Outside Markets: Dollar Index
down 0.073 at 79.841; NYMEX-WTI up $0.76 at $86.49; Brent Crude up $1.17 at
$109.02; Heating Oil up $0.0241 at $3.0635; Livestock markets are firmer this
AM; Gold up $15.50 at $1716.00; Copper is up $0.0010 at $3.5690; The Yen is
down 0.44%, but other major currencies are firmer; Softs are rallying at the
moment, led by Coffee and Sugar which are both up 1.0%+; S&P’s are up 8.25
at 1413.25, Dow futures are up 61.00 at 13,082.00 and Treasuries are off
0.4-0.7%.
Financials are mostly positive this
morning with equities up and borrowing costs down. A few data points
overnight worth noting: The U.K.’s gross domestic product rose 1% in the third
quarter, the fastest growth in five years and helping the UK to exit their
double dip recession. Olympic ticket sales and a surge in services helped
the rebound. Analysts think the UK growth could go back to flat to close
out the year. Also supportive overnight was a Nikkei newspaper saying the
Bank of Japan will add to its stimulus policies. Economic data in the US
today will include weekly jobless claims (370,000; -18,000), the Chicago Fed
Index (-0.2); Durable Goods Orders (+7.5% m/m) and US Capital Goods Orders
(+0.8%).
Since midnight, rains have
fallen in the upper-Midwest, dropping 0.25-1.00” amounts across
E-NE/E-SD/NW-IA/S-MN/NW-WI. This system continues to impact the
upper-Midwest this morning with 0.75” having fallen in the Twin Cities in the
last six hours. The next 1-2 days will see more rain affect the central
corn belt and Great Lakes areas with totals heaviest in WI to the tune of 0.25-0.90”.
This will continue to plague harvest efforts there. Aside from that, the
far eastern corn belt will be impacted by hurricane Sandy early next
week. OH/PA will see the most effect, two of the states lagging the
national average in harvest. No change to NOAA maps with normal/below
normal precip for the southern plains and Midwest while below normal temps will
be seen east of the Mississippi. Late in the period, more normal/above
temps will creep in over the Rockies and western corn belt. South America
is expected to see above normal precip in the central/southern growing areas
while northern Brazil is expected dry the next 3-7 days.
Quiet trade in fairly narrow ranges overnight. Grains
seem unwilling to extend yesterday’s gains as most expect a disappointing corn
export sales report, and unless wheat sales are near/above 500TMT, most will
view as disappointing. As of yet, it doesn’t appear corn can maintain
strength on just domestic basis levels. The market needs to see the
export market claw back some business to give a sub-700mbu carryout some
merit. Soybeans and products should see another sizable week with soybean
sales expected between 600-800TMT. This will get soybeans back close to
80% of the marketing year forecast already on the books. Encouragingly,
crush basis and meal offers firmed again last night, in-keeping with robust
meal export sales and a lack of rationing in domestic livestock operations.
Overnight, Taiwan Sugar Corp bought 23,000MT of US corn and
12,000MT of US soybeans from CJ International. The grain was bought at
$374.68/MT C&F for corn and $652.27/MT C&F on beans. South
American FOB offers remain at least 90c below US offers, or $38.58/MT. Of
particular interest overnight, China only 9.8% of the 398,025MT of soybeans auctioned
overnight with an average price of $19.71/bu. About ¼ of the beans were
offered in Inner Mongolia which failed to attract buyers. This is
in-keeping with the recent uptick in soybean exports to China as the government
tries to encourage demand of foreign beans at these prices. Should signal
value to US traders… Japan said last evening they are poised to boost
rapeseed imports to a record 2.4MMT this year, up from 2.3MMT in 2010.
Soybean imports may drop 4.6% to 2.7MMT, the lowest in 43 years. Looks
like diversification as opposed to a slowdown in outright demand.
Mexico’s stock exchange will now offer corn futures contracts denominated in
pesos that will trade on MexDer, the Mexican derivatives market. The
contract size will be 25MT of yellow corn. EU grain inspections from the
French port of Rouen were up 78% last week to the highest total since March on
large barley exports to Saudi Arabia and wheat shipments to Algeria.
Open interest changes yesterday included wheat up 9,890,
corn up 5,000, beans up 690, meal up 3,020 and soy oil up 2,850. Looked
like some fresh speculative buying yesterday with the markets firm as they
were. Chinese markets were mixed overnight with soybeans up 6.50c, meal
down $1.70/ton, soy oil down 4c, corn up 7.25c, palm up 1c and wheat up
7.75c. The Chinese Yuan continues to strengthen, firming to 6.24 from
6.25 yesterday. Malaysian Palm Oil was up 25 ringgit overnight to 2,603,
the highest in almost a month on speculation stockpiles in Malaysia will decline
now that exports have picked up. Paris Milling wheat is down 0.75%,
Rapeseed up 0.31%, Corn down 0.20%, UK feed wheat up 0.61% and Canola is up
0.42%.
Export sales, or lack thereof, is likely to drive early
morning direction. Demand remains real for the soy complex, but modest to
poor on grains. With barge freight jumping to 750-800% of tariff this
week, corn is being stopped by the ethanol plant or feedlot before it even gets
to water. The jump in barge freight is said to be barges moving up the
Miss with good quality corn to blend with afla corn. Continue to pay
attention to energy markets as they get sold. Crude/Corn and RBOB/Corn
spreads are at some very weak levels.
Trade as of 7:10
Corn down 1
Soy down 1-2
Wheat down 1-3
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons
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