KCG FUTURES PM GRAIN FUTURES COMMENTS

KCG FUTURES   PM GRAIN FUTURES COMMENTS  

 

The Federal Reserve has decided not to make any changes in their bond buying program at present, but suggests a change could happen any time.  The result was a sharp break in the dollar, and rallies in the stocks, bonds, crude oil, gold, and copper.  The weaker dollar may also be part of the reason that grain futures found buyers in the last half hour, but it is equally likely that traders covered short positions before tomorrow morning’s Weekly Export Sales Report in expectation of another week of healthy export business.

Most of the session grain futures traded either side of unchanged in a narrow range.  Most of the session risk premium was added back into the bean complex as traders bought beans and sold corn and wheat.  Ideas that increased “prevent plant” acres would result in tighter carryover stocks – with more price rationing needed for the already exceedingly tight US bean market.  A late rally closed futures slightly higher and erased gains in the bean/corn ratios.

–       Helen Pound

 

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CZ3

SX3

SMZ3

BOZ3

WZ3

KWZ3

MWZ3

Today’s Close

$4.56

$13.48

$426

$0.4271

$6.47

$6.93

$7.00

     Change

+2

+5

-1

+0.0047

+4

+2

+1

Total Open Interest

1,124,419

613,083

269,238

291,377

356,151

147,690

41,657

     Change

+18,458

-607

-1,527

+3,461

+68

-796

+1,187

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

October

-0.4 %

%

+1.1 %

December (or X), 2013

+0.5 %

+0.4 %

%

-0.2 %

%

+1.1 %

+0.5 %

+0.3 %

+0.1 %

July, 2014

+0.5 %

+0.6 %

+0.2 %

+1.1 %

+0.5 %

+0.5 %

+0.1 %

December (or X), 2014

+0.5 %

+0.6 %

+0.3 %

+1.1 %

+0.6 %

+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

-1.1 %

+1.3 %

+1.2 %

+2.7 %

+2.8 %

+2.4 %

+5.5 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

October-December

(1)

0.0024

     Percent Full Carry

(21 %)

53 %

November – January

2

     Percent Full Carry

13 %

December(orX) – March

13

(15)

(8)

0.0055

11

6

12

     Percent Full Carry

67 %

(44 %)

(85 %)

82 %

54 %

26 %

61 %

December(orX)–July14

27

(49)

(26)

0.0112

12

(2)

27

     Percent Full Carry

61 %

(72 %)

(111 %)

71 %

25 %

(3%)

56 %

Dec(orX)–Dec(orX)14

39

(159)

(71)

0.0079

25

20

39

     Percent Full Carry

50 %

(154 %)

(179 %)

29 %

30 %

21 %

47 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

December

190

701

892

2.95 %

59

54

8

46

July 2014

175

641

816

2.69 %

64

70

37

33

Dec 2014

176

519

694

2.40 %

71

70

28

42

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

Monday

9.09

9.10

9.11

9.12

9.13

Monday

9.16

9.17

9.18

CZ3

570

81 %

82 %

83 %

82 %

81 %

80 %

80 %

80 %

CN4

592

83 %

84%

84%

83%

82 %

82 %

81 %

82 %

 

 

OZ3

338

93 %

94 %

95 %

94 %

92 %

92 %

91 %

90 %

ON4

409

77 %

77 %

78 %

77 %

76 %

74 %

74 %

74 %

 

 

WZ3

779

82 %

83 %

83 %

84 %

82 %

82 %

83 %

83 %

WN4

775

85 %

85 %

85 %

86 %

85 %

84 %

84 %

85 %

 

 

KWZ3

830

83 %

84 %

84 %

85 %

83 %

83 %

83 %

83 %

KWN4

790

88 %

88 %

88 %

89 %

88 %

87 %

87 %

87 %

 

 

MWZ3

858

82 %

82 %

83 %

83 %

82 %

82 %

82 %

82 %

MWN4

890

82 %

83 %

83 %

83 %

82 %

82 %

82 %

82 %

 

 

SX3

1259

108 %

108 %

108 %

111 %

110 %

107 %

107 %

107 %

SN4

1287

101 %

101 %

102 %

103 %

102 %

100 %

100 %

101 %

 

 

SMZ3

353

121 %

120 %

121 %

127 %

125 %

121 %

121 %

121 %

SMN4

365

109 %

109 %

110 %

112 %

111 %

109 %

110 %

110 %

 

 

BOZ3

49.00

88 %

88 %

88 %

88 %

87 %

86 %

86 %

87 %

BON4

49.92

89 %

89 %

88 %

88 %

88 %

87 %

87 %

88 %

 

  • +   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 out 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.

 

 

 

 

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