5/1/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:45am: Dollar Index down 0.0240 at 79.4500; Eurp is up 0.00050 at 1.38750; S&P’s are up 1.25 at 1879.25; Dow futures are up 10.00 at 16521.00; 10-yr futures are down 0.06%; The Nikkei closed up 1.27% at 14,485.13; The Russian MICEX is up 0.09% at 1,306.01; Gold is down $12.00 at $1283.90; Copper is down $4.35 at $302.95; Crude Oil is down $0.51 at $99.24; Heating Oil is down $0.0196 at $2.9085; Paris Milling Wheat is closed.

Much of Europe is closed today due to the May Day Holiday. Delivering those baskets is serious business.  Mixed bag of global news otherwise with China’s April purchasing manager’s index rising a touch to 50.4 from 50.3 in March, and remained above the 50.0 contraction/expansion line.  Portugal is set to exit its three-year €78 billion bailout without an emergency backstop which is a remarkable turnaround for a country who six months ago seemed destined for a second bailout.  The IMF approved a $17 billion load for Ukraine over the next two years in a solid stamp of approval by western nations.  In the same breath, the IMF cut the Russian 2014 GDP forecast to 0.2% from 1.3% in 2013 thanks to capital outflow of $100 billion.  Further sanctions could put the nail in the recession coffin.  Weekly jobless claims in the US are expected to drop 9,000 to 320,000.  Also on the economic docket today are ISM Manufacturing Index for April (54.3), March Personal Spending (+0.6%), March Personal Income (+0.4%) and April total vehicle sales (16.2 million).

Light shower activity in MN this morning, otherwise the Midwest is mostly quiet.  Mostly dry weather will occur in the Midwest the next two days before a light system impacts SD on Saturday evening with totals expected around 0.10-0.20”.  The system looks to park over the upper-Midwest Sunday-Tuesday bringing shower activity to ND/SD/MT with the heaviest totals in MT.  The light band will extend from SD through S-MN to IL/IN/S-OH.  Additional precip is being shown by NOAA this morning moving in Tue-Thur focused on the same areas: MT/ND/SD/ but impacting MN/WI as well.  Totals will be heavier with the mid-week system.  The entire 7-day precip forecast is shown below.  Should this confirm, spring wheat planting will fall further behind averages.  6-10 and 8-14 day maps show more of the same with below normal temps for the northern plains, above normal for the lower Midwest and above normal precip for the entire Midwest.  The real question is how much planting progress can occur in between showers to make the moisture a positive rather than a negative?  Current forecasts should remain mostly favorable for price, especially the acres in question in ND/N-MN.

 

Weaker Ag markets to begin the month of May, led by beans down 10c on the front end following five straight days of.  Despite the constant barrage of market chatter over ongoing soybean imports from South America, the soy complex has been able to weather the storm fairly well as crushers remain armed with solid cash crush margins in the central corn belt.  In addition, CIF bids have actually appreciated this week with spot bids sitting around +68/70K vs +65/66K a week ago.  Traders will also be watching today’s export sales report for any cancelation activity, although nothing in cash markets or spreads the last week would suggest widespread cancellation activity.  Grains are also taking a breather this morning with both corn and wheat sitting on marginal gains for the week.  Weather forecasts remain supportive for both markets with too cool and wet in the Midwest for planting, and zero moisture forecast in the southern plains the next 7-days.  Many areas will hit 90* this weekend south of I-70.

Day 2 of the Kansas Wheat Tour produced an average yield of 30.8bpa on 271 stops vs. last year’s 37.1bpa.  Mark Hodges, executive director of Plains Grains, estimated extreme drought will limit OK wheat production to 66.5mbu on an average yield of 18.5bpa vs last year’s 105mbu crop.  If true, one analyst said this would be the first time the OK wheat crop had been below 70mbu since 1957.  Day 1 of the KS wheat tour produced an average yield 21% below last year while Day 2 was 17% below last year.  The production data so far is certainly supportive of recent KC futures gains, although it should be pointed out the crop is about 2-weeks behind average on development which can lead to more ambiguity of production guesses.  Either way, the news flow supports new contract highs in KC/CHI and KC/MW, and seasonal strength in wheat is also strong during May.  Charts are supportive, and there doesn’t seem to be a reason to step in front of this market just yet, although incremental sales on the rally when marketing targets are obtained is solid risk management.

Export sales estimates for this morning peg corn at 350-725TMT old, 150-625TMT new; wheat at 100-425TMT old, 200-450 new; soybeans at -250/+100 old, 200-450TMT new, meal at 50-190 old and 0-100 new.  Soy oil is seen at 0-50TMT old and 0-20TMT new.  Lots of confusion about the corn export program and the lack of strength in basis for upper-Midwest elevators.  At current, the vast majority of the current export program is occurring out of the Gulf, not the PNW.  This is due in large part to the unreliable rail service (and expense) as well as the Chinese program which continues to get canceled week after week.  This has created an excess amount of corn in the upper-Midwest with a lack of homes.  The few ethanol plants north of I-90 have been able to source all the corn necessary, and railroads have been reluctant to move corn East to the corn belt or south to Gulf, not wanting to congest the situation further.  This leaves elevators unwilling to bid for corn, and farmers holding old crop waiting for basis appreciation which hasn’t yet happened.  Until the central/east cornbelt shows signs of needing corn, or an export program develops off the PNW, corn basis looks to remain weak for the current time frame.

Ethanol production data remained solid yesterday at 898,000bbls, down from 910,000bbls/day last week but right at the level needed to hit the USDA’s marketing year forecast.

