KCG PM Futures News

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures closed mostly higher, led by an explosive soy meal and bean rally as traders focused on a return to hot, mostly dry weather in the US midwest for the weekend and early next week.  This stress reducing yield created a more exaggerated price reaction in the bean crop than in the corn crop as US new crop bean supplies are already expected to be extraordinarily tight in the 2013-14 season – C/U% for beans is 6% and 14% for corn.  Futures market traders reacted by adding new bean and meal long positions as well as shifting long positions to beans from corn or wheat.  The bean/corn ratio sky rocketed 3-6 points higher and could continue to gain.

  • SU and SX traded above their June highs and appear headed for their July highs – 12 cents higher in SU and 5 cents higher in SX.  January post-harvest highs are 22 cents higher.
  • Soy meal gained more than more than beans on a percentage basis as lagging bean oil prices limited bean price advances.
  • Corn closed within this week’s range – consolidating last week’s rally.
  • Chicago and KC wheat closed within this week’s range – near recent lows
  • Minneapolis wheat continued to close at new recent lows as the pace of spring wheat harvest increases.

Traders expect to begin trade Sunday night after a hot, dry weekend expecting to see further crop quality reductions in Monday afternoon’s crop quality and progress report.  It will be interesting to see if the warmers temps help crop progress to increase maturity.  Expect to see US spring wheat about 40% or more harvested.

Today’s September option expiration added volatility to today’s market action – especially as beans and meal made new highs and forced those short out of the money calls to cover.  September futures open interest will decrease as option hedges are offset.  Next Friday is first Notice Day for September futures expiration and traders will be anxious to see if old crop cash and futures prices are encouraging September futures position liquidation.  – Helen Pound

 

GRAIN FUTURES CLOSING PRICES AND CHANGE

Close – Rounded

 

CU3

SU3

SMU3

BOU3

WU3

KWU3

MWU3

Today’s Close

$4.96

$13.65

$433

$0.4264

$6.35

$6.96

$7.16

     Change

+8

+43

-20

+0.0021

+4

+1

-3

Total Open Interest

1,178,382

569,282

281,359

294,811

400,445

139,092

37,930

     Change

-14,300

+9,078

+1,988

-3,686

-3,251

-286

+166

OVERNIGHT PERCENT CHANGE IN FUTURES VALUE

Grains

Corn

Soybeans

Soy Meal

Soy Oil

Wheat

KC Wheat

MN Wheat

September, 2013

+1.6 %

+3.3 %

%

+4.8 %

%

+0.5 %

+0.6 %

+0.2 %

-0.4 %

December, 2013

+1.2 %

+3.2 %

+4.8 %

+0.6 %

+0.9 %

+0.3 %

-0.2 %

July, 2014

+1.0 %

+2.3 %

+3.1 %

+0.6 %

+0.8 %

+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

-0.2 %

+0.5 %

+0.2 %

+1.3 %

+0.6 %

+2.0 %

+3.1 %

TERM STRUCTURE

Carries (Inverses) – Rounded

 

Corn

Soybeans

Soy meal

Soy Oil

Wheat

KC Wheat

MN Wheat

September – December

(25)

(36)

(14)

0.0036

11

2

8

     Percent Full Carry

(123 %)

(207 %)

(140 %)

54 %

55 %

5 %

30 %

December – July 2014

26

(50)

(26)

0.0082

15

0

28

     Percent Full Carry

54 %

(69 %)

(114 %)

52 %

31 %

0 %

43 %

INTERMARKET SPREADS

                                                                    Rounded

 

W-C

S-W

S-C

S/C

BC*

MW-W

MW-KW

KW-W

September

139

731

870

2.76 %

57

82

21

61

December

176

682

858

2.73 %

68

79

28

51

July 2014

165

614

779

2.57 %

68

91

54

37

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

8.14

8.15

8.16

Monday

8.19

8.20

8.21

8.22

8.23

CU3

592

79 %

81 %

80 %

83 %

82 %

84 %

82 %

84 %

CZ3

570

80 %

83 %

81 %

85 %

83 %

85 %

81 %

82 %

CN4

592

82 %

84 %

85 %

86 %

85 %

86 %

83 %

84 %

 

