7/2/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:40am: Dollar Index up 0.0380 at 79.8530; Euro down 0.00170 at 1.36660; S&P’s are up 0.75 at 1966.50; Dow futures are up 10.00 at 16886.00; 10-yr futures are up 0.04%; The Nikkei closed up 0.29% at 15,369.97; The DAX is up 0.23% at 9,925.44; The IBEX-35 is up 0.13% at 11,021.90; Gold is up $1.30 at $1327.90; Copper is down $0.20 at $320.20; Crude Oil is down $0.33 at $105.01; Heating Oil is down $0.0085 at $2.9697; Paris Milling Wheat is unchanged €184.25/MT.

Mostly firmer equity markets today in front of the first of two employment reports this week.  Later this morning we’ll get the ADP private payroll report which is expected to show a solid rise of 205,000 jobs added, strengthening from May’s report which showed hiring of 179,000.  This should hopefully set the stage for a solid June unemployment report which market consensus puts at 215,000, close to the May increase of 217,000.  The market is also expecting the unemployment rate to be unchanged from the 5-3/4 low of 6.3% posted in April and May.  The labor force participation rate is seen remaining near the 36-year low of 62.8% from April and May as well.  The labor force as a percentage of the entire population is the lowest since 1979.  May factory orders out later today are expected to show a decline of -0.3% following an increase in April of +0.7%.

Showers moving across the southern plains this morning, but otherwise the Midwest is enjoying a welcome day without moisture.  Things should be mostly quiet outside of the southern plains the rest of the week until scattered precip pops up Friday into Saturday for the entire Great Plains from ND-KS.  Totals are expected to remain light with heaviest amounts under 0.50” in ND.  This precip will move east into IA/MO late in the weekend, bringing another 0.50-1.00” to most of IA, with IL/IN/OH seeing moisture at the beginning of next week.  Extended weather maps remain favorable for the Midwest with below normal temps for the entire central corridor accompanied by normal/above precip which gets us out to July 11th.  The 8-14 day is similar, although a little drier in the southern plains, but nothing threatening through July 15th which should mark the beginning of pollination for corn.

 

Mixed markets this morning with soybeans firm and grains a bit softer as offices empty ahead of the July 4th holiday Friday.  Most are still digesting the USDA data from Monday and the implications it carries the next 3-months, especially provided the current weather pattern rolls forward to produce favorable reproductive phases for both corn and soybeans.  It is difficult to really get a good gauge of cash markets following the USDA reports in this holiday shortened week, but for the most part grain movement has shut off as would be expected and the positive margin structure for domestic end users of corn and soybeans hasn’t gone anywhere.  Still, buyers are armed with good forecasts and data from the USDA saying old crop supplies are larger than previously thought, so most are going to remain hand-to-mouth as long as possible.

End user margins as compiled by rjomrt.com mostly improved last week as the drop in board grain prices and the continued improvement in meat prices keeps margins elevated.  MN Spot Gross Ethanol margins improved to $1.07/gln vs $1.06/gln last week and $0.85/gln last year.  Poultry margins improved to 89.3c/lb vs 88.99c/lb last week and 80.43c/lb last year.  Hog crush tabulated at $152.34/hd vs $145.42/hd last week and $87.80/hd last year.  Cattle crush remains woefully in the red at $85.94/hd vs $100.13/hd last week and $208.25/hd last year.  The constantly surging feeder cattle market is easily offsetting any gains seen by live cattle or the drop in corn prices, so unless the feedlot is vertically integrated with slaughterhouses and packing facilities, odds are good money isn’t being made.  C-IL soy crush margins jumped to $1.17/bu vs $0.91/bu last week and $0.84c/bu last year.

Reuters published an article overnight talking about the burdensome stocks levels in China, which should eventually lead to the government scrapping its stockpiling program for corn as it has with soybeans and cotton.  Stocks of corn in China, while not 100% clear, are thought to be around 100MMT, which is over half of the world’s expected carryout for the 2014/15 crop year.  Because of the government’s push to elevate farm income, their stock piling program has kept domestic prices artificially high, causing end users in southeast China to opt for cheaper, imported supplies from countries like the US.  If China begins to rotate inventories, or become more liberal with dumping supplies on the domestic market, or even exporting some of the supply, world prices could be pressed even lower.  Because the situation in China seems to be one of logistics and keeping supply in condition, it looks increasingly likely China will not be a major corn importer in the 14/15 marketing year which is one less demand cog.  Couple this with the current MIR-162 rejections, and the USDA’s current 1.700bbu corn export forecast for 14/15 looks appropriate to possibly even a touch high.  Price will be the ultimate arbiter of supply.

The Financial Times also had a good piece talking about the possibility of improved demand for commodities by passive and active investors in 2014/15.  That article can be found here: http://www.ft.com/intl/cms/s/0/d4fc6394-006e-11e4-9a62-00144feab7de.html?siteedition=intl#axzz36J8caBGM

Egypt’s GASC bought 240,000MT of wheat in their latest international tender for August delivery, bypassing all US and French offers in a sign of the West’s competitiveness into MENA.  The average price on the tender was $252.38/MT C&F, around $0.20/MT above the latest tender two-weeks ago.  US offers centered around $259/MT C&F.  A quality theme is already popping up with traders said to be adding in a premium for Romanian wheat given doubts surrounding the country’s harvest.

Several spreads hit contract lows during yesterday’s session including the WN/WU, WZ/WH, WH/WK and the WK/WN, all of which are trading around 63-83% of full financial carry.  The forward curve continues to reflect good quality and abundant supplies around the OH-River Valley delivery warehouses.  Interestingly, as the WN/WU and MWN/MWU both hit fresh contract lows yesterday, the KWN/KWU hit a new contract high, highlighting the crop expectations for each class, and the inter-market spread taking place as evidenced by last week’s COT data.  Several soybean spreads also hit contract lows including the SX/SF, SF/SH and SH/SK as traders waste no time pricing in larger new crop soybean supplies.  Keep an eye on -10.00c for the SX/SF as this would be near full delivery storage carry with no contribution to interest, which might not be a bad place to move hedges to January.

A few basis moves of note yesterday including Brazilian corn offers sliding 7-10c from spot through December to bring their FOB prices right down to current US offers.  Both countries are now offering corn around $192-193/MT FOB, while Argentina remains several dollars higher.  Traders have been waiting for Brazilian supplies to have more of an impact on their competitiveness, and it looks like those supplies are finally getting into position.  On the opposite end of the spectrum, Brazilian FOB soybean offers continue to appreciate with spot offers now +150Q, August at +115Q and Sept at +190U.  This would compare with the US at +100N for spot and +180U for September.  Would appear Brazilian farmer selling of soybeans has come to a screeching halt, and so too will the imports into the US of Brazilian soybeans at that type of price spread.

Weekly ethanol production out at 9:30am with production expected to remain elevated and well above the level needed to hit the USDA’s marketing year forecast.  Keep a close eye on ethanol inventories and EIA gasoline demand, as these two will provide clues about production moving forward.

 

Bottom Line:  Mixed open as we continue to digest the wave of bearish data dumped on the market Monday while trying to retain some measure of premium as grains enter the key reproductive stages in coming weeks.  Global grain inventories are abundant, exporting nations are or will harvest adequate crops, weather remains price bearish, funds are in sell mode, charts remain terrible and end users are content to watch prices slide.  At some point we’ll need a relief bounce, but nobody is getting too lathered up about the next bounce to sell.

 

Good Luck Today.

 

 

 

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.

7/1/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:40am: Dollar Index up 0.0360 at 79.8130; Euro down 0.00030 at 1.36950; S&P’s are up 4.50 at 1957.00; Dow futures are up 45.00 at 16784.00; 10-yr futures are down 0.21%; The Nikkei closed up 1.08% at 15,326.20; The DAX is up 0.31% at 9,863.77; The IBEX-35 is up 0.40% at 10,966.80; Gold is up $5.30 at $1327.30; Copper is down $0.45 at $319.90;Crude Oil is up $0.42 at $$105.77; Heating Oil up $0.0012 at $2.9763; Paris Milling Wheat is down €0.25 at €185.50/MT.

Mostly better equity markets overnight after China’s June manufacturing PMI rose +0.2 to a 7-month high of 51.0, which fell in line with expectations.  This survey is compiled by the National Bureau of Statistics and is much stronger than the HSBC manufacturing PMI, but nonetheless both measures are above the 50.0 contraction/expansion line.  In the US, today’s ISM manufacturing index is expected to show a +0.5 point increase to 55.4, marking the fifth consecutive monthly increase in manufacturing confidence. Today will also see June total vehicle sales which are expected to fall back to 16.3 million units after posting 7 1/3 year high of 16.7 million units in May.  In other news, Ukrainian President Poroshenko has effectively called peace talks with the Kremlin dead, ending the unilateral truce and ceasefire, with more sanctions on Russia expected.

