2/5/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:25am: Dollar Index down 0.0750 at 93.9160; Euro is up 0.00070 at 1.14300; S&P‘s are up 14.00 at 2044.00; Dow futures are up 97.00 at 17,665.00; 10-yr futures are up 0.06%; The Nikkei closed down 0.98% at 17,504.62; The DAX is down 0.13% at 10,897.22; The IBEX-35 is down 0.64% at 10,510.10; Gold is down $3.90 at $1260.60; Copper is down $5.10 at $254.00; Crude Oil is up $.70 at $49.15; Heating Oil is up $0.0179 at $1.7845; Paris Milling Wheat is up €1.25 at €187.75/MT.

The incredible volatility in crude oil continued yesterday with spot month futures dropping $4.60/bbl by the close to erase the previous day’s $3.48/bbl gain and more.  www.sentimentrader.com published an article last night looking at the volatility in crude oil compared to other major bottoms in crude in the past.  Over the last 30-days, crude oil has witnessed three days with 3-standard deviation moves (7%).  This is well short of the major bottoms witnessed in 2008 and 1986 in which they saw 11 and 10, respectively.  Still, this sort of whipsaw activity is consistent with a larger degree bottom, although still probably premature to conclude that as the case.  Crude oil inventories in the week ended 1/30 rose by 6.33 million barrels to 413.06 million barrels, much higher than the +3.70 million barrel build estimate.  Stocks at 413.06 million barrels are another new record going back to August 1986.

The band of snow heading towards the East coast and dumping snow along the way looks to finally be dissipating over the Atlantic.  Moisture the next 3-days will be confined to the Dakotas/MN/MT and the Canadian Prairies.  Although, with the warmup on tap, uncertain as to how this moisture will fall.  The temperature dichotomy will remain in place the next 15-days with above normal temps west of the MS-River and below normal temps east of there.  Moisture will also be a mixed bag with much below normal in the US-SE, but above normal over the Great Lakes and Northern Plains.  Hard to find a forecaster who doesn’t call current weather in SAM nearly ideal so expect crop ideas there to hold or get larger.  Corn conditions in Argentina are said to be excellent.

 

In a similar fashion, although much less volatile, one could say the grain markets are exercising very choppy trading behavior which can be consistent with a near-term bottom.  All three of the major Ag commodity markets have posted reversals from the previous week, or have taken out the previous week’s highs, some of which have occurred at major Fibonacci retracement and progression levels.  More than anything, it feels as though our markets are still subject to money flow in the near-term while price tries to find the sweet spot of where the US/SAM farmer turns a palms out seller, and where the natural consumptive demand rests.  US corn has a ton of competition into Asia from Ukrainian maize, US wheat is not close to connecting on MENA business and the trade flows have slowly, but surely, shifted from the US to SAM on soybeans.  When the aforementioned happens, we turn inward.  Ethanol grind is still strong while livestock margins have slipped notably.  Domestic wheat basis remains strong, although tied more to protein and quality considerations.  Soy crush margins are strong and meal basis is above delivery equivalence.  All of the above looks like a holding pattern to this analyst.

Ethanol production in the week ended 1/30 finally saw the pullback many have been waiting for with per day production pegged at 948,000bbls/day vs. 978,000bbls/day the week previous.  This is the lowest production total since early November, but importantly, still well above the 908,000bbls/day needed to hit the USDA’s 5.175bbu corn demand for ethanol estimate.  Despite the pullback in production, stocks continued to climb, which may be the more important headline.  Stocks rose 355,000bbls to 20.986 million barrels, the highest since June 2012.  Fortunately, RBOB has moved backed to a premium over ethanol for spot month out through August.  At 6c a gallon for spot month and 28-29c a gallon through the rest of the curve, some discretionary blending might actually come back to the ethanol sector which is what the stocks situation needs badly.

StatsCan also released their stocks of principle field crops as of December 31, 2014 yesterday, coming in at or slightly above expectations.  Total wheat stocks as of 12/31 totaled 24.818MMT, down around 13.5% from 2013 but right in line with expectations of 25MMT.  Stocks of canola totaled 11.1MMT vs. the average trade estimate of 10.7MMT, but down from last year’s 12.4MMT.  Stocks at 11.1MMT would still be the second largest on record.  Nothing here to really move the needle, and I think the larger theme to focus on is the continued lack of Canadian wheat exports to the US through December.  Through Dec, exports to the US are down over 50%, despite many thinking the weak Loonie would support increased movement south.  This will have to be monitored in coming months to gauge export velocity as it relates to total US imports.

CIF NOLA SRW premiums continued to ease yesterday, but barge freight slipped faster, keeping delivery economics well above gross DVE.  The upper and lower-OH River Valley remains 18-26c above DVE for Feb, 23-30c above for Mar, 25-32c above for May and 3-10c above for July.  FOB Toledo rail bids were whispered around +30/35H and Chicago around +20/25H, both above gross DVE.  Still no reason to turn bearish WH/WK or WH/WN at current levels given aforementioned basis bids.  The index fund bearspread roll will get underway tomorrow, so be aware of drive-by weakness from index flows.  A lot of chatter yesterday about Egypt agreeing to use $100 million in US grant money to buy American wheat, with payment made in Egyptian pounds.  None of it was enough to get algos going, and obviously CIF NOLA premiums didn’t exhibit any undue influence.  Seemed to be a lot more confusion about the article than clarity, especially given suspect quality of this year’s old crop SRW.  Some posited it will be for new crop slots, others suggested US-HRW could be in the mix.  Will continue to watch headlines for any change.

Another feature worth pointing out has been the continued downward assault on hog crush margins.  Board spreads hit contract lows for the G, J, N and Q contracts yesterday, and the chart below shows front-month rolling hog crush at the lowest levels since April of 2013.  As one will notice in the chart, much better hog crush margins have been present for much of 2014, and odds are high integrated hog feeding operations took that opportunity to forward hedge.  Many think attractive margins were locked in out through June 2015.  This should minimize the impact of the reduced margin structure, but it is still important to keep in mind for forward projections.

Export sales out momentarily.  Wheat seen at 250-650TMT, corn at 700-1,150TMT, soybeans at 200-600TMT, meal at 120-300TMT and soy oil at 5-20TMT.

 

Bottom Line: Our markets seem to be settling into a tighter range, exhibiting the choppiness commonly associated with at least an intermediate term bottom.  Farm gate movement has been better this week, but by no means heavy.  Many think the US farmer is behind the 8-ball on marketing, but as of February 5th, he doesn’t seem to be any big hurry to change that situation.

 

Good Luck Today.

Hog Crush 2-5

 

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.

2/4/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:25am: Dollar Index up 0.1780 at 93.7780; Euro down 0.002870 at 1.14620; S&P’s are down 7.00 at 2035.00; Dow futures are down 34.00 at 17,538.00; 10-yr futures are unchanged; The Nikkei closed up 1.98% at 17,678.74; The DAX closed down 0.19% at 10,870.55; The IBEX-35 is down 0.33% at 10,563.40; Gold is up $6.60 at $1266.90; Copper is up $1.05 at $259.20; Crude Oil is down $1.62 at $51.42; Heating Oil is down $0.0246 at $1.8219; Paris Milling Wheat is up €1.25 at €187.75/MT.

Crude oil is once again grabbing headlines after a 7% move Tuesday to follow up its 8% move on Friday, both of which helped Brent crude move into a bull market for 2014.  Investors are hoping oil has found a floor after a 60% freefall, but based on crude oil carloadings, inventories at Cushing, OK, and the productivity from new wells replacing legacy wells, it might be premature to think supplies have peaked in the US.  Another fly in the ointment of crude oil is the fact calendar spreads haven’t rallied anywhere close to what flat price has.  Front month CLH/CLJ is trading at -0.85c this morning, up from its low print of -1.03 on 2/2, but only 0.03 up from its low close of -0.88c the same day.  Back month crude spreads have rallied even less.  Crude oil is certainly entitled to some bounce, having suffered one of the worst selloffs in recent memory, but definitively concluding crude has bottomed could prove to be risky.  The weekly EIA inventory report is expected to show a 3.0 million bbl increase in crude oil inventories.  Current oil inventories have risen 21.3 million bbls (5.5%) since the beginning of the year to a record high of 406.727 million bbls.

A band of snow moving across the central plains this morning, bringing accumulation to WU/CO/NE/IA and expected to bring snow to the Great Lakes and ECB as well.  The upper-Midwest has built back a little bit of snow cover, with most areas north of KS/MO/KY having at least some protection as of this morning.  Temps will be rising into the weekend for much of the Midwest, however, putting much of that snow cover at risk once again.  The map below shows high temps for Friday with Saturday and Sunday to see similar temps.  The ridge of high temps is cut off with the snow cover as areas around the Great Lakes with more abundant accumulation will remain colder.  Would imagine we will start to hear about wheat breaking dormancy once again in the southern plains in coming weeks.

