KCG FUTURES PM GRAIN FUTURES COMMENTS

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures market action was erratic with markets trading both sides of unchanged before corn closed slightly higher while wheat and beans closed slightly lower.  Grain futures have been consolidating over the last several sessions with wheat near last week’s highs, beans mid range, and corn just above recent lows.  With harvest approaching a third complete, traders seem to be taking some profits on long wheat or beans versus short corn positions. Managed money Funds have held extremely large long bean positions and short massive corn positions – and have recently evened up short wheat positions.

Although wheat futures closed slightly lower, they have held on to the majority of the 50-70 cent rally during the last month.  Cash traders report continued export sales to Brazil and buying inquiries from China.  Basis levels remain historically high as exporters and millers vie for available supplies.  This morning exporters jumped nearby SRW barge bids a dime – but there are still carries to be earned until post-harvest freight becomes cheaper.

Beans also closed a tad weaker after trading in a narrow, erratic range all session.  Export basis levels continue to firm in an effort to encourage farmers to market beans off the combine.  The SX-SF spread is inverted 4 cents – gaining 3 today, and the SX-SN is inverted 41 cents – gaining 4 cents today.  Domestic processors are also aggressive buyers as they source supplies to process and sell into the inverted meal market.

Corn futures closed slightly higher as farmers store harvested bushels in order to earn the carry.  Export and domestic cash market basis levels are a tad weaker.

CONAB reported their survey of expected Brazilian corn (first crop) and bean production.  Bean production is a record and 6-8 mmt larger than last year – in line with September USDA estimates.  Corn (first crop) production at about 33 mmt is lower than last year’s 34.83 mmt due to lower seedings. (Note the USDA estimates this year’s total Brazilian corn crop at 72 mmt – down 5 mmt from last year)  – Helen Pound

 

BRAZILIAN PRODUCTION ESTIMATES FROM CONAB

 

PRODUCTION

HECTARES

TRENDLINE YIELD

CORN

32.25 – 33.45 mmt

6.36 – 7.57 mln HA

5.081 MT/HA

BEANS

87.6 – 89.2 mmt

28.66 – 29.35 mln HA

Up 3.4 %  –  5.9 %

3.056 MT/HA

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CZ3

SX3

SMZ3

BOZ3

WZ3

KWZ3

MWZ3

Today’s Close

$4.44

$12.88

$412

$0.4067

$6.93

$7.59

$7.53

     Change

+2

-1

-3

+0.0024

-3

-2

0

Total Open Interest

1,215,467

623,084

262,950

302,984

366,070

150,209

49,906

     Change

+8750

+7,132

-5,323

+53

+625

+654

-127

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

October

-0.8 %

%

+0.9 %

December (or X), 2013

+0.4 %

-0.1 %

%

-0.8 %

%

+0.6 %

-0.4 %

-0.2 %

-0.1 %

July, 2014

+0.5 %

-0.4 %

-0.9 %

+0.5 %

-0.3 %

+0.1 %

+0.1 %

December (or X), 2014

+0.5 %

-0.2 %

-0.4 %

+0.4 %

-0.4 %

-0.2 %

-0.1 %

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Macros

 

Dollar

10 Year

S&P 500

Crude Oil

Copper

Gold

Silver

Percent Daily Change

+0.4 %

-0.1 %

+0.3 %

-2.0 %

-1.7 %

-1.3 %

-2.2 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

October-December

(13.7)

0.0010

     Percent Full Carry

(208%)

22 %

November – January

(4)

     Percent Full Carry

(24 %)

December(orX) – March

13

(19)

(13)

0.0067

10

(1)

9

     Percent Full Carry

67 %

(56 %)

(127 %)

100 %

51 %

(4 %)

45 %

December(orX)–July14

29

(41)

(27)

0.0126

9

(16)

13

     Percent Full Carry

63 %

(60 %)

(116 %)

80 %

18 %

(30 %)

26 %

Dec(orX)–Dec(orX)14

41

(111)

(54)

0.0116

23

1

18

     Percent Full Carry

53 %

(108 %)

(136 %)

43 %

28 %

1 %

22 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

December

252

595

847

2.92 %

69

63

-6

69

July 2014

230

552

783

2.66 %

62

69

25

44

Dec 2014

232

464

695

2.44 %

70

63

14

49

*BC = Synthetic Soybean Crush
COMPARISON OF CURRENT FUTURES PRICE AND JANUARY (F) CROP REPORT LOWS – percent of Low
  Low (F)