Deliveries overnight included 9 corn, and 113 Chicago wheat.  Minneapolis sees 143 re-deliveries and 106 fresh deliveries.  All of the re-deliveries in MPLS are Seg accounts, not commercials, as are the stoppers.  No big sponsors in MGEx.

 

Bottom Line: Export sales should help set the tone, although markets are due for a corrective day considering the strength witnessed this week.  All of the grain markets remain in uptrends with charts looking strong.  Weather forecasts are supportive to price for both wheat and corn, and the soybean market appears comfortable with the amount of soybeans currently pointed at the US.  Considering a lot of the soybeans won’t arrive until June or later, it is imperative basis and spreads remain stout to encourage remaining bean supplies to head to the crush plants.  Nothing as of yet to suggest managed funds are willing to abandon well entrenched long positions in the Ag markets with so much growing weather still in front of the market.  Weather forecasts will continue to be the focal point.

 

Good Luck Today.

 

HPC 5-1

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

 

4/30/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index down 0.1180 at 79.6910; Euro is up 0.00380 at  1.38480; S&P’s are down 1.75 at 1870.00; Dow futures are down 5.00 at 16,462.00; The Nikkei closed up 0.11% at 14,304.11; The DAX is off 0.07% at 9,579.99; The IBEX-35 is down 0.26% at 10,434.00; The Russian MICEX closed down 0.34% at 1,300.37; Gold is down $6.80 at $1292.20; Copper is down $2.05 at $307.25; Crude Oil is down $1.25 at $100.03; Heating Oil is down $0.0167 at $2.9468; Paris Milling Wheat is unchanged at €214.75/MT.

More political rancor out of Russia this morning as President Vladimir Putin is threatening to retaliate for further economic sanctions against Russian companies and citizens.  Experts think Putin could make life difficult for western companies operating in the country.  This comes as Kiev appears to be losing control over the pro-Russian militants in several of its eastern cities.  Still no impact to Agriculture shipments or sowing of spring crops.  FOMC meeting today with another $10 billion expected to be tapered from the Federal Reserve’s bond buying program.  This would scale the program down to $45 billion per month.  This morning will see the April ADP employment report which is expected to see 210,000 jobs added by private companies in April, up from 191,000 in March.  Weekly EIA inventory report is expected to show crude oil inventories up 1.1 million bbls to a new 26.5 year high.

Quieter radar returns this morning as most of the heavy storm systems exit the Midwest.  Scattered precip is still falling in E-ND/MN/WI.  The Midwest will see drying the next 3-days before precip begins moving back into the western corn belt and northern plains by late weekend/early next week.  Precip amounts should be heaviest in the Dakotas and MT with portions of C-ND seeing up to another 1.0” by next week.  Interesting maps from NOAA yesterday with the 6-10 showing a split right through the heart of the US with below normal temps north of I-80 and above normal temps south of there.  Precip is expected to see a similar pattern with above normal to the north and below normal to the south.  Essentially, cold and wet for corn growing areas and hot and dry for wheat areas.  About the opposite of that wanted by farmers.  KS temps will see 32* for lows and 90* for highs all in the next 5-days.

 

Mostly weaker trade this morning across the major Ag markets led by wheat as it back and fills following the solid rally witnessed yesterday.  News flow out of the Wheat Quality Council Tour remains supportive with Day 1 results showing a tour average yield of 34.7bpa, the lowest in a decade and compares with 43.8bpa last year and 53.4bpa in 2012.  Total KS production is being estimated at 299mbu according to a Bloomberg survey of analysts and would compare with 319mbu in 2013 and 378mbu in 2012.  Yields are expected to get worse as they move west and south.  Precip maps for the next 7-days show almost nothing south of NE, but all other major wheat producers in the world are enjoying favorable growing weather.  One of the other concern areas in the world was the Black Sea, but the map below shows forecasted precip the next 15-days there.  Also, charts are taking on a rather bullish tilt this last week.  On a monthly-continuation basis, Chicago wheat looks like it’s confirming a bullish divergence in monthly momentum, something that hasn’t happened since June of 2012 when prices rocketed towards $9.00 on the Midwest drought.  Both Minneapolis and Chicago are showing a possible inverted head and shoulders pattern which has many upside targets over $1.00 higher.  More confirmation will be needed in weeks and months ahead, but the US production situation isn’t improving and charts are really looking supportive.

Divergence occurring in corn basis this week with rail corn bids continuing to soften with weakening rail freight while CIF bids keep marching higher.  PNW, Hereford-TX and over Chicago markets are all weaker this week, while CIF is up 1-2c.  This is keeping local corn basis in the upper-Midwest weak without much hope for strength by the time producers need to make room before wheat harvest.  Ethanol plants are getting all the corn they need without having to pay up for it, and the strong export pull is occurring out of the Gulf, not the PNW which is supporting CIF bids.  Difficult situation for where the corn crops were some of the strongest last fall.

First Notice Day today for May futures with 144 Chicago Wheat being delivered out of the 253 certs registered for delivery.  There were also 2,596 soybean oil.  In an impressive sign, 64 soybean certificates were canceled last night with 1 barge placed for load out at ADM-Hennepin.  This left 1 certificate outstanding, and is a show of commercial support for the SK/SN spread.  Soybean supplies in the interior are still tight and will remain that way until SAM imports make a difference.  Cash traders said there are 420TMT of SAM soybeans in the lineup for the US.  There were 0 corn deliveries, but 453 Minneapolis wheat deliveries by Louis Dryfus.  437 were in Duluth, but there were no strong commercial stoppers which is why the MWK/MWN puked as bad as it did yesterday.  The quantity totals right around two Laker sized boats, so unsure if LDC canceled part of a Laker program due to slow ice thaw?