 

Mixed markets this morning following the sharp rallies across the entire Ag complex yesterday.  The severity of the rally certainly had fund activity written all over it, especially as basis continues to muddle along which wouldn’t imply robust consumer demand.  Farm gate movement did pick up a bit yesterday, but still nothing above a “5” on the old 1-10 scale according to most cash traders.  Usually, the least complicated approach proves to be the most appropriate, and in the case of grains, funds were toting the largest shorts in beans since mid-September, the largest shorts in wheat since mid-November and the smallest net long in corn since late-October.  Add in an impressive day from crude oil as well as technical considerations, and we had the makings of an abrupt covering-type rally.  Most important will be how the natural seller, farmers, follow the rally?  It is widely expected the US farmer still owns 60% of the US corn crop, either on the farm or in Delayed Pricing programs.  Soybeans it is thought less to around 30-40%.  Combine slower than expected farmer selling in SAM, and there remains ample supply to throw at a rally.  Vigilant watching of basis and spreads here will prove wise.

Taking care of a bit of house-keeping from yesterday, Egypt’s GASC bought 300,000MT of French and Romanian wheat for Mar 1-10 shipment.  The average price of the purchase was $236.25/MT C&F.  There was no US-SRW offered in the tender, no Russian and one Ukrainian boat.  CIF NOLA SRW premiums didn’t show a lot of change yesterday, going home offered +95H for Feb/Mar against bids around +75H which could be called softer than Monday.  Corn and soybean premiums also held ground yesterday, indicating what supply was moving wasn’t making it to the river or the west coast.  Going home, CIF NOLA corn premiums were bid +58/59H for Feb/Mar and +55H for AM which could be called steady.  PNW corn shuttles went home +102/103H bids against +106H offers for Feb/Mar.  The PNW continues to look like a situation where export business was conducted when the PNW was the cheapest FOB corn supply in the world, which was also right before the board slid 40-50c/bu.  There appears to be a short, whether reseller or outright export, which is trying to cover considering the FOB spread with the Gulf now in place.  CIF NOLA soybeans went home +90H for Jan, +78/80H for Feb, steady.

Spreads did pop on the rally yesterday with the CH/CK rising to -7.50c overnight, the highest trade since 1/22.  Chicago wheat spreads were firmer, continuing their trek higher since putting in lows on 1/28.  At its zenith yesterday, the KWH/KWK hit -0.75c, the highest trade since 12/1.  MWH/MWK also joined in the party, hitting -2.00c at the highs yesterday and this morning, the highest trades since last May.  Hard wheats are certainly correcting sharply against Chicago, which appears to be warranted given the strength Chicago has been exhibiting much of the winter.  As noted in yesterday’s comments, wheat/corn spreads are by no means cheap at current levels relative to history, but considering the correction already witnessed, these inter-market spreads look ripe for profit taking.  W/C and KW/C still near the lows on a weight-adjusted basis.

Before switching away from wheat, worth noting the changes in deliverable stocks yesterday.  Minneapolis saw another nice bump in Duluth with supplies now at 20.025mbu vs. 19.544mbu last week and 16.180mbu last year.  Combined supplies in MPLS/DUL now total 25.935mbu, up  32.8% from a year ago at this time.  This makes the spread strength a little more peculiar, although protein spreads continue to suggest a shortage of premium milling wheat in the country.  SRW total wheat stocks fell 791,000 bushels last week to 58.683mbu which would compare with 48.516mbu last year at this time.  Deliverable grades fell 867,000 bushels to 38.434mbu, however, which is around 6.5mbu lower than a year ago.  Milling grade supplies continue to drop while non-deliverable grades hold to build.  HRW supplies fell 905,000 bushels on the week to 44.430mbu vs. 59.681mbu a year ago.

Domestic margins for corn end users as complied by www.rjomrt.com mostly fell last week with gross ethanol margins calculated at $0.68/gln vs. $0.73/gln last week and $0.91/gln last year.  Broiler crush was estimated at 74.93c/lb vs. 78.01c/lb last week and 72.59c/lb last year.  Hog crush fell to $70.55/hd vs. $75.30/hd last week and $128.87/hd last year.  Cattle crush remains negative at $55.96/hd vs. $60.04/hd last week and $129.91/hd last year.  Crush margins in C-IL remain positive.

Weekly ethanol production will be released at 9:30 this morning with a lot of focus on the continued decline in estimated margins.  It seems most market observers are waiting for ethanol production to decline along with margins, much the same traders are waiting for crude oil production to decline along with price.  Production last week at 978,000bbls/day was well above the 909,000bbls/day needed while stocks increased to 20.631 million barrels.

 

Bottom Line: A little back and fill for row crops after the largest rallies in weeks.  It doesn’t seem like the US farmer is engaged at these prices just yet, but how long the gains hang around could have a lot to say about that.  Monitoring weekly demand statistics along with basis and spreads should give us the clearest view of where price is headed.  South American farmers have been slow sellers as well recently, but have a mountain of grain to throw at the market in coming weeks/months.

 

Good Luck Today.

 

High Temp 2-4

 

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.

 

2/3/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index down 0.0710 at 94.4390; Euro up 0.00060 at 1.13560; Aussie Dollar down 1.75% at 0.76490; S&P’s are up 9.00 at 2026.00; Dow futures are up 70.00 at 17,369.00; 10-yr futures are down 0.30%; THE Nikkei closed down 1.27% at 17,335.85; The DAX is up 1.20% at 10,958.05; The IBEX-35 is up 2.25% at 10,560.00; Gold is up $4.00 at $1280.90; Copper is up $8.85 at $257.85; Crude Oil is up $1.53 at $51.10; Heating Oil is up $0.0479 at $1.8054; Paris Milling Wheat is up €2.00 at €185.00/MT.

A surprise rate cut by the Reserve Bank of Australia sent stocks there to a near-seven-year high, but continued pummeling of the Aussie Dollar sent it to the lowest level since May 2009.  RBA cut its benchmark interest rate by 0.25bp to a record low 2.25% in an attempt to revive the economy which is being hit especially hard with the fall in commodity prices.  A particularly interesting article from www.sentimentrader.com took a look at correlations with the VIX “fear gauge” and found that Interest Rates and the US Dollar currently have the largest negative correlation with the index, a sign that traders deem these two markets to be more important than most others at the current time.  The interest rate:VIX correlation stands at -0.80 and the Dollar:Vix sits at -0.44, both the most extreme of the last two years.

Fairly quiet Midwest radar this morning with the exception of some snow moving across MT and ND.  There will be several rounds of precip moving across the upper-Midwest the next several days with heaviest amounts seen in MT/ND/MN to the tune of 0.50-0.70” of moisture.  Many of these areas of the upper-Midwest have entered drought status on the latest drought monitor, so some precip relief is needed.  Extended weather maps look to remain fairly steady the next 15-days with normal/above precip for the upper Plains and Great Lakes while a drier bias holds for the southern plains and US-SE.  Temps will remain normal/above in the west and normal/below in the east.  Hard to call SAM weather anything but favorable.  Harvest as of Monday in Brazil was estimated at 6% vs. 3% a week ago.

 

A bit of turnaround Tuesday action in our grain markets led by row crops which find themselves up over 1.0% heading into the 7:00 hour.  All of our markets remain in downtrends to varying degrees, and need substantial upside progress to flip trends higher.  It appears as though wheat and corn especially are searching for the level which incites consumer demand above and beyond passive buying to cover spot needs.  Despite corn being off 45c from the December highs and wheat off $1.70, managed funds still seem ready and willing to shed corn length and engage wheat shorts.  Index funds have finally ceased their sell-commodities program, but until crude oil can mount a sustained rally, we shouldn’t expect that demand to return.  February can be an especially slow month for commodity news, aside from the spring insurance pricing period.  Otherwise traders will be looking forward to the February 20th USDA Outlook Conference at which the USDA gives us their first guess about the 2015/16 balance sheet.  It does feel as though next year’s crop will be the next opportunity for our markets to really break from current ranges.

Several states released crop progress reports yesterday afternoon, and going into the reports there was a fair amount of concern given precip patterns during the month of December.  The first map below shows the percent of normal precip for the month of December in KS/OK/TX/SE-CO.  As one can see, there were notable moisture deficits in OK and the TX-panhandle.  Fast forward a month to the end of January, however, and much of that deficit appears to have been erased with favorable moisture patterns across TX throughout Jan.  CO reported winter wheat conditions at 38% G/E and 14% P/VP.  KS wheat conditions were seen at 46% G/E and 14% P/VP. OK wheat conditions were estimated at 41% G/E and 13% P/VP, while TX was seen at 42% G/E and 16% P/VP.  Spring wheat and oats planting was said to be finishing up in S-TX.

