Below is overnight highlights from Country Hedging's Tregg Cronin
Outside Markets: Dollar Index up
0.105 at 79.354; NYMEX-WTI down $0.64 at $94.65; Brent Crude down $1.28 at
$110.75; Heating Oil down $0.0251 at $3.1020; Livestock are all in the red;
Gold up $10.10 at $1778.50; Copper up $0.0095 at $3.8120; The Yen and Loonie
are firmer, while the other major currencies are weaker; Cocoa and Lumber are
positive; S&P’s are up 1.00 at 1460.25, Dow futures are up 14.00 at
13,584.00 and Treasuries are bid.
Japan is still making headlines
overnight, but for a change, it doesn’t have to do with the China/Japan
conflict. Overnight, the Bank of Japan unexpectedly increased their asset
purchase program by $126 billion as officials try desperately to stave off
economic contraction in the world’s third largest economy. The NIKKEI
equity index rose 1.19% last evening, but the Yen is currently 0.15% higher.
The EURUSD briefly ticked below $1.30 last night following comments from the
European Commission which said strict conditionality will accompany all aid
programs. That wasn’t a provision to begin with? The US economic
calendar today has housing starts, building permits and the already released
MBA Mortgage Applications which came in -0.2% vs. 11.1% the week previously.
The Midwest was mostly devoid of
any moisture the last 24 hours, but the East Coast did see rain from NC to
NY. Some light showers are working across N-MN this morning. No big
change to the 5-day forecasted precip map, although the storms impacting MO and
bringing 0.70” will extend east through S-IL/IN/OH/MI to the tune of
0.40-0.80”. The WCB will be dry through Monday. NOAA’s extended
maps last night show above normal temps building over ID and beginning to push
the cold air mass east, centering over the US-SE. The WCB should see
normal/above temps by September 24th, but moisture will remain below
normal, aiding harvest, through the end of the month. The coldest day the
next 10-days will be Saturday with chances of frost present as 33* temps will
be witnessed. Australia saw a few light showers of less than 0.10” in
most wheat areas with some totals up to 0.35” in W-Aus. The forecast sees
things quiet for the next week or so, but the very end of next week sees a
front to bring 0.20-0.60” to NSW and Queensland.
Grains are seeing “green across the screen” this morning for
the first time since Friday as a relief bounce makes its way through the Ag
space. Following the $1.00+ break in soybeans the past two days, it is
generally believed end users will grow more interested down at these levels,
and the balance sheet can ill-afford a ton of new demand cropping up. It
also doesn’t hurt the US’s largest export destination enacted another $126
billion worth of monetary stimulus last night. Today’s bounce doesn’t
change the lower trend mind you, and prices are still expected to work lower
through the balance of the month which will mark month end, quarter end,
increasing harvest and the September 28th Grain Stocks report.
The last several Sept 1 Grain Stocks reports have been especially bearish to
our space.
Harvest progress in Ukraine was pegged at 28.49MMT as of
Sept 18th, which covered about 72% of the total area to be
harvested. Average yields were pegged at 2.63MT/ha vs. 3.08MT/ha last
year. Ukraine had harvested 36.48MMT at this point last year.
Russia’s Ag Minister is still pegging total grain harvest to hit 72-73MMT.
Harvest has covered 76% of the total acreage to be harvested with 63MMT in the
bin. In export news, South Korea bought 28,700MT of US wheat from LD for
shipment in December. The wheat was 8.5-9.5% protein soft white wheat at
$328/MT FOB. The mills also bought a small quantity of HRW (11.5) and DNS
(14) at $362 and $378/MT FOB, respectively. Taiwan’s BSPA is tendering
for 40-60,000MT of soybeans from the US or South America for shipment April
26-May 10. South Korea’s MFG is also tendering for 55,000MT of soy meal for
arrival by Jan 5. Japan bought 51,890MT of feed wheat and 36,555MT of
feed barley in a S-B-S tender. Deliverable Stocks in Duluth/MPLS rose to
25.349mbu, up 3.5mbu and vs. 13.8mbu last year.
Open interest changes yesterday included drops on everything
including wheat down 5,440, corn down 3,000, beans down 3,230, meal down 3,840
and soyoil down 8,260. These all fit with modest liquidation, but still
seem light considering the severity of the drops. Still arguing end users
are stepping up a bit of pricing at these levels. Chinese markets finally
stabilized seeing beans up 7c, meal up $1.70, soy oil up 27c, corn up 2.50c and
wheat up 6c. Paris Milling Wheat is currently up 8c, Rapeseed up 14c,
corn up 11.5c, UK feed wheat up 8c and Canola up $8.00. The US remained
the world’s largest exporter of Ag products in 2011 at $168.2 billion according
to WTO data. We were followed by the Netherlands at $108.1 billion, and
Germany in third place at $94.5 billion. Cattle-on-feed out Friday.
Call things firmer today as we enjoy a bit of a relief
bounce. Ethanol production at 9:30 will be watched closely, but the
themes of the week haven’t changed: specs are still loaded up, harvest is going
to advance rapidly the next 15-days, harvest prices are record high, and the
monetary silver bullets are being spent by the ECB, Fed and BOJ as we
speak. The long-term fundamental stories haven’t changed, but that
doesn’t mean short-term direction can’t deviate.
Trade as of 7:10
Corn up 3-6
Soy up 12-19
Wheat up 10-16
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