Outside Markets: Dollar Index
down 0.008 at 82.771; NYMEX-WTI down $0.28 at $93.22; Brent Crude down $0.48 at
$108.24; Heating Oil down $0.0053 at $2.8868; Livestock markets are mixed;
Softs are better; Gold up $0.30 at $1608.00; Copper up $0.0100 at $3.4565;
Silver up $0.103 at $28.920; S&P’s are up 0.50 at 1549.50, Dow futures are
up 17.00 at 14,425.00 and Treasuries are weaker.
Mixed equity markets overnight with
the NIKKEI +1.34%, but the CAC 40 -1.00% and the FTSE 100 -0.74%. More
poor European economic data overnight along with more drama in Cyprus is keeping
things under pressure. The Euro-area PMI fell to 46.5 from 47.9 in
February, below the forecasted 48.2, and below the 50.0 contraction/expansion
level. The European recession is not bottoming, and could in fact be
getting worse. As troubling is the fact France’s manufacturing PMI of
43.9 is only slightly better than Greece’s 43.0. I don’t think we’re
prepared for France slipping into recession. In Cyprus, The ECB said
it will cut Cypriot banks off from emergency funds after March 25th
unless the country comes up with a plan to post collateral for a bailout.
The country’s banks are remaining closed as ATM’s run out of cash across the
island. 5-yr Credit Default Swaps for Cyprus are up 55bp to 1,002bp,
while Argentine 5-yr’s re up 165bp @ 3,261. Have to point out the huge
moves going on in the Forex market this morning with the New Zealand Dollar up
over 1.0% against all trading partners, and the Yen is up sharply as well with
the JPYEUR +1.094%, JPYCHF +1.006% and JPYUSD +0.869%. The EURUSD -0.139%.
Jobless claims and existing home sales are on deck in the US today.
Quiet Midwest overnight and only
a skiff in the central plains this morning. The precip event begins
tomorrow in the southern plains with 0.25-0.85” falling in the far eastern reaches
of HRW country. This pushes East over Dixieland Saturday with similar
totals. Sunday will bring more moisture to KS with the entire state
looking at 0.75”. Surrounding states could pick up 0.25”. Monday
and Tuesday will see moisture in the ECB impact mainly OH with totals around
0.25-0.50”. Things then get cold and dry in the 6-10 with the epicenter
of the cold over KY/TN/IL/IN/OH but extending all the way to E-NE/E-KS.
The dryness will be centered over MN/IA/WI. Similar readings in the
8-14. The 6-10 below normal cold readings are the deepest purple I can
remember seeing on these maps.
Mixed trade overnight with weaker grains but firmer oilseeds
as soybeans put together a two-day winning streak for the first time since the
beginning of the month. Overnight wires suggest the oilseed strength
is tied to continued Brazilian shipping delays, and the belief that the
cancelation talk earlier in the week was actually origin or slot switching, not
outright cancelations. See article below. The weakness in
grains seems tied to easier cash markets thanks to heavy far movement of corn
and spring wheat earlier this week. Spreads have been on the defensive,
and cash basis on corn is weak across almost every demand center. Still,
the technical picture is much improved for both corn and wheat, implying
further upside to come, and the continued rise in open interest signals trend
followers getting onboard.
Actually a fair amount of news overnight so check the bottom
of the email for more articles. China released Feb import data overnight
with wheat at 222,519MT, down 40.2% y/y, although the US did ship 57,750MT
which was up sharply from a year ago. Corn imports were 394,090MT, down
24.31% y/y, and all of it coming from the US. Soybeans imports were 2.898MMT,
down 24.33% y/y with all of it coming from the US. Jan-Feb imports of
beans were down 8.97% at 7.681MMT. The soybean shipments could be due
in part to the Chinese New Year, or the willingness to “de-stock” inventories
ahead of South American harvests which as we’re seeing now was a risky
proposition thanks to logistics. Japan bought their 132,777MT of
milling wheat with 76,000MT coming from the US.