Wheat/corn spreads hit fresh contract lows yesterday for the WH/CH through WZ/CZ contracts, while KWK/CK through KWZ/CZ also hit fresh contract lows.  On a front-month continuous basis, W/C is at the lowest levels since mid-July, while KW/C is at the lowest levels since July 2013.  When looking at history, W/C typically trades in a range between 50c and 150c, with the exception of 2007/08 and 2011/12 when W/C moved outside of this band for an extended time period.  So given that band, W/C at +123.75c is still near the upper level of that band despite the $1.25 move off the highs.  However, W/C also hasn’t traded below $1.20 since July-2013 either, and seasonally W/C begins to strengthen by the end of February.  Managed fund positions could have much to do with that spreads trajectory and their willingness to extend current positions will guide the spread.

Export inspections data released yesterday morning showed wheat shipments at 14.5mbu vs. the 19.8mbu needed, corn shipments at 26.0mbu vs. 34.8mbu needed and soybean shipments at 62.4mbu vs. the 12.1mbu needed.  The biggest surprise was obviously the torrid pace soy shipments continue to run at despite the world transitioning to SAM supply in another 30-days.  Shipments now total 1.376bbu, up 18.8% from a year ago while the USDA marketing year forecast stands at 1.770bbu.  This 77.7% shipped percentage is extremely impressive and might suggest the USDA’s export forecast is still a bit too low.  Many private forecasters are carrying 1.800bbu in their balance sheets, but shipments and cancellations during February will give us a better clue than anything as to the USDA export potential this year.

Corn basis continues to work its way higher, probably a sign of slow farm gate selling more than anything.  PNW corn shuttles went home bid +102/103H, up 2-3c from a week ago and likely a reseller short trying to cover positions after the dearth of farm selling.  CIF NOLA corn barges went home bid +58/62H for Feb, +59/62H for Mar and +54/57K for AM.  Call these up 2-3c from Friday’s levels.  Columbus and Evansville 90’s seem to be grouped around option-price bids and +6/8H for offers.  Decatur, IL is bid +8H, up 4c from Friday.  Given the PNW’s lack of competitiveness with the Gulf, poor ethanol crush margins and slack livestock margins for cattle and hogs, would characterize above basis strength as lack of farm gate replacement until proven otherwise.  Regardless, keep eyes on the CH/CK at wider than -9.00c, especially as the index funds get set to roll H length to K this week.

GASC tendered for Mar 1-10 shipment overnight with results expected later this morning.  Interestingly, GASC lowered the moisture content ceiling to 13.0% with no allowances to 13.5%, which might limit French availability.  In addition, GASC specs call for max 1.25ppm vomi, something US-SRW will have a difficult time meeting.  How the tender shakes out will be interesting, especially with the almost certainty Russia and Ukraine won’t be participating.  Separately, StatsCan will release grain stocks as of Dec 31, 2014 tomorrow morning.  Average trade estimates are looking for all-wheat stocks to fall 13% to 25MMT, which would be the second largest supply at the end of the year since 1996.  Canola stocks are estimated at 10.7MMT, down 14% from the previous year.

 

Bottom Line:  Our markets are probably owed a firmer day following the bludgeoning witnessed the last several weeks.  Basis and spreads aren’t indicating our markets have run into robust consumer demand, so be wary about calling bottoms just yet.  Farm selling has slowed to a trickle, but it’s hard telling how far we are from panic induced selling.

 

Good Luck Today.

AHPS Dec 2-3

AHPS Jan 2-3

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.

 

 

1/29/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:40am: Dollar Index up 0.1700 at 94.9400; Euro down 0.00030 at 1.13110; Aussie Dollar down 1.94% at 0.77750; S&P’s are up 8.00 at 1999.25; Dow futures are up 80.00 at 17,1780.00; 10-yr futures are down 0.18%;  The Nikkei closed down 1.06% at 17,606.22; The DAX is up 0.25% at 10,738.06; The IBEX-35 is up 0.35% at 10,494.00;  Gold is down $16.30 at $1269.60; Copper is down 2.12% at $242.70; Crude Oil is up $0.09 at $44.54; Heating Oil is up $0.0039 at $1.6132; Paris Milling Wheat is down €0.50 at €187.00/MT.

The largest market mover this morning would be the Aussie Dollar which finds itself down over 2.0% as investors expect the Reserve Bank of Australia to cur borrowing costs at their February 3rd meeting.  Currently, swap traders see 66% odds RBA cuts rates, which drove the Aussie Dollar to a low of 0.77530, the lowest trade since July 2009.  The kiwi was also down sharply with the expectation New Zealand’s central bank would also cut rates in tandem with RBA.  Otherwise the focus remains solely on energies with crude oil inventories once again rising larger than expectations.  In the week ended 1/23, crude oil inventories rose 8.87 million barrels, over twice the average estimate, to 406.73 million barrels, the largest in EIA records going back to August 1982.  The Financial Times said it’s the largest crude oil inventory for this time of year in over 80-years.  However big inventories may be, it does not yet look as though the energy sector is done going down, which will in turn keep pressure on commodities as a whole.  Well-read market analyst Dennis Gartman told a crowd the US Dollar Index is in the third inning of a nine inning rally.  Take that for what it’s worth.

Wintry mix moving across the ECB and Great Lakes region this morning, but the WCB and Plains region remains quiet.  Moisture will move into TX by Sunday, with the almost the entire state receiving 0.50-1.30” in total moisture.  This system will stretch up into OK and SE-KS before making its way east to bring precip to the Delta and US-SE.  The central and western corn belt as well as the Northern Plains should be mainly dry the next week with a slight chance of precip late this weekend.  Totals should be minimal.  Dry bias for the Midwest remains in place the next 15-days, while temps slowly work towards below normal status, especially in the East.  Weather forecasters continue to see very little to complain about in South America, which likely means crop ideas there are holding to getting larger.

 

Another day, another red screen.  Grains are once again lower, following yesterday’s sizable losses and pushing many contracts one step closer to revisiting Sept/Oct lows.  Export inquiries have picked up for wheat, and one large scale importer even called for a major international tender, but until US wheat begins connecting on business, or even has firmer basis to support the idea of additional business, markets are going to struggle.  The chart below from Bloomberg illustrates wheat’s biggest problem as traders watch US export share drop to the lowest level in at least three decades.  Corn demand has actually remain strong over the last several weeks, but the variables of lower energy prices and a stronger dollar continue to undercut US grains.  Competitor exports also remain priced to move, eating into US market share when normally we are the world’s chief supplier.  It is clear managed and passive money longs aren’t excited about owning the Ag space, when volatility and opportunity remain higher elsewhere.  Without a value proposition besides “things are cheap,” commodities could continue to struggle to find paper demand.

Weekly ethanol production continues to grab attention, namely because of the relentless production rate despite margins which are generally perceived as poor.  To wit, weekly ethanol production declined 1,000bbls/day to 978,000bbls/day in the week ended 1/23, well above the 909,000bbls/day needed to hit the USDA’s corn demand for ethanol forecast.  Stocks continue to build, up 244,000bbbls to 20.631 million barrels.  The one facet the ethanol market doesn’t have timely data on is exports, although it would seem unlikely exports are keeping production strong given the Dollar index strength and the still building stocks levels.  Stocks are at the highest levels since December of 2012.  Ethanol calendar spreads have mainly remained in a downtrend with the ACG/ACH hitting -0.021 yesterday, a new contract low, before recovering above January lows.  Ethanol remains at a small premium to RBOB for February and March, but an 17-18c discount for April-July, possibly highlighting the market’s ideas of when the ethanol supply glut may ease.  As long as ethanol remains at a premium to RBOB, discretionary blending should remain almost non-existent.

Really nothing in basis or spreads to suggest the wheat market has found a bottom.  WH/WN hit -11.00c yesterday, the lowest trade since 12/1, but it should be noted cash is still well above gross delivery equivalence on the river and domestically.  This would suggest current levels might be an opportunity to move hedges forward, even as the downtrend continues.  KWH/KWN hit -6.00c yesterday, the lowest trade since 7/28/14, despite the fact deliverable supplies continue to decline.  W/w, HRW supplies declined 1.30% to 45.335mbu and are down 26.83% from a year ago.  The KWK/KWN at -5.75c would be a new contract low as is the KWH/KWN.  Wheat/corn spreads haven’t let up on the wheat pressure either with KWH15/CH15 through KWH16/CH16 hitting fresh contract lows.  CIF SRW bids were mostly unchanged at +80/81H for spot, unchanged to weaker on the week.  TX-Gulf HRW bids were steady/weaker at +130H.  Saudi Arabia tendered last night for 660,000MT of hard wheat to be shipped for April/May with a deadline on tender offers of January 30th.  US wheat would do well to grab a share of this business.

