KCG FUTURES PM GRAIN FUTURES COMMENTS

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures traded both sides of unchanged before closing steady to slightly lower.  Corn consolidated its recent bounce, beans consolidated its recent break, and wheat found follow through buying early but ran into resistance and closed several cents lower.  Export sales numbers come out tomorrow morning.  Friday is the Last Trading Day for December ag options.  Some other considerations:

 

Bean fundamentals-

Bullish

  • Recent market focus has been on the need to ration tight US stocks
  • The US is the main shipper into the world market until late Feb
  • Managed Money has a sizable Long futures position
  • Rain in the Mid south is slowing wind up of the US bean harvest
  • Argentina could use more rain
  • Cash market basis levels were historically high through harvest and the futures market is inverted
  • The US is shipping huge amounts of beans – especially to China.
  • Bean exports dominate US export loading capacity into February
  • Total bean sales are almost 90% of expected business
  • These sizable sales need to be originated and shipped

Bearish

  • World supply-demand balance will eventually become more comfortable if South America produces sizable crops
  • Brazil has been receiving regular rain with more on the way over the next couple of weeks
  • Argentina is expected to receive showers Sunday through early next week in ½ to 1 ½ inch range
  • US bean basis is backing off from historical highs and SF-SN inverses are eroding
  • Brazilian beans for LH Feb are offered cheaper than US beans
  • Most importers have coverage through Feb
  • The US has been making more corn export sales than bean export sales the past couple of weeks
  • Argentina is selling meal for April-June positions
  • India is selling meal in SE Asia

 

Corn fundamentals-

Bullish

  • Sizeable carries encouraged farmers and commercial elevators to store newly harvested corn
  • Basis levels have been improving
  • Ethanol producers are good corn buyers – last week crushed 95 million bushels of corn – need to average 93.7 mln bu
  • The pace of export sales has been above rates needed to hit the USDA export target
  • There are sizable sales that need to be originated and shipped

Bearish

  • World supply-demand balances are comfortable and expected to grow
  • South American corn growing weather has been beneficial
  • The EPA is expected to cut ethanol blend requirements next year
  • Prices are near contract lows
  • Managed Money hold sizeable Short corn futures positions

 

Wheat fundamentals-

Bullish-

  • Argentina may not be an aggressive wheat seller due to a short crop, and willingness to hold raw materials as a hedge against inflation or devaluation
  • Brazil may need to buy more US HRW once the South American harvest is over
  • SRW stocks are tight
  • A private Egyptian importer bought two cargos of SRW off the Atlantic coast
  • US wheat prices are competitive with other world exporters
  • US mills continue to have difficulty sourcing good quality milling wheat

Bearish

  • World wheat stocks are comfortable
  • India has become a competitive wheat exporter
  • Russia has become a competitive wheat exporter
  • US sales programs to China and Brazil are winding down
  • Transportation logistics are beginning to ease

 

It will be interesting to see how the market reacts to tomorrow’s Export Sales Report, especially if the pace of export business begins to slow.  – Helen Pound

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CZ3

SF4

SMZ3

BOZ3

WZ3

KWZ3

MWZ3

Today’s Close

$4.17

$12.74

$407

$0.4032

$6.47

$6.96

$6.98

     Change

-1

-3

-2

+0.0033

-3

-3

0

Total Open Interest

1,386,379

580,418

284,962

336,724

412,986

154,141

57,852

     Change

+1,159

-4,533

-636

+3,521

-14,405

+408

+35

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

December

-0.2 %

-0.5 %

+0.8 %

-0.5 %

-0.4 %

+0.0 %

January

-0.2 %

-0.5 %

+0.8 %

March

-0.2 %

-0.0 %

-0.3 %

+0.8 %

-0.6 %

-0.6 %

+0.0 %

July

-0.3 %

+0.1 %

-0.3 %

+0.7 %

-0.7 %

-0.6 %

-0.1 %

December (or X), 2014

-0.3 %

+0.3 %

+0.2 %

+0.6 %

-0.7 %

-0.4 %

-0.2 %

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Macros

 

Dollar

10 Year

S&P 500

Crude Oil

Copper

Gold

Silver

Percent Daily Change

+0.5 %

-0.3 %

-0.5 %

-0.2 %

-0.1 %

-1.2 %

-0.9 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

DEC – JAN

(4.1)

0.0024

% FULL CARRY

(127 %)

DEC-MCH

8

(10.4)

0.0063

8 1/4

1 3/4

9 1/2

% FULL CARRY

39 %

(108%)

