KCG FUTURES PM GRAIN FUTURES COMMENTS

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures spent the day under pressure on ideas that next week’s US weather would be less stressful than the past two weeks.  SX and CZ both traded into the gap left when futures opened significantly higher last Sunday night, but both ended up closing within Monday’s range.  WZ as a bit firmer than the row crops, but settled near unchanged toward range lows.

Cooler US weather returning toward the end of the holiday weekend and next week sparked some profit taking and Fund liquidation.  The bean/corn ratio closed soft after making new recent highs early in the day.  The SX also lost a chunk of its recent premium gain versus SN.  Futures markets continue their transition from very tight old crop supplies to new crop.  Farmers in the southern US are ramping up corn harvest and beginning bean harvest. Farmers in the north are emptying out bins and expect to be shipping new crop beans in three weeks.

The USDA will issue its September Supply/Demand report in about two weeks – Thursday 9.12.13.  Next week we should be seeing wire service stories about analyst prognostications for corn and bean yields and production. Tuesday’s Weekly Crop Quality and Progress report is expected to show a 4-6% drop in good to excellent bean ratings, as well as a 2-4% crop in corn rating.  These numbers will be considered in context with how much rain hits the Midwest this weekend and is forecasted for next week – more than expected rain will limit the bullish bias to the Crop Quality number deterioration – or add to the bullish bias if rains are disappointing.

Another factor influencing the Sept S+D will be export demand.  So far we have sold over 50% of the US expected bean export sales and almost 40% of expected corn sales.  The current inverted new crop bean futures price structure indicates that the market is trying to ration bean supplies.  Chances are that futures prices, futures inverses and basis levels will combine to reduce US bean exports.  The August S+D indicated that the USDA thought that 44% of US bean production would be exported – close to this year’s pace – and now seems overly optimistic given recent weather.  The August corn S+D indicated that the USDA expected US corn exports to continue to be just a small percentage of total use – 10% for 2013-14 as compared to 6% for 2012-13 – and that carryover stocks would build.  Their corn stock building pace now also seems overly optimistic.

Grain futures markets will resume electronic trade Monday at 7 pm.  – Helen

 

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CZ3

SX3

SMZ3

BOZ3

WZ3

KWZ3

MWZ3

Today’s Close

$4.82

$13.58

$424

$0.4429

$6.54

$7.04

$7.30

     Change

+1

-11

+1

-0.0009

0

0

-3

Total Open Interest

1,071,328

579,413

271,408

285,395

360,442

137,497

32,516

     Change

-7,051

-2,391

-2,651

-6,862

-4,378

-893

-2,024

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

September, 2013

-0.5 %

-0.4 %

%

+0.2 %

%

+0.3 %

+0.3 %

-0.1 %

-0.6 %

December, 2013

+0.1 %

-0.8 %

-1.5 %

+0.2 %

-0.1 %

+0.1 %

-0.4 %

July, 2014

+0.3 %

+0.3 %

+0.4 %

+0.4 %

+0.1 %

+0.5 %

-0.2 %

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Macros

 

Dollar

10 Year

S&P 500

Crude Oil

Copper

Gold

Silver

Percent Daily Change

+0.2 %

-0.1 %

-0.2 %

-1.1 %

-0.6 %

-1.1 %

-2.6 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

September – December

(14)

(66)

(44.7)

0.0040

11

3

10 1/2

     Percent Full Carry

(68 %)

(379 %)

(453 %)

59 %

54 %

9 %

38 %

December – July 2014

27

(44)

(22)

0.0091

13

6

26

     Percent Full Carry

56 %

(61 %)

(97 %)

58 %

26 %

12 %

40 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

September

148

781

929

2.88 %

89

77

20

58

December

172

704

876

2.82 %

62

76

27

50

July 2014

158

641

799

2.57 %

69

91

50

41

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

8.21

8.22

8.23

Monday

8.26

8.27

8.28

8.29

8.30

CU3

592

84 %

82 %

84 %

87 %

84 %

85 %

84 %

84 %

CZ3

570

85 %

81 %

82 %

88 %

85 %

84 %

84 %

85 %

CN4

592

86 %

83 %

84 %

89 %

86 %

86 %

86 %

86 %

 

OU3

350

110 %

109 %

104 %

101 %

104 %

107 %

113 %

112 %

OZ3

338

99 %

98 %

98 %

102 %

103 %

103 %

103 %

101 %

ON4

409

81 %

80 %

79 %

84 %

85 %

85 %

83 %

82 %

 

WU3

765

83 %

82 %

83 %

86 %

85 %

85 %

84 %

84 %

WZ3

779

83 %

82 %

83 %

86 %

85 %

85 %

84 %

84 %

WN4

775

85 %

85 %

85 %

88 %

87 %

87 %

86 %

86 %

 

KWU3

876

86 %

85 %

85 %

87 %

87 %

87 %

86 %

86 %

KWZ3

830

85 %

84 %

84 %

86 %

86 %

86 %

85 %

85 %

KWN4

790

89 %

88 %

88 %

91 %

90 %

90 %

89 %

90 %

 

MWU3

860

85 %

84 %

83 %

85 %

85 %

85 %

84 %

84 %

MWZ3

858

86 %

85 %

84 %

86 %

86 %

86 %

85 %

85 %

MWN4

890

85 %

85 %

84 %

86 %

86 %

86 %

85 %

85 %

 

