Grain Futures Update

News & commentary on Grain Futures markets including wheat, soybeans, corn & more.

Grain Futures Update is a blog dedicated to bringing updates, news and commentary on grain futures markets including the commodities wheat, corn, soybeans and more.

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09/30 Corn sell signal

Posted on 10/1/2014 1:45:10 PM by: Larry Baer, Market Strategist @ Zaner. 312-277-0112.

Call me for trade

 

 


GRAIN STOCKS REPORT: BULLISH SOYBEANS, BEARISH WHEAT AND CORN

Posted on 10/1/2014 7:12:26 AM by: Rick Alexander, VP, Trading @ Zaner. 312-277-0107.

WE HAVE A VERY GOOD HEDGING DEPARTMENT HEADED BY TED SEIFRIED. WHY NOT TALK TO HIM OR ANY OF OUR OTHER HEDGING BROKERS. NO ONE WILL PRESSURE YOU AND WHAT HAVE YOU GOT TO LOSE? I'VE BEEN A LICENSED FUTURES BROKER FOR 41 YEARS AND TRUST NO ONE MORE THAN TED AND HIS GROUP

 

Higher closes for oats and rough rice while lower for corn, soybeans, soybean meal, soybeans, Minneapolis, Kansas City and Chicago wheat. The grain stocks report was really no surprise although the beans were at the lower end of expectations but you can see how they ended up. The wheat stocks were bearish but Chicago came back nicely off its lows. Minneapolis wheat made a new CONTRACT LOW while KC a new CONTRACT LOW CLOSE. Now the first thing Minneapolis has to do is close above 540 to have a hopeful retracement higher and you can see there's little resistance up to the 610 area. Basically the same goes for KC which needs to settle above 570 with little in the way of resistance, after that, up to around 620.Chicago just settled lower but not making new lows. A close over 480 would be helpful especially since Chicago has been consolidating over the last eight sessions. There's also little resistance up to 540. The Minneapolis/KC spreads continue to look bearish while rallying over the last few days but has been in this technical pattern before while trending lower since the middle of August. Oats settled higher while holding a strong looking support area but looking toppy at the same time. Holding 320 in my opinion remains important. It's probably better to just stand aside this grain for now. Rice settled higher still in a downtrend overall but, at the same time, forming a possible bottom. A close over 1300 could reverse its downtrend trend. Corn made a new CONTRACT LOW AND CLOSE. We need to keep an eye on the 300 area which is very important to hold psychologically as well as technically. There's some resistance around 340 with strong looking resistance remaining from 360 up to around 375 and, of course, 350  which is a psychological price area to watch.  Every farmer that reads my comments should call me about hedging concerns so I can place them with one of our qualified hedging brokers. You should always be thinking ahead. Since everybody knows the government is looking at record crops and yields and corn storage remains a factor. Our hedge department says many farmers have been holding on to corn from the previous year(s) leaving little room for storage whereby farmers would be forced to sell a large part of their crops in the near term. The beans and oil settled down while the meal made new CONTRACT LOW AND CLOSE but helped a little by the stocks report even if it doesn't seem like it. The July15/Dec15 meal/oil spreads are now below even money which is exceedlngly rare if my memory serves me correctly.  Oil closed down, and while still bearish, has continuing to show some bottoming signs probably being helped by unwinding and/or new meal/oil spreads in favor of the oil. SELL SIGNALS FOR MINNEAPOLIS, KANSAS CITY AND CHICAGO WHEAT ALONG WITH CORN, ROUGH RICE SOYBEANS, SOYBEAN MEAL AND SOYBEAN OIL. CALL FOR DETAILS.  For additional charts, quotes, news, commentary & more sign-up for a FREE 30-day trial to Market head.Com.

 

 

  

  

 

 

 

 


How does Quarterly Grain Stocks Impact New Crop Soybeans?