Monday

9.30

10.01

10.02

10.03

10.04

Monday

10.07

10.08

10.09

CZ3

570

77 %

77 %

77 %

77 %

78 %

79 %

78 %

78 %

CN4

592

79 %

79 %

79 %

79 %

80 %

81 %

79 %

80 %

 

 

OZ3

338

94 %

93 %

93 %

94 %

94 %

94 %

94 %

94 %

ON4

409

73 %

72 %

73 %

74 %

73 %

73 %

72 %

72 %

 

 

WZ3

779

87 %

87 %

88 %

88 %

88 %

89 %

89 %

89 %

WN4

775

87 %

87 %

88 %

89 %

90 %

90 %

90 %

90 %

 

 

KWZ3

830

89 %

90 %

91 %

91 %

90 %

91 %

92 %

91 %

KWN4

790

91 %

91 %

91 %

93 %

93 %

94 %

94 %

94 %

 

 

MWZ3

858

85 %

86 %

87 %

87 %

87 %

87 %

88 %

88 %

MWN4

890

84 %

84 %

84 %

85 %

85 %

86 %

86 %

86 %

 

 

SX3

1259

102 %

101 %

101 %

102 %

103 %

103 %

102 %

102 %

SN4

1287

96 %

95 %

96 %

97 %

97 %

98 %

97 %

97 %

 

 

SMZ3

353

115 %

114 %

117 %

118 %

119 %

119 %

118 %

117 %

SMN4

365

105 %

104 %

106 %

106 %

107 %

108 %

107 %

106 %

 

 

BOZ3

49.00

84 %

82 %

80 %

82 %

82 %

81 %

83 %

83 %

BON4

49.92

84 %

83 %

81 %

83 %

83 %

83 %

84 %

84 %

 

  • +   Jan lows occurred in anticipation of bearish Production, Stocks, Winter Wheat Seeding, and WASDE reports.  Instead the Jan reports were friendlier than expected, with less than expected US stocks and tighter world carryover.
  • –  The USDA February report showed just a few changes – more wheat feeding – but was viewed as “not bullish”.  South American and US crop growing weather improved during February.
  • -/+  The feature in the USDA March report was an increase of 100 mln bu of US corn feeding offset by 75 million bushels fewer US corn exports and an additional 25 million bushels of US corn imports.
  •   The March Quarterly Stocks report was a bearish surprise with grain stocks above estimates – and corn stocks well above trade estimates forcing corn limit down.
  • -/+  The April S+D report showed World carryover for corn, beans and wheat above the high end of the analysts’ range of guesses.  US carryover didn’t increase as much as suggested by the Stocks report – with bean carryover unchanged at pipeline needs.  Cool, wet weather delayed planting and reduced HRW quality.
  •   The May S+D report showed increased South American corn production, as well as increased South American old crop corn and bean carryover as China reduced old crop imports.  US old crop bean and corn stocks continue to be exceedingly tight.  New crop US and World corn, bean and wheat carryover were larger than the average guesses.  Planting weather is erratic, and analysts expect some corn, bean and spring wheat acres to go unplanted.
  • -/+  The June S+D report showed another increase in ‘12-13 South American corn production, but a decrease in bean production.  The ‘13-14 S+D showed reduced Ukraine and Russian wheat production, as well as lower US corn production.  World wheat supplies continue to be abundant, while world corn and bean supplies are expected to become more comfortable as US new crop is harvested this fall.  In contrast, US bean supplies are expected to remain exceedingly tight.
  • +   The 6.28.13 Quarterly Stocks Report was a bullish surprise which showed less than expected corn and bean stocks with greater than expected March-May use.
  • –  The 6.28.13 Acreage Report was a bearish surprise which showed harvested corn acres up 2% from last year and up 1% for beans.  In addition, yields are expected to be much improved over last year.  Harvested wheat acres are expected to be down 7% from last year – with many less HRW and HRS acres, but many more SRW acres.  This was somewhat offset by heavy old crop HRW and HRS stocks and less abundant SRW stocks.
  • -/+   The July S+D was the most neutral report that the USDA has issued in a while, with changes mostly well within the range of guesses.  New crop US carryover for soybeans remains quite tight (but more abundant than old crop) and corn remains tight (but much more abundant than old crop), while wheat carryover is finally moving back to more normal levels (much less than the overly abundant carryover of the past several years).  Improving weather has supported new crop quality and progress, and weighed on prices.
  • +     The August S+D Report was a bullish surprise as the USDA cut yield and production estimates for US new crop corn and beans.  The result was reduced US and World carryout.  Carryout as a percent of use for new crop beans dropped to 6% (-2%) – indicating exceedingly tight new crop supplies but still better than the 2012-13 C/U% of 4%.  Corn C/U% is also tight at 14 %.  Tight stocks create volatile responses to changes in the weather forecast.  Last Half August US weather turned hot and dry, and sparked a short covering rally.
  • +/-     The September S+D report featured a surprise increase in the new crop corn yield, in contrast to   the new crop bean yield which was reduced as anticipated.  This pushed the SX/CZ ratio up to 3.01%.  Wheat is now being priced as a “food grain” rather than as “feed grain” – as it was the last couple of years when wheat stocks were enormous.
  •      The Quarterly Grain Stocks report showed much more corn than expected, slightly more beans than expected, and much less wheat than expected – indicating more than expected wheat feeding.  The Small Grain Summary showed much less than expected HRW production, but much more than expected production of HRS, SRW, and White wheat.

