Outside Markets: Dollar Index
down 0.371 at 79.369; NYMEX-WTI up $0.33 at $92.19; Brent Crude up $0.28 at
$115.50; Heating Oil up $0.0039 at $3.2130; Livestock are quietly mixed; Gold
up $7.60 at $1743.60; Copper up $0.0130 at $3.7245; The Yen and Loonie are
getting sold this morning; The softs are bouncing rather sharply this
morning with Cotton, Cocoa, Sugar and Coffee all up 1.1-2.8%; S&P’s are
up 6.75 at 1442.25, Dow futures are up 59.00 at 13,419.00 and Treasuries are
weaker.
Equity markets are bouncing around
the globe this morning, most likely catching up to the strong finish in the US
yesterday afternoon. Most economic data received yesterday was positive,
and there seems to a bit better optimism from consumers, at least that’s what
the underlying theme of the data seems to suggest. Today’s data points in
the US will include the Consumer Price Index, Industrial Production and the
Housing Market Index. The CPI is expected to show a 0.50% gain m/m, and
up 0.2% less food and energy. This measure, at least, continues to agree
with the Federal Reserve’s recent policy initiatives. Tonight will see
the second Presidential debate in New York which will be a town hall format
covering both domestic and foreign policy.
Not much for measureable precip
in the last 24 hours. There are some scattered showers over
N-MN/N-WI. The next 48-hours will see more moisture fall from LA to MI
with totals expected in the 0.25-1.21” range. Most The precip will be
mostly east of the MS river. N-MN and up into the Canadian Prairies
should also see some solid amounts. 5-day totals should be generous, and
the PNW also looks to finally see rain. Areas along the Pacific in WA/OR
could see between 2.0-5.0”. ID will also see some showers. Pretty split
through the belly of the country on NOAA’s extended maps. Below normal
precip in the southern plains, above in the Great Lakes and far-northern plains
for the 6-10. Similar set up in the 8-14. No discernible changes to
either South America or Australia.
Moderate relief bounce overnight in all of the Ags with
soybeans clawing back about half of what the lost and keeping their nostrils
above the $15.00 mark. Nothing in the overnight wires to point to
directly, so we’ll attribute the bounce to being “oversold.” There was
talk of China snooping around for 3-5 cargoes of soybeans yesterday, but this
is commonplace. Remember, China imports 60MMT, which is just over 1MMT
every week. Assuming they spread it out evenly, that’s almost 2.5 Panamax
vessels every single day of the week, including Sunday. China shopping
for soybeans is no reason to get excited. Of the three major commodity
markets, wheat holding the bottom end of its 12-week range (HRW & HRS)
seems to be the most constructive thing about yesterday.
The China National Grains and Oils Information Center
released update production forecasts overnight with corn at 201MMT, up from
197MMT last and up 4.26% y/y. Wheat was seen at 118MMT, unchanged from
the last guess and up 0.51% y/y. Soybean production was estimated at
12.8MMT, down 0.2MMT from last month and -11.63% y/y. FWIW, very few
private estimates have China’s wheat crop anywhere near 118MMT, but are closer
to 110MMT. This on top of the rumored purchase of 300,000MT of Canadian
spring wheat yesterday. Also of note, Japan issued a tender for
128,144MMT from the US and Canada. All but 28,068MT will come from the
US. A wire story also said Japan bought 250,000MT of corn from Ukraine at
$1.10 over the December CBOT board. The cargoes were said to be for Nov-Dec
shipment. Also from Ukraine, grain stocks as of Oct 1 were 19.4MMT, down
11% y/y. Ukraine grain exports are up 73% y/y July 1-Oct 15 to
6.64MMT. The ministry said exports will slow appreciably through the end
of the year.
Open interest changes yesterday included corn down 6,124
contracts, wheat down 607, soybeans up 1,213, meal up 1,104, and soy oil up
4,421. Corn is still seeing long liquidation, somewhat of silver lining,
while the soy complex appears to be adding fresh shorts almost daily.
Open interest continues to steadily increase in soy oil which is likely to be
noncommercials. Chinese markets were a bit firmer last night with
soybeans up 8.75c, meal down $1.00, soy oil up 75c, corn up 4c, Malaysian palm
oil up 2 ringgit at 2,435 (Dec), Paris Milling Wheat is up 0.19%, Rapeseed is
up 0.47%, Corn up 0.31%, UK feed wheat up 0.05% and Canola is up
2.20%. Canola’s demand prospects still look incredibly strong,
and after slightly smaller supplies, fits with it putting a growing premium
over soybeans..
Not much really stood out about the crop progress report
with corn harvest heading down the homestretch at 79% complete. Notable
progress remains in OH at 31%, MI at 36%, PA at 41% and WI at 54%. On
soybeans the stand outs are OH at 38%, KS at 40%, TN at 33%, SC at 7% and KY at
42%. Much of these are double crop beans, however, and national progress
remains 13% ahead of average. Winter wheat emergence in the northern
plains remains a big concern. SD is at 11%, MT at 25%, ID at 33% and OR
at 24%. Too dry.
Not a surprise to see a decent bounce today consider the
Fri/Mon break. Most fundamentalists continue to scratch their head at the
current sell off given the lack of movement from the farm, firm cash markets
and firm spreads. This seems to point toward value at current flat price
levels, so would caution against getting overly bearish “down here.” On
the other hand, liquidation events usually last longer than anybody thinks they
can, so no need to a hero…
Trade as of 7:10
Corn up 5-7
Soy up 11-13
Wheat up 7-10
Tregg Cronin
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
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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