Posted on 9/30/2014 4:38:42 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

At first glance the number that sticks out the most on this Quarterly Grain Stocks report is soybean stocks.  This number represents old crop soybean ending stocks and therefore new crop soybean beginning stocks.  Soybean stocks stick out the most because at 92 million bushels not only did this number come out well below trade expectations but it was below the low end of trade guesses and it is the tightest ending stocks figure we have seen in soybeans for a long time.  This certainly has an impact on the new crop soybean balance sheet, but was there another number today that may have a bigger impact?
 
At 92 million bushels this is the lowest soybean ending stocks figure in recent history and it is well below what is generally considered bare minimum "pipeline" supplies.  For comparison, even the drought effected 2012 crop had an ending stocks figure almost 50 million bushels higher.  In other words we were dangerously close to running out of soybeans.  This tight situation has been somewhat reflected in the cash market in the last few months and may have caused sharply higher futures prices if we had seen it earlier.  So at face value this is a very bullish number vs trade expectations but it may have come too late to get too excited about considering the massive crop we are in the process of harvesting.
 
It will be interesting to see how the USDA handles this on the upcoming WASDE report on October 10th.  In the last few reports the USDA has made a fine mess of the old crop soybean balance sheet by using a negative 94 million bushel residual.  On paper is one thing but in real life this hugely negative residual is impossible as the residual, by nature, is a positive number.  So, the question will be - does the USDA leave demand unchanged and move the residual to a more natural number of at least zero or even a positive number?  Or, does the USDA continue to push the unrealistic negative 94 million bushel residual and increase demand or decrease imports?  Or a combination of both?  We would hope to see positive residual number on the next report which would suggest demand would stay unchanged or be up only slightly.
 
How the USDA handles the old crop balance sheet will have an impact on the new crop balance sheet.  If they were to choose to leave the residual at a negative number and increase demand this could suggest that demand for new crop soybeans should be going higher as well.  Either way the drop in ending stocks will have an impact on the new crop balance sheet as lower ending stocks for old crop mean lower beginning stocks for new crop.  Right now, if we were to leave everything else on the soybean balance sheet unchanged we would see new crop soybeans ending stocks drop to 437 million bushels down from 475 million just based on lower beginning stocks alone.
 
But there was another number released by the USDA today that may end up impacting the new crop balance sheet even more then implied demand or beginning stocks.  Along with this Quarterly Grain Stocks report the USDA took the opportunity to revisit 2013 production.  This was highly expected as most analysts felt they were too low on production and we were concerned they had missed some bushels or acres during the two week government shut down during harvest last year.  As it turns out they missed a little bit of both.  The USDA updated 2013 soybean crop by increasing production by 69 million bushels to 3.358 billion bushels.  They did this by increasing acreage by a little over 300k acres and increasing the national average yield by .7 bushels an acre.
 
This increase in production and how it was done could have two potential impacts on the new crop soybean balance sheet.  One, this helps explain some of the difference in gaurenteed acres we have seen between NASS and FSA.  Last years number may have simply been too low.  Two, and maybe the most important feature of the reports today, is that with yields increasing for last year this could be suggesting that yields for this year are understated as well.  With USDA NASS crop conditions 19 points higher in the good to excellent year over year we would expect the national average soybean yield to be 3.6 to 4.6 bushels an acre higher as well. 
 
This would suggest that the USDA may need to increase their current yield estimate by 1-2 bushels an acre which would impact final production significantly.  Based on the USDA's current harvested acreage figure every 1 bushel an acre increase in yield equated to about an 84 million bushel increase in production.  If this is the case we would expect a higher production figure to more then offset lower beginning stocks and slightly higher demand leaving us with an even larger projected new crop soybean ending stocks number.
 
This assessment is based on logic and reasoning.  The USDA however, does not always feel inclined to be bound by such things like we do in our every day life.  The negative 94 million bushel residual that they presented on the September report was evidence of that.  So, this sets up for what will be a very highly anticipated October 10th USDA WASDE report when they will address the balance sheets. 
 