In a sign we may be nearing a bottom, wheat volume has been especially heavy this week.  Prelim Minneapolis wheat volume yesterday totaled 17,174 contracts, the largest since 2/6/14.  Chicago wheat volume totaled 134,536 contracts, the largest since 12/18.  KC wheat volume at 33,824 contracts was the largest since 12/2 and open interest is at the highest level since mid-November.  Heightened volume with a positive technical signal such as a reversal would be a positive for the wheat markets.  Worth mentioning, March Chicago wheat is nearing the 100% progression of the 6.77-5.74 selloff from 6.03 at 5.01.  Should Chicago wheat find support there, it would argue for at least a near-term correction higher given it would suggest the completion of an ABC corrective sequence, or at the very least the fourth wave correction before a resumption of the downtrend and an eventual fifth-wave lower.

Export sales were mostly favorable with corn sales totaling 1.07MMT for 14/15 and 16,000MT for 15/16 vs. estimates of 800-1,600TMT.  Soybean sales were surprisingly large at 888,200MT for 14/15 and 20,800MT for 15/16 vs. estimates of 200-600MT.  Wheat sales were also decent at 544,400MT vs. estimates of 250-650MT.  Soymeal sales were very strong at 296,500MT vs. estimates of 100-350MT while soy oil sales were a little light at 10,600MT vs. estimates of 15-30TMT.  In soybean sales, China reported increases of 548,900MT with 126,000MT switched from unknown destinations.  The total was up 41% from the 4-week average.  Total soybean commitments now total 1.656bbu, up 6% on the year and accounting for 93.5% of the USDA’s marketing year objective.  Corn sales at 42.1mbu were well above the 18.2mbu needed weekly, taking total commitments to 1.236bbu, unchanged from a year ago despite the USDA’s export forecast calling for an 8.7% decline.  Wheat sales at 20.0mbu were actually the largest in 17-weeks and could be the start of an uptick in business.  4.4mbu of the total was from the unknown category which will lead some to question if the business was Chinese.

 

Bottom Line: Weaker markets but a nice pop from soybeans on the stronger than expected export sales.  Corn and wheat need to show improved demand at these levels or risk further declines, especially as the dollar index continues to push higher.  The month of February can be the longest and slowest month of the year from a fundamental perspective, and the path of least resistance at current seems to be lower.  Market attention will drift to 15/16 as crop insurance prices get set.

 

Good Luck Today.

 

 

Wheat Sales % Global Trade 3

 

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.

 

 

 

 

 

 

1/28/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:30am: Dollar Index up 0.0690 at 94.0850; Euro down 0.00130 at 1.13670; S&P’s are up 4.75 at 2034.75; Dow futures are unchanged at 17,378.00; 10-yr futures are up 0.04%; The Nikkei closed up 0.15% at 17,795.73; The DAX is down 0.04% at 10,623.82; The MICEX is up 0.47% at 1,681.85; The IBEX-35 is down 1.22% at 10,469.40; Greek equities are down 8.16%; Gold is down $2.30 at $1289.40; Copper is up $1.45 at $247.70; Crude Oil is down $0.66 at $45.57; Heating Oil is down $0.0122 at $1.6280; Paris Milling Wheat is €2.75 at €190.50/MT.

Apparently the Greek elections from Sunday night had a delayed fuse as equity and fixed income markets in that country are being hit hard this morning on fears the anti-austerity party could derail the terms of its financial support from its European partners.  This was of course the fear all along, but apparently it took 72-hours for the news to travel to all parts of the globe.  Greek bonds maturing in 2019 issued just last year at a yield of 5% are now yielding over 13%.  American Petroleum Institute’s weekly inventory estimates showed a massive build of 12.7 million barrels of crude oil last night with Cushing, OK supplies up 2.0 million barrels.  This will keep traders watching the weekly energy inventory data from the EIA at 9:30am CT especially close.  Drilling rigs have been declining, but crude oil carloadings have not with some pointing towards June/July before a slowdown.

Wide open Midwest weather this morning, and finally nothing on the radar over the US-NE, although almost all would agree forecasters missed the mark in a rather big way with this week’s snow forecast.  A rather large band of moisture will be moving through the southern and eastern slices of the Midwest next week, bringing a widespread 0.50-1.50” from TX to PA, although how the moisture falls depend on location.  Temperatures will begin to cool back off in the 6-10 with the Midwest moving back towards below normal temps, but precip will remain below normal for areas west of the MS-River.  No immediate changes in the 8-14.  Much of the nation’s winter wheat is now exposed, so severe cold snap would not be welcome at this time.

 

Weaker prices overnight and continuing this morning as our markets can’t seem to find strength from anything at the moment.  The threat of additional Chinese soybean cancellations, Black Sea maize competitiveness, a strong US Dollar, benign SAM weather, deteriorating domestic margins and a weak energy sector seem to be what traders are focusing on at current.  Technically based traders also have nothing to get excited about with any of our markets as prices continue to leak lower by the day.  While the US Dollar Index card has been played many times since the beginning of the year, it is especially difficult to know how to quantity the strongest US Dollar since 2003 in terms of lost competitiveness with other exporting nations. The equation is not simple algebra, but its implications are real.  Demand is sufficient, but the strong currency is hurting earnings of many US companies and its effects are likely to be felt in our markets for some time.

End users of corn saw their margins stabilize in the last week, but at depressed levels as complied by www.rjomrt.com.  Ethanol margins were listed at $0.73/gln vs. $0.67/gln but down from $0.96/gln last year.  Broiler margins were seen at 78.01c/lb vs. 84.43c/lb last week but above 73.57c/lb last year.  Broiler prices fell swiftly last week.  Hog crush declined further to $75.30/hd vs. $78.41/hd last week and $97.52/hd last year.  Hog margins are now the lowest since May 2013, but it should be pointed out attractive margins were present as far out as December for many months of 2014.  If there is one group of end users who do a good job of locking in margin via hedging it is the hog industry, so margins probably aren’t as bad as implied by the board.  Cattle crush steadied at $60.04/hd vs. $57.68/hd last week and $127.22/hd last year.  C-IL cash soybean crush remains solid at $1.70/bu vs. $1.45/bu last year.

While still on corn, cash traders noted a very heavy tone to Ukrainian maize values yesterday with FOB prices reported as trading around $172/173/MT FOB.  This equates to around +52H, compared with CIF NOLA bids around +52/53H for Jan/Feb.  One must also remember the Black Sea enjoys a ~$5/MT freight advantage to Asian destinations, or around 12c/bu.  This would put landed prices at roughly +40H FOB, or well below CIF NOLA equivalent.  Season-to-date corn export shipments are pegged around 8.6MMT for Ukraine compared with the USDA’s current export forecast of 16.5MMT.  Of the 8MMT left, it is believed 3-4MMT are sold waiting to ship, leaving around 150-200mbu looking for a home at what appear to be distressed levels.  Add in US currency considerations and US stem is on the outside looking in.  Interestingly, PNW corn bids improved last night to +100/100/100H for JFM compared with +95H a week ago.  As of last week, the PNW/Gulf ocean freight spread was reported at $14.18/MT, or 36c/bu which would be +63H CIF NOLA equivalent.  Not sure the basis of the PNW strength, but the CIF NOLA weakness is apparent, and will need to be monitored against export sales in coming weeks.

CIF NOLA SRW premiums were also weaker yesterday, down 4-9c with Feb/Mar bids now indicated at +81H.  TX-Gulf premiums were also softer, reported off 5c to +130H for Feb/Mar.  KCBT spot floor premiums were firmer for 12.4-13.8% by 4c with 12.0% inverted by 6c at +96/106H.  14.0% pro MGEX was unchanged at +130/145H.  Spot floor movement has been heavier as of late with favorable weather contributing to improved rail movement.  Chicago wheat spreads have been on the defensive with the declining board and premiums aren’t helping.  The WH/WK traded down to -4.25c overnight, the lowest since 1/14.  The KWH/KWK hit -5.75c overnight, the lowest trade since mid-August.  MWH/MWK at -7.75c is the lowest trade since 1/5.  Hard to get excited about firmer wheat prices until some premium strength shows up or spreads can pick a shoulder off the mat.  Even if export inquiries for US wheat have picked up, it’s clear business isn’t being conducted.  No change in the trajectory of wheat/corn spreads.

Weekly ethanol production at 9:30am will be watched especially closely to see if the poor margin structure is finally impacting output.  Last week’s surprising increase in weekly production to 979,000bbls/day measured up in the 10-largest production weeks on record.  Stocks continue to build, however, raising the question of how large the ethanol infrastructure is and how much more can be handled if discretionary blending remains low?

 

Bottom Line: Lower markets as prices continue to search out demand.  Our markets were well-supplied before the Dollar strength, and prices seem to be suggesting lower levels are needed to ensure demand continues unabated.  Continue to watch basis and spreads for clues to bottoming action, but realize world carryouts are at record or near-record levels for all of our commodities.  The currency influence is something we haven’t had to deal with in over a decade.

