KCG FUTURES PM GRAIN FUTURES COMMENTS

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures closed mixed with corn and beans higher, while wheat closed lower.  Futures market action was all over the map.

  • Corn had the most positive market action and closed better than a dime above contract lows.
  • Beans traded down to within a nickel of recent range lows in reaction to a much less robust Weekly Export Sales report and then rebounded, but closed only slightly higher.
  • Wheat futures had an impressive bounce early, but new buying interest failed to materialize and wheat prices ended the day at new contract lows.

Recently soy meal and beans have had the most upward momentum as the market has rationed tight US supplies.  Today’s USDA Weekly Export Sales report showed much less robust trading activity.  Both export and domestic basis levels appear to be easing.  Futures inverses for SF over SN have been easing, having lost 15 cents in the past two weeks.  All in all, the bean futures complex appears to be on the knife edge between the need for weather premium pricing in this week’s hotter, drier weather in central Argentina and southern Brazil, and the desire to replace high priced US purchases with considerably cheaper South American supplies.

Recently wheat futures prices have had the most downward momentum as the market priced in additional production in Australia, Canada and the US HRS markets.  Traders have been talking about the futures being technically oversold and looking for the market to “bottom”.  Early today the impressive Weekly Export Sales numbers appeared to have sparked a rally, but the bulls ended up sorely disappointed.  It’s hard to predict the bottom of a liquidating market as one of the hallmarks of a market that is trending lower is that technical rallies are short lived.  It’s pretty disappointing when there is a long period of ever lower prices and a piece of bullish news is unable to generate significant new buying interest.  It suggests that end users are uncomfortable with the size of their inventories as the average price of their ownership has to be in the red.  Note that the WH-CH spread has lost about 80 cents in the past few weeks.

Corn has been consolidating within 20 cents of contract lows for the past 6-8 weeks.  High priced freight has created good carries in the northern corn belt into March, but clearly there is enough corn in the marketing pipeline to keep spot basis levels soft.

Expect market action to be thinner and more erratic as we enter holiday mode for the next couple of weeks.  – Helen Pound

 

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CH3

SF4

SMF4

BOF4

WH3

KWH3

MWH3

Today’s Close

$4.31

$13.27

$442

$0.3933

$6.11

$6.53

$6.46

     Change

+6

+3

+1

+0.0027

-2

-1

-1

Total Open Interest

1,189,784

642,540

281,668

351,215

400,646

146,672

61,116

     Change

-4874

-8,321

-71

+220

+3,461

-407

+1,199

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

January

+0.2 %

+0.2 %

+0.7 %

March

+1.3 %

+0.4 %

+0.2 %

+0.7 %

-0.3 %

-0.2 %

-0.1 %

July

+1.1 %

+0.5 %

+0.4 %

+0.6 %

-0.2 %

-0.4 %

-0.3 %

December (or X), 2014

+0.9 %

+0.4 %

+0.2 %

+0.5 %

-0.2 %

-0.4 %

-0.3 %

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Macros

 

Dollar

10 Year

S&P 500

Crude Oil

Copper

Gold

Silver

Percent Daily Change

+0.7 %

-0.6 %

-0.1 %

+0.7 %

-0.6 %

-3.2 %

-4.4 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

JAN-MARCH

(8)

(13.6)

0.0031

% FULL CARRY

(23 %)

(122 %)

73 %

MARCH – JULY

15 1/4

(26)

(16.7)

0.0076

10 1/4

1 1/4

20 1/4

% FULL CARRY

56 %

(76 %)

(130 %)

91 %

36 %

4 %

58 %

 %

JULY – DEC(or NOV)

13 1/4

(128)

(53.4)

0.0043

22 3/4

22

20 1/4

% FULL CARRY

38 %

(360 %)

(328 %)

50 %

63 %

60 %

45 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

March (or SF)

180

716

897

3.08 %

60

36

-7

42

July

176

672

848

2.90 %

57

46

13

33

Dec 2014

186

521

707

2.54 %

73

43

11

32

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

Nov S+D High

12.10

12.11

12.12

12.13

Monday

12.16

12.17

12.18

12.19

CH4

449

97 %

98 %

97 %

95 %

94 %

95 %

95 %

96 %

CN4

465

97 %

98 %

97 %

95 %

94 %

95 %

95 %

96 %

CZ4

478

97 %

98 %

97 %

95 %

94 %

95 %

95 %

96 %

 