While the USDA can be unpredictable at times and other times be just flat out un-comprehendible we would think that the very good crop conditions will sway them toward raising their new crop soybean yield which could lead to a higher ending stocks estimate.  We would also think (maybe hope rather) that given the opportunity they would like to fix the broken old crop balance sheet by remedying the negative 94 million bushel residual figure and not trying to play around with other demand numbers that we have a pretty good handle on such as exports or crush.
 
Feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.  Also, follow me on twitter @thetedspread if that is your thing. 
 
December Corn Daily chart:

November Soybeans Daily chart:

December Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


NO UPDATE TODAY

Posted on 9/29/2014 6:34:31 AM by: Rick Alexander, VP, Trading @ Zaner. 312-277-0107.

WE HAVE A VERY GOOD HEDGING DEPARTMENT HEADED BY TED SEIFRIED. WHY NOT TALK TO HIM OR ANY OF OUR OTHER HEDGING BROKERS. NO ONE WILL PRESSURE YOU AND WHAT HAVE YOU GOT TO LOSE? I'VE BEEN A LICENSED FUTURES BROKER FOR 41 YEARS AND TRUST NO ONE MORE THAN TED AND HIS GROUP

 

Higher closes for Kansas City wheat, rough rice and soybean oil while lower for oats, corn, soybeans, soybean meal, Minneapolis and Chicago wheat. It's only fitting that, since I collect vinyl records, when I talk about the wheat complex its sound like a 'broken record'! So, it should be no surprise that I'm reporting that Minneapolis made a new CONTRACT LOW CLOSE. At least Kansas City made a DOUBLE BOTTOM and settled higher. Chicago just settled slightly lower.There's no resistance nearby and little support below also. Besides that, the Minneapolis/KC spreads continue to trade lower making its worst close since May 23rd. Oats settled down for its sixth session in a row culminating in its worst low and close since the middle of August. At least now they're in a good looking support area but need to not settle below 320 in my opinion. Rice settled higher but remains In a long term downtrend still needing to close over 1300 before I begin to look at a possible turnaround. Corn made a new CONTRACT LOW AND CLOSE falling for its fifth session in a row now in the 320's which was my next objective. Now we need to keep an eye on the 300 area although a rally from this area is not out of the question. Strong looking resistance remains from 360 up to around 375 and, of course, the 350 area is a psychological price to watch first.  Every farmer that reads my comments should call me about hedging concerns so I can place them with one of our qualified hedging brokers. You should always be thinking ahead. Since everybody knows the government is looking at record crops and yields and corn storage is at a high, the only hope for the remaining bulls in the near term is a freeze scare in my opinion. Our hedge department says many farmers have been holding on to corn from the previous year(s) leaving little room for storage whereby farmers would be forced to sell a large part of their crops in the near term. The beans made a new CONTRACT LOW AND CLOSE dropping four sessions in a row continuing its downward spiral towards nine dollars at least. I've heard about the beans falling to eight dollars but I feel its unlikely they'lll drop that far. Meal made its worst low and close since July 12th while the July15/Dec15 meal/oil spreads are approaching even money which is exceedlngly rare and shouldn't stay there based on history. Oil closed higher continuing to show some bottoming signs probably being helped by unwinding and/or new meal/oil spreads in favor of the oil. SELL SIGNALS FOR MINNEAPOLIS, KANSAS CITY AND CHICAGO WHEAT ALONG WITH CORN, ROUGH RICE SOYBEANS, SOYBEAN MEAL AND SOYBEAN OIL. CALL FOR DETAILS.  For additional charts, quotes, news, commentary & more sign-up for a FREE 30-day trial to Market head.Com.

 

 

  

 

 

 


200 Million Bushels Away from a Bull Market in Wheat

Posted on 9/25/2014 1:11:41 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

The domestic balance sheet for wheat in the US is not all that bearish.  Wheat is very much a global market and the global market is very much the bearish driver for wheat.  Too much or too little rain this year has caused production problems for wheat in the US, but with world wheat stocks ballooning it is hard to get bullish about wheat at the moment.  But, if export sales were to pick up and we were to challenge the current USDA export estimate a bull market might not be as far away as some may think.
 