Storms are moving across the southern plains this morning, and will push into the central and southern corn belt later today.  A round of fairly heavy showers went through IA/IL last night, with some of the storms severe. Pictures are flying around social media of flattened crops due to high wind and hail.  Total damage is difficult to quantify at this point.  Heaviest totals in the last 24 hours were along the IA/IL border where up to 3.0” fell.  After showers finish up today, things will turn quiet for much of the week with only some scattered precip falling in the northern corn belt, but most totals will be under 0.20”.  The southern plains will see the most concentrated moisture.  The open weather will be welcome for most.  Extended maps show a warming trend in the Northern Plains and WCB, but precip looks to stay above normal as well in both the 6-10 and 8-14.  Still no major threats seen.

 

Mostly weaker markets overnight, following the price direction prevalent post-USDA report yesterday.  Old crop soybeans have pushed positive several times, however, with old/new inverses going to work more than ever thanks to the acreage surprises put forth by the USDA.  Now that the highest risk reports of the summer are behind the market, traders are free to focus almost exclusively on weather aside from regional cash issues.  With current weather patterns in place to mid-July, and the latest extended maps from NOAA showing normal/below temps through summer, there just isn’t much to latch on to from the supply side for bulls.  With end users strapped with yesterday’s numbers, they will be slow to bid up for stem given larger old crop supplies, and until we’ve got an issue, new crop is growing by the day.

The biggest surprise to the numbers yesterday belonged to soybeans in the form of both June 1 stocks as well as planted soybean acreage.  First with stocks, June 1 soybean stocks totaled 405mbu, well above the average trade estimate of 378mbu, although far from the top of 440mbu.  This “miss” by the trade of 27mbu represents the second largest miss going back to at least 1989.  The larger than expected stocks also implies a negative Q3 residual of -110mbu, the largest negative residual for Q3 on record.  Essentially, the USDA confirmed the 2013 soybean crop was understated, and is backing into the number via the residual category until it can properly adjust the 2013 crop on the September 30th batch of reports.  In addition, the negative residual will allow the USDA to account for the stronger crush and export pace than they are currently reflecting in their balance sheets.  Current cash basis levels in the country tracking below year ago levels are certainly more palatable when considering there is actually more available supply in the country then we’ve been led to believe up to this point.

On acreage, the USDA also walloped the trade with an 84.839 million acre planted figure for soybeans, up 3.346 million from March, up 2.7 million from average trade ideas and up 8.3 million from 2013.  Largest acreage increases from the March Prospective Planting report were seen in IL (+600k), IA (+500k), and ND (+350k).  Is somewhat odd to see North Dakota become the swing acreage state it has the past two years given its geography, weather patterns, growing season length and crop diversity.  When plugging in the 84.8 million acre number into the balance sheet with the current USDA yield assessment of 45.2bpa, stocks balloon anyway one slices it.  Even with increased demand assumptions, carryout still rises towards 375mbu, or even 400mbu in some analyst balance sheets.  With a stocks/use ratio that is likely to climb over 10.0% for the first time since 2006/07, it looks like new crop soybean prices are going to continue shedding risk premium in the sessions to come.  In 06/07, the stocks/use ratio climbed to 18.6% and farm prices averaged $6.43/bu.  10% is a far-cry from 18%, but supplies will be the most plentiful since that time should weather cooperate, and we’ve had much lower prices than $11.50 SX since 2007.  Between larger old crop stocks, increased SAM imports, larger planted acreage and favorable weather to date, soybeans are getting pelted with bearish inputs from all sides.  The path of least resistance is down.

Switching to corn, stocks were the surprise to the trade, coming in at 3.854bbu vs the average trade estimate of 3.722bbu and the 2.766bbu on June 1, 2013.  The USDA had been indicating better than expected feed demand on its previous two quarterly stocks reports, but brought marketing year feed demand back down to earth with today’s figures.  3rd quarter feed/residual was implied at around 860-865mbu, down 6% from a year ago.  That would put Q1-Q3 feed demand at 4.720bbu, up 15.4% from last year.  Assuming the USDA is correct with their 5.300bbu marketing year feed estimate, that would imply Q4 feed demand at 580mbu, up 234% from a year ago.  Obviously this type of statistical anomaly can’t be explained through animal numbers and feed conversions.  Therefore, it would appear the USDA is set to drop its marketing year feed/residual number on the July WASDE between 100-150mbu.  Last Friday’s Quarterly Hog and Pigs report certainly corroborated the lighter than expected Q3 feed demand number as there just aren’t as many animals in feed lots and confinement barns as there were in Q3-2013.  Keeping ethanol and export data static, 13/14 carryout could grow towards 1.300bbu.

Corn acreage ideas provided little fodder for bulls or bears, coming in at 91.641 million acres vs the March estimate of 91.691 million and market expectations at 91.725 million.  The focus will now shift solely to the USDA’s yield assumption of 165.3bpa, which as of today looks appropriate given the highest crop condition ratings since 1999.  If yield ideas rise further from 165.3bpa, balance sheet ideas quickly rise towards a 14/15 carryout near 2.0bbu.  Demand assumptions for 14/15 have feed/residual largely steady to slightly lower next year, exports lower and ethanol flat.  Looking at current margin structures, the argument can certainly be made ethanol demand will be higher, and livestock feed demand will remain stout.  Exports should struggle, however, given competing nations unless price drops to a level which makes the US the clear quantity and quality choice of global importers.

A quick note on corn exports, yesterday also saw weekly export inspections released just before the USDA numbers.  Corn export inspections came in at 34.4mbu, below last week’s 38.9mbu and the 41.0mbu needed weekly to hit the USDA’s export estimate.  The 34.4mbu worth of exports were the lowest level in 18-weeks, and marks a continued downtrend since the marketing year high near 65.0mbu in April.  While this alone isn’t evidence for the USDA to drop their export estimate, it is enough to warrant them taking pause until the August WASDE to get a better feel of exports to that point.  Certainly something to monitor moving forward.  Wheat exports were light at 12.3mbu vs the 17.4mbu needed, and soybean shipments were 2.7mbu vs the 0.50mbu needed weekly.

Wheat stocks data was largely a non-event with June 1 stocks coming in at 590mbu vs the average trade guess of 598mbu and vs 718mbu last year.  The big surprise came by way of spring wheat planted acreage which was pegged at 12.709 million acres vs the 12.009 million estimated in March and the 11.86 million acres based on the average trade guess.  Acres would also be up from last year’s 11.596 million, showing Northern Plains farmers continued planting wheat and soybeans after corn PP dates came and went.  Spring wheat acreage coming in above the average trade estimate on the June report marks the fifth year in the last six in which this has occurred.  Durum acreage was pegged at 1.469 million vs 1.790 million for an average trade guess and 1.470 million last year.  As important will be the status of Canadian planted acreage and crop conditions moving forward.  Several weather outlets have made mention of the heavy rains over the weekend in SE-Saskatchewan and SW-Manitoba where localized totals were as high as 6.89”.  This heavy rain follows several events the past few weeks which have left fields flooded and crops sickly.  Commodity Weather Group is estimating as much as 10% of the Canadian spring wheat crop and 15% of the canola crop could be affected.

Crop progress reports released last night showed the corn condition rating rising nationally by 1% to 75% G/E with declines in ND/MN/SD offset by increases in NE/KS/MO/IL/MI.  Soybean conditions were unchanged at 72% G/E, although the trade had been expecting the national rating to fall by 1-2% given the heavy rain in the Northern Plains.  SD/ND/MN/IA/WI did see ratings fall, but were offset by improvements in NE/KS/MO/IL.  Soybean conditions are now rated the highest for late June since at least 1986.  Spring wheat conditions fell 1pt to 70% G/E with a 7% drop in SD and a 9% drop in MN.  The spring wheat crop is rated just below the 5 and 10-yr averages, despite anecdotal comments of an amazing crop currently developing in the field.  Winter wheat harvest was pegged at 43% vs 40% last year and 48% on the 5-yr average.  KS is 40% harvested vs 66% average.

While the data certainly took precedence yesterday, there were some cash moves which beg attention, notably Brazilian soybean basis.  One cash source noted Brazilian FOB soybean premiums rallying 20c for spot and August and 30-45c for September with new crop bids also rising 5-10c.  While Brazil is the clear low cost leader for Jul-Aug, they are only $4/MT cheaper than the US for September.  Corn basis was understandably firmer with the drop in the board as both CIF and PNW premiums firmed by 2-5c.  SAM offers steady and still above US replacement through December.  14.0% protein HRS basis on the spot floor popped 15-40c to +285U yesterday with 63 cars on the floor.  Hog board crush feeding spreads hit new contract highs pretty much as far out the curve as one wants to do the calculation.