39 %

8 %

36 %

JAN-MCH

(9 3/4)

(6.3)

0.0039

% FULL CARRY

(29 %)

(149%)

DEC (or Jan) – JULY

23 1/4

(24 ¼)

(20.7)

0.0140

7 1/4

(8 ¼)

23 3/4

% FULL CARRY

49 %

(35 %)

(92%)

15 %

(16 %)

39 %

JULY – DEC(or NOV)

13 1/2

(97)

(38.9)

0.0027

18 3/4

20 3/4

9 1/2

% FULL CARRY

39 %

(272%)

(239 %)

52 %

57 %

21 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

December

230

600

820

3.05 %

68

51

2

48

March

230

609

839

2.97 %

59

52

10

42

July

215

596

810

2.84 %

59

66

32

34

Dec 2014

220

480

700

2.54 %

73

57

19

37

*BC = Synthetic Soybean Crush
COMPARISON OF CURRENT FUTURES PRICE AND NOVEMBER CROP REPORT HIGHS – percent of High
 

Nov S+D High

Monday

11.11

11.12

11.13

11.14

11.15

Monday

11.18

11.19

11.20

CZ3

438

100 %

99 %

98 %

97 %

96 %

94 %

95 %

95 %

CN4

465

99 %

99 %

98 %

97 %

96 %

94%

95%

95%

CZ4

478

100 %

99 %

98 %

98 %

96 %

94 %

95 %

95 %

 

 

WZ3

660

98 %

98 %

98 %

98 %

98 %

97 %

99 %

98 %

WN4

676

98 %

98 %

98 %

98 %

97 %

97 %

98 %

97 %

WZ4

697

99 %

98 %

98 %

97 %

97 %

96 %

97 %

97 %

 

 

KWZ3

715

99 %

98 %

98 %

98 %

98 %

97 %

98 %

97 %

KWN4

717

98 %

97 %

97 %

97 %

96 %

96 %

97 %

96 %

KWZ4

730

99 %

98 %

98 %

98 %

97 %

97 %

98 %

97 %

 

 

MWZ3

714

99 %

98 %

98 %

98 %

98 %

97 %

98 %

98 %

MWN4

738

99 %

98 %

98 %

98 %

98 %

97 %

98 %

98 %

MWU4

740

99 %

99 %

98 %

98 %

98 %

98 %

98 %

98 %

MWZ4

741

100 %

100 %

99 %

99 %

99 %

99 %

99 %

99 %

 

 

SF4

1322

98 %

99 %

99 %

99 %

97 %

97 %

97 %

96 %

SN4

1280

98 %

99 %

100 %

100 %

97 %

98 %

98 %

98 %

SX4

1178

99 %

100 %

100 %

100 %

98 %

98 %

97 %

98 %

 

 

SMZ3

429

98 %

100 %

99 %

99 %

96 %

97 %

95 %

95 %

SMN4

396

98 %

100 %

100 %

100 %

97 %

98 %

98 %

98 %

SMZ4

356

99 %

100 %

99 %

100 %

97 %

97 %

98 %

98 %

 

 

BOZ3

41.47

98 %

98 %

99 %

99 %

98 %

96 %

97 %

97 %

BON4

42.86

98 %

99 %

99 %

99 %

98 %

97 %

97 %

97 %

BOZ4

43.17

98 %

99 %

99 %

99 %

98 %

97 %

97 %

97 %

  • The September 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.
  • The USDA did not issue an October S+D report as the government was shut down for several weeks.    Sizable business and still tight pipeline pushed beans and wheat futures up to new recent highs, while corn made new contract lows.
  • Surprisingly, there was little change in November supply/demand balances in terms of carryover as a percent of use as compared to the Sept S+D report.  The report can best be described as “not any more bearish than the market has already been trading”.