 

 

 

 

 

 

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures market action was erratic with markets trading both sides of unchanged before corn closed slightly higher while wheat and beans closed slightly lower.  Grain futures have been consolidating over the last several sessions with wheat near last week’s highs, beans mid range, and corn just above recent lows.  With harvest approaching a third complete, traders seem to be taking some profits on long wheat or beans versus short corn positions. Managed money Funds have held extremely large long bean positions and short massive corn positions – and have recently evened up short wheat positions.

Although wheat futures closed slightly lower, they have held on to the majority of the 50-70 cent rally during the last month.  Cash traders report continued export sales to Brazil and buying inquiries from China.  Basis levels remain historically high as exporters and millers vie for available supplies.  This morning exporters jumped nearby SRW barge bids a dime – but there are still carries to be earned until post-harvest freight becomes cheaper.

Beans also closed a tad weaker after trading in a narrow, erratic range all session.  Export basis levels continue to firm in an effort to encourage farmers to market beans off the combine.  The SX-SF spread is inverted 4 cents – gaining 3 today, and the SX-SN is inverted 41 cents – gaining 4 cents today.  Domestic processors are also aggressive buyers as they source supplies to process and sell into the inverted meal market.

Corn futures closed slightly higher as farmers store harvested bushels in order to earn the carry.  Export and domestic cash market basis levels are a tad weaker.

CONAB reported their survey of expected Brazilian corn (first crop) and bean production.  Bean production is a record and 6-8 mmt larger than last year – in line with September USDA estimates.  Corn (first crop) production at about 33 mmt is lower than last year’s 34.83 mmt due to lower seedings. (Note the USDA estimates this year’s total Brazilian corn crop at 72 mmt – down 5 mmt from last year)  – Helen Pound

 

BRAZILIAN PRODUCTION ESTIMATES FROM CONAB

 

PRODUCTION

HECTARES

TRENDLINE YIELD

CORN

32.25 – 33.45 mmt

6.36 – 7.57 mln HA

5.081 MT/HA

BEANS

87.6 – 89.2 mmt

28.66 – 29.35 mln HA

Up 3.4 %  –  5.9 %

3.056 MT/HA

 

WORLD BEAN PRODUCTION / TRADE / CARRYOVER – in mmt – USDA SEPT 2013

 

13-14

13-14

12-13

13-14

13-14

12-13

13-14

13-14

12-13

 

Sept

Aug

 

Sept

Aug

 

Sept

Aug

 

 

Prod

Prod

Prod

Trade

Trade

Trade

C/U %

C/U %

C/U %

World

281.7

281.7

268.1

 

 

 

19%

19%

18 %

 

 

 

 

 

 

 

 

 

 

Exporters

 

 

 

Export

Export

Export

 

 

 

 Brazil

88.0

85.0

82.0

42.5

41.5

37.9

27 %

26 %

24 %

 US

85.7

88.6

82.1

37.3

37.7

36.2

5 %

7 %

4%

Argentina

53.5

53.5

50.2

12.7

13.7

7.8

53 %

52 %

56 %

 Paraguay

9.0

8.4

 