 

Bottom Line:  Markets need to correct lower to find fair value for the larger old crop stocks and ballooning new crop carryout.  Until proven otherwise via weather forecasts, the trade will assume new crop supplies are growing and carryouts are expanding.  Managed funds still have length to shed in corn, and seem ready and willing to press shorts in wheat and soybeans.  Without their money on the long side, markets need to find the natural buyer by way of demand.  End users are in the black, but will be in no hurry to step in front of our markets falling down the elevator shaft.

 

Good Luck Today.

 

USDA Acreage Change 7-1

 

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 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.

 

6/30/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:50am: Dollar Index down 0.0230 at 80.0160’ Euro up 0.00080 at 1.36570; S&P’s are down 2.00 at 1950.25; Dow futures are down 16.00 at 16,741.00; 10-yr futures are up 0.04%; The Nikkei closed up 0.44% at 15,162.10; The DAX is up 0.10% at 9,824.83; The IBEX-35 is down 0.74% at 10,878.80; Gold is down $6.40 at $1313.60; Copper is down $0.10 at $316.70; Crude Oil is down $0.44 at $105.30; Heating Oil is down $0.0184 at $2.9851; Paris Milling Wheat is down €0.25 at €187.50/MT.

A heavy economic calendar will be the feature this week, especially Friday’s June employment situation report as investors wait to see if the improving job market continues into summer.  The Bloomberg Economic Surprise Index posted a 14-month high last week of 0.292, but backed off slightly to 0.262 by Friday.  This shows US economic data is the strongest relative the market expectations since March of 2013.  Strong economic data this week expected to help elevate this indicator further will include May pending home sales (+1.2%), the June ISM-Manufacturing index (+0.4 to 55.8) and Thursday’s unemployment report (+215,000).  Today will see May pending home sales which are expected to increase +1.2% m/m.

Systems moving across NE/E-SD/IA/IL this morning, following the moderate to heavy totals witnessed over the weekend in the WCB and Northern Plains.  Heaviest totals over the weekend were seen in N-ND an E-IA where localized amounts topped 3.0”.  The rains turned out lighter than forecast in S-MN, which was beneficial as areas there have received their entire years’ worth of rainfall in the last 3-weeks.  Rainfall this week will be confined to IA/S-WI/IL as well as a separate system in NM/N-TX/OK.  Rains in IA are seen as heavy as 2.0-3.0”, but the majority of the Midwest will be on the dry side, although soil moisture profiles are nearly full in many areas.  Nothing too extreme in the NOAA extended maps over the weekend as temps will remain normal/below for the Midwest through July 9th, while precip is going to be normal/below.  Temperatures push well above normal in the Northern Rockies, however.

 

The wait is over and the Quarterly Stocks reports are now just a few hours away.  Our markets are taking a breather heading into the numbers as weekend weather was beneficial for most areas, even though soybean condition ratings on this evening’s crop progress report are expected to ease 1-2pts.  Corn condition ratings are expected to stabilize after a couple weeks of decline, but both crops will still be rated near the highest levels of the last two decades.  The focus of today’s reports will undoubtedly be the old crop stocks as of June 1st for both corn and soybeans.  Bullish and bearish surprises of great magnitude have been witnessed in these reports, and more than once have led to “Waterloo” moments for row crops.  The largest fundamental factor, however, is still weather and that remains price bearish as of June 30th.  Expect choppy markets heading into 11:00am with our usual dose of volatility as the algos react to the numbers before most of us can even find the line item we’re looking for.

The Minnesota River at Savage crested over the weekend, and has started to come down although it doesn’t appear water levels will drop to the point barges can be loaded until after July 6th.  This will keep one more supply source from hitting the river and the export market.  It also looks as though the high water will roll forward to the mid-Miss as locations such as Quincy and Keokuk, IL look to reach moderate-major flood stage around July 5th/6th.  Any impediment of the mid-Miss will have far more effect to CIF premiums than the upper-Miss.  See charts below.

Today is First Notice Day, and deliveries today included 3 corn, 3 oats and 71 Chicago wheat.  There were also 396 Minneapolis Wheat with 391 in Duluth and 5 in MPLS/STP.  ADMIS House account put out all 396 with the only real strong stopper looking like CHS house standing in on 166.  The MWN/MWU is bid/offered 12c wide this morning, so not sure we can really glean much until we get markets opened up.  The DTN National Cash Corn Index is implying a national basis of -19N, the firmest basis level since February 3rd.  As if we needed proof the farmer isn’t moving corn.

Friday saw the USDA Quarterly Hogs and Pigs Report which was viewed bullishly for hog prices but bearishly for corn feed demand.  All Hogs and Pigs as of June 1 were pegged at 95.3% of a year ago, well under the 97.1% average estimate.  The June 1 hog inventory of 62.1 million was the smallest since 2007, and highlights the continued struggle with PEDv.  All major categories missed estimates with Kept for Breeding at 99.5% vs 101.8%, Kept for Marketing at 94.9% vs 96.8% expected and the Mar-May pig crop was 94.6% vs 97.7% expected.  Farrowing intentions for Jun-Aug look to be on par with a year ago rather than the 2.2% expected given the economic incentives to expand the hog herd.  This could create problems for corn feed demand during Q4 of the 13/14 marketing year, but we’ll have a much better idea of that after 11:00am this morning.

Friday also saw the latest COT data released which showed continued selling across the row crop markets with the large spec now long just 50,376 contracts of corn, the smallest position since 2/25/2014.  Unfortunately, the gross commercial long (end user) also sold corn in large volumes, taking their gross long down from 442,087 contracts to 407,329 in the latest reporting week.  Large specs also sold soybeans lightly to take them to a net short position of -573 contracts, the first net short since 8/6/2013.  Since 1/2/2007, large specs have only been net short soybeans 33 out of 391 weeks, or 8.44% of the time.  Today’s report could have implications for this group.  Large specs continued to sell Chicago wheat, pushing their net short to -61,783 contracts, the largest net short since mid-February.  Interestingly, specs bought KC while selling CGO and MPLS, highlighting the inter-market spreading taking place.

 

Bottom Line:  Not worth discussing much else until the numbers are released.  Ensure positions are in-line with risk tolerances heading into these important numbers.  The week of July 4th is often seen as the turning point in the marketing year in terms of weather as often we get a glimpse into early pollination and price can either stage a bottom or prepare for a further thrust lower.  As of June 30th, weather looks mostly ideal and managed money appears ready to push price to the downside.  Prepare your balance sheet for all possibilities.

 

Good Luck Today.

 

Savage 6-30 Quincy 6-30

 

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 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.

6/27/2014 Morning Comments

Good Morning,

 

Outside Markets as of 7:20am: Dollar Index down 0.0500 at 80.1710; Euro is up 0.00160 at 1.36270; S&P’s are down 4.25 at 1944.50; Dow futures are down 30.00 at 16732.00; 10-yr futures are up 0.07%; The Nikkei closed down 1.39% at 15,095.00; The DAX is up 0.14% at 9,818.31; The Russian MICEX is down 0.27% at 1,469.17; Gold is down $1.10 at $1315.90; Copper is down $0.05 at $317.15; Crude Oil is down $0.02 at $105.82; Heating Oil is up $0.0114 at $3.0726; Paris Milling Wheat is unchanged at €186.75/MT.

Mixed to weaker global equity markets this morning after sluggish economic data yesterday and overnight.  Chinese industrial profits grew 8.9% in May, the slowest rate this year as the number two economy continues to struggle with lackluster economic performance.  US consumer spending yesterday rose +0.2% in May, half the rate expected by economists.  Personal income rose +0.4%, right in line with expectations.  Technical indicators on the e-mini S&P 500 are throwing off some negative signals as prices chop near the recent record highs.  Volume has been declining since 6/17, right up to the new record highs hit on 6/24.  In addition, the new highs made in price were accompanied by waning and diverging momentum, a sign the thrust is slowing down.  Open interest had been rising into expiration of the June contract, and has been climbing each day since.

A very active radar this morning across the WCB and Northern Plains as expected with showers impacting NE/SD/IA/S-MN.  The precip returns for the five-days ending this morning is below showing widespread rains across IA and decent totals in the Dakotas.  The other map below shows the 3-day forecasted precip through Sunday with additional rain falling in the WCB.  Additional rain in SE-SD/S-MN/NW-IA/E-NE won’t be welcome, but heavy rains are expected and should increase flooding/ponding concerns.  Wheat crops in the Dakotas will soak up the rain as spring wheat begins flowering.  Winter Wheat harvest in South Dakota is around 2-3 weeks away.  Nothing materially different or threatening from NOAA’s extended maps although the Northern Plains look as though they will dry out a bit in the 6-10 day period.