 

Good Luck Today.

 

HPC 1-28

 

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.

 

 

 

1/27/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:20am: Dollar Index down 0.1200 at 94.6820; Euro up 0.00160 at 1.12880; S&P’s are down 10.50 at 2043.00; Dow futures are down 117.00 at 17,496.00; 10-yr futures are up 0.06%; The Nikkei closed up 1.72% at 17,768.30; The DAX is down 1.23% at 10,665.62; The IBEX-35 is down 1.51% at 10,534.90; Gold is up $1.80 at $1281.20; Copper is down $3.45 at $250.85; Crude Oil is up $0.02 at $45.16; Heating oil is down 0.0077 at 1.6066; Paris Milling Wheat is down €2.25 at €194.25/MT.

Not a lot of fresh headlines outside of the winter storm overtaking the US-NE, although investors are waiting for a tranche of corporate earnings to be released today including Pfizer, Procter & Gamble, Apple and Yahoo.  Worth noting from yesterday, S&P cut the Russian credit rating to “junk” status, the first time since 2004 as sanctions from the West continue to undercut the world’s largest energy exporter.  The Russian Ruble fell sharply yesterday by as much as 5-6% to near 70:1 to the US Dollar.  Borrowing costs for Russian farmers and exporters should be incredibly high as we enter the 2015/16 crop year.  European shares are weaker this morning as investors continue to debate whether the Greek situation is as negative for the euro-bloc as feared.  The Euro currency stabilized after making fresh lows for the move near 1.1102 this morning.

In the US, focus continues to be on the snowstorm dumping precip on the Northeast.  Elsewhere, the central and northern corn belt as well as the southern plains are experiencing a counter-seasonal warmup which is quickly decimating the countries snow cover.  The latest NOAA snow cover map as of this morning shows zero snow cover from TX to SD and by tomorrow, North Dakota should be almost uncovered.  SRW states like IL/IN/OH/KY received snow over the weekend, and may retain some cover as temps cool off into the weekend.  The forecasted high temp for today shows the extreme highs for January hitting TX to ND, and the next question will be if this pushes any wheat out of dormancy prematurely.  No big cold snap is seen the next 15-days in the Plains, but neither is any notable moisture.  This remains a risk for the HRW crop, but nothing to get alarmed about just yet.

 

Fairly quiet overnight trade in the Ags with most all contracts seeing both sides of unchanged inside 4-6c ranges.  Very, very little news flow related to AGs specifically overnight, highlighting the seemingly aimless chop our markets are carrying out.  The next major fundamental input will be the USDA February Outlook Conference at which time the USDA will issue their first guess as to the 2015/16 balance sheet.  The Congressional Budget Office did release their long-term baseline numbers for budgeting purposes yesterday, in the for-what-it’s-worth category.  Based on their estimates, corn ending stocks for 15/16 total 1.959bbu, soybeans at 498mbu and wheat at 749mbu.  All would be considered comfortable and non-rally warranting, but that’s why we grow and trade the crops.  Wheat is finding a bit of interest at these levels, which could start the stabilization process.

Cash traders have reported increased inquiries for US wheat in the last several days as wheat prices push to the lowest levels since last fall.  A lot of chatter, but so far not much confirmation including Egyptian private mills inquiring about SRW ex-USGX and US-East Coast.  Also, Egyptian privates were said to be asking for offers on US-HRW, especially with HRW trading much weaker than SRW and HRS, although many believe German wheat would intercept any potential hard wheat business out of the states.  In addition, trade rumors report China inquiring about US-SRW ex-St. Lawrence Seaway, although freight differentials not discussed.  Lastly, Brazilian mills were said to be asking for HRW offers, although difficult to comprehend given Brazil’s cancellation of 27,000MT of HRW on last week’s export sales report.  After that cancellation, Brazil had no outstanding wheat sales left with the US and were expected to migrate towards Argentine stem.  On a FOB basis, the US-HRW/Argy FOB wheat spread has narrowed in recent days to +$3.35/MT, although Argentina enjoys an obvious freight advantage.  Wheat futures will need more than export inquiries to stem the tide of falling prices, especially as the US Dollar Index hits the highest levels since 2003.  Still, this is the kind of business the US needs to be conducting given the poor state of current sales and the depressed price levels.

Another feature which might help the wheat market find support is the fresh lows, and contract lows in some cases, being posted in wheat/corn spreads.  WH/CH is currently sitting at +135.75c, the lowest level since January 31, 2014.  Back month WU/CU and WZ/CZ hit fresh contract lows yesterday, as did KWU/CU and KWZ/CZ.  On a front-month rolling basis, W/C is at the lowest levels since last July while KW/C is at the lowest levels since June 2013.  However, on a weight-adjusted basis, W/C is currently at 126% and KW/C is at 134%, neither of which is at risk of pushing wheat into feed rations.  Seasonally, wheat tends to stay weak against corn basis March futures through February, and through March basis May futures.  Still, the massive correction in wheat/corn spreads could be enough to stem the tide for the time being.

A quick note from Friday’s COT data, the Aggregate Index Fund net long continues to drop precipitously as those traders go looking for returns in equities, currencies and energies.  For the week ended 1/20, the aggregate index net long for C,S,W,KW,MW,BO,SM,FC,LC,LH,CC,KC,CT,SB totaled 1,235,558 contracts, the smallest net long since 6/20/2009.  Over the last three-weeks, index funds have sold over 121,000 contracts from these 14-markets.  Hard to argue with considering passive-long commodity funds have posted negative annual returns the last four years in a row.  With the strong Dollar, expectation for rising interest rates in 2015, and well supplies markets from corn to crude, the index fund is having a difficult time expressing a value statement other than “values are depressed.”

Rail corn basis does remain steady/better with corn futures trading sideways/weaker and US producer selling having ground to a halt following the January WASDE.  PNW rail premiums could now be called +98/98/100H for JFM vs. +95H a week ago.  CIF corn bids aren’t nearly as impressive which highlights where recent export business has been conducted from.  CIF NOLA corn bids went home last night +52/58H for Jan, +53/– for Feb and +57/60H for March.  These would compare with +66/71H for Jan, +66/68H for Feb and +61/63H for Mar a week ago.  Corn spreads have been notably weaker over the last week with the CH/CK at -8.25c this morning vs. a high of -7.00c last week.  CK/CN hit -7.75c yesterday after trading to a high of -6.25c last week. The Index Fund bearspread roll will begin next week Friday from March to May futures.

Lastly, worth noting Canadian export data through December as it relates to US wheat imports.  Through December, Canadian wheat exports to the US totaled 392,500MT, down 58.1% from a year ago.  The problem with imports being down that much is the USDA is calling for a 6.5% increase in wheat imports y/y to 180mbu, which would be the highest in at least 15-years.  It is important to remember the US did import several cargoes of European feed wheat early last fall, but the total was thought to be less than 5, or ~11mbu.  Even if the eventual total was 5 panamaxes, this would still leave US imports woefully short of the pace needed for 180mbu on the marketing year.  With the continued strength in the US Dollar, and corresponding weakness in the Loonie, wheat imports could still kick in Q3-Q4, but it is something to take note of as wheat prices continue weaker.

 

Bottom Line: Doesn’t look like a lot of feature in today’s trade, although outside markets are showing quite a bit of weakness with equities off over 1.0% and the US Dollar Index down 0.30%.  Still monitoring basis levels and spreads in regards to weekly demand of our grains, especially as it pertains to the shift in soybean demand from NAM to SAM.  Wheat needs to show stabilization and recovery here, namely HRW, to prevent accelerating losses.  Otherwise, range-bound trade could be the order of the day until we get closer to spring.

 

Good Luck Today.

 

Snow Cover 1-27 High Temp 1-27

 

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.

1/23/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index up 1.0370 (1.10%) at 95.1110; Euro down 0.02610 (-2.31%) at 1.11230; The Canadian Dollar is down 1.22% at 0.79330; S&P’s are up 0.50 at 2057.00; Dow futures are up 15.00 at 17,752.00; 10-yr futures are up 0.51%; The Nikkei closed up 1.05% at 17,511.75; The DAX is up 1.77% at 10,620.76; The IBEX-35 is up 1.16% at 10,632.40; Gold is down $6.50 at $1294.20; Copper is down $4.10 at $253.75; Crude Oil is up $0.38 at $46.68; Heating Oil is up $0.0245 at $1.6349; Paris Milling Wheat is up €1.25 at €199.25/MT.