OU3

350

104 %

109 %

108 %

110 %

109 %

110 %

109 %

104 %

OZ3

338

97 %

98 %

98 %

99 %

99 %

99 %

98 %

98 %

ON4

409

82 %

83 %

83 %

84 %

84 %

81 %

80 %

79 %

 

WU3

765

82 %

83 %

82 %

84 %

83 %

83 %

82 %

83 %

WZ3

779

83 %

83 %

83 %

84 %

83 %

83 %

82 %

83 %

WN4

775

85 %

86 %

85 %

86 %

85 %

85 %

85 %

85 %

 

KWU3

876

86 %

86 %

86 %

86 %

85 %

86 %

85 %

85 %

KWZ3

830

85 %

85 %

85 %

85 %

84 %

85 %

84 %

84 %

KWN4

790

88 %

89 %

89 %

90 %

89 %

89 %

88 %

88 %

 

MWU3

860

86 %

87 %

87 %

87 %

85 %

85 %

84 %

83 %

MWZ3

858

86 %

87 %

86 %

87 %

86 %

86 %

85 %

84 %

MWN4

890

85 %

86 %

85 %

86 %

85 %

85 %

85 %

84 %

 

SU3

1288

99 %

100 %

100 %

103 %

102 %

103 %

103 %

106 %

SX3

1259

98 %

101 %

100 %

104 %

103 %

104 %

102 %

105 %

SN4

1287

96 %

97 %

96 %

97 %

97 %

97 %

97 %

99 %

 

SMU3

369

111 %

111 %

111 %

114 %

112 %

114 %

112 %

117 %

SMZ3

353

107 %

110 %

109 %

115 %

114 %

116 %

113 %

119 %

SMN4

365

102 %

103 %

102 %

104 %

104 %

105 %

104 %

107 %

 

BOU3 49.81

85 %

87 %

86 %

87 %

86 %

86 %

85 %

86 %

BOZ3 49.00

87 %

89 %

88 %

89 %

88 %

88 %

87 %

88 %

BON4 49.92

87 %

89 %

88 %

89 %

88 %

88 %

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.

 

 

 

KCG FUTURES   PM GRAIN FUTURES COMMENTS

 

Grain futures closed mostly higher, led by an explosive soy meal and bean rally as traders focused on a return to hot, mostly dry weather in the US midwest for the weekend and early next week.  This stress reducing yield created a more exaggerated price reaction in the bean crop than in the corn crop as US new crop bean supplies are already expected to be extraordinarily tight in the 2013-14 season – C/U% for beans is 6% and 14% for corn.  Futures market traders reacted by adding new bean and meal long positions as well as shifting long positions to beans from corn or wheat.  The bean/corn ratio sky rocketed 3-6 points higher and could continue to gain.

  • SU and SX traded above their June highs and appear headed for their July highs – 12 cents higher in SU and 5 cents higher in SX.  January post-harvest highs are 22 cents higher.
  • Soy meal gained more than more than beans on a percentage basis as lagging bean oil prices limited bean price advances.
  • Corn closed within this week’s range – consolidating last week’s rally.
  • Chicago and KC wheat closed within this week’s range – near recent lows
  • Minneapolis wheat continued to close at new recent lows as the pace of spring wheat harvest increases.

Traders expect to begin trade Sunday night after a hot, dry weekend expecting to see further crop quality reductions in Monday afternoon’s crop quality and progress report.  It will be interesting to see if the warmers temps help crop progress to increase maturity.  Expect to see US spring wheat about 40% or more harvested.

Today’s September option expiration added volatility to today’s market action – especially as beans and meal made new highs and forced those short out of the money calls to cover.  September futures open interest will decrease as option hedges are offset.  Next Friday is first Notice Day for September futures expiration and traders will be anxious to see if old crop cash and futures prices are encouraging September futures position liquidation.  – Helen Pound

 

 

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.

KCG Holdings, Inc. (“KCG”) is comprised of trading and related entities under common control such as Knight Capital Americas, LLC, KCG Europe Limited (a U.K. registered broker-dealer) and KCG Hotspot FX LLC.

© 2013 KCG Holdings, Inc. (“KCG”) All rights reserved. Provided by Knight Capital Americas LLC, member of FINRA and SIPC. For additional information about KCG Holdings, Inc. (NYSE: Euronext: KCG) please visit www.kcg.com.

Helen Pound