WH4

667

95 %

96 %

94 %

94 %

93 %

93 %

92 %

92 %

WN4

676

95 %

96 %

94 %

94 %

93 %

93 %

92 %

92 %

WZ4

697

95 %

96 %

94 %

95 %

94 %

95 %

93 %

92 %

 

KWH4

719

95 %

95 %

94 %

94 %

93 %

95 %

91 %

91 %

KWN4

717

95 %

95 %

95 %

94 %

93 %

95 %

92 %

91 %

KWZ4

730

96 %

97 %

96 %

95 %

94 %

94 %

93 %

93 %

 

MWH4

737

91 %

91 %

90 %

90 %

89 %

88 %

88 %

88 %

MWN4

738

93 %

93 %

93 %

92 %

92 %

91 %

91 %

90 %

MWU4

740

94 %

94 %

94 %

93 %

93 %

92 %

91 %

91 %

MWZ4

741

96 %

96 %

95 %

95 %

94 %

94 %

93 %

93 %

 

SF4

1322

101 %

102 %

100 %

100 %

101 %

102 %

100 %

100 %

SH4

1304

101 %

102 %

101 %

101 %

102 %

102 %

101 %

101 %

SN4

1280

101 %

101 %

100 %

100 %

101 %

102 %

101 %

101 %

SX4

1178

99 %

99 %

98 %

98 %

99 %

99 %

98 %

99 %

 

SMF4

423

104 %

104 %

102 %

102 %

104 %

106 %

104 %

105 %

SMH4

411

104 %

104 %

103 %

103 %

105 %

106 %

104 %

104 %

SMN4

396

103 %

103 %

102 %

102 %

104 %

105 %

104 %

104 %

SMZ4

356

100 %

99%

99%

99%

100 %

101 %

101 %

101 %

 

BOF4

41.00

98 %

98 %

97 %

97 %

97 %

96 %

95 %

96 %

BOH4

41.50

98 %

98 %

97 %

97 %

97 %

96 %

95 %

96 %

BON4

42.86

96 %

97 %

96 %

96 %

95 %

94 %

94 %

94 %

BOZ4

43.17

97 %

98 %

97 %

96 %

96 %

95 %

94 %

95 %

 

  • 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”.
  • There were few changes in December supply/demand balances in terms of carryover as a percent of use.  More changes are expected Jan 10 when the Jan S+D, Production, and Quarterly Stocks reports are issued.  This report can best be described as  “not any more bullish than the market has already been trading”.  World wheat supplies are abundant, bean stocks are adequate, and corn supplies are a bit tight.  US bean and meal stocks are still quite tight.

WEEKLY EXPORT SALES REPORT

BEANS

  • Export sales of soybeans have slowed dramatically from their recent torrid pace, but are still above the weekly average needed to hit the USDA export target.  Meal sales were below the average needed to hit the USDA target again this week.
  • The total beans sold to date is well above the normal pace of sales at 97% sold versus a five year average of 73% sold –Feb and March are offered at significantly cheaper than US prices loading in South America
  • US bean supplies are expected to remain exceedingly tight in the coming season.  It is crucial for South America to produce a large soybean crop.  Recent weather is close to ideal, but this week Argentina and southern Brazil are experiencing hotter, drier weather.
  • The function of futures prices, futures inverses and cash market basis levels in an extremely tight supply situation is to encourage end users to find substitutes or delay purchase until South American new crop supplies become available.  This week’s Export Sales Report shows that current high prices are beginning to price US soybean export sales out of the world market.
  • Most of this week’s bean “sales” for China, the Netherlands, Spain and Indonesia included large switches from Unknown
  • The next question is whether or not current high prices are enough to generate cancellations or a shift for vessel loading to South America.  There are a sizable amount of unshipped sales that could be rolled forward, shifted to S Am or cancelled.
  • Export loadings continue to be huge and are almost three times the amount needed to load each week to hit the USDA target.  Export traders say that beans will dominate export loading capacity into at least January – and possibly March if S Am harvesting weather creates problems.
  • We are shipping more beans to China than we are selling, so cash and futures market structures could shift from high prices that limit export sales to basis levels and steep inverses  that keep the origination pipeline full.