 

Weaker prices for grains to close the week as we head into the biscuit break and the USDA reports on Monday.  On the whole, volume has been light as would be expected, but in corn, volume has actually climbed each day this week with Thursday’s total topping 349,356 contracts, the highest since June 12th.  As noted earlier this week, the range of estimates on June 1 stocks for both corn and soybeans are especially wide and have the potential to effect price considerably.  The trade needs answers, or at least clues, as to how the US will solve its soybean balance sheet as well as indications of how robust feed demand of corn remained during Q3.  Acreage on both corn and soybeans has the potential to increase, but how much of those planted acres will actually be harvested is something which won’t be known for weeks or even months.

I don’t normally review export sales from the previous day, but soybean sales yesterday are worth mentioning again.  Export sales yesterday totaled 317,000MT (11.7mbu) of old crop, blowing out the top end of the range of estimates of 50-200k.  The trade knew about 140,000MT of the total which were declared in a daily sales announcement, but the other 177,000MT were obviously larger than expected.  These sales combined to push the total export sales commitments to 1.671bbu, 71mbu above the USDA’s current projection, clearly indicating the USDA is too low with their current number.  In addition, with unknown sales still occurring, it makes cancellations of the sales on the books unlikely with just 10-weeks left in the marketing year.  Rolling of sales to new crop could still occur, and it is possible the fresh sales are a straddle sale between Aug/Sep which could end up affecting the final sale total.  Either way, the USDA sales projection is too low, export sales aren’t being rationed and cash basis is reflecting the same at both the Gulf and at crush plants across the Midwest.  The USDA had better show us a negative residual on Monday, or things will get really interesting.

Along the same lines, with CIF bids pushing the river corridor above gross delivery equivalence, commercials began canceling soybean delivery receipts last night as was hinted at.  44 delivery receipts were canceled at Zen-noh’s house in Hennepin and other 85 at their Utica location.  21 certs remain outstanding at CGB in Hennepin.  The previous paragraph on export sales commitments, and this one on delivery certs, speak to the same thing: strong export pull and lack of soybeans moving.

StatsCan released their June acreage report this morning for the period ended June 10th.  Canola acreage was bearish at 20.228 million acres vs. the March report at 19.801 million and 19.936 million last year.  All-wheat acreage came in at 24.087 million vs 24.766 million in March and 26.015 million in 2013/14.  Wheat acreage slipped a bit more than estimates.  Most other acreage numbers were in line with estimates.  While on wheat, Russia’s wheat harvest has been slightly delayed by rains so far this year and yields have been a bit underwhelming.  As of June 25th, Russia has harvested 0.8% (1.3MMT) of its crop area with average yields of 3.75MT/ha vs 2.9MMT harvested last year and yields of 3.96MT/ha.  It is incredibly early in the harvest cycle, but progress will need to be monitored.

A quick look at the options pit heading into Monday’s numbers hints at a bullish lean based on the put/call ratios.  The September corn put/call ratio as of this morning computed to 73.9% vs 79.9% two weeks ago and 83.0% at the end of May.  The December put/call ratio tabulated out at 151.3% vs. 164.3% 2-weeks ago and 169.0% at the end of May.  On soybeans, the September put/call ratio sits at 322% vs 361% 2-weeks ago and 405% at the end of May.  November was seen at 247% vs 267% 2-weeks ago and 293% at the end of May.  No substantial changes seen in wheat, but December soymeal has watched its put/call ratio decline from 299% at the end of ay to 287% 2-weeks ago to 273% this morning.  We’ll see if the options pit is correctly positioned late Monday morning.

Protein scales continued to increase on the KCBT yesterday with 11.60%-12.80% all rising by 12c with 12.0% protein winter wheat valued at +127/137U vs +110/120N at the beginning of the week.  14.0% protein spring wheat basis on the MGEX was steady at +240U vs +250/285N on Monday.  CIF-SRW bids rose further yesterday, up another 4c Jul-Sep with spot offers at +65N.  CIF corn bids were 3-4c firmer with spot bid +67N.

 

Bottom Line: Expect trade inside recent ranges to get this Friday out of the way before the real fun starts Monday.  The options pit is suggesting a bullish lean, cash markets are strong and funds have unloaded a massive amount of length the past several weeks.  Contrarians are probably seeing pieces line up for a bullish surprise, but technicals and trends remain bearish.  Growing weather remains nearly ideal, and the crop in the field not under water is looking very good.

 

Good Luck Today.

 

RFC 6-27 HPC 6-27

 

 

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.

6/26/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index down 0.0010 at 80.2240; Euro is down 0.00150 at 1.36160; S&P’s are down 1.50 at 1948.00; Dow futures are down 7.00 at 16,764.00; 10-yr futures are unchanged; The Nikkei closed up 0.27% at 15,308.49; The DAX is down 0.09% at 9,859.11; The IBEX-35 is up 0.34% at 11,004.20; Gold is down $10.60 at $1312.00; Copper is down $0.10 at $316.50; Crude Oil is down $0.14 at $106.35; Heating Oil is down $0.0054 at $3.0306; Paris Milling Wheat is up €0.75 at €186.25/MT.

Despite the worst change quarter over quarter in economic growth since the recession of 2009, US equity markets rebounded nicely yesterday and are still within arm’s length of all time high prices.  The Commerce Department said the US economy contracted -2.9% in Q1, thanks in large part to the cold, snowy winter, but investors are obviously focusing on the accommodative monetary policy instead of hard data.  The reaction in stock prices continues to worry contrarians as it doesn’t seem to matter what this market has thrown at it, higher prices is the trend.  Economic data in the US today will include weekly jobless claims which are seen down 2,000 to 310,000 while continuing claims are expected to drop 1,000 to 2.560 million.  Personal income for May is expected to rise +0.4% m/m, while spending is expected to be up +0.3%, better than April’s -0.1% drop.

Rain moved through the Dakotas and WCB last night and is still dropping moisture this morning in what promises to be a wet start to the weekend.  Since 6:00 last evening a large swath of SD/ND receive 0.25-0.50” with localized areas seeing as much as 1.00” in parts west of the Missouri River.  More rain is expected today in the Eastern Dakotas with 1.0” amounts falling along I-29.  Friday brings with it more moisture, mainly settled on South Dakota with more 0.50-1.00” amounts.  Saturday into Sunday will see the systems move into MN/IA/WI with portions of MN not needing any excess water.  Things finally clear out by early next week.  Extended maps keep things cool for the Northern Plains with below normal temps, but above normal in the ECB.  Precip will be drier for the Northern Plains, but stays above normal for the ECB.  Word Weather, Inc. released a special on the Canadian Prairies yesterday morning which focused on the excessive rains there and the fact all intended acres were not planted.  They seemed less concerned about excess water on planted crops at this juncture, but StatsCan will release planted acreage data tomorrow.

 

Firmer prices this morning across the grain room with corn clawing back the small losses from yesterday’s session as flooded crops prepare for another round of moisture the next several days.  It is hard to read too much at all into the price action the past couple days and what will take place today and tomorrow ahead of Monday’s reports.  Volume has understandably dropped, as has volatility, highlighting traders unwillingness to stake out a large position ahead of the high risk SIAP numbers.  That being said, traders will still focus on this morning’s export sales, and continue monitoring cash markets to see if recent basis strength continues pre and post report.  It is interesting to note public opinion on some of our beloved grains have dropped to monthly lows ahead of one of the most high-risk reports of the entire year, especially wheat which has precious few advocates these days.

Reuters published an article yesterday talking about the import spread between Chinese domestic cash corn prices and imported supply from either Brazil or US.  The graphic below accompanied the article, and as one can see the price spread between the two has climbed to $142/MT, meaning it is $3.61/bu cheaper for Chinese end users to buy US/BRAZ corn than from the Chinese domestic market.  This continues to highlight a number of things, namely the price support system China uses for its farmers which keeps prices artificially high as well as the total lack of infrastructure from North China where the corn is grown to South China where the corn is used.  Does this mean we should expect another big round of Chinese corn imports anytime soon?  Probably not as the Chinese end users can’t import corn without being granted an import quota, and also China is trying to get rid of burdensome stocks ahead of this year’s harvest which are going out of condition.  So at its base, the supply situation isn’t all that bullish in China, but due to poor policy and poor logistics, price should still force American corn into China.  Time will tell.