Lots of headline drivers this morning, beginning first with the announcement yesterday of the ECB’s very own QE program.  ECB President Mario Daghi announced yesterday the central bank will buy $60 billion euros worth of debt a month, larger than originally anticipated.  In addition, this Sunday will also see Greek voters go to the poll in a general election which will decide whether Europe’s most indebted country sticks to an austerity program, or the country votes the party into power which wants to secede from the Eurozone.  Both headlines are crushing the Euro to the lowest level in 11-years.  Also noteworthy was the passing of Saudi Arabia’s King  Abdullah, one of the US’s strongest allies in the Middle East.  His brother, King Salman, will follow in his stead, assuaging fears the Kingdom would be ruled by someone with anti-American sentiment.  Crude oil popped briefly on the news, but it is important to note the build in US crude oil inventories yesterday by 10.1 million barrels to 397.9 million barrels.  The build was the largest weekly build since 2001, and pushed inventories above last year (351.2) and the 3-yr avg (349.7).  Dollar Index highest since 9/29/2003.

Wintry-mix moving across the US-SE and Delta this morning with similar precip moving across WI into the Great Lakes.  7-day precip totals will push East bringing heavy rain/snow to the ECB and East Coast.  The Southern Plains, WCB and Northern Plains will be mostly dry with the exception of some flurries in the North late this weekend.  NOAA maps keep it dry and cold in the East but warm and wet in the West during the 6-10 and 8-14 day outlooks.  No change to SAM maps with precip still called for in dry areas of NE-Brazil.

 

A rather mundane week looks to keep things on the weak side as we head into the weekend.  For the week, corn is down 4.75c, Chicago wheat is down 5.25c and soybeans are down 16.25c.  Corn and wheat remain in much better shape technically than do soybeans, but the downtrends are intact in all three commodities.  With the January reports behind us, our markets are continuing to look forward to the looming avalanche of SAM soybeans and the USDA Outlook Conference in February.  Demand is holding serve for the time being, but will need to see continued expansion to prevent carryouts from growing further.  For once, our markets seem rather tame when compared to the volatility being experienced in currencies, energies and equities.  This too remains a concern as investors opt for markets with more opportunity (index), or funds which can trade both sides of the market (managed).

Weekly ethanol production grabbed attention yesterday as it continues to power forward despite weak margins across the industry.  Weekly ethanol production rose 1,000bbls/day to 979,000bbls/day, within spitting distance from the record totals 4-weeks ago.  Stocks rose 158,000bbls to 20.387 million barrels, the highest since early 2013.  Production at 979,000bbls/day is around 7.5% higher than the level needed, which continues to create cushion between the USDA’s ethanol estimate and current run-rates.  The concerning thing is the current estimated margin structure at $0.67/gln vs. $0.79 last week and $1.11/gln last year.  Margins are estimated at the lowest levels since March 2013.  Ethanol prices remain near the lowest levels on record going back to 2005 while cash DDGs prices remain elevated due to the resumption of Chinese imports.  The Andersons Grain Company, which owns many ethanol plants, watched its share price hit the lowest level since May 27th.  ADM’s shares are sitting near the lowest levels since November.

On the basis front, corn premiums remain mostly firm, at least on destination rail.  PNW premiums went home last night bid +95H with indications by one house at +96/97/95H for JFM.  In turn, BNSF rail freight has improved to “Tariff” bid from -$300/car bid a week ago.  Ingredion in Chicago also firmed basis to +4/6/8H for JFM vs. +0/2/4H a week ago.  The lone weak spot appears to be CIF NOLA corn premiums which went home last night at +60/62H for Jan, +60/62H for Feb and +60H for March.  Zone 3 cash basis is roughly 3-11c below gross DVE for Feb and March, which is keeping pressure on CH/CK.  Corn spreads were soft yesterday as CK/CN traded down to -7.25c, the lowest trade since 11/26/14.  The weaker CIF complexion appears to be related to Ukrainian competition into SE-Asia, as several cargoes have connected this week.  Ukrainian corn exports to China rose 785% from 2013 to 2014.

A day late, but deliverable wheat stocks data out Wednesday showed continued declines in SRW and HRW, while HRS stocks continue building at an impressive rate.  SRW deliverable supplies declined by 2.84% to 39.925mbu, and down 11.07% from a year ago.  Total wheat stocks, however, are up 24.04% to 60.487mbu vs. a year ago thanks to non-deliverable supplies being up 466% from a year ago.  HRW supplies declined 0.97% from a week ago to 45.932mbu and compares with 65.099mbu a year ago.  HRS stocks in Duluth rose 11.0% w/w to 19.393mbu, which are up 15.6% from a year ago.  Total stocks in Duluth/MPLS now sit at 25.182mbu, up 21.8% from a year ago.  Both HRW and HRS basis improved vs. a week ago with 12.0%-HRW now bid +96/106H, and 14.0% HRS bid +130/150H.

From an inter-market standpoint, HRW continues to trade much weaker than SRW or HRS, despite the fact HRW normally gains seasonally against SRW.  On an individual basis, HRW should find very good support at the October and November lows as the fundamentals of the wheat market don’t appear to warrant trade down to fresh 4-1/2 year lows.  MRCI study shows very strong correlation with (86%+) 2005, 1997, 1991 and 1990 which saw strength in March-HRW at the end of January well into FND.  March Minneapolis wheat also enjoys favorable seasonal tendencies from early-Feb through early March.  Trade above the corrective highs from 1/21 would ease the downside pressure in both markets.

Export sales data is delayed until this morning with estimates for wheat at 275-525TMT, corn at 750-1,100TMT, soybeans at 600-1,150TMT, soymeal at 50-150TMT and soy oil at 5-30TMT.

 

Bottom Line: The soaring Dollar Index and the incredibly weak energy sector are features our grain markets haven’t had to deal with since the 2008 financial crisis, neither of which gives fund managers great reasons to own Ag commodities.  Charts remain neutral/negative, and without a demand surprise, carryouts will remain ample.  In order to really change the complexion of our markets at this stage, it will have to come from a SAM supply shortfall (running out of time), or weather issue in NAM this spring/summer.

 

Good Luck Today.

 

US Corn and By-Product Exports 1-22

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 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.

1/21/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:30am: Dollar Index down 0.3350 at 92.7110; Euro up 0.00320 at 1.15860; S&P’s are down 6.50 at 2010.25; Dow futures are down 78.00 at 17,383.00; 10-yr futures are down 0.05%; The Nikkei closed down 0.49% at 17,280.48; The DAX is down 0.40% at 10,215.79; The IBEX-35 is down 0.60% at 10,222.00; Gold is up $4.20 at $1298.40; Copper is down $4.65 at $254.75; Crude Oil is up $0.25 at $46.73; Heating Oil is up $0.0090 at $1.5995; Paris Milling Wheat is up €1.75 at €198.25/MT.

President Obama’s State of the Union speech grabbed headlines in the US, but financial media seem more concerned with the decision by the European Central Bank on Thursday as to whether they unleash another round of economic stimulus.  The Dollar Index set back notably this morning by 0.33%, but sentiment for the Dollar continues to grow more bullish.  The Optimism Index, or Optix, as compiled by Sentimentrader climbed to 91% last week, a new all-time record going back to July of 1999.  While incredibly frothy, the researchers point out as the Dollar Index pushes to new 10-yr highs, we may be resetting parameters, which might suggest such a bullish attitude might not mean a pending selloff or correction.  Later today in the US we will receive December housing starts which are expected to rise 1.2% to 1.040 million, reversing part of the -1.7% decline from November.

In a separate, but relevant, note, it was interesting to see crude oil and frac-sand carloadings continue higher in the most recent reporting week despite the fact drilling rigs have declined notably.  It has been the belief that with dropping rig counts, crude oil production and demand for rail has declined, but the data would suggest otherwise.  According to Baker-Hughes, rigs in the US declined 74 to 1,676 in the week ended 1/16/2015, which would compare with 1,777 a year ago.  In North America total, rigs were unchanged at 2,116 from last week but down from 2,342 last week.  Crude oil carloadings by contrast rose from 15,327 to 15,437 last week and are up 1,556 from a year ago.  The 15,437 also compares with 8,899 from three years ago.  On frac-sand, carloadings last week totaled 29,502 vs. 25,390 the week before, and would be up 5,591 from a year ago.  It is very conceivable there is a backlog of wells which have been drilled but still need to be ‘fracked,’ hence the continued carloadings of frac-sand.  The still increasing crude oil carloadings despite plummeting crude oil prices remains a head scratcher, however, and might suggest crude oil supplies are still set to rise further.  Should this be the case, crude oil might not yet have found the bottom many think, which in-turn could have larger implications for the commodity sector as a whole.  Continued monitoring of both rig counts and carloadings will be important to gauge the NAM slowdown, or lack thereof as it appears to be the case.