SU3

1288

103 %

103 %

106 %

111 %

110 %

111 %

111 %

111 %

SX3

1259

104 %

102 %

105 %

110 %

109 %

109 %

109 %

108 %

SN4

1287

97 %

97 %

99 %

102 %

101 %

102 %

101 %

102 %

 

SMU3

369

114 %

112 %

117 %

124 %

124 %

126 %

127 %

127 %

SMZ3

353

116 %

113 %

119 %

124 %

122 %

122 %

122 %

120 %

SMN4

365

105 %

104 %

107 %

110 %

108 %

109 %

109 %

110 %

 

BOU3 49.81

86 %

85 %

86 %

89 %

89 %

89 %

88 %

88 %

BOZ3 49.00

88 %

87 %

88 %

92 %

91 %

91 %

90 %

90 %

BON4 49.92

88 %

87 %

88 %

91 %

91 %

92 %

90 %

91 %

 

  • +   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.

 

 

 

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures spent the day under pressure on ideas that next week’s US weather would be less stressful than the past two weeks.  SX and CZ both traded into the gap left when futures opened significantly higher last Sunday night, but both ended up closing within Monday’s range.  WZ as a bit firmer than the row crops, but settled near unchanged toward range lows.

Cooler US weather returning toward the end of the holiday weekend and next week sparked some profit taking and Fund liquidation.  The bean/corn ratio closed soft after making new recent highs early in the day.  The SX also lost a chunk of its recent premium gain versus SN.  Futures markets continue their transition from very tight old crop supplies to new crop.  Farmers in the southern US are ramping up corn harvest and beginning bean harvest. Farmers in the north are emptying out bins and expect to be shipping new crop beans in three weeks.

The USDA will issue its September Supply/Demand report in about two weeks – Thursday 9.12.13.  Next week we should be seeing wire service stories about analyst prognostications for corn and bean yields and production. Tuesday’s Weekly Crop Quality and Progress report is expected to show a 4-6% drop in good to excellent bean ratings, as well as a 2-4% crop in corn rating.  These numbers will be considered in context with how much rain hits the Midwest this weekend and is forecasted for next week – more than expected rain will limit the bullish bias to the Crop Quality number deterioration – or add to the bullish bias if rains are disappointing.

Another factor influencing the Sept S+D will be export demand.  So far we have sold over 50% of the US expected bean export sales and almost 40% of expected corn sales.  The current inverted new crop bean futures price structure indicates that the market is trying to ration bean supplies.  Chances are that futures prices, futures inverses and basis levels will combine to reduce US bean exports.  The August S+D indicated that the USDA thought that 44% of US bean production would be exported – close to this year’s pace – and now seems overly optimistic given recent weather.  The August corn S+D indicated that the USDA expected US corn exports to continue to be just a small percentage of total use – 10% for 2013-14 as compared to 6% for 2012-13 – and that carryover stocks would build.  Their corn stock building pace now also seems overly optimistic.

Grain futures markets will resume electronic trade Monday at 7 pm.  – Helen

 

 

 

COT CHANGES IN SWAP DEALER AND MANAGED MONEY FUTURES + OPTION OPEN INTEREST

With changes in Futures + Option positions to 8.27.13 from 8.20.13 –   in number of net contracts

 

  • Swap Dealers added to Chi wheat and bean Longs position, while liquidating corn and bean meal Long positions
  • Managed Money were buyers of  the beans complex, corn and wheat
  • Managed Money continues to be net Short corn and wheat, while they are increasingly Longer beans and meal

 

 

Swap Dealers

Managed Money

   

Swap Dealers

Managed Money

 

   

ChiWht

+105,491

-30,043

  Beans

+77,046

+138,182

 

+2,081

+12,898

   

+2,575

+38,194

 

   

 

   

KC Wht

+36,536

+13,950

  Bean Oil

+71,944

-17,635

 

+100

+921

   

-302

+17,370

 

   

 

   

M Wht

+2,966

-3654

  Meal

+46,155

+56,962

 

+115

-662

   

-3,887

+12,379

 

   

 

   

Corn

+273,231

-57,428

  Oats

+1,293

525

 

-5,065

+34,349

   

+87

+669

  • Swap dealers tend to hold positions for the long term.  Position changes tend to reflect “investors” adjusting their exposure to this asset class.
  • Managed money will trade actively from either the long or short side of the market

 

 

This communication has been prepared by the trading, market making and/or the sales personnel (“Trader”) of Knight Capital Americas, LLC. (“KCA”), a subsidiary of KCG Holdings, Inc. (“KCG”). The information contained herein may be the personal perspective of the KCG Trader and/or commentary compiled from public sources. The information from public sources is believed to be reliable but KCG does not guarantee or represent its accuracy or completeness. The opinions and views expressed by the individual trader do not represent the opinions and views of KCG, its affiliates, officers or other personnel. No responsibility and no express or limited liability is assumed jointly or individually for any losses or damages arising out of errors, omissions, delays in the receipt of the information, or any actions taken in reliance upon the information. The information contained herein does not provide investment advice and is not a sufficient basis for an investment decision. No information contained herein should be construed as a solicitation or an offer to buy or sell any security or product. Indications of interest, opinions or views expressed by the trader are not firm orders or quotes and may not be current. No responsibility is assumed to maintain and/or update the information. KCA most likely makes a market in the securities mentioned in this document and its personnel, including those involved in the preparation or issuance of the material may take a position or action which may be inconsistent with the opinions and views expressed therein. Questions regarding the information presented herein or to request a copy of this document should be referred to your KCG Representative.

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