 

Bottom Line:  A little back and fill trade today wouldn’t be unreasonable after the rallies we’re on in all of the major grains.  Wheat charts are flashing a breakout, soymeal is hit new contract highs, soybeans are back at the upper-end of their range and corn remains in a strong up channel.  Charts are bullish, and most of the weather related chatter in the US is supportive.  Still, moisture in the corn belt long-term isn’t bullish and the drought monitor is slowly deteriorating in the Midwest.

 

Good Luck Today.

 

FSU precip 4-30

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

 

4/29/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:30am: Dollar Index down 0.0230 at 79.6630; Euro is up 0.00050 at 1.38570; S&P’s are up 6.25 at 1872.25; Dow futures are up 48.00 at 16,445.00; 10-yr futures are down 0.23%; The Nikkei closed down 0.98% at 14,288.23; The DAX is up 1.12% at 10,415.60; IBEX-35 is up 0.92% at 10,415.60; The Russian MICEX closed up 1.07% at 1,313.08; Gold is down $8.70 at $1290.30; Copper is down $0.55 at $308.75; Crude Oil is up $0.60 at $101.44; Heating Oil is up $0.0143 at $2.9588; Paris Milling Wheat is down €0.50 at €214.50.

Mostly better global equity markets this morning with much chatter related to the fresh sanctions put on Russian companies and individuals by the US, although debate rages whether the sanctions were hard-hitting enough.  17 companies and seven Russian officials were targeted, although the US stopped short of announcing sector-wide sanctions, preferring to keep those in their arsenal.  Archer Daniels Midland announced Q1 earnings this morning of $0.55/share, up from $0.46/share a year ago, but slightly missing analyst estimates.  Corn processing operating profit increased $64 million on strong results from ethanol, and oilseeds earnings were also solid thanks to firm margins at its soybean crush facilities.  Transportation and Ag Services were the weak links.  The Financial Times ran a story this morning about investors returning to passive long index vehicles in 2014.  The link can be found here: http://www.ft.com/intl/cms/s/0/cf516ab4-ced9-11e3-8e62-00144feabdc0.html?ftcamp=crm/email/2014429/nbe/USMorningHeadlines/product&siteedition=intl#axzz30H3T3gmz The negative correlation from equities are making Ag markets a sought after space.

More moisture falling this morning across the Midwest with rain in the central belt and snow storms in the west.  Models this morning continue pointing towards a wet week with very little fieldwork expected until next week.  The latest 5-day forecasted precip map is shown below.  NOAA maps continue to park below to much below normal temps across the Midwest during the 6-14 day period.  This pushes cooler than average temperatures out to May 12th which will remain a concern for uniform emergence of corn seeds.  At the end of the day, however, rain in Iowa isn’t bullish longer-term, especially when some of the WCB states were still showing various stages of drought.

 

Mixed markets following yesterday’s gains by most contracts, although wheat is under light pressure thanks to the systems moving across KS this morning which weren’t expressly forecast.  Headline grabbers include comments from the KS wheat tour currently working its way across KS and N-OK.  The executive director of Plains Grains, Inc. said the non-irrigated wheat is toast in S-KS/N-OK.  Yesterday’s crop progress reports were also of great interest with the national winter wheat index seeing a 1% decline to 33% good/excellent.  SRW and SWW mostly improved while HRW declined with the largest decline seen in MI where the crop dropped 8pts.  KS fell 3pts G/E and saw its P/VP go up 5pts.  HRS planting remains slow with 18% planted vs 11% last year but behind the 30% average. SD is progressing normally, but ND and MT are slower than average.

Corn planting progress was pegged at 19% complete vs 6% last week and 28% average.  Next week’s 5-yr average is 40%, and this year shouldn’t come anywhere close to that given the week’s moisture.  Oats planting progress remains woefully slow with just 34% planted vs 46% last year and 63% average.  Emergence is seen at 12% vs 45% average.  Sugar beet planting progress was shown at 16% vs 17% last year and 47% average.  Soybeans were 3% planted vs 4% average.  Last year the US farmer planted 43% of the corn crop in one week, and several analysts continue to point towards July temperature and moisture as far more important than planting date in determining yield.  One would certainly have to agree with that based on last year.  Forecasts do look drier next week, so the panic button is being pressed yet, but better cooperation from the weather is going to be needed.

Many were scratching their heads on the soybean rally yesterday, looking for news to blame the strength on.  CIF soybean bids were up 1-3c yesterday, and FOB Brazilian premiums climbed 10-15c from last week’s distressed sales levels.  The pop in basis levels accompanied chatter on Friday Chinese crush margins have been improving.  This along with comments from Bunge’s CEO suggesting the cancelations and defaults of Brazilian soybeans by Chinese crushers should run its course in the next 2-3 months all supported futures.  In addition, the SK/SN spread jumped 4.5c yesterday ahead of first notice day Wednesday as traders realize the ability to utilize delivery warehouse supplies won’t be available until mid-July once the May goes off the board.  Armed with strong crush margins, the 8.5c spread is a “cheap” cash call against not being able to source soybeans in IL during May and June.  Cash sources reported ADM rolling cash bids from the May to the July at several crush and ethanol plants yesterday.  This too is supportive of the CK/CN and SK/SN.  Any opportunistic or outright bearspreads still in play should be reviewed as FND approaches.  One other note about the stronger US and Brazilian soybean basis is the incredibly weak Argentine soybean basis.  Cash traders are reporting very low protein levels in the Argentine crop which is forcing sizable discounts to get the crop sold.  This could limit Argy meal imports into the US if it can’t meet quality specs.