South American weather patterns continue to point towards a pattern change in drier NE-Brazilian growing areas with 48-hour precip forecasts putting 0.10-0.50” over said areas.  The 3-7 day outlook also points towards above normal precip for the worst areas over the last 20-days.  Much improvement will be needed as weather tables for the period Jan 1-17 show 1-18% of normal precip in Minas Gerias, 6-27% of normal in Goias and below normal precip in both MGDS and Mato Grosso.  For Dec 1-Jan 17, Minas Gerias has witnessed only 9-34% of normal precip.  Additional drying will also be needed in water-logged areas of Argentina as reporting stations in Santa Fe show 247-330% of normal precip Jan 1-17, Cordoba at 126-229% and Entre Rios at 214-516% of normal.  Argentina is much further away from key growing weather than Brazil, but it remains an area of concern.

 

Mixed overnight session for Ag markets with wheat commanding 2-5c gains so far this morning.  Tensions between Russia and Ukraine have flared up once again in eastern areas, but the bounce in wheat seems to be much more relief-related than anything Soviet.  Soybeans saw sharp losses yesterday as weather patterns slowly turn more favorable in South America, and the cancellations of US soybeans keep coming.  Yesterday morning, China canceled another 174,000MT of soybeans for 2014/15 shipment which followed the 285,000MT canceled last week.  There is obviously growing fear the cancellations continue, which have started much earlier this year than last, partially due to the better growing conditions and larger crop prospects out of Brazil.  End users of corn continue to watch their margins slip, but basis remains firm sending mixed signals to corn traders.

Nothing to shocking out of the inspections data yesterday, although corn and wheat continue to miss estimates.  Wheat shipments have missed the level “needed” to hit the USDA’s export forecast the last 13-weeks in a row while corn shipments have missed the last 14-weeks in a row.  Wheat shipments are now down 32.5% from a year ago while the USDA export forecast is only calling for a 21% decline.  Corn shipments on the other hand are up 0.6% from a year ago, which buy it much more breathing room.  Shipments a year ago began picking up heavily by mid-February, implying there is still time for corn to reach the desired shipment level.  Wheat on the other hand looks like it needs its export forecast cut on the next WASDE.  Soybean shipments remain strong at 55.8mbu, well better than the 15.0mbu needed, which brought total shipments to 1,256.2mbu.  Total shipments are now up 20.7% from a year ago vs. the USDA export forecast calling for a 7.4% rise y/y.  The shipment pace will need to be monitored closely given the recent string of cancellations.

Corn end user margins as compiled by www.rjomrt.com declined sharply for ethanol once again this week and should be forecasting an impending fall in production rates in weeks to come.  Gross margins fell to $0.67/gln last week from $0.79/gln the week before and vs. $1.11 a year ago.  The drop was due in large part to cash ethanol falling to $1.528/gln from $1.648/gln a week ago and $2.195/gln a year ago.  Broiler prices did climb last week to 79.75c/lb from 75.84c/lb and compare with 73.83c/lb last week.  Hog margins fell again to $78.41/hd from $85.33/hd last week and $99.80/hd last year.  Margins are now at their lowest point since June of 2013, but it should be noted solid margins have existed for quite some time which provided ample hedging opportunities.  Cattle margins did climb to $57.68/hd from $40.17/hd the week before, but well off the $132.57/hd last year and still likely negative when total expenses are added in.

Inter-market wheat spreads continue to be a feature with Minneapolis gaining significant ground on both KC and Chicago in recent sessions.  The MWH/WH traded up to +52.25c yesterday, the highest since October 17th, while the MWH/KWH hit +12.00c, the highest since 1/2/2014.  Both of these spreads have hit their 200-day moving averages which might suggest a pause in the rally.  It would seem Minneapolis is simply gaining back its usual premium to the other two wheat classes after having relinquished this margin much earlier in the marketing year.  Wheat/corn spreads have also corrected sharply the last several sessions with both KWH/CH and WH/CH at the lowest level since February 2014.  Still, Chicago wheat remains at 128% of the weigh-adjusted price of corn and KC and 138%, so still not at risk of working into feed rations.  Having said that, wheat/corn has probably done enough correcting for the time being considering the lofty levels at which the correction began.

 

Bottom Line: A little upside correction is probably warranted today pending any additional soybean export sales cancellations at 8:00am CT this morning.  If the window of exports to China has actually closed for the year, soybeans will continue to struggle and most likely head towards 2014-fall lows.  Corn needs to see demand pick up even though USDA cut supplies last week.  Farmers aren’t selling a bushel which is keeping basis and spreads firm, and should prevent much additional downside in the board.

 

Good Luck Today.

 

Nat Gas Rig Counts 1-21

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 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.

1/20/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index up 0.2460 at 92.7660; Euro down 0.00060 at 1.15840; Swiss Franc off 1.76% at 1.14940; S&P’s are up 10.00 at 2023.00; Dow futures are up 76.00 at 17,508.00; 10-yr futures are down 0.12%; The Nikkei closed up 60.00 at 17,450.00; The DAX is up 35.50 at 10,277.00; The IBEX-35 is up 160.30 at 10,304; Gold is up $9.70 at $1286.60; Copper is down $1.20 at $260.50; Crude Oil is down $1.10 at $48.01; Heating Oil is down $0.02630 at $1.6393; Paris Milling Wheat is down €2.00 at €194.00/MT.

Growth data and estimates are grabbing the majority of financial headlines this morning with China releasing 2014 annual GDP growth of 7.4% which narrowly beat estimates of 7.3%, but was still the slowest annual growth since 1990.  In addition, the IMF lowered its forecast for global growth over the next two years, warning that weak oil prices will not be enough to offset persistent weakness in most major economies.  The IMF cut its 2015 global growth forecast to 3.5% from 3.8%.  The Dollar Index remains strong this morning, although just below the 93.2620 level recorded last week which was the highest trade since November 10th, 2003.  In similar fashion, crude oil is sitting just off the $44.78 level hit last week, the lowest trade since March 16th, 2009.  Investors everywhere are still adjusting to this new dynamic.

Some flurries/snow showers around the Midwest this week including over the Great Lakes, the Dakotas and rain/snow mix in the southern plains.  The current above normal temps across the Midwest remain in place until at least the weekend and beginning of next at which time the Great Lakes region will finally see daily highs fail to reach the freezing mark.  The cool-down won’t be uniform, however, with above normal temps in the west hanging tough during the 6-10 and 8-14 while the east sits at normal/above.  The real concern would obviously be the loss of snow pack which by next Monday will be drastically reduced from even the map below.  Almost all but the very northern reaches of winter wheat country has lost its snow cover and will need to be monitored should any cold snap develop.

 

Weaker Ag prices to begin the MLK-holiday shortened trading week with the soy complex leading monetary losses but corn leading percentage losses.  Weather patterns for the driest stretches of NE-Brazil look like they’ve finally improved, and could limit production losses on one of the only trouble spots in all of the massive South America country.  In addition, the soybean sales cancellation by China from the US last week continues to hang over the heads of traders.  Follow up cancellations this week will be watched closely to determine if the long-awaited shift to SAM supplies is finally underway.  Farm gate movement continues to be pathetically slow given the board drop following last week’s WASDE report.  Cash has in-turn firmed, and commercials bought futures heavily on last week’s selloff which gives pause for punishing our markets too much.  Demand will remain in the forefront on a week-to-week basis, but it almost feels like the trade is already looking ahead to the 2015/16 crop and any potential supply shortfalls or burdens for the next market information which could drive us from our ranges.  Export inspections will be delayed until this morning.

Digging first into the COT data from last Friday, several key points are worth sharing.  First on corn, funds sold heavily through the day after the report, dropping their net long by 19,262 contracts to 149,950 contracts.  Index funds also sold heavily, dropping their net long by 20,796 contracts, the fifth largest single week of selling on record as part of their rebalancing efforts.  Index funds are now the least long the corn market since 11/15/2011.  Encouragingly, the gross commercial long bought 32,000 contracts last week to bump their gross long to the largest since August.  Soybeans also saw big fund selling with trend followers selling 22,120 contracts to place them net short -21,342 contracts.  Commercials on the other hand, bought 29,366 contracts, leaving them net short only 15,631 contracts.  Should commercials move back to a net long position, it will raise caution flags about lower prices, just as it did when they went net long in July/August before peaking in late-September which coincided with the futures bottom.  Soymeal saw the fifth largest week of managed fund selling on record as they dumped 15,995 contracts.  Very little change by funds in Chicago wheat, buying just 124 contracts on the week.  Commercials bought 11,512 contracts, however, as index funds sold 8,047 contracts.

Index fund rebalancing was obviously in full force last week, with Ags seeing the majority of the selling while energies and softs saw the bulk of the buying.  In total, the Aggregate Index fund net long position across C,S,W,MW,KW,SM,BO,FC,LC,LH,CT,SB,CC,CT dropped to 1,275,259 contracts, the smallest net long since 9/8/2009.  The chart below shows the aggregate position going back to September of 2007.  In total, index funds sold 55,050 contracts from these 14 commodities, the fifth largest week on record, and follows 17,992 contracts last week.  Continued rotation out of Ags and into other sectors will need to be watched on next week’s COT data, but the bottom line is we took out a big chunk of passive long money from underneath our markets.

