KCG FUTURES AM GRAIN FUTURES COMMENTS

KCG FUTURES   AM GRAIN FUTURES COMMENTS   Monday   11.04.13

 

There were 275 SX receipts delivered overnight – 200 in Chicago and 75 across the Lake in Burns Harbor, Indiana.  The SX-SF declined from a 14 inverse to a 9 inverse.  This pressured SX prices overnight and kept grain futures trading near unchanged.  After the pause this morning, bean futures began to find buyers and are currently gaining back a chunk of what they lost on Friday after several firms released larger than expected estimates for bean yield and production for this Friday’s USDA S+D report.  SX open interest continues to decline quickly – with the oldest Long now Oct 1.

The focus of the futures market this week will include crop report estimates, South American weather, and the Fund “roll” for December futures expiration.

  • USDA Crop Report thoughts
    • There is a divergence of opinion on whether the USDA will end up increasing or decreasing US bean carryover.  The bears think better production will increase carryover, while the bulls think increased production will be offset by increased demand – more exports and more crush.  All in all, the estimates take carryover as a percent of use from the Sept level of just under 5% to as high as 8% – and have next year’s C/U% also at about 8%
    • Most analysts think US corn carryover will increase – but will not change C/U% very much – in a range of 15-16%.  They do expect carryover to increase dramatically next year – to about 20%
    • Most analysts think US wheat carryover will decrease and tighten up the C/U% from 23% in Sept to as tight at 17% in the Nov report – with most guesses around 19%.  Most analysts think there will be a huge increase in US wheat stocks next year – to a C/U% of about 30%
    • As far as world S+Ds go, the changes in the US S+Ds are expected to have minimal impact, with most analysts expecting increased bean, wheat and corn carryover – with coarse grains still the tightest supply-demand balance.
    • The big question is whether general price levels reflect relatively comfortable world supplies or will tight US bean stocks have an impact.
  • South American weather
    • South American received goods week end rains – as expected – helping new crop planting off to a good start.  Brazil is expected to have a series of showers over the next ten days that will also be supportive.  Argentina is expected to be drier, but another rain system is due at the end of the week.
    • Analysts expect to see more bean and less corn acres planted – and less investment in Brazilian second crop corn.
    • South America has had a lot of weather trouble with their wheat crops.  Rains have also interrupted the Brazilian wheat harvest.  The Argentine harvest will begin soon, but the government is expected to limit exports until domestic prices lose their huge premiums.
    • Inflation is high, so farmers may not be motivated to be aggressive sellers.
  • Fund Roll
    • Funds are heavily Long beans, but the SX roll is long over and the SF roll nowhere near to starting.
    • Funds are Long wheat – especially in KC and Chicago – and will need to sell Dec and buy a forward month – most likely March.  In KC, commercials who have short hedges in the KWZ are anxious to buy the KWZ wheat futures the Funds have to sell as basis levels are still well over delivery values.  In Chicago, the Funds may have a more difficult time finding commercials who want to roll unless the WZ-WH is wide enough to price in the likelihood of low quality deliveries – note there are still 213 Chicago wheat receipts that have been on the street since July than are of a quality that no one wants.
    • Funds are heavily short corn and may have a tough time finding willing CZ sellers as farmers and commercials are both interested in earning carries themselves and have their short hedges in forward months already.  In addition, the export market is picking up steam.

All this suggests that we may make harvest lows this week, but we may not make season lows until the South America harvests next spring – or summer.  – Helen Pound

 

GRAIN FUTURES after the 7:45 to 8:30 am PAUSE: about 8:45 am –rounded

 

CZ

SF

SMZ

BOZ

WZ

KWZ

MWZ

Today’s Pause

$4.27

$12.61

$398

$0.4152

$6.70

$7.35

$7.26

Change

0

+9

+3

-0.0007

+3

+2

+1

 

OVERNIGHT PERCENT CHANGE IN FUTURES VALUES

Grains

Corn

Beans

Meal

Soy Oil

W

KC

Mpls

% Daily Change

  NOV

+0.3%

  DEC

-0.1%

+0.8%

-0.2%

+0.4%

+0.2%

+0.1%

  JAN

+0.7%

  JULY 14

+0.2%

+0.8%

+1.1%

-0.2%

+0.2%

-0.0%

-0.0%

DEC 14(or X)

+0.3%

+0.7%

+0.8%

-0.3%

-0.0%

+0.1%

na

 

Macros

Dollar

10 Yr

S+P

Crude

Copper

Gold

Silver

% Daily Change

-0.1%

+0.2%

+0.3%

-0.1%

+0.3%

-0.1%

-0.1%

 

SPOT TRUCK BASIS BID

 

MEMPHIS

CHICAGO

CENTRAL ILLINOIS

CEDAR RAPIDS

HERFORD, TX

DENVER

CORN

+10 CZ

+2 CZ

+18 CZ

+22 CZ

+110 CZ

+15 CZ

 change

+5

0

0

-1

+10

0

 

BEANS

+28 SX

+37 SF

+10 SX

+12 SX

+8 SX

 change

0

-3

0

 

GRAIN FUTURES DELIVERIES – SEE BELOW FOR FIRST NOTICE DAY

 

Corn

Beans

Meal

Soy Oil

W

KC

Mpls

NOV-JAN

(9)

% FULL CARRY

(52%)

 

DEC- MARCH

10 3/4

(14.5)

0.0068

11 1/2

2

11

% FULL CARRY

56%

(148%)

101%

58%

9%

54%

 

 

Deliveries

  Mon 11.04

275

  Fri 11.01

0

  Thurs 10.31

0

Oldest Long

10.01.13

 

Delivery Stocks

2.5

5.5

59.3

83.5

23.2

 

Registrations

0

275

0

9,930

213

0

Locations

Chicago

All over

Toledo

 

 

NOV or DEC

OPEN INTERST

661,521

14,144

111,490

125,119

186,981

76,214

26,849

   CHANGE

-17,397

-5,260

-4,703

-745

-10,259

-1,444

-2

SX First Notice Day is Thursday 10.31.13 – Last Trading Day is Thursday 11.14.13

Dec First Notice Day is Friday 11.29.13 – Last Trading Day is Friday 12.13.13

Registrations for Delivery against Futures and Open Interest are in # contracts.

Stocks in Delivery elevators are in millions of bushels.

 

 

 

UPCOMING REPORTS –

 

Week of 11.04.13

Mon 11.04                 10:00 am       Export Inspections

3:00 pm          Weekly Crop Progress Report

Tues 11.05                3:30 pm          API Energy Stocks

Futures Delivery Stocks

Wed 11.06                 9:30 am          EIA Energy Stocks

Thur 11.07                 7:30 am          Export Sales

Fri 11.08                    11:00 AM       USDA SUPPLY/DEMAND REPORT

11:00 AM       USDA CROP PRODUCTION REPORT

2:00 pm          Commitment of Traders report

 

 

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