While missed by this analyst, worth noting the 38 delivery certificates of HRW canceled in Salina, KS on Friday.  This supported the KWK/KWN, and the overall wheat complex.  KC continues to lead the wheat strength on ideas of declining crop production, and this has helped KW/MW and KW/W inter-market spreads hit new contract highs.  In fact, the KWK/WK spread hit +83.00c yesterday which was the highest level for a front-month KC/Chicago spread since November 2011.  Calendar spreads also suggest the KC crop is getting smaller as the KWN/KWU is up 3.5c in the last 11 sessions, and the KWK15/KWN15 is up 15c in the last 2-weeks.  Despite this, when comparing other drought-ridden years, the strength of KC over MPLS and CHI usually doesn’t last until expiration with seasonal weakness setting in for KC as we near harvest.  Keep this in mind for any inter-market hedging decisions.

Several news outlets commented on the declining crop prospects in Syria this year with the worst wheat crop expected in 40 years.  Analysts on the ground aren’t sure if there crop will make 1MMT, a level not breached since 1973 and would compare with 3.5MMT on average.  Drought is the primary driver, but the raging civil war is also preventing supplies and inputs from being sourced by the countries farmers.

Lastly, one source reported GAFTA (Grain and Feed Trade Association) issued an advisory yesterday morning that China’s National Bio-safety committee supposedly approved MIR-162 (Agrisure Vipterra) earlier this month for import.  However, the strain must still pass the Chinese Ministry of Agriculture for full approval which won’t consider the issue until June.  Still a positive step, although it hasn’t stopped China from canceling US bought corn boats.

 

Bottom Line:  Back and fill in wheat as we await more news from the KS wheat tour, while corn and soybeans can remain firm on strong basis and supportive spreads.  The US farmer is either planting or sitting, but he’s not selling grain until more is planted or the moisture abates and grain can be hauled.  Commodities are enjoying a resurgence in investor appetite, and the news flow remains more positive than negative at current levels.  Still, the crop will get planted eventually.  Review marketing objectives and targets early and often.

 

Good Luck Today.

 

HPC 4-29

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

 

4/28/2014 Morning Comments

Good Morning,

 

Outside Markets as of 7:00am: Dollar Index down 0.1360 at 79.6140; Euro is up 0.00250 at 1.38590; S&P’s are up 6.75 at 1866.50; Dow futures are up 66.00 at 16,389.00; 10-yr futures are down 0.06%; The Nikkei closed down 0.98%; The DAX is up 0.77% at 9,473.68; The IBEX-35 is up 0.30% at 10,336.80; The Russian MICEX closed off 0.04% at 1,279.56; Copper is down $0.20 at $309.10; Gold is down $0.50 at $1300.30; Crude Oil is up $0.54 at $101.14; Heating Oil is up $0.0047 at $2.9856; Paris Milling Wheat is down €1.50 at €215.75/MT.

Despite escalating tension over the weekend in the Ukraine/Russia saga, global equities are starting the last week of April on a positive note.  Pro-Russian militants turned to kidnapping over the weekend, with Ukraine mobilizing military forces in an attempt to take back the eastern part of its country.  The Whitehouse has announced a new round of sanctions targeting Russian companies and individuals for the country’s non-compliance with the Geneva agreement.  Unless the course is altered, chances will increase the Russian economy could hit a recession sometime in 2H2014 if capital continues to flee Russian markets.  The Federal Reserve’s FOMC will meet later this week where they are expected to taper another $10 billion from their bond-buying program.

The much anticipated rain event for the Midwest finally began last night with lots of 1.0” totals in MO/IL/IA/MN/SD/ND and lesser amounts in areas between.  Additional precip is expected the next several days for the Midwest, essentially bringing fieldwork to a stop across the corn belt.  Heaviest rain this morning is falling in MO/IL with snow falling in W-ND/E-MT.  6-10 and 8-14 day maps released from NOAA yesterday afternoon suggest a continuation of below normal temps, and in some cases much below normal, for the upper-Midwest.  Precip patterns are mixed, but the maps seem fairly consistent with below normal temps which seems more of a concern than the water.  Uniform emergence when temps remain stubbornly on or below 50* becomes difficult.  As the calendar flips to May, the planting conditions and pace will become more pressing.

 

Firmer to sharply firmer markets overnight led by old crop soybeans now that first notice day is upon us.  Stength is being derived from the Ukraine/Russian tensions, lack of rainfall in the southern plains over the weekend and none in the 7-day forecast and slow planting progress in the Midwest.  This afternoon’s crop progress report will be watched closely with most expecting corn planting progress between 18-22%.  Chatter suggests the number could be higher than expected, but little to no progress will be made this week.  The real concern is the 2-3 million acres analysts are throwing back into the mix from last year’s prevent plant.  The later the calendar gets, the less confident one can be about those be available for corn and soybeans.  The emergence issue is also one the market may pick up on more as we work our way into May.

The Wheat Quality Council Tour begins their observation of the winter wheat crop in the southern plains today, so expect to see a lot of pictures and articles about conditions there.  What will be interesting it their assessment of the freeze event a couple weeks back.  Their timing should be perfect to get a solid handle on any losses, which were expected to be worst in N-TX/S-OK.  KC continues to lead complex strength on conditions, although the rest of the Northern Hemisphere wheat producers are reportedly receiving good growing conditions.  China’s winter wheat crop is said to be in excellent shape.  Paris Milling Wheat is soft in this morning’s trade on the solid crop prospects they have coming.