The second chart below is also from Reuters and details the pre-report estimates for the Statistics Canada principle crop acreage report set for release tomorrow.  Analysts are expecting the numbers to show Canadian farmers planted 24.5 million acres of all-wheat, which would include spring, durum and winter wheat, which would be down 7% from last year and 2% from the April report.  Canola acres are expected to be near 19.9 million acres, essentially the same as last year, but up 0.5% from StatsCan’s April report.  As mentioned above, given the flooding of acres, planted acreage figures this early in the year could end up proving to be the highest of the year as abandonment could rise, and planted acreage could also be down from the April intentions.  Either way, stocks of grain in Canada are still rather high, so an abrupt reaction might not be warranted just yet.

CIF basis had some movers yesterday including SRW which firmed another 3-5c yesterday alone to put FOB bids at +61N for spot, +45U for August and +55U for Sept.  Given firming CIF basis and weakening calendar spreads it would the cash market is trying to suggest current available supplies in the Delta are of poorer quality (TW/Vomo), while the supplies expected to be harvested in the OH-River Valley are going to be of better quality.  The spread between US-SRW and French Milling Wheat continues to move in favor of the US, but the freight advantage looks to keep US-SRW out of MENA anytime soon.  CIF corn bids softened 3c or so, but remain $3-5/MT cheaper on a FOB basis than both Argentina and Brazil through December.  At some point SAM prices should get more aggressive, but harvest has also been laborious so far.  Brazilian FOB soy bids softened 5-9c, but Brazil didn’t play in the World Cup yesterday, so there’s that.

Weekly ethanol production yesterday dropped from the previous week’s record, but maintained a level well above that needed to hit the USDA’s ethanol production forecast.  Weekly ethanol production totaled 938,000bbls/day vs 972,000bbls the week before, while stocks ballooned to 18.183 million barrels, up 333,000 from the week before.  Stocks are still down from the seasonal peak two weeks ago, but sit at the highest levels since the spring of 2013.  The yo-yo action in weekly gasoline demand continued with the surge two-weeks ago followed by a sharp sell off last week to near the low end of the range for the last 5-years.  Production is running well higher than levels needed to hit the USDA’s forecast, but the continued deterioration in margin structure is a concern moving forward.

A few tidbits on Monday’s reports:  June 1 soy stocks have exceeded trade expectations in 5 of the last 7 years, but usually fall within 20mbu of the average trade guess.  Based on the Reuters average analyst estimates, traders are looking for the 2013 crop to be understated around 35mbu, although this will be reflected in the residual category.  The 2013 crop won’t be adjusted, if it needs to be, until the September 30th grain stocks report.  Corn stocks have also exceeded expectations in 5 of the last 7 years, although most years are within 75mbu of the average trade guess.  Corn acreage has exceeded the average trade guess in 5 of the last 7 years, but soy acreage has been much more unpredictable.  From the March to June report, corn acreage has increased 9 of the last 10-years, while soy acreage has increased from March to June in 4 of the last 5 years.  The risk to price is both increase given the large amount of PP acreage last year which wasn’t accounted for in the March acreage report.  Remember, this year more acreage could have been planted, but won’t be harvested, but that will be reflected differently in the USDA’s balance sheets.

Export sales this morning are expected at 300-455TMT for wheat, corn is seen at 125-450 old and 100-300 new.  Soybeans are expected at -100/+100 and new crop at 350-500TMT, although traders already know the big daily sales from last week are coming.  Soymeal sales are seen at 0-180TMT and soyoil is pegged at 0-20TMT.

 

Bottom Line:  Prices look firmer as they bounce a bit on the low-volume roll coaster ahead of Monday.  Hard to read too much into the price action, but continue to monitor cash markets for underlying signals.

 

Good Luck Today.

 

Reuters Corn 6-26 StatsCan 6-26

 

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.

 

6/25/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:40am: Dollar Index up 0.0070 at 80.3440; Euro up 0.00020 at 1.36080; S&P’s are up 1.75 at 1945.00; Dow futures are up 3.00 at 16755.00; 10-yr futures are up 0.06%; The Nikkei closed down 0.71% at 15,266.61; The DAX is down 0.43% at 9,894.85; The IBEX-35 is down 0.63% at 11,036.30; Gold is down $7.80 at $1313.50; Copper is up $0.10 at $314.60; Crude Oil is up $0.55 at $106.57; Heating Oil is down $0.0126 at $3.0364; Paris Milling Wheat is down €1.00 at €185.50/MT.

Equity markets finally showed some life yesterday, even if it was to the downside as stocks had their biggest decline in two weeks amidst the ongoing violence in Iraq.  The S&P 500 posted a key reversal which is defined as when price puts in a new, meaningful high followed by trade below the previous day’s low.  By the end of trading, the S&P 500 had closed below the previous three day’s closes, helped in part because of the narrow ranges the past week.  Economic data on the docket today will include May durable goods orders which are expected to be up 0.3% ex-transportation, following the 0.6% rise in April.   Today will also see Q1-GDP which is expected to show a downward revision of -1.8% q/q from the last estimate of -1.0%.  The level of importance placed on GDP, despite the fact it is revised three times, is still something comical about Wall Street.

Fairly quiet radar today ahead of the next round of storms to hit the Midwest the next several days.  Rains are still expected to start up later today in the WCB and Northern Plains with 0.40-0.50” seen across much of NE/SD/NE/MT while KS/OK will see similar to heavier amounts the next 24-hours.  The pattern remains active in the aforementioned states as well as MN and IA the next 3-days with projected 3-day rainfall totals hitting 1.8-2.4” in parts of ND/SD and S-MN.  The deluge of water witnessed the past 3-weeks looks as though it will get worse this week in some of the Northern Plains states.  The 5-day forecasted precip map below shows the sizable totals expected.  6-10 and 8-14 day maps continue to show normal to above normal precip across the Midwest, although temperatures are rising to above normal east of the Mississippi River.  Temps will need to be monitored as we get into July.

 

Mixed to weaker markets this morning as grains head lower, but soybeans claw back small gains led by new crop.  Doesn’t seem to be any notable change to the current liquidation trend in place ahead of the June 30th reports with managed money ignoring cash and spread signals in favor of what continues to be ideal growing weather for corn and soybeans in most areas of the corn belt.  Concerning to some is the still large amount of open interest left in the July corn with first notice day occurring Monday, the same day as the June 30th reports.  As of this morning, July open interest totaled 142,391 contracts, compared with 89,727 contracts a year ago.  This could be a further downside catalyst with funds still net long corn and needing to pare positions by Friday.  Average trade estimates were released yesterday by Reuters and Bloomberg, and the most notable thing to stick out is the seeming lack of confidence in the trade on the stocks report.  For corn, the range of estimates is around 900mbu wide,  or nearly 25% of the average trade guess.  Should be noted the range would fall by half if one analyst on the low-side was removed. On soybeans, the range of estimates goes from 440mbu down to 334mbu, or 28% from the average trade guess.  The report could prove especially volatile.  Acres should take a back seat with fairly tight ranges from the March 1 prospective planting numbers, although the range on soybean acres is nearly 4.0 million wide.  The surprise, in either direction, should be focused on soybeans.

The notable feature in cash markets yesterday was the strength in soybean basis.  FH-July CIF bids for soybeans pushed to +80N, while LH-July held firm at +73N.  With 365%-355% barge freight, this equates to 10-17c above gross delivery equivalence in Zone 3 which should all but guarantee no deliveries on FND.  In fact, given tightening domestic cash, it could mean delivery certificates get canceled and barges be placed for load-out.  As of last night’s CME Registrar report, there were 150 soybean certs registered for delivery (all in Zone 3), with 21 at CGB houses, and the other 129 at Commercial-Z’s house.  Were this isolated to the river, it probably wouldn’t be as notable, but Chicago beyond rail was firmer, and WCB crush plants were said to be paying pushes ranging from 5-10c to 15-25c depending on location.  Given the strength in Brazilian FOB premiums the past several weeks, and the likelihood imports from that source have all but stopped on new purchases, it raises the prospect not only will the USDA’s 90mbu of imports prove high, but the rationing to take place on exports and crush isn’t over just yet.  Monday will answer a few questions, but the cash strength is a major feature in our markets.

One other note on cash markets, Argentine corn premiums remain stubbornly high at +75/80N vs. US FOB premiums around +67N for spot and +73U for August.  Brazil remains bracketed between +80N for spot and +75U for August-December.  Argentina’s corn harvest still stands at only 50% +/- which is 5-8 weeks behind averages thanks to heavy rains.  Eventually, SAM supplies should compete with US supplies head on, but that day ain’t today my friend.

Deliverable stocks at several wheat elevators jumped materially in the last week, signaling the start of harvest in many areas.  The biggest jump occurred at the Mississippi River SRW locations where weekly stocks went from 408,000 bushels last week to 10.045mbu this week.  Quality in the Delta is said to be a major concern with low test weight and vomitoxin concerns, but the WZ/WH, WH/WK, WK/WN and WN/WU all hit fresh contract lows yesterday which seems to be the market signaling it is okay with expected supplies in Ohio-River delivery location areas.  We shall see as harvest progresses.  HRW delivery supplies are growing in Hutchinson, Salina and Wichita but have yet to move higher in Kansas City, highlighting the slow pace in the North.  More moisture this week isn’t going to help.

