Outside Markets: Dollar Index up
0.0780 at 82.908; NYMEX-WTI up 0.48 at $95.29; Brent Crude down $0.12 at
$108.05; Heating Oil down $0.0032 at $2.8740; Livestock markets are
mixed/better led by hogs; Softs are rallying this morning; Gold is down $6.70
at $1597.70; Copper up $0.0135 at $3.4585; Silver down $0.060 at $28.755;
S&P’s are up 2.00 at 1549.00, Dow futures are up 17.00 at 14,403.00 and
Treasuries are weaker.
A relative calm over the financial
world this morning as investors continue to digest the recent Cyprus bailout
and the implications it could have for Italy, Spain and Portugal. An
executive board member on the European Central Bank said overnight the ECB will
do everything it can to preserve the common currency which is giving support to
the euro. The EURUSD is +0.155% and the EURJPY is up +0.412%. A
fair amount of economic data this morning with durable goods forecast up
3.9%. The S&P/Cash Shiller 20 City housing index for January is
forecast up 0.75%. Consumer Confidence for March is seen at 67.2, down
from 69.6 in February. New home sales are forecast at 420,000, down 3.9%
from last month. Argentine 5-yr Credit Default Swaps are up 437.22bp
to 3,634bp this morning.
A little additional moisture in
the last 24 hours, but mostly east of the MS-River. Dry everywhere west
of there. Light snow falling in the east this morning. Dry in the
Midwest until Friday at which time another 0.10-0.50” is forecast in
AR/MO/SE-KS/OK. This starts the system, and then Friday through Sunday
brings a total of 0.50-1.75” to the same border area of the aforementioned
states. Early next week sees more moisture fall west of that area
covering more of N-TX and OK. KS should see a general 0.25” of water
moisture. Northern Plains is mainly dry. Wet and cold persists in
the 6-10 and 8-14 according to NOAA last night. The above normal precip
is mainly focused in the mid-south and south. Little snowpack melt seen
for MN/ND/SD.
***Note Attachment from the CME Group related to margin
changes***
Despite the CME Group raising margins on swaps, new crop
corn futures and old/new spreads, margin induced selling pressure didn’t take
hold last night and markets chopped inside very tight ranges. As of
this writing, the corn overnight range is 2.5c, beans is 6c and wheat at
4c. This shouldn’t surprise given one of the four biggest USDA reports of
the year is two days away. As noted yesterday, don’t try and read too
much into the pre-report chop. More chatter about spring planting and the
acreage pie overnight, but nothing substantive. Cash markets were quiet
yesterday, mostly unchanged from Friday although corn looked a tad
firmer. Row crop spreads remain in general uptrends. We should all
go home and come back Thursday at 11:00…
Overnight news was sparse. Reuters carried articles
about Egypt’s dire wheat stock piles and their inability to source additional
supplies. Due to the economic and political turmoil of the last two
years, Egypt’s hard currency reserves have eroded by about $1 billion a month,
raising questions about its ability to pay cash at open tenders. Sources
say they have enough wheat to get to new crop in June, but Egypt will remain
the largest wheat importer in the world with the inability to pay. NASS
released updated wheat condition ratings with KS and TX showing slight declines
while OK improved. KS saw its G/E unchanged at 29%, but it’s weighted
index declined from 292 to 284. See table below. There were
articles out overnight also talking about the level of abandonment rising to
>20% this year. This has been talked about in the trade before, but
few have probably thought about the full implications. Also below is a
table showing southern corn planting progress. As one can see, three of
the four states are ahead of the 5-yr average for this week.
Other articles included IMEA reducing its forecast for Mato
Grosso soybean production to 23.6MMT from 24.1MMT due to the dry spell earlier
this year. The state’s harvest is estimated at 92.6% vs. 85.2% a week ago
and 94.4% a year ago. China’s state owned researcher Grain.Gov.Cn said
China’s major ports had 1.25MMT of palm oil stocks, down 30,000MT from a week
earlier, but up from 850,000MT a year ago. Inventories remain high,
pressuring crush margins. South Korea’s NOFI is tendering to buy 140,000MT of
corn for August delivery and 70,000MT of wheat for August 25th.
United Arab Emirates purchased 40,000MT of corn from South America.
Open interest changes yesterday included wheat up 860
contracts, corn up 1,670, beans down 1,120, meal up 730 and soyoil down
500. The string of huge open interest increases in corn looks like it is
finally over, but over 100,000 contracts has been added since March 1, at the
same time as funds were adding close to 100,000 contracts of net length over
the same time. Chinese markets were quiet with beans unchanged, meal up
$1.60, oil down 15c, corn down 0.75c, palm down 51c and wheat down 2.25c.
Paris Milling Wheat is up 0.31%, Rapeseed up 0.42%, UK feed wheat up 0.30%,
Corn up 0.44% and Canola is up 0.65%.
Call things mixed to get started, but it might be worth
noting how the pit likes the margin increases at 9:30. Locals are the
ones really affected by margin changes. Otherwise expect more chop and
slop ahead of Thursday with no major reports or data sets due out until
tomorrow. Corn is holding recent gains well, but the strength has been
mainly about specs adding length while the farmer sold physical. End
users seem well supplied unless the perception about stocks changes Thursday.
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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