Soybeans are clawing back last week’s losses as traders realize once May goes off the board, delivery warehouse supplies won’t be assessable again until mid-July.  The South American soybeans we’re importing aren’t working into the central belt crush locations who are still enjoying solid margins.  Cash guys think the US farmer is down to his last 5-10% of the crop in many areas, if not totally sold out already.  The SK/SN is up 3.50c this morning to +7.25c, and to be honest, additional strength back into double digits shouldn’t surprise.  Basis and spreads have more work to do in rationing remaining soybean supplies.  CIF trades Friday also suggest CK/CN shouldn’t see any weakness past -6.00c.  Zone 3 cash basis is trading well above delivery equivalence, making bullspreads look cheap at current values.

Export inspections out mid-morning with another big corn week expected.  Nothing to date which suggests the US won’t hit export targets, although wheat needs a few solid weeks to close out May to make sure the no export reduction takes place.

 

Bottom Line: Expect firmer markets for the duration as traders grow concerned about planting progress, lack of rainfall in wheat areas and the constant fear of disruption out of the Black Sea.  If tensions continue escalating, one would think world wheat importers will hasten their move in diversifying suppliers.  Soybeans supplies remain incredibly tight, and the market doesn’t seem convinced the current amount of South American soybean imports will do the job of alleviating said tightness.  Scales are tipped toward the bulls at the moment.

 

Good Luck Today.

 

4-28 precip

 

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS EMAIL. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

4/25/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:00am: Dollar Index down 0.0520 at 79.7170; Euro is up 0.00120 at 1.38350; S&P’s are down 4.75 at 1868.25; Dow futures are down 54.0 at 16,377.00; 10-yr futures are up 0.2%; The Nikkei closed up 0.17% at 14,429.26; The DAX is down 0.84% at 9,468.22; Gold is up $4.80 at $1295.40; Copper is down $0.65 at $308.15; Crude Oil is down $0.46 at $101.48; Heating Oil is down $0.0155 at $2.9940; Paris Milling Wheat is up €0.75 at €216.75/MT.

Groundhog’s Day once again with tensions escalating in Ukraine which is weighing on global equities as we cap off a mostly positive week in US financials.  Amid the chaos, the rating agency Standard and Poor’s cut Russia’s credit rating from BBB to BBB- as it warns of capital flight and risks to investment due to the crisis.  Ukraine continues to stand by its operation to drive pro-Russian insurgents out of occupied building in the eastern part of the country while Russia stands firm on its threats of invasion should its citizens be harmed.  The Russian MICEX finished down another 0.69% on the day and is down 14.09% YTD.  According to the US State Department, additional sanctions are “teed up” and ready to go should Russia continue not honoring the Geneva agreement.  In the US today, we’ll see April Consumer Confidence which is expected up 0.4 to 83.0, but is still below the 6 ¾ year high hit last July.

Additional moisture falling in the ECB this morning, but a pretty wide open Midwest otherwise before the next significant system rolls through this weekend.  The first map below shows past 48-hour precip totals for the Midwest, while the second map shows 5-day forecasted precip.  As one can plainly see, fieldwork is going to come to a grinding halt later this weekend as heavy rains impact almost every portion of the corn belt.  This is behind some of the strength witnessed this week, especially with the below normal temps following it up in the 6-15 day period.  Eastern portions of the southern plains should see some decent rain totals, but dry areas of SW-KS and the panhandle will remain dry.  Forecasted temps in HRW country this weekend will see solid 90’s followed up by 50’s next week for highs.  Still no alarm bells for planting, but behind average we will stay.  Estimates for Monday are 18-20% planted.

 

A little bit of a bounce as we close as we round a positive week for the grains and a negative week for the complex.  On the week, July soybeans are down 24.75c, July corn is up 9.75c and July Chicago Wheat is up 0.75c.  Export sales kept the ball rolling yesterday with sales at or above expectations in all categories, and shipments of corn hit  62.88mbu, the highest weekly total going back 24 years.  In addition, the sweltering temps forecast for the southern plains and the general lack of rain helped wheat futures claw back to positive on the week from earlier week losses.  Several analysts are bringing their HRW production forecasts down, and the Wheat Quality Council Tour begins Monday in the Southern Plains.  The constant threat of world wheat importers going outside of the Black Sea has also lent support, but to date we’ve seen no incremental business to any major MENA destinations.

CIF corn premiums continue to slowly firm at the Gulf, up another 2c yesterday with spot barges pegged at +66K vs +62K a week ago.  This is putting Zone 3 basis at 3.7-7.1c above gross delivery equivalence, meaning buying the CK/CN spread and standing in for delivery is currently at 9c winner.  Should help with spread stability and keep futures firm on the front-end.  In addition, Argentine FOB premiums keep firming, likely part of the strength in CIF as imports keep tapping US supplies.  June basis was up another 3c yesterday to +80N vs US June CIF at +63N.  The chart picture for July corn gets a whole lot more positive with a push over $5.13 ¾ which would open up a test of the highs at $5.24.  Demand from exports remains strong, but despite strong weekly ethanol production data, ethanol plants continue to bid as though they have adequate coverage, limiting domestic homes for WCB corn.

Old news this morning, but StatsCan said Canadian farmers plan to plant much less canola than analyst originally figured.  Canola plantings are seen at 19.801 million acres, down 0.7% from last year and well short of the 21.1 million forecast.  All-wheat acres are pegged at 24.766 million, down 4.8% from last year but exceeding the average analyst estimate of 24.4 million.  Oats acres are seen at 3.188 million, up 0.6% from a year ago and in-line with expectations.