Ethanol margins continue to ease with MN-spot ethanol margins as complied by www.rjomrt.com with the latest week showing $1.06/gln vs $1.13 last week and $0.91 a year ago.  DDGs prices continue to be the main culprit, although falling ethanol prices aren’t helping either.  Today’s weekly ethanol production will be watched closely given last week’s record 972,000bbls/day figure.  Driving season will be hitting its peak soon, and the massive production should eventually lead to a backup in supplies even if exports are strong.  Couple it with weak DDGs prices and margins could get tight the next several weeks.  Hog and poultry crush remains well in the black, while cattle feeders struggle with $210/cwt feeder prices.

Bloomberg carried a story which can be found here http://www.bloomberg.com/news/2014-06-25/crop-sowing-delayed-by-weak-india-monsoon-stoking-prices.html on the Indian monsoon which is off to its weakest start in at least five years.  Rainfall is 38% below the 50-yr average since June 1, the least since 2009, according to the India Meteorological Department.  This is delaying sowing of many crops, and needs to be monitored closely given the volatility which has been seen in Indian food supplies over the past 10-years.  The last several years have witnessed record harvests for many crops, the planting season is so far off to a slow start.

 

Bottom Line: Grains look like they’ll continue to struggle today with weekly ethanol production monitored closely.  Soybeans are throwing some strong signals from cash markets that the rationing process is not yet complete, although few are going to want to step in front of Monday’s reports with any sizable positions given the volatility always present with quarterly stocks reports.  Continue to stress test marketing plans against these prices and lower prices.  Pictures of flooded fields from social media can’t be one’s marketing plan.

 

Good Luck Today.

 

HPC 6-25

 

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 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.

6/24/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:40am: Dollar Index down 0.0580 at 80.2150; Euro is up 0.00190 at 1.36270; S&P’s are down 4.25 at 1948.75; Dow futures are down 29.00 at 16,811.00; 10-yr futures are up 0.16%; The Nikkei closed up 0.05%; The DAX is up 0.02% at 9,922.70; The IBEX-35 is down 0.01% at 11,117.20; Gold is up $6.50 at $1324.90; Copper is up $0.70 at $314.90; Crude Oil is up $0.07 at $106.23; Heating Oil is up $0.0030 at $3.0435; Paris Milling Wheat is down €1.50 at €187.00/MT.

Muted global equity markets as the DJIA fell yesterday for the first time in seven days, and the lack of volatility has grown to the point contrarian’s are really beginning to lick their chops.  As an example,  www.sentimentrader.com pointed out the put/call ratio on the CBOE’s Volatility Index has dropped to 0.1, meaning for every 1,000 put options there are only 100 calls open.  Obviously the options pit is positioning itself heavily for a drop in the S&P 500 in coming weeks.  New home prices for April from FHFA are expected to show a solid gain of +0.5% m/m, adding to the +0.7% gain witnessed in March.  New home sales data for May is also expected to show an increase of +1.6% to 440,000 units which would add to the 433,000 units in march.  New home sales posted a 5 ½ year high in January of 457,000 units but have fallen off since.

More precip falling across western parts of the southern plains as well as moving across IL/IN/MI/MO, keeping the corn belt cool and moist.  This week remains an active one for almost all growing areas of the Midwest as the southern and northern plains will see rain the next 3-days with heaviest totals in KS/OK/N-TX where 0.50-1.70” is expected.  The northern plains will see a general 0.25” while ND/N-MN will see upwards of 0.70” in spots.  The weekend brings additional moisture to the northern plains as central and southern MN sees another 1.0” which should exacerbate flooding problems on the various rivers there.  The Dakotas will also see moisture out of that system.  IA sees 0.50-1.00” early next week.  Nothing threatening in the way of lack of moisture or oppressive heat in the 6-10 and 8-14 day outlooks.  Weather remains a non-starter through July 7th according to NOAA.  Keep calm and carry on.

 

Weakness throughout the evening session last night as crop conditions came in about as expected, but traders don’t seem to be sinking their teeth into the “too much rain” argument at this point.  While the flooding in parts of NE/SD/MN/IA is a major concern for the affected farmers, the majority of the corn belt has been receiving timely rain with mild temperatures, keeping the idea of record row crop yields squarely on the table.  In addition, there seem to be more and more demand concerns for corn popping up on the new crop balance sheet, especially export pull from China who is dealing with massive stocks which are going out of condition.  The double whammy of growing supply and shaky demand is unnerving the bulls, leading to bounces being sold not bought.  Volatility should subside in the ramp up to the June 30th reports, but that isn’t necessarily a good thing for bulls as trends are down.

Crop progress report out last night showed the national corn condition dropping 2pts to 74% G/E, in-line with expectations.  Largest declines were IA (-4), MN (-7), SD (-3) and WI (-3).  Soybean conditions fell 1pt to 72% G/E with large declines witnessed in SD (-8) and MN (-10).  Soybean conditions are still rated the highest since at least 1986, while corn is the highest rated since 2000.  The weakness, despite the declines, seems to be tied to the idea our early season ratings were too high and the needed correction is being applied.  Still, the declines aside, our crops our still very highly rated for late-June.  Spring wheat conditions fell 1pt to 71% G/E, but would compare with 61% last year and is sitting just below the 5 & 10-yr averages.  SD saw a jump of 6pts while MN was down 9pts.  Winter wheat conditions were unchanged at 30% G/E and harvest sits at 33% complete with KS at 24% complete.

Interesting article yesterday from Reuters which said Brazilian dock workers have negotiated an ordinance with the ports which allows them to stop working when the Brazilian national soccer team plays.  Port reps said this is “unprecedented,” but also probably necessary considering the tensions between dock workers and port owners in years past.  While this isn’t the sole reason, Brazilian FOB basis does continue to hold steady or firm on both corn and soybeans with spot FOB bids at +42N and +82Q for August vs +8N and +63Q a week ago.  Brazil also remains $1-3/MT higher than US corn through December.

Two major international wheat tenders over the weekend continued to reflect the premium US wheat is carrying relative to its exporting competition.  Egypt bought 180,000MT of Black Sea wheat from Russian and Romania at $262/MT C&F while the lowest US offer was $292/MT C&F.  Russian wheat prices have continued to fall in recent weeks with FOB offers now around $250/MT FOB vs $260/MT FOB the week before according to SovEcon.  Ideas of the Russian wheat crop have begun creeping back higher after concern over dryness in May and early-June.  Reuters released a poll which showed analysts pegging the Russian wheat crop at 53MMT, up 2% from a year ago.  Exports are seen at 19MMT which would be up slightly from 2013/14.  Also worth noting, Argentina’s FOB prices have come down sharply with last night’s offers at $335/MT FOB (+198N) vs $375/MT FOB (+308N) a week ago, although well placed cash traders said Argy wheat still isn’t trading any material tonnage.  Seems like US wheat is finding more competition by the day, and there just isn’t a major production issue outside of the US, which even that doesn’t seem as dire as a month ago based on yield reports flowing in from KS.

Several news outlets reported ethanol RIN prices jumping sharply late last week to 64c/gln vs 48c/gln last Wednesday.  Rumors were the EPA would soon release its revised 2014 blending rules which some thought would be pushed back until fall.  Most think the requirement will be somewhere around 13.5 billion gallons vs the initial proposal for 13.0 billion, but still below the 14.4 billion gallons required by the RFS.  This much is certain: ethanol production margins are solid and will encourage production, and the RBOB/Ethanol spread remains conducive to blending.

 

Bottom Line:  Markets look like they want to be lower today, and it’s hard to argue with given current condition ratings, moisture to date and moisture forecast.  Aside from some localized flooding, crops are developing well in nearly ideal conditions for both row crops and spring wheat.  Equities continue to make new highs by the day, diverting additional capital away from our space.  There isn’t an underlying bullish catalyst to change trends right now, although the June 30th reports have often been labeled “game changers.”  Better living through lower prices.

 

Good Luck Today.

 

 

 

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.

6/23/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:50am: Dollar Index down 0.00020 at 80.3710; Euro is down 0.00110 at 1.35850; S&P’s are unchanged at 1953.25; Dow futures are down 6.00 at 16,852.00; 10-yr futures are up 0.09%; The Nikkei closed up 0.13% at 15,369.28; The DAX is down 0.38% at 9,948.85; The IBEX-35 is down 0.12% at 11,141.80; Gold is down $4.10 at $1312.50; Copper is up $2.55 at $313.85; Crude Oil is up $0.15 at $106.98; Heating Oil is up $0.0012 at $305.97; Paris Milling Wheat is up €0.50 at €188.75/MT.

