Monday, April 8, 2013

Daily Summary from CHS Hedging's Chris Steinhoff

Crude oil was mixed and choppy early before firming later in session…DJIA is lower as N Korea threatens war, US companies report earnings etc etc…Grain get back to the 1:15pm CST close in Chicago and KC and 1:30pm CST in Mpls…looks like Chicago forgot to change when they post settlemetns

Corn===front end buying led the strength and also firmed spreads..CK was up 4-5,   CZ was down 3,  K/N settled at a 15 inverse
                ===RIN values were up, leading some to believe that helped the front month corn contracts
                ===volumes were modest as traders try to square positions ahead of Wednesday report after liquidating longs last week
                ===average trade guess on carryout is 812-824, depending on the survey…Some unusually low estimates: lanworth is 632, GCA is 625, Macquarie is 686 and a few more around 700mb skew the                       average to lower!!!
                ===bird flu in China still sees headlines as it sounds like a 7th person dies
                ===seems like options volume picked up from large traders, possibly in anticipation of the USDA report
                ===export inspections of 10.1mb is well below the 17+/-mb needed weekly…is there any evidence the USDA will change exports?
                ===hearing a barge tries to get through lake pepin on the Miss River. It could lead to the open of the upper Miss River system…fertilizer north?
                ===CME plans to introduce an ethanol RIN contract by the end of May
                ===Some corn fields have seen some planting while other fields are ready..awaiting warmer temps, insurance and forecasted rains
                ===CIF  was up 1 to 2…processors were mostly unchanged  but looking for June forward

Beans===double digit gains led by SK as SK was up 15 cents… SX struggled to stay positive but last tick was up 4 cents
                ===possible short covering was seen as traders position themselves ahead of the USDA report on Wednesday
                ===Will USDA raise carryout like many expect? 50/50 chance
===bird flu in China causes worry about Chinese soy and meal demand as reports of killing birds circulate..Pigeons now seem to have the strain…but the problem doesn’t seem as bad as thot
last week
                ===export inspections of 15.3 was nearly triple the weekly needed amount as US exports remain stronger than needed
                ===S America harvest expands as Brazil is on the last 25% of harvest. Logistics remain back logged but they seem to be getting by
                ===China has been, almost unusually quiet in the export front, as they work thru the arriving boats
                ===K/N was firmer at a 19+ inverse as movement is quite slow and demand stays steady
                ===CIF was steady to a nickel better..processors were mostly steady to slightly better with quick ship bids

Wheat===double digit gains, led by HRW on nervousness about recent frost damage to the OK crop
                ===Meanwhile wheat looks pretty good in parts of KS and MT..(see link to article below)
                ===China pretty much admits they bought up to 1mmt of US wheat last week…it has not been reported through the daily announcement system, so inspections will need to be watched later
this summer
                ===KC was up 19  , CME was up  12 and MGEx was 12 ¼ higher
                ===KC spot was 2 to 5 lower for the 11.60 to 12.20 pro
                ===MGEx 14 spot is 90 to 107…seems like farmer has moved the low pro spring wheat and is sitting on a fair amount of higher pro
                ===export inspections were 27.2mb, above the 22.5mb needed weekly as we enter the last 60 days of the wheat marketing year

From: []
Sent: Monday, April 08, 2013 10:38 AM
To: OPIS Ethanol Updates
Subject: BIOFUELS UPDATE: ***RINs Rally into The 80s and 90s as Word of New EPA Estimate Spreads

2013-04-08 11:37:27 EDT
***RINs Rally into The 80s and 90s as Word of New EPA Estimate Spreads

It may not qualify as RINsanity, but values for 2013 Renewable Identification Numbers, or RINs, are up sharply this morning, in recognition of the revelation that 500 million less RINs were carried over from 2012, according to numbers released by the Environmental Protection Agency over the weekend.

The carryover of 2012 RINs into 2013 was just 2.1 billion gallons, down from the prior estimate of 2.6 billion gallons, and news of the lower number has sent bids streaking higher this morning. Latest bids for 2013 ethanol RINs were in the realm of 80-81cts/gal with confirmation that at least one transaction was done at 81.5cts/gal with sellers left over at 83cts/gal.

That would represent an increase of more than a nickel from Friday, and it would also represent a rebound of more than 25cts/gal from some of the softer numbers seen toward the end of March. The price for 2013 RINs began the year at just 7cts/gal, and then ascended to $1.10/gal during the worst of the winter buying frenzy.

There is less talk about biodiesel RINs, but sources say that prices continue to track around 10cts/gal above the ethanol RINs. A 92cts/gal deal was recorded this morning for 2013 RINs.

At least one exchange is excited about leveraging the volatility and the lack of transparency that has come to be associated with RINs trading. The CME has launched an effort to initiate a RINs futures market. OPIS will have more details on this effort today.

Christopher Steinhoff
Market Analyst
651-355-3723 fax

CHS Hedging, Inc.
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