Strong seasonals begin soon on many old crop/new crop spreads in corn and soybeans with CN/CZ typically weakening from now through June.  Many analysts tout the bullish old crop story has been priced in, and the market is solely focused on weather from here through planting.  Certainly hard to argue with, especially until the next major old crop update at the end of June.  Ethanol and exports are towing the line, but not yet doing enough to warrant another increase in either category.

 

 

Bottom Line:  Look for firmer trade in the early going today as there is more supportive news around this morning than negative.  Soybeans will continue battling with rumors of imports, defaults and cancellations, likely keeping us in a range 30c either side of $15.00.  Forecasts remain supportive for grains, as does solid export pull on corn.  Wheat is a weather market and will live and die with each model run.  Sometimes it’s helpful to take a step back and look at the last 3-6 months of price movement.  $5.00 new crop corn is still available on the board.

 

 

Good Luck Today.

 

48-hr precip 4-255-day HPC 4-25

 

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

4/24/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:00am: Dollar Index down 0.0420 at 79.8000; Euro up 0.00080 at 1.38220; S&P’s up 6.50 at 1879.50; Dow futures are up 34.00 at 16,494.00; 10-yr Treasuries are down 0.13%; The Nikkei closed down 0.97% at 14,404.99; The DAX is up 0.84% at 9,624.61; Gold is down $0.90 at $1280.20; Copper is up $3.60 at $307.00; Crude Oil is up $0.34 at $101.77; Heating Oil is up $0.0020 at $2.9778; Paris Milling Wheat is unchanged at €214.75/MT.

Global equities are mostly higher this morning after a lower Asian close when President Obama and Japan’s Prime Minister failed to reach a trade agreement.  Japan’s Prime Minister Shinzo Abe seemed more interested in re-affirming Japan and the US’s security ties in light of the building tension between China and Japan.  Speaking of escalating tension, Ukraine and Russia are splashed back on the front-page this morning as the Ukrainian government has been setting up checkpoints to keep pro-Russian protestors out of Ukrainian cities.  In the process, there are reports of 5 protestors being shot and killed by the Kiev backed forces.  Russian President Vladimir Putin said any attack on its citizens in Ukraine would be considered an attack on Russia itself.  This morning will see unemployment claims which are expected to show an increase of 11,000 to 315,000.

Lots of moisture working across the Mississippi River this morning with fieldwork being stalled in various stages.  The 7-day forecasted precip map shows heavy rains to impact S-MN/IA/MO/AR/L/IN/PH/KY/TN during the next week and should keep planting progress subdued after decent headway was made this week.  There are still relatively few who are overly concerned with delays to this point with May 5th being an unofficial line in the sand for concerns to increase.  NOAA extended maps continue to point towards below normal temps and below normal precip for the majority of the Midwest.  The temps almost seem more of a concern than the below normal precip being helpful as cool temperatures hamper even emergence.  4” soil temps below as of this morning.

 

Mostly firmer markets overnight in grains while soybeans continue to be the weak leg as has been the trend this week.  The themes in our market haven’t changed a great deal with the exception of US corn back to being the cheapest source of FOB supply in the world.  Argentine farmers have been slow sellers to date in part off inflation concerns and in part off a delayed crop.  $15.00 soybeans also seem more attractive than $5.00 corn.  At the close last night, US-Gulf corn was bid around +66K for spot, +64N for June and +63N for July putting is between $224/225/MT.  In Argentina, price per tonne was sitting around $243/MT for spot, $229/MT for June and $225/MT for July.  Ukraine remains near $245/MT.  Import needs should continue being sourced out of the US, especially with cheapening freight costs.  To wit, BNSF spot cars are now bid $500/car vs $2000 a week ago and $3500 a month ago.

While still on the subject of corn, worth noting the huge open interest increase yesterday on the bounce.  Corn open interest jumped 22,810 contracts on volume of 317,000.  Other notable changes included soybeans down 5,530, wheat up 2,340, meal up 270 and soy oil up 3,970.  Some of the starch definitely seems to be coming out of soybeans this week with Brazilian FOB premiums continuing to trade at distressed levels, CIF NOLA premiums arching lower and the rhetoric coming out of China about crusher financing.  Obtaining letters of credit is becoming a more difficult issue by the day, and just last night Reuters reported Chinese officials had detained Marubeni employees for failing to pay taxes on imported soybeans.  None of the aforementioned leaves a good taste in mouth of the global exporter when the globe’s largest natural long is experiencing the issues it is.

Old crop export sales estimates this morning show wheat at 100-450TMT, corn at 300-800TMT, soybeans at -250/+100TMT, meal at 25-175TMT and soy oil at 0-50TMT.  Keep an eye on wheat sales as with only 6-weeks left in the marketing year, wheat needs to see commitments rise a bit more to prevent a reduction in marketing year exports on next month’s WASDE report.  Traders will also be watching soybeans intently to see if this is the week we finally have a net negative sales report.

Spring wheat continues to trade at a 20-25c discount to KC winter wheat on the board through March.  Would continue monitoring this spread as even in very, very tight balance sheet years for HRW, the new crop spreads almost always see KC winter wheat lose premium relative to spring wheat and trade at par or even a substantial discount.  There may be inter-market opportunities available.

 

Bottom Line:  Grains are feeling the bounce this morning, and barring a disastrous export sales report, there is little to deter them from trading higher.  Fieldwork will come to a halt, planting progress will remain behind the averages, farmers are focused on farming and not selling grain, and there is just enough geo-political unrest to keep things supported.  Soybeans have been the bull-leg of spreads for weeks, and as funds roll length forward, they are entitled to some profit taking.  Still no South American soybeans trading into Iowa.