Solid economic data out of China last night failed to offset weaker numbers from Europe to keep global equities off balance to begin the week.  The HSBC preliminary purchasing managers index for China rose to 50.8 compared with the final reading of 49.4 in May, putting it above the 50.0 expansion/contraction line.  This noted the first time the index had moved above the expansion line in six months.  The same index for the Eurozone fell to 52.8 from 53.5 in May, drug down by France where activity declined for the second straight month at a quickening pace.  S&P 500 futures rose to new record highs overnight of 1959.00,  and the VIX remains especially depressed, highlighting the complacent state of equity markets at current.  We still haven’t had a 1% move in the S&P 500 in over 45 sessions.

Several systems at work this morning with rain moving across TX/OK/NE and a separate cell dropping rain in WI/IL/MI.  Weekend rain fell with heaviest totals in NE/W-IA/IL/SD with localized totals north of 3.0”.  The next 3-days sees rainfall mainly in the southern plains where totals as high as 2.50-4.00” are forecast in E-TX/AR, but all of the southern plains is slated for rain which will further hamper harvest efforts.  Additional rainfall will be seen by mid-week in the Northern Plains with 0.50-1.70” is expected in most of SD/ND/MN.  Extended maps from NOAA sees temperatures to warm to above normal beginning June 28th, while precip stays mainly above normal as well, although the southern plains look as though they will dry out a bit.  Similar pattern for the 8-14.

 

Stronger markets out of the gate last night, and continuing that trend this morning led by soybeans which find most contracts up 11-18c on ideas of declining conditions on this evening’s crop progress report.  The heavy rainfall witnessed in places in the WCB and Northern Plains seems to be resonating a bit with the trade as does the still tight balance sheet on old crop.  Most expect a further 1-2pt drop in the national soybean condition index on tonight’s report.  The June 30th reports are just a week away, and while many think the USDA will hint at the idea the 2013 soybean crop was understated, the rate of crush and export demand just won’t allow much margin regardless of what the USDA prints for a Q3 residual demand number.  After dropping to $13.93 on Wednesday, July soybeans have tacked on 40c and seem content to defend $14.00 until more clarity is attained on the supply side.

Friday’s Commitments of Traders report showed massive selling pressure in soybeans by the large spec crowd as they dumped 39,433 contracts, the fourth largest single week of selling on record.  This took the large spec position down to net long 1,074 contracts, the smallest net long since August 6th, 2013 when funds went short for a week before beginning to buy again.  What’s more, the net commercial short is only -71,797 contracts, the smallest net short since March 10th, 2009.  The soybean market has taken the brunt of the selling pressure head on, and it would seem as though large specs won’t be in too big of hurry to initiate a big short position considering all of the major development weather is still in front of us.  This too should prevent a ton of further downside pressure. Also worth noting, the Gross Commercial Long in soymeal is now long 101,616 contracts, the largest since 12/20/11, showing end users still have a large interest in owning soymeal at these kind of levels.

DDGs prices continued to drop last week with the Iowa weekly DDGS vs Corn price ratio dropping to 90.62%, the first time a ton of DDGs has been less than a ton of corn in Iowa since August of 2013.  We’ve now seen DDGs prices in Iowa fall form nearly $250/ton to $145/ton over the course of the last 3-months, and puts more competition for soymeal in hog and poultry rations.  Without the demand pull from exports to China, the largest importer over the last year, domestic supplies will remain heavy and prices depressed.  This has the potential to slow ethanol grind rates as well as margins contact.

Updated map from NOAA shows the Minnesota River at Savage, MN with major flooding still to occur by mid-week.  The river level needs to be below 702ft before barges can be placed underneath loading spouts, so it doesn’t look like Savage will be able to supply any corn or soybeans to the export market until after the 4th of July holiday.  This among other things is helping to keep CIF bids firm, and most delivery zones on the river well above gross delivery equivalence.  CN/CU at +5.0c with current delivery economics should have a tendency to firm from this level as opposed to weaken.

Travels to southern Saskatchewan over the weekend took me through a large slice of US-HRS country.  We traveled from Gettysburg, SD north on Hwy-83 all the way to Minot, ND before jogging west to Kenmare, ND and north into Canada on our way to Arcola Saskatchewan.  The crop in northern SD and most of ND looks to be in great shape.  Deep green with a generally even stand look as though ND is on tap in many areas for another large wheat crop.  Canada looks very wet, however, with a real need for heat and sunshine.  Excessive rainfall in Sask has left a very uneven crop with standing water and delayed development.  The map below from World Weather, Inc. shows the topsoil conditions in Canada over the last week.  As one can see, conditions are extremely wet in many areas, and Canadian producers have called the crop about a month behind normal.  No one is writing off another large Canadian wheat crop, but conditions to date aren’t ideal, and a change going forward will be needed to prevent disease and development issues.  Hard to argue with the USDA’s current 28.5MMT wheat production estimate vs last year’s 37.5MMT crop.

 

Bottom Line:  Call markets firmer today as we ready for more rain in areas which don’t especially need it at the moment, and the same water keeps southern plains harvest efforts delayed.  Row crop prices also want to be firmer on excess rainfall, and in the ramp up to the June 30th reports.  Development weather is pretty good for many areas of the corn belt, but the trouble areas do seem like they’re grabbing more attention and keeping acreage ideas a mystery.  Farmers also aren’t in a big hurry to sell remaining old crop which will keep cash supported.

 

Good Luck Today.

 

Savage 6-22 Canadian Top SOoil 6-23

 

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.

6/20/2014 Morning Comments

Good Morning,

 

Outside Markets as of 5:40am: Dollar Index up 0.0420 at 80.3570; Euro down 0.00040 at 1.36070; S&P’s are up 0.75 at 1959.25; Dow futures are up 14.00 at 16930.00; 10-yr futures are up 0.01%; The Nikkei closed down 0.08% at 15,349.42; The DAX is up 0.27% at 10,030.91; The IBEX-35 is down 0.12% at 11,173.90; The Russian MICEX is down 0.36% at 1,489.67; Gold is down $2.20 at $1311.90; Copper is up $1.5 at $309.10; Crude Oil is down $0.01 at $106.02; Heating Oil is down $0.0037 at $3.0562; Paris Milling Wheat is up €0.25 at €188.50.

Would appear as though the Federal Reserve-high global equity markets have been trading on is finally fading out as bourses around the world trade rather subdued heading into the weekend.  News from the major financial media is almost non-existent this morning as even the Iraqi conflict is receiving precious little coverage aside from President Obama deciding to send 300 ‘military advisors’ into Iraq, but remains steadfast about not engaging in another war there.  Iraq’s government is desperately trying to hold off extremists at the Beiji oil refinery which has a capacity of 320,000 barrels per day.

Two systems on the radar this morning with one moving across W-ND and another hitting WI and the Great Lakes.  5-day radar returns from the upper-Midwest show moderate to heavy rainfall across the entire area with portions of IA/S-MN seeing up to 6-8” this week alone.  It felt like the market was finally responding to the water-logged fields during yesterday’s session, although many areas still have crops developing in near ideal condition.  The weekend will see rain fall in KS/NE/IA/N-MO/IL with heaviest totals along the NE/KS border where up to 2.6” is being forecast, but a general 0.50-1.00” is expected.  The rest of the corn belt will see rain Monday-Wednesday.  No real changes to extended maps as temperatures look to remain non-threatening while the Northern Plain is still slated for a bit drier weather, while the ECB remains above normal.

 

Easier markets to begin the last trading day of the week with bulls and bears still vying for control as currently wheat is up 5c since last Friday, corn up 2c and soybeans down 10c.  Condition reports on Monday will be a focus as the excess water in parts of SD/NE/IA/MN are grabbing a lot of attention via social media, but crop conditions should better reflect the overall status of the crop in these select states.  Several analysts are still keeping open the potential for record breaking yields of 165bpa+ on corn and 45bpa+ on soybeans.  So far, one can’t rule those out provided the weather remains ideal.  With those type of yields, carryouts will balloon, and prices will remain under pressure.  We’re a long way from a 1.7bbu and a 350mbu carryout, respectively, however.  Wheat markets are trying to retain some measure of premium for the moisture expected to disrupt harvest in KS this weekend.