Definition to the CIF market will be important today as many changes occurred Friday which need to be confirmed today.  CIF-SRW bids went home defensive with Jan bid +85H, Feb +90H and Mar +86H, down around 5-10c on the week.  CIF corn bids were firm with the defensive posture of the board as spot boats commanded +63/67H, with Feb at +64/66H, both up around 7-10c on the week.  PNW corn shuttles went home Friday at +95H, steady on the week, but firm.  In response, the CH/CK traded to -7.00c last week, the highest trade since 7/1/2014.  No other changes to rail bids of any merit, but the ongoing PNW labor disputes will need to be monitored closely as progress there has stalled.  Just as PNW corn became the cheapest FOB stem in the world, labor disputes flared up which will undoubtedly keep any sort of program from getting off its feet.  Encouragingly, however, ocean freight rates continue to be very defensive with the soft crude oil prices.  Capesize vessels improved slightly w/w to $5,908/day, but are down 58% from a year ago.  Panamax rates were steady on the week to $6,114/day, but off 51% from a year ago.

On another transportation related note, the Brazilian Transport Minister announced last week the partially completed road connecting the northern Brazilian river terminals and export ports in the Para region in Mato Grosso will not be completed until the end of 2016.  The road was expected to be paved and completed by mid-2015, but construction delays and decreased funding have pushed back the project completion date further.  Logistics look as though they will remain a hurdle for Brazilian harvest again in 2015, although improvements keep being made each year.

 

Bottom Line: Defensive action to begin the holiday-shortened week with funds still looking to sell our markets as opposed to owning them.  Commercial activity post-report in futures was encouraging, however, and the firm tone to basis and spreads in the corn market suggests farmers are in no hurry to sell.  Ethanol production needs to be monitored, but export activity is humming along.  Snow cover in US wheat areas has evaporated, and concern will remain until we break dormancy.  Soybeans are fighting a supply battle and time looks to be running out.

 

Good Luck Today.

Snow Cover 1-20 Aggregate Index Long 1-20

 

 

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.

 

 

 

 

 

 

1/15/2015 Morning Comments

Good Morning,

 

Outside Markets as of 6:25am: Dollar Index down 0.2220 at 91.9230; Euro down 0.00900 at 1.16920; Swiss Franc is up 0.15960 (+16.26%) at 1.14170; S&P’s are down 3.75 at 2004.00; Dow futures are down 10.00 at 17,355.00; 10-yr futures are up 0.04%; The Nikkei closed up 1.86% at 17,108.70; The DAX is up 0.36% at 9,852.10; The IBEX-35 is up 0.08% at 9,854.10; Gold is up $21.60 at $1256.10; Copper is up $4.80 at $255.35; Crude Oil is up $0.58 at $49.04; Heating Oil is up $0.0058 at $1.6610; Paris Milling Wheat is up €1.25 at €193.25/MT.

In a very surprising move overnight, the Swiss National Bank abandoned its minimum exchange rate policy today, scrapping the three-year-old cap of 1.20 franc per euro.  The surprising part is the fact the SNB said just days ago the policy was necessary to ward of deflation.  After the cap was removed, the Swiss franc jumped to a record against the euro, and rose to the highest level against the Dollar in more than three years.  Swiss stocks are getting pummeled on the news.  SNB officials said they have spent billions defending the franc, but the need to stem a tide of money flowing from Russia’s financial crisis was central to the decision.  At its highs against the Dollar, the franc was up 25%+.  US markets remain a bit jittery after weaker than expected retail sales figures yesterday, but oil is encroaching on the $50-handle which will now become psychological resistance.

No big changes to US weather as of this morning.  Warmer temps through the weekend and next 10-days as above normal patterns persist.  Precip will pick up along the plains from ND to TX during the 6-10 and 8-14, but the central corn belt should remain below normal.  Temps will begin to cool to normal/below during the 8-14, specifically the southern plains.  Snow cover maps will need to be checked after our warm up period for winter-wheat protection as any sudden plunge in temps could leave things vulnerable.  Map below shows current cover which still has things north of I-70 fairly well protected.  No change to SAM weather maps this morning either with persistent dryness in NE-Brazil, while the rest of the country enjoys favorable weather.  Wet areas of Argentina do look to experience a bit of relief the next 10-days.

 

A bit of a relief rally this morning across the Ag floor following what has to be described as a poor week-to-date considering the USDA reports on Monday.  Now that several days have passed since the report, one can take a bit closer look at the data with rested eyes and look for any longer-term implications.  In grains, it really does appear the market is worried about demand of both corn and wheat with performance going forward the real concern.  In soybeans, it’s all a matter of how long the rampant demand for US soybeans can hang on before the door is shut in favor of South America.  Some analysts think we could see historically low 2nd half exports of soybeans this year given the record crops developing in the southern hemisphere.  NOPA crush data out later this morning will provide another barometer of demand, but exports will be the key going forward.

The big news from yesterday was the weekly ethanol data which provided a number of surprises for market participants.  Despite the weakest production margins since Mar-Jul 2013, weekly ethanol production rose to 978,000bbls/day, up 29,000bbls/day on the week, and notching the fifth largest weekly production total on record.  The level was also sharply above the 900,000bbls/day “needed” weekly to hit the USDA’s revised 5.175bbu corn for ethanol demand figure.  Even more impressive, and possibly worrisome, was the surge in weekly stocks of 1.384 million barrels to 20.229 million barrels, the largest single week rise on record.  Weekly stocks now stand at the highest level since January 2013 and near the highest level since June 2012.  Weekly gasoline demand ticked slightly higher w/w, but it would certainly appear the premium ethanol had been trading at relative to RBOB gasoline has finally led to a halt in discretionary blending above and beyond the mandated level.  In the last two days, ethanol has moved back to a discount to gasoline of 2-3c/gln, the first time since 12/22-12/23.  Spot ethanol prices yesterday fell to $1.33/gln, the weakest since June of 2005, and essentially ever considering the low volume when futures trading began in that contract.  Ethanol will need to maintain a discount to RBOB, providing blenders an incentive to use more ethanol than needed, otherwise stocks levels run the risk of ballooning further given the surge to record production over the last month.  Plunging energy prices make alternative fuels a tough sell, so ethanol’s resiliency will be seen given the weakest energy prices since the financial crisis.

Switching to wheat, markets will be waiting the results of the latest GASC tender sometime this morning, although French wheat is expected to be awarded the business.  CIF NOLA SRW premiums were relatively quiet at +90H yesterday going home, not indicating any undue export demand pull.  India made headlines yesterday after officials there said they see the potential for 2MMT worth of wheat exports given Russia’s exit from the export table.  Indian wheat is currently priced at $270/MT FOB, which is well above competing export sources such as Ukraine at $165/MT FOB and French at $220/MT.  Freight to SE-Asia, however, is only $12-15/MT for Indian wheat vs. $30/MT for Ukraine, and even higher for French wheat.  The recent focus on Ukrainian milling wheat exports could also tighten that FOB spread with India.  As always, quality will remain an issue with sourcing Indian wheat.

Corn basis remains well supported on the break in futures, a sign of farmer engagement.  PNW corn shuttles went home bid +95H, up 3c from a day before.  CIF NOLA corn premiums are firmer as well with ETA’s indicated at +64H, Jan +63H, Feb +64/67H and Mar at +61/63H.  The CH/CK corn spread continues to trade well, pushing to -7.25c overnight, the highest trade since July 3rd, 2014.  Barge freight has been moving higher along with CIF premiums, so CH isn’t making any headway towards gross delivery equivalence, but warmer weather is around the corn which should help ease the premium BF has built in for ice conditions on the Illinois River.

Export sales out later this morning with a special focus on wheat exports to see if the Chinese business rumored to have been conducted 7-10 days ago actually shows up in the details.  In addition, corn exports should be healthy given the amount of pre-WASDE activity by SE-Asian customers.  Estimates for sales put wheat between 350-550TMT, corn at 650-1,500TMT, soybeans at 600-900TMT, meal at 25-150TMT and oil at 10-30TMT.

 

Bottom Line: After holding the 100-day MA, corn is probably entitled to a bit of rally, and if sales confirm a big jump in export activity, the fund selling could abate for the time being.  Basis and spreads are firming in response to a lack of movement, and fresh sales will be needed to meet export demand.  Firmer basis and firmer spreads don’t beget lower futures, generally.  Wheat needs a pickup in demand as badly as anyone, and soybeans don’t appear ready to get into the single digits for the long haul just yet.

 

Good Luck Today.

 

Snow Cover 1-15-15 Commodities Rout 1-15-16

 

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.