Outside Markets: Dollar Index
down 0.246 at 81.624; NYMEX-WTI up $0.07 at $92.71; Brent Crude up $0.19 at
$112.90; Heating Oil up $0.0113 at $3.0430; Livestock markets are mixed; Softs
are mixed/better; Gold is down $9.00 at $1606.30; Copper down $0.0085 at
$3.5580; Silver down $0.220 at $29.040; S&P’s are up 3.50 at 1496.25, Dow
futures are up 30.00 at 13,889.00 and Treasuries are firmer.
After the Italian flush yesterday
tied to the hung elections, a sense of normalcy is taking over this
morning. While the NIKKEI was down 1.35% overnight, the Shanghai
Composite was up 0.87%, the FTSE MIB is up 0.29%, the IBEX-35 is up 0.53% and
the CAC 40 is up 0.62%. The Euro is also continuing its recovery from
yesterday with the EURUSD up 0.46%. The Aussie and New Zealand Dollars
are getting pounded this morning with the EURAUD +0.732% and the EURNZD
+0.544%. Part of the strength this morning was tied to an Italian bond
auction this morning which saw 4 billion euros worth of 10-yr bonds sold at
4.83% vs. 4.17% last month. MBA Mortgage Applications were down
3.6%. Durable Goods (-4.7%), Capital Goods (+0.2%) and DOE inventories
due up today.
The southern plains storm moved
east the last 24 hours, bringing heavy moisture to C-IL/IN/OH and the
Carolinas. Totals in IN look better than 1.0” in a large swath of the
state. As our Indy office has stated, they are 100% replenished.
Still snow falling in IA/MO/WI/IL/MI this morning. The 5 & 7-day
forecasted precip maps are dry until some moisture begins toward the 5th
and 6th of March in the ECB. NOAA’s extended maps are
putting above normal precip in SD/NE/IA in the 6-10, and that would certainly
be welcome. 8-14 puts above normal precip for the entire Midwest and
southern plains. Below normal temps during the 6-15. Dry
weather in SAM yesterday. The forecast sees another front to bring rains
of 0.50-1.50” to 85-90% of Argentine growing regions by Friday and over the
weekend. S-Brazil sees 0.50-1.00” for Sunday. Temps remain non-threatening.
Soybean quality is said to be improving in the north as the rains subside while
harvest advances.
Mostly better trade overnight as futures try to continue the
moves seen late in the session yesterday. Overnight news flow would
suggest demand is improving at this lower price echelon, thanks in part to the
tightening wheat/corn spreads, spurring feedlot demand for the milling
component. In addition, it doesn’t seem as though any progress has been
made in easing Brazilian logistical woes, raising the possibility of more
Mar/Apr soybean business. Still, news from China would suggest they
are more interested in releasing state reserves of oilseeds (2.0-2.5MMT of
soybeans from ‘09 & ‘10) to bridge the gap to Brazilian supplies, than
reach for a ton of nearby stem. Cash meal markets in the US were very
weak yesterday as the board crush slips to the lowest levels since October at
50c/bu.
Bulls continue to discount the Paraguayan soybeans trading
into the US. Analysts note they have bought paper as a hedge against US
beans, but no basis or freight has been established, leaving open the
possibility of it not being executed. In tender news, South Korea’s KFS
bought 60,000MT of optional origin feed wheat at $312.84/MT C&F for June 30
which looks like Indian. India continues to auction wheat from state
reserves. Japan bought 18,340MT of feed wheat and 51,660MT of feed
barley, their first feed purchase in five weeks, a strong signal we have found
a bottom. Japan will be tendering for 320,000MT of feed wheat and barley
on March 6 for shipment by July 30. Egypt said it has 3MMT of
domestic and imported wheat in stockpiles, enough to meet consumption for 123
days. SovEcon said Russian grain stockpiles may fall to 600-700TMT by
July 1 which would be a record low. Winter crop losses are seen at 12%,
but production should still rebound. Grain Union officials there said
prices should remain high in 13/14 on tight supplies.
Also a fair amount of Chinese news on the wire overnight
including the Ministry of Ag saying several provinces received below normal
rainfall, and others were hit by freeze, damaging the rapeseed crop.
Research firm Yigu Information Consulting said feed mills in China will
probably order more US grain on concern the domestic supply won’t meet demand
as well as a higher vulnerability to mold due to recent moisture in Northern
China. They said China’s corn shortfall may reach 5MMT this year
from 2MMT last year. Traders noted US Corn delivered China at $356/MT
C&F in Sept. vs. Dalian futures for September delivery at $390.50/MT.
COFCO, China’s largest state grain trader, is slated for $4.8 billion to boost
processing and shipping capabilities this year. China’s inventory of
soybeans may fall to 4MMT by the end of March from 5.2MMT as of last week
according to grain.gov.cn. Arrival shipments may be 7MMT in Feb-Mar,
lower than the 8.66MMT a year ago.
Open interest changes yesterday included wheat down 6,940
contracts, corn down 5,310, soybeans down 10,380 contracts, meal down 4,780 and
soy oil down 1,960. Partially some long liquidation in the soy complex as
well as traders exiting positions ahead of FND Friday. Chinese markets
were weak with beans down 20c, meal down $1.90, soy oil down 48c, corn
unchanged, palm down 38c and wheat down 5.75c. Malaysian Palm Oil was
down 9 ringgit at 2,410. Paris Milling Wheat is up 1.24%, Rapeseed is up
0.21%, UK Feed wheat is up 0.37%, Corn is up 1.11% and Canola is down 0.40%.
Worth noting, wheat traded below corn yesterday for the
first time since May. Lots of anecdotal reports of feedlots in KS and CO
reaching for HRW instead of corn. In addition, corn basis remains very
firm with +145N PNW being shown for June/July delivery vs. some of the
strongest trades of the year last year around +160N. Group-3 rail also
remains very firm with +30’s being posted commonly. Lastly, remember
funds in Chicago wheat are short more wheat than the commercials are, the only
time in history this has happened, just as US-SRW starts hitting global feed
channels, milling channels and US feed lots.
Call things better today with an eye towards ethanol
production and stocks at 9:30am. It feels as though the news flow is
turning much more positive down at these levels, and according to basis and
spreads, so is demand at least for grains. Would be stress-testing any
short wheat/long corn positions one has on given wheat’s competitive position
relative to corn. Also, it feels as though we’ve discounted the
winter storms for now, or at least until more moisture comes. The market
needs the US farmer’s corn.
Trade as of 6:55
Corn up 1-2
Soy up 6-8
Wheat up 2-6
Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
CHS Hedging, Inc.
The Right Decisions for the Right Reasons
The Right Decisions for the Right Reasons
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