The Minnesota River pushed above 702 ft. yesterday, bringing barge loading to a halt at the four elevators in Savage, MN.  It looks as though these elevators will remain offline until close to July 7th according to the NOAA forecast.  CIF corn and soybean bids held steady yesterday, and the CN/CU continues to trade near +6.00c.  Based on the river trading 5-17c above gross delivery equivalence, there doesn’t seem to be a lot of reason the CN/CU doesn’t head towards 10.0c in my opinion.  Yesterday’s rally barely moved the marketing needle for the farmer, and the crop remains miles away from throwing tassels in the heart of the corn belt.  The KWN/KWU continued to tack on premium, rallying to +4.00c yesterday as harvest remains dreadfully slow in Kansas.  No changes to 12.0% protein HRW, bracketed at +110/120N.

Old crop board crush continues to trade softly with the July dropping to +18.5c yesterday before settling at +21.0c.  July appears to be tracking 2013 fairly closely as last year board crush dropped all the way to -2.0c/bu by June 26th, but recovered to trade up to 70.0c while in delivery.  Soymeal basis remains under pressure thanks to the higher availability of domestic DDGs and the Chinese trade dispute.  Technically, soybean charts have held some key Fibonacci retracement levels, and momentum appears as though it has bottomed and is trying to trace out a divergence.  New crop soybeans don’t appear to want to trade below $12.00 just yet, having tested that level several times the last couple weeks.  There is a lot of grass between the ball and the hole on soybean development, so we’re not ready to give the farm away just yet.

Reuters published an article yesterday quoting an official with the Chinese National Development and Reform Commission who said the government is seeking opinions on how to deal with their “massive corn stocks” before this year’s harvest.  The government stockpiled more than 90MMT of corn over the last two-years to leave total stocks near 150MMT with supplies going out of condition.  Opinions so far include lowering the bidding prices for its weekly sales, as well as offering subsidies and tax incentives to loss-making industry processors.  The current stocks situation in China reflects how poor their infrastructure is given their stocks levels, yet it is still cheaper for feedlots and corn processors in southern China to import corn from the US than buy supplies from the north.

 

Bottom Line: Call markets softer to get started, although more short-covering going into the weekend wouldn’t be a total surprise either.  Traders will be anxious to get additional yield reports from KS as harvest progresses north, and to assess quality after the forecasted rains.  Corn and soybeans continue to receive mostly beneficial weather aside from the trouble pocket in MN/IA/SD/NE, so a sustained rally will be difficult to mount if adverse conditions are limited to 5-10% of the crop.  Cash and spreads say weakness should be limited, but right now crops appear to be getting bigger.

 

Good Luck Today.

 

rfc 6-20 Savage 6-20

 

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.

 

6/19/2014 Morning Comments

Good Morning,

 

Outside Markets as of 6:15am: Dollar Index down 0.3560 at 80.2240; Euro up 0.00680 at 1.36310; S&P’s down 0.25 at 1956.75; Dow futures are up 2.00 at 16900.00; 10-yr futures are up 0.29%; The Nikkei closed up 1.62% at 15,361.16; The DAX is up 0.81% at 10,010.49; The IBEX-35 is up 0.95% at 11,218.10; The Russian MICEX is up 0.62% at 1,503.61; Gold is up $9.20 at $1281.90; Copper is up $0.70 at $306.80; Crude Oil is up $0.45 at $106.04; Heating Oil is up $0.0049 at $3.0450; Paris Milling Wheat is up €1.00 at €189.50/MT.

Global equity markets are rallying today after the Fed signaled that US interest rates would remain at record lows until the US economy was seeing a steadily improving job market and modest inflation.  Despite the fact the unemployment rate has moved under the original 6.5% target, and equities continue to hit new record highs, Fed chair Yellen said there was no need to raise short-term rates from record lows anytime soon.  This has put the US Dollar under heavy pressure, hitting the lowest level since May 27th on the news.  Weekly unemployment claims are expected to show a decline of 5,000 to 312,000, reversing last week’s 4,000 claim increase.  The Philadelphia Fed index is expected to show a -1.4 point decline to 14.0, adding to the small -1.2 point decline in May.

Shower activity working across MN/IA/WI/IL as well as OK this morning following another night of severe weather, this time in South Dakota and the town of Wessington Springs.  As many as 20 homes were either severely damaged, destroyed or uninhabitable after last night’s tornado.  Rainfall totals continue to stack up over the water-logged Northern Plains with another 0.25-1.00”, and in some localized areas 3.0”, falling in parts of NE/SD/ND/MN in the last 24 hours.  The map below shows the rainfall since Monday.  Several areas in SD/MN/IA/WI/NE have seen totals between 3.0-10.0” since the beginning of the week.  Pictures of crops standing in water are becoming common, but many crops are benefitting from the current weather pattern.  More rain expected the next 3-days, with heaviest amounts where they don’t need it.  SE-SD/N-IA/S-MN are slated for another 1.0-2.5” through Sunday.  KS/MO/S-IA are expecting rain Sunday-Tuesday with heaviest amounts in E-KS at 2.50”.  No big changes to extended maps with the Northern Plains seen getting a stretch of drier weather in the 6-10 and 8-14 which would be welcome.

 

Green across the screen again this morning led by the wheat market which is tacking on 7-9c as we head into the seven o’clock hour.  The bounce in wheat seems to be largely technical in nature after the nearly month long sell off, but concerns are being raised about winter wheat harvest in both the southern plains and Delta.  Despite the fact progress is behind normal, ripened wheat is now being hit with rain which can degrade quality.  The market’s concern has been expressed through calendar spreads and basis this week with the KWN/KWU pushing to +1.75c yesterday, the highest trade for the contract since May 15th, 2013.  High protein spring wheat basis has been improving as well with 14.0% pro up 30-35c yesterday to +235/275N vs +160/180N a week ago.  Late yesterday it was reported Brazil has also approved another 1MMT of duty-free non-Mercosur wheat imports through August 15th, 2014, which could be supplied by the US.  The aforementioned isn’t enough to reverse the losses sustained in June, but it definitely argues for a near-term bottom which the market seems to be granting.  To really turn the technical buying switch on, however, July Chicago wheat would need to see trade above $6.26-6.29.  Momentum indicators are indicating a bullish divergence and On-Balance-Volume has bottomed and is rising, both positive signals.

The big surprise in yesterday’s session was the 8:00am announcement of 140,000MT of soybeans being sold to an unknown destination for the 13/14 crop year.  This is the kind of business the old crop balance sheet can’t afford to be doing, and many began to think it was a reporting error by the USDA.  Whatever the case, FOB Brazilian soybean basis continues to appreciate, lending credence to the idea of an old crop sale.  As of last night, spot Brazilian soybean basis was quoted at +35N with August at +75Q vs +8N and +63Q yesterday.  A week ago, the spot bid was -25N and August was +42Q.  So in a week’s time the spot soybean bid has rallied 60c, or about as much as the futures board has sold off since last Thursday.  With the basis rally, imports of Brazilian soybeans should all but stop, and it even raises the question of whether the sales to the US on the books will be executed or routed to another destination?  The story in old crop soybeans is far from over.

The second chart below shows the Mississippi River flood forecast for St. Paul.  It was reported yesterday barge loading in Savage, MN on the Minnesota River would come to a halt until July 1st due to high water.  As one can see from the chart below, moderate flood stage is expected to be hit in downtown St. Paul sometime around June 25th.  The current precip forecast will exacerbate the situation, and while Savage, MN isn’t the Illinois River district, it does take available supply off the export market.  This should help CN/CU and export premiums hold firm in the near-term.  Corn basis as a whole seemed to hold steady to even firm a bit yesterday with PNW corn shuttles bouncing back to +107/108N for JJ.

Weekly ethanol production hit a new record for the weekly data series going back to June 2010 yesterday, highlighting the solid margin structure which exists in that industry.  Weekly production of 972,000bbls/day compared with 944,000 the week before and the 899,000 needed to hit the USDA’s current ethanol production forecast.  With the past several weekly production figures, the USDA is likely to raise their ethanol demand for corn forecast on the July WASDE assuming no big surprises on the June 1 stocks report.  Interestingly, stocks also saw a draw despite the big production jump with weekly stocks declining to 17.850 million barrels, down 572,000 on the week.  Weekly gasoline demand also surged higher in the latest week after two weeks of sharp decline, raising the prospect for further stock declines in coming weeks.

Weekly exports sales out later this morning should provide further price guidance for the balance of the week.

 

Bottom Line: Firmer prices again today as grains bounce from their oversold condition.  More and more press being given to the water-logged crops in the north, although many quick to point out for every low spot there are two hillsides.  Too early to understand the full impact, but top end acres could be in for both corn and soybeans.  Cash markets are trying to pry grain loose from farmer hands to no avail as the price and calendar aren’t enticing anyone to sell just yet.  Continue to watch technicals for short-term signals in the ramp up to the June 30th reports.

 

Good Luck Today.

 

RFC 6-19 Miss River St Paul 6-19

 

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.