 

 

Good Luck Today.

Soil Temps 4-24

 

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

 

4/22/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:15am: Dollar Index down 0.0760 at 79.8760; Euro is up 0.00120 at 1.38060; S&P’s are up 1.25 at 1865.75; Dow futures are up 9.00 at 16,380.00; 10-yr is up 0.05%; The Nikkei closed down 0.85% at 14,388.77; The DAX is up 1.17% at 9,519.86; The FTSE-100 is up 0.96% at 6,689.07; The IBEX-35 is up 0.71% at 10,365.90; Gold is down $3.30 at $1290.60; Copper is down $1.90 at $301.50; Crude Oil is down $0.42 at $103.21; Heating Oil is down $0.0082 at $3.0035; Paris Milling Wheat is down €2.75 at €214.75/MT.

World equities are mostly firmer today as Q1 earnings seasons has gotten off to a solid start, although investors remain wary of this evening’s report on Chinese manufacturing as well as the possibility of more sanctions being levied against Russia.  The US has warned it will order new economic sanctions on Russia if it does not comply with the Geneva accord entered last week.  Pro-Moscow gunmen are showing no signs of surrendering government buildings they have seized, and it widely suspected the protesters are backed by the Kremlin who is trying to incite civil war in Ukraine.  Existing home sales data will be released in the US today, and it is expected to show a 1.1% decline to 4.55 million units which would be a 1 ¾ year low.  The 1% rise interest rates combined with lower consumer confidence tied to the Affordable Care act are being cited.

 

After a band of showers exits the far eastern corn belt this morning, the Midwest should see pretty wide open weather until this evening when another system tracks through the upper-Midwest and far-western corn belt.  This will produce modest precip in SD/ND/MN with heavier totals in IA/NE/KS.  This system will push East and impact MO/IL/WI on Thursday into Friday with heaviest totals in MO/WI up to 1.15”.  Additional moisture will push in this weekend with South Dakota seeing another shot Sunday into Monday with totals between 0.50-1.00” while S-IL/MO/AR see another 0.75-2.00”.  Lots of showers around, but expect planting to surge when and where it can occur.  Extended maps from NOAA show a cooling of temperatures to below normal during the 6-10 and 8-14, but precip will slip from above normal to below normal late in the period as we round out April.

Firmer markets overnight as prices bounce from yesterday’s sharp selloff and react to the mostly friendly crop progress report issued yesterday afternoon.  Yesterday’s loss leader, wheat, succumbed to selling pressure based on better than expected rainfall over the weekend, the forecast for rain this week in the southern plains, temporary optimism surrounding Ukraine/Russia and the trimming of fund length.  The technical picture of wheat is not incredibly encouraging, and if the lows from April 11th are breached, it will look increasingly likely the entire rally from the end of January through March 20th was bear-market corrective, and prices are set to trend towards those January lows.  Lots to happen between now and then, namely growing weather, but funds should be a little anxious about the developing chart picture in wheat.  A close over $7.18 basis July Chicago would be encouraging.

Yesterday’s crop progress report was about as expected to maybe a touch friendly with nation-wide corn planting progress pegged at 6% vs 3% last week and 14% on the 5-yr average.  Progress is slightly ahead of last year’s incredibly slow pace, and should be near 20-25% next Monday.  There are roughly 85 million acres of corn remaining to be planted.  Spring wheat planting progress was estimated at 10% vs 6% last week and 19% average.  North Dakota is 1% planted.  Oats planting progress was listed at 20% complete vs 41% last year and 55% on the 5-yr average.  The national winter wheat condition held steady at 34% G/E vs 35% last year.  Notable changes were witnessed in OK where G/E dropped 3pts to 11% G/E, while poor/very poor increased 7% to 61%.  Freeze damage is still being assessed.  9% of the winter wheat crop is headed vs 17% average with TX at 34% and OK at 38%.

Statistics Canada will be out Thursday with their first estimates of plantings on principle field crops.  Analysts expect the agency to show farmers intending to plant 24.4 million acres of wheat, down 7% from a year ago.  Canola seedings are seen up 6% to 21.1 million acres, the second largest on record after 2012’s 22 million.  Oats acres are seen steady at 3.2 million acres.  Incredibly wide basis levels, -$3.00 under the Minneapolis Board price in some cases, are expected to encourage less wheat plantings in 2014.  Poor rail performance is also thought to be inhibiting additional plantings.

Australia’s Bureau of Meteorology said in a recent statement El Nino was likely this year, and now put chances at 65% for the weather phenomena showing up as early as July.  El Nino is associated with above normal rainfall in the Americas as well as drought in Australia and Southeast Asia.

Yesterday’s export inspections on corn of 63.0 million bushels were tied for the largest single week since 1990.  Still plenty of chatter about Chinese soybean length being sold and looking for a home.  Several more Brazilian soybean cargoes were said to be trading into Mobile, AL with expectations of being railed to a southeast crusher.  Brazilian harvest is thought to be around 90% complete according to SAFRAS.  Delivery certificates continue to be canceled, and funds continue to load up on beans which should keep SN/SX very resilient above $2.50.

 

Bottom Line: Markets can find a little bit of a bounce today from yesterday’s drubbing, especially with the extended forecast looking a bit wet and cool for ramping up the planting pace.  South American soybeans are still heading to the US, and Chinese soybean inventories remain an issue.  Still, the US has to get to the end of August before new crop beans are harvested, so downside should remain limited as long as Chinese economic data doesn’t suggest a more severe slowdown is waiting in the wings.  Charts on corn and wheat need to turn around or risk further erosion.  Weather maps remain key.

