Midwest
this AM. Cold official start to spring with the Twin Cities 5* this
morning. Next moisture looks like Friday in SE-KS/E-OK/AR/MO to the tune
of 0.20-1.40”. Then by Saturday through Monday, another system works into
the central corn belt, bringing 0.50-1.05” to E-KS/S-IA/MO/IL/IN/OH/KY/TN and
all of the South East including AL/GA/SC. MN/SD/ND look to be left dry,
but this will stall any fieldwork further. See map below for totals.
No change to 6-10 and 8-14 day outlooks from NOAA with sharply below normal
temperatures and well below normal precip. Cold and dry which again will
not aid in dry down through the end of the month.
Continuation of gains witnessed yesterday during the
overnight session with May corn back above $7.30 for the first time since
February 6th, while spring wheat is trading comfortably above $8.00
for the first time since the beginning of the month. It isn’t just wheat
and corn, however, as nearly every commodity around the globe is staging a
rally this morning from palm oil to gasoline. The wheat and corn rallies
continue to be front-end led which seems to be a product of two things: 1)
funds wishing to get either outright long or at least bullspread in
anticipation of a bullish stocks report next week, and 2) end user margins on
corn are rather profitable which should be bolstering buying power. Wheat
is a big short and must stay with corn for feed, but also US wheat is the
cheapest in the world right now, so additional export business is probably
occurring to a certain degree. Soybeans are just seeing some corrective
bounce along with commodities in general as cash remains flat/weaker and China
absent for additional US stem.
Overnight headlines included wires suggesting the Sunrise
Group isn’t the only Chinese trading firm to be canceling Brazilian soybean
cargoes, although additional details weren’t available. India’s trade
minister is in talks with Egypt on becoming an approved supplier to the world’s
largest wheat importer. Egypt has the strictest quality standards of any
importer, so the likelihood of India displacing more traditional exporters
isn’t likely at first, but it does signal a shift in world wheat trade that is
important. Taiwan bought 60,000MT of Argentine corn for May 1-15 shipment
at $326.87/MT C&F. It also bought 58,865MT at $1.2850 over the July
board. Agriculture & Agri-Food Canada said they see grain prices
dropping 10-20% in 13/14 on output, rising exports. They see oilseed
production up 5% and wheat up 4.4% with total exports up 0.9%. Grain
Industry Researchers have been comparing Australian soft and hard wheats with
that of Saudi Arabia and said the two compare favorably. See article
Open interest changes yesterday saw another huge jump in
corn of 23,050 contracts, wheat down 2,500, beans down 6,120, meal down
4,070 and soyoil up 1,900 contracts. Corn appears to be attracting trend
type money with the rising open interest which is a short-term positive.
Liquidation in the soy complex which makes sense considering the relative size
of the fund longs there. Chinese markets were slightly better with beans
up 4.75c, meal up $3.80, soyoil down 16c, corn down 1.25c, palm up 1c and wheat
up 4c. Malaysian Palm Oil was up 26 ringgit at 2,441. There were
135 deliveries in Minneapolis last night. Paris Milling wheat is up
1.26%, Rapeseed up 0.81%, UK Feed wheat up 1.14%, Corn up 0.77% and Canola is
Call things better as the Ags benefit from a global risk-on
mentality, but also due to the positive fundamental factors at work in corn and
wheat. Spreads are firm, but basis has been mixed as farmers have been
selling into the rally heavily on corn and to a lesser extent on wheat.
Another 20-30c rally in wheat would buy a lot in the upper-Midwest, so a
defensive basis position as long as futures keep rallying is probably
warranted. Funds have lots of room to buy on both corn and wheat should
they decide to. Farmer orders are probably waiting at $7.40-7.50, so we
probably “have to go to where the orders are.” Corn’s technical picture
is good right now. Soybeans will be the laggard.
Egypt Yet to Contribute to AMIS Commodity Database (1)
2013-03-20 10:51:52.774 GMT
(Adds Nigeria unavailable for
comment in 10th paragraph.)
By Rudy Ruitenberg
March 20 (Bloomberg) -- Russia,
Egypt and Nigeria are among
the five countries that still need to contribute data to
Agricultural Market Information System set up by Group of
countries to avoid a repeat of the 2007-08 food-price
The others are Kazakhstan and
Saudi Arabia, David Hallam,
head of markets and trade at the United Nations’ Food
Agriculture Organization, said in an interview in Geneva
yesterday. Russia was the world’s third-largest wheat
in 2011-12, and Egypt was the biggest buyer of the grain,
Nigeria is the world’s biggest rice importer, according
Department of Agriculture estimates.
Rice prices surged in 2008,
after the Philippines failed to
fill a rice tender following export restrictions by countries
including Vietnam and India. That made other grains more
expensive and helped push global food prices to a record.
Rome-based AMIS has “fairly
complete” data for 18
members, some information from four and “really no useful
at all” from five, Hallam said. AMIS consists of the G-20
members as well as seven countries that are large users
producers of farm products.
“All of the countries we’re
working with, there isn’t a
single one saying they won’t collaborate,” Hallam said.
AMIS was set up to improve data
on stocks and production of
corn, wheat, rice and soybeans with the goal of reducing
swings. To fill in the gaps for countries that haven’t
provided figures, AMIS uses publicly available
well as data from the International Grains Council and
according to Hallam.
The five countries have failed
to provide data “for a
variety of reasons, technical and organizational,” the
“Until we get everybody
supplying data which is
comprehensive and up to the standards we want, we’re
another couple of years,” Hallam said. “This whole
a long-term effort. It’s a similar effort as what was
oil, and that took eight or nine years.”
Russia faces “an organizational
issue” and a resolution
may be reached at an AMIS meeting in April, Hallam said.
The Russian agriculture ministry
wasn’t available to
immediately comment when called by Bloomberg today.
Salisu Na’inna, the spokesman
for Nigeria’s agriculture
ministry, wasn’t able to comment immediately when called
Bloomberg. Saken Kalkamanov, a spokesman for the Astana,