                        

 

 

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures traded both sides of unchanged before closing steady to slightly lower.  Corn consolidated its recent bounce, beans consolidated its recent break, and wheat found follow through buying early but ran into resistance and closed several cents lower.  Export sales numbers come out tomorrow morning.  Friday is the Last Trading Day for December ag options.  Some other considerations:

 

Bean fundamentals-

Bullish

  • Recent market focus has been on the need to ration tight US stocks
  • The US is the main shipper into the world market until late Feb
  • Managed Money has a sizable Long futures position
  • Rain in the Mid south is slowing wind up of the US bean harvest
  • Argentina could use more rain
  • Cash market basis levels were historically high through harvest and the futures market is inverted
  • The US is shipping huge amounts of beans – especially to China.
  • Bean exports dominate US export loading capacity into February
  • Total bean sales are almost 90% of expected business
  • These sizable sales need to be originated and shipped

Bearish

  • World supply-demand balance will eventually become more comfortable if South America produces sizable crops
  • Brazil has been receiving regular rain with more on the way over the next couple of weeks
  • Argentina is expected to receive showers Sunday through early next week in ½ to 1 ½ inch range
  • US bean basis is backing off from historical highs and SF-SN inverses are eroding
  • Brazilian beans for LH Feb are offered cheaper than US beans
  • Most importers have coverage through Feb
  • The US has been making more corn export sales than bean export sales the past couple of weeks
  • Argentina is selling meal for April-June positions
  • India is selling meal in SE Asia

 

Corn fundamentals-

Bullish

  • Sizeable carries encouraged farmers and commercial elevators to store newly harvested corn
  • Basis levels have been improving
  • Ethanol producers are good corn buyers – last week crushed 95 million bushels of corn – need to average 93.7 mln bu
  • The pace of export sales has been above rates needed to hit the USDA export target
  • There are sizable sales that need to be originated and shipped

Bearish

  • World supply-demand balances are comfortable and expected to grow
  • South American corn growing weather has been beneficial
  • The EPA is expected to cut ethanol blend requirements next year
  • Prices are near contract lows
  • Managed Money hold sizeable Short corn futures positions

 

Wheat fundamentals-

Bullish-

  • Argentina may not be an aggressive wheat seller due to a short crop, and willingness to hold raw materials as a hedge against inflation or devaluation
  • Brazil may need to buy more US HRW once the South American harvest is over
  • SRW stocks are tight
  • A private Egyptian importer bought two cargos of SRW off the Atlantic coast
  • US wheat prices are competitive with other world exporters
  • US mills continue to have difficulty sourcing good quality milling wheat

Bearish

  • World wheat stocks are comfortable
  • India has become a competitive wheat exporter
  • Russia has become a competitive wheat exporter
  • US sales programs to China and Brazil are winding down
  • Transportation logistics are beginning to ease

 

It will be interesting to see how the market reacts to tomorrow’s Export Sales Report, especially if the pace of export business begins to slow.  – Helen Pound

 

 

GRAIN FUTURES DELIVERIES – SEE BELOW FOR FIRST NOTICE/LAST TRADING DAY

 

Corn

Beans

Meal

Soy Oil

W

KC

Mpls

DEC – JAN

(4.1)

0.0024

% FULL CARRY

(127 %)

 

DEC-MCH

8

(10.4)

0.0063

8 1/4

1 3/4

9 1/2

% FULL CARRY

39 %

(108%)

39 %

8 %

36 %

 

JAN-MCH

(9 3/4)

(6.3)

0.0039

% FULL CARRY

(29 %)

(149%)

 

 

Delivery Stocks

5.3

6.7

55.6

76.8

21.8*

 

Registrations

0

170

0

9,921

213

0

Locations

Chi/Ill Riv

All over

Toledo

 

 

DEC or JAN

OPEN INTERST

355,128

269,432

65,826

67,234

106,616

28,362

14,995

   CHANGE

-31,484

-8,288

-4,848

-5,117

-29,031

-1,676

-985

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.

*Not Updated since weekly report – others updated daily.

 

DAILY GRAIN RECEIPTS AND SHIPMENTS AT CBT FUTURES DELIVERY TERMINALS

-in millions of bushels

 

RECEIVED

SHIPPED

NET INTO STORAGE

11.15 STOCKS

STOCK

ADJ

NEW

STOCKS

 

CORN

0.340

0.274

0.066

4.881

0.373

5.254

SOYBEANS

0.836

0.658

0.178

6.765

-0.027

6.738

WHEAT

0.025

0.612

-0.587

56.910

-1.337

55.573

KC WHEAT

0.154

0.475

-0.321

77.549

-0.782

76.767

 

  • Bean futures delivery terminal receipts and shipments are active..
  • Corn futures delivery terminal receipts and shipments are active.  Stocks continue to build.
  • In Chicago, wheat futures delivery terminal receipts are slow, but there continue to be sizable lower Mississippi load outs.  Stocks decreasing.
  • KC futures delivery terminals have periodic large wheat receipts and/or shipments.  The shipments may go to either mills or exporters.  Stocks decreasing.

 

                                                                                                      

 

 

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