 

Headline US bean export sales and shipments in thousand metric tons

 

Sold

Shipped

Yet to Ship

% Sold vsTtl

% Shipped

China

24831

14590

10241

64 %

59 %

Unknown

4631

4631

12 %

Total US Sales

39042

20492

18550

52 %

 

 

CORN

  • Sales of corn were about three times the average needed to hit the USDA annual export target.  In spite of that, export and domestic basis levels are soft.
  • Total corn sold to date is well above the normal pace of sales at 75% sold versus a five year average of 53% sold.  About a third of these sales have been shipped.
  • US corn exports in 2013-14 are expected to be about 11% of total use, well under the 45% of exports versus total use for beans and wheat.
  • Note the majority of the “sales” to China were switches from Unknown.  Also a cargo of corn previously sold to China was rejected and went to South Korea.
  • We sold 35 mln bu of corn this week.  In comparison, we need to grind 93.7 mil bu/ week to hit the ethanol production estimate.

 

Headline US corn export sales and shipments – in thousand metric tons

 

Sold

Shipped

Yet to Ship

% Sold vs Ttl

% Shipped

Mexico

7471

2854

4617

27 %

38 %

China

5898

3288

2610

21 %

56 %

Unknown

4654

4654

17 %

 

Japan

4440

1407

3033

16 %

32 %

Total US Sales

27523

9772

17751

36 %

 

 

WHEAT

  • Weekly US wheat sales were twice the level needed to hit the USDA target.  
  • So far we have sold 79% of our expected 2013-14 wheat exports versus a 5 year   average of 73% sold.
  • 91% of expected sales for the year have already been shipped versus an average pace of 53%.  Less than 5% of the early wheat sales to China and Brazil are left to ship.
  • Note a portion of the “sale” to Brazil was a switch from Unknown
  • US millers are paying premiums for good quality wheat – especially good test weight SRW and high protein HRW and HRS.  Logistics is a huge problem as rail cars are difficult to get.

 

Headline US wheat export sales and shipments – in thousand metric tons

 

Sold

Shipped

Yet to Ship

% Sold

% Shipped

HRW to Brazil

3201

3035

166

14 %

95 %

HRW to Unknown

168

168

<1 %

 

 

 

 

 

SRW to China

3568

3385

183

15 %

95 %

SRW to Unknown

85

84

<1 %

 

 

 

 

 

HRS to China

340

280

60

1 %

82 %

HRS to Unknown

483

483

2 %

 

 

 

 

 

White to China

170

170

0

<1 %

38 %

White to Unknown

251

251

1 %

 

 

 

Total Unknown

1015

1015

4 %

 

Total US Sales

23634

18258

5376

77 %

 

 

 

2013-2014 EXPORT SALES (in Millions of bushels – rounded)

Week ended 12.12.13

CORN

BEANS

WHEAT

 

TOTAL WEEKLY SALES

35

18

24

Analyst Estimate

18-30

26-37

11-18

 

WEEKLY SALES for 2013-14

33

15

24

Needed to hit USDA target

(11)

(1.4)

(10)

 

TOTAL SALES

1084

1435

868

USDA YEARLY SALES ESTIMATE

1450

1475

1100

 

PERCENT SOLD

75 %

97 %

79 %

5 year average percent sold

53 %

73 %

73 %

 

UNSOLD

366

40

232

UNSHIPPED

699

681

198

 

SHIPPED THIS WEEK

27

58

14

Needed to ship to hit USDA target

(29)

(20)

(18)

 

PERCENT SHIPPED

27 %

51 %

61 %

5 year average percent shipped

28 %

42 %

53 %

 

 

US CARRYOVER/USE %

14 %

5 %

23 %

WORLD CARRYOVER/USE %

14 %

19 %

21 %

 

US EXPORTS AS A PERCENT OF

US TOTAL USE

11 %

45 %

45 %

# weeks left in marketing year:  wheat = 24  corn and beans = 37

 