Vessel lineups at Brazilian ports continue to rise with 206
boats waiting to load beans, meal and pellets totaling 12.280MMT. Algeria
bought 350,000MT of optional-origin milling wheat at $330/MT C&F, Libya
bought 50,000MT of Hungarian wheat and an Oman flour mill bought 10,000MT of
Indian-origin milling wheat. A Bloomberg article, see below, quoted
an official at the second largest feed mill in China who said China may have a
20-30MMT annual shortage in feed grains within 2-3 years. He said China’s
meat consumption could expand 25% within 5-years. He also said China
would import 10MMT of corn per year now if there were no policies restricting
imports. Investment bank Credit Suisse cut their 12-month corn price
forecast to $6.00/bu. Wheat to $6.90 and beans to $13.50.
Open interest changes yesterday included corn up another
14,200 contracts, wheat up 1,940, beans down 400, meal down 3,550 and oil up
2,160. Since the price low on March 7th, corn open interest
is up 97,828 contracts signaling a piling on of trend type following funds, and
giving this rally some legitimacy. Chinese markets were firmer
overnight with soybeans up 11.75c, meal up $6.20, oil up 56c, corn unchanged,
palm up 72c and wheat down 0.75c. Malaysian Palm Oil up 15 ringgit at
2,456. Paris Milling Wheat is currently down 0.51%, Rapeseed up 0.27%, UK
Feed wheat down 0.75% and corn up 0.76%.
Call things mixed to start with an eye on export sales in 10
minutes. Corn sales are expected at 0-300,000MT, beans at 150-700,000MT
and wheat at 300-825,000MT. Another big wheat number (700+) would go a
long ways to giving legitimacy to the current rally. We are running into
producer selling and most basis levels are on the retreat. Keep this in
mind as we climb higher towards more marketing objectives. Funds still
short a pile of wheat. Hog board crush spreads are hitting fresh contract
lows.
China
Has No Reason to Cancel Soybean Orders, CHS’s Liu Says
2013-03-21
10:05:10.898 GMT
By Bloomberg News
March 21 (Bloomberg) -- Chinese
crushers have “no ability
or
real intention” to cancel soybean orders, Liu Guoqiang,
general manager of CHS (Shanghai) Trading Co., said at a
forum
in Kunming. CHS is a U.S.-owned grain trader.
Liu’s response came after
Shandong Chenxi Group, a Chinese
soybean crusher and trader, said this week that it plans
to
cancel orders for almost 2 million metric tons of
Brazilian
cargoes on shipment delays.
“Soybeans are needed in China and supplies are hard
enough
to
buy from March to May,” Liu said. “The comments to media by
some
Chinese crusher wanting to cancel 2 million tons of
soybeans
may have other motivations.”
Only one cargo of soybeans was
resold by a crusher, and
there are no cancelations and won’t likely be any in the
“near” future, according to Liu.
China
May Have 20m Tons Shortage of Coarse Grain, Feed Mill: Yi
2013-03-21 07:10:09.204 GMT
By Bloomberg News
March 21 (Bloomberg) -- China may have 20-30m tons of
annual
shortage in feed grain supply in 2-3 years, boosting
needs for imports, Yi Ganfeng, vice president of Beijing
Dabeinong Technology Group Co., the country’s
second-biggest
feed miller, said on the sideline of the JCI grain
conference in
Kunming.
* As China’s livestock industry matures, feed
mills will
prefer to use bulk-commodity grain,
including corn and dried
distillers’ grains, in place of
traditional materials such
as oilseed meal, used by smaller farms
now, Yi says
*
China’s meat demand may expand about 25% from current level
in about 5 years, spurring consumption
of feed grain, Yi
says
*
China may import 10m tons of corn a year now if there were
no policies restricting imports, Yi says
Oil
Companies Using RINs to Remove Ethanol Law, Growth CEO Says
2013-03-20 13:24:30.99 GMT
By Mario Parker
March 20 (Bloomberg) -- Oil
companies are manipulating the
value of Renewable Identification Numbers, or RINs,used
to help
the government track biofuel use, in an effort to
eliminate the
country’s ethanol mandate, Growth Energy Chief Executive
Officer
Tom Buis said today on a conference call.
* Growth Energy is Washington-based ethanol trade
group
Mexico
Corn Production Will Rise in 2013, USDA Unit Says
2013-03-20 19:06:01.573 GMT
By Steve Stroth
March 20 (Bloomberg) -- Output
in the year starting Oct 1
will rise to 22mt from 21.5mt a year earlier, the U.S.
Department of Agriculture’s Foreign Agricultural Service
said in
a report posted today on its website.
* Sorghum production will be 6.8mt, compared with
6.9mt a yr
earlier
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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