5.5

5

 

9 %

10 %

 

 

WORLD CORN PRODUCTION / TRADE / CARRYOVER –mmt – USDA SEPT 2013 

 

13-14

13-14

12-13

13-14

13-14

12-13

13-14

13-14

12-13

 

Sept

Aug

 

Sept

Aug

 

Sept

Aug

 

 

Prod

Prod

Prod

Trade

Trade

Trade

C/U %

C/U %

C/U %

World

956.7

957.1

858.0

 

 

 

15 %

15 %

13 %

 

 

 

 

 

 

 

 

 

 

Exporters

 

 

 

Export

Export

Export

 

 

 

 US

351.6

349.6

273.8

31.1

31.1

17.8

15 %

14 %

7 %

 Argent

26.0

27.0

26.5

18.0

18.5

19.0

4 %

3 %

3 %

 Brazil

72.0

72.0

77.0

18.0

18.0

22.0

20 %

18 %

15 %

 Ukraine

29.0

29.0

20.9

18.0

18.0

13.5

10 %

10 %

4 %

 S. Africa

13.0

13.0

12.2

2.0

2.0

1.9

25 %

25 %

27 %

 

 

 

ANALYSTS ESTIMATES FOR THE DELAYED OCTOBER USDA SUPPLY-DEMAND REPORT

2013-14 US CARRYOUT (billion bushels)

 

2013-14

2013-14

2013-14

 

Oct

Average

Range

Sept

2012-13

2011-12

2010-11

CORN

1.941

1.644-2.160

1.855

0.661

0.989

1.128

BEANS

0.168

0.125-0.206

0.150

0.125

0.169

0.215

WHEAT

0.524

0.400-0.575

0.561

0.718

0.743

0.862

 

2013-14 US PRODUCTION (billion bushels)

 

2013-14

2013-14

2013-14

 

Oct

Average

Range

Sept

2012-13

2011-12

2010-11

CORN

13.842

13.49-14.08

13.843

10.780

12,358

12,447

BEANS

3.150

2.980-3.201

3.149

3.015

3.094

3.329

 

2013-14 US YIELD (bushels/acre)

 

2013-14

2013-14

2013-14

 

Oct

Average

Range

Sept

2012-13

2011-12

2010-11

CORN

156.75

153.2-159.4

155.3

123.4

147.2

152.8

BEANS

41.5

39.9-42.3

41.2

39.6

41.9

43.5

 

2013-14 US HARVESTED ACRES  (million acres)

 

2013-14

2013-14

2013-14

 

Oct

Average

Range

Sept

2012-13

CORN

88.2

86.9-89.1

89.1

87.4

BEANS

75.9

75.1-76.8

76.4

76.1

US Production and Carryout-

  • Corn and bean US production nearly unchanged with better yields and less harvested acres expected.
  • Increased US corn carryout – but stocks still somewhat tight
  • Increased US bean carryout – but stocks still very tight
  • Decreased US wheat carryout – but stocks still available – but wide class by class variation

 

2013-14 WORLD CARRYOUT (billion bushels)

 

2013-14

2013-14

2013-14

 

Oct

Average

Range

Sept

2012-13

2011-12

2010-11

CORN

153

149.5-160.0

151.4

123.1

131.9

127.9

BEANS

71.3

61.5-73.0

71.5

61.21

55.1

69.9

WHEAT

175

173.0-178.0

176.3

174.4

199.4

198.0

World Production and Carryout-

  • Increased world corn carryout – but stocks remain somewhat tight
  • World bean carryout nearly unchanged – with world stocks much more available than in the US
  • Lower world wheat carryout – but supplies available from a variety of sources

 

 

DAILY GRAIN RECEIPTS AND SHIPMENTS AT CBT FUTURES DELIVERY TERMINALS

-thousand bushels

 

RECEIVED

SHIPPED

NET

 

CORN

133

26

107

SOYBEANS

555

322

233

WHEAT

118

95

23

KC WHEAT

479

440

39

  • Futures delivery terminal receipts for beans increased
  • Futures delivery terminal receipts for corn are slow
  • Unloads and Load outs of wheat are in balance –  KC shipments improved

 

 

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