 

NOAA 4-22

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

 

4/21/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:30am: Dollar Index down 0.0210 at 79.8260; Euro is up 0.0020 at 1.38190; S&P’s up 1.75 at 1859.75; Dow futures up 17.00 at 16,360.00’ 10-yr is down 0.03%; The Nikkei closed down 0.03% at 14,512.38; The FTSE is up 0.62% at 6,625.25; The IBEX-35 is up 0.24% at 10,292.40; Gold is down $6.00 at 1,287.90; Copper is down $0.10 at $303.30; Crude Oil is down $0.19 at $104.13; Heating Oil is down $0.0140 at $2.9942; Paris Milling Wheat is still closed from the weekend.

Mixed to better financial markets overnight as the world slowly comes back from the Easter holiday.  One of the biggest pieces of news over the weekend was obviously the tentative agreement reached between Ukraine and Russia which called on all parties to make sure groups are disarmed and free captured government buildings.  It also included the call for constitutional reform that would engage representatives of all regions, but didn’t have any reference to Ukraine’s bloc-free statue.  The agreement was vague at best, but was a step in the right direction.  A shooting at a checkpoint over the weekend highlighted the fact tensions are still very high, and the conflict isn’t yet over.  Barclays became the latest Wall Street bank to wind down it’s commodity trading arm with investment banks fleeing the space in droves.  Q1 earnings season continues this week with 83 companies of the S&P 500 reporting.  Next week 155 of the 500 will be releasing earnings data.  The Bloomberg Economic Surprise Index hit a 3-month high Friday of -0.003, indicating recent US economic data has been strong relative to market expectations.  The CRB-Food Index is now up 21.6% YTD.

Some decent rainfall amounts around over the weekend with two portions of TX receiving between 0.25-1.00” in total, although the N-TX plains didn’t see the same rain.  W-KS and E-NE also saw scattered totals, and N-IA saw cumulative totals of 0.50-1.00”.  the SE-US including AL/GA/SC/NC likely had fieldwork delayed as well with the heaviest totals hitting 2.5-3.0”.  The forecast has several systems around this week which will impact the central and southern corn belt as well as the eastern portions of the southern plains.  The 7-day forecasted precip map has some rather heavy totals for E-KS/E-NE/SW-IA/MO/AR/E-OK/E-TX.  See map below.  Few will ward off the rain, especially those in the southern plains.  Some decent chances in the driest areas of  HRW country.  Not much guidance from the 6-10 and 8-14 days maps from NOAA, although warmer temps look to remain going forward.

 

The biggest mover overnight would be the wheat market with double digit losses occurring within the first five minutes of the overnight session on weekend rainfall, forecasts for this week and a slight easing in the Ukraine/Russia tensions.  While 100% coverage didn’t occur, rains that did fall should help the battered wheat crop, and the forecasts are certainly promising like the ones shown below.  Traders have pumped up wheat on fear of disruptions to exports out of the Black Sea due to the conflict there, but despite the events to date, no shipments have been compromised and exporters continue to mop up nearly every high profile wheat tender.  Of growing concern also is the technical picture in the wheat market until prices can take out the March 20th highs.  As long as those highs remain in place, the rally which stalled last Wednesday looks like a corrective rally and selling opportunity.

Row crops are also under pressure this morning as soybeans opened 10c better last night to find themselves down 3-7c this morning.  Lots of questions remain about Chinese crush demand, and when/if US beans will see cancellations.  Before the forecasted rains move in later this week, planting progress is expected to see a notable jump.  Weekend weather was rather conducive to planting in many areas, while soil temperatures remain a bit cool north of I-80 for popping corn out of the ground.  Tonight’s crop progress report will be a focus for traders with average corn planting progress for this week at 14%.  The incredibly fast 2012 planting campaign, in which 25% of the crop was planted, certainly skews the numbers up a bit.  On Friday while markets were closed, the USDA announced 128,000MT of corn sold to unknown destinations for the 13/14 marketing year.  Corn exports continue to roll.

China released March import data overnight with total corn imports at 48,131MT, down 79% y/y.  Wheat imports were pegged at 538,950MT, up 86% y/y with the top destination being Australia at 325,684MT.  The US, France, Canada and Kazakhstan also sent wheat to China in March.  Soybean imports totaled 4.623MMT, up 20.4% y/y with the US still comprising 3.692MMT of that total.  Chinese imports of US soybeans YTD are up 11.67%, while Brazil at 929,709MT is up 121% from there terrible export performance in 2013.  Malaysian Palm Oil exports from April 1-20 totaled 717,842MT, down 6.0% from a month ago as palm oil prices have rallied sharply the past several weeks.

Will have a more in-depth look at the Commitments of Traders Report tomorrow.

 

Bottom Line:  Slow news overnight with the focus squarely on planting weather, rainfall in the southern plains and the global trade flows of soybeans.  Crop progress reports this evening will be a feature, but the markets don’t seem too concerned about any planting delays just yet.  At the end of the day, old crop corn demand is still better than expected, we need good yields in 14/15 to build carryout and acres are probably going to prove larger than current estimates provided farmers can get into the fields.  The soybean market is tight and will remain tight no matter how many imports we pencil in.  Still too many questions on the size of the HRW crop and too few answers.  Mixed to weaker trade with midday maps eyed.

 

 

 

 

Good Luck Today.

 

HPC 4-21

 

 

 

Tregg Cronin

Market Analyst

Tregg.Cronin@halocommodities.com

www.halocommodities.com

@5thWave_tcronin

 

 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.