Corn sales:  Unknown, Mexico, China, Taiwan, South Korea and Dominican Republic

Beans sales:  China, Netherlands, Spain, Indonesia and Mexico

Wheat sales:  Japan, Nigeria, Mexico, Brazil and others

 

 

WHEAT SALES BY CLASS (in Millions of bushels – rounded)

 

HRW

HRS

DURUM

SRW

WHITE

WEEKLY SALES

11

7

0.8

2

4

(NEED TO HIT USDA)

(4)

(2)

(0.5)

(3)

(2)

 

TOTAL SALES

324

174

12

240

118

USDA ESTIMATE

415

210

25

300

150

 

PERCENT SOLD

78 %

83 %

48 %

80 %

79 %

 

UNSOLD

102

42

13

62

36

UNSHIPPED

58

61

4

39

36

 

CARRYOVER/USE %

21 %

39 %

29 %

14 %

21 %

 

EXPORTS AS A PERCENT OF USE

46 %

41 %

24 %

48 %

53 %

#   weeks left in the wheat marketing year: 24

 

 

2013-14 MEAL AND OIL SALES  (in 000 mt)

MEAL

OIL

WEEKLY SALES for 2013-14

77

27

(NEEDED TO HIT USDA EST)

(87)

(6)

Analyst Estimate

100-245

0-20

 

TOTAL SALES

5949

298

USDA YEARLY SALES ESTIMATE

9530

520

 

PERCENT SOLD

62 %

57 %

5 yr Average percent Sold

53 %

51 %

 

UNSOLD

3581

222

UNSHIPPED

3456

171

 

PERCENT SHIPPED

26 %

24 %

5 yr Average percent Shipped

22 %

24 %

 

 

US CARRYOVER/USE %

>1 %

8%

WORLD CARRYOVER/USE %

5 %

6 %

 

US EXPORTS AS A PERCENT

OF  US TOTAL USE

26 %

6 %

#  weeks left in marketing year: 41

 

 

GRAIN FUTURES DELIVERIES

 

Corn

Beans

Meal

Soy Oil

W

KC

Mpls

JAN-MARCH

(8)

(13.6)

0.0031

% FULL CARRY

(23 %)

(122 %)

73 %

 

 

Delivery Stocks

7.4

8.4

50.4

72.4

18.5

 

Registrations

33

0

1

9,921

1558

189

700

Locations

Morris,

Ill Riv

Des

Moines

All over

Toledo

NWOhio

Salina

Dul/Mpls

 

 

JANUARY

OPEN INTERST

131,507

45,096

58,104

   CHANGE

-19,501

-5,439

-7,509

January – First Notice Day is Tuesday 12.31.13 – Last Trading Day is Tuesday 1.14.14

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

Stocks in Futures Delivery elevators are in millions of bushels – updated each Tuesday.

 

 

DAILY GRAIN RECEIPTS AND SHIPMENTS AT CBT FUTURES DELIVERY TERMINALS

-in millions of bushels

 

RECEIVED

SHIPPED

NET INTO STORAGE

12.06.13 STOCKS

 

CORN

0.457

0.195

+0.262

7.4

SOYBEANS

2.861

2.677

+0.184

8.4

WHEAT

0.264

0.347

-0.083

50.4

KC WHEAT

0.412

0.161

+0.251

72.4

 

 

 

 

 

  • Corn futures delivery terminal receipts and shipments are active.  In Chicago, there is a 29 cent carry to March – mostly due to high nearby barge freight due to low water, but much cheaper March barge freight once bean export loading program winds down.
  • Bean futures delivery terminal receipts and shipments are very active.  In Chicago, basis levels for loaded barges are firmer into January and then cheaper as the US export program winds down.
  • In Chicago wheat, futures delivery terminal receipts are picking up, and there continue to be good load outs. In Chicago, there is a 24 cent carry from Dec to Mch due to cheaper freight.  Most of the load outs had been coming from the lower Mississippi and Ohio Rivers, but we are starting to see some load outs from Toledo.
  • KC futures delivery terminals have periodic large wheat receipts and/or shipments.  The shipments may go to either mills or exporters.    The basis is historically high.