Dry conditions in the SW Plains this year did a lot of damage to wheat growing in those areas and wet conditions in the north also caused production issues.  So wheat is not in the same huge crop boat as the row crops are this year, at least domestically.  At the same time global wheat stocks are ballooning.  We have gone from a 175 million metric ton world carry over in 2012/2013 to a projected 193 million metric ton world carry over for 2014/2015.  This means that there is a lot of wheat in the world and a lot of competition on the global export market.  While we certainly have had our production concerns this year we have still manage to produce well more then our domestic demand and a weak export outlook leaves us with a comfortable carry over.
 
Currently the USDA is projecting a sharp drop from year to year in our wheat exports due to strong global competition.  Right now the USDA is projecting export demand of 900 million bushels compared to last year's 1.176 billion bushels.  With this lower export demand estimate the USDA is projecting ending stocks at 698 million bushels, a 109 million bushel increase from last marketing year.  For now the lower export pace is certainly justified as wheat shipments for this marketing year to date are only about 2/3s of what they were last year.  However, with prices continuing to drop export demand could pick up at some point (it is unclear at what point though).  So, if there was an up tick in US wheat exports this would have a significant impact on the wheat balance sheet and possibly prices as well.
 
If, for example, some of the major wheat importers of the world were to decide not to buy Russian/Ukrainian wheat and some of this business were to come to the US it could bring a significant increase in US exports.  Another possibility is that some global importers look at US wheat as a premium product and choose to purchase US wheat given equal prices and shipping rates.  With US wheat prices continuing to come down this could be a possibility at some point.
 
The bottom line is that if wheat prices continue to fall and/or US export business picks up significantly it would not take much to put the wheat balance sheet in a position where some price rationing could be necessary.  Now, unless there is a major issue with another major global wheat exporter it seems unlikely that prices could go much higher without pricing US wheat out of global competition. The reality is however that wheat could be just 200 million bushels of increased export demand away from a shot at a bull market. 
 
Feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.   
 
December Corn Daily chart:

November Soybeans Daily chart:

December Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


Adding Pennies to Corn Bushels

Posted on 9/23/2014 4:12:47 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

Right now corn seems stuck in a strong down trend.  The frost damage fueled attempt at a bounce from earlier this week has been erased and corn is once again flirting with contract lows.  Enormous yield reports coming from Central Illinois and yet another private analyst's super sized yield estimate has moved into the focus for now.  Going forward the emphasis on corn has to be adding pennies to bushels to help with the bottom line.  While short positions have worked well to this point could we getting close to a time where it may be beneficial to be looking for a strategy to capitalize on a bounce?
 
Earlier this week a hard frost damaged many crops in the northern growing areas.  Estimates suggest that as much as ten million acres were effected.  At this point the true amount of damage is a little unclear as we have heard mixed reports.  Some will say that the damage was fairly minor and that the freeze may have only taken 5% of the remaining yield potential while others report near total loss in some areas.  For the moment the market is looking at this as having little impact on the total national production figure.  Combines will give us a much better picture but, we would not be surprised if the market is underestimating the impact on production.
 
In the mean time the bear camp and the market as a whole has taken hold of very big yield reports coming out of some early harvest efforts.  There have been reports coming out of Southern and Central growing areas that have been very large and well above previous record for the area.  To an extent the market should be expecting this as most of the huge yield reports are coming from areas that we knew were the best looking crops.  It will be interesting to see what happens as the harvest moves further North, especially into areas effected by early frost.  We would expect yield reports to less and less fantastic in the next few weeks.  We may even get to the point where we can legitimately question the huge national average yield estimates that are flying around the market right now.  There is also a question of planted acreage after a wet spring.  Some analysts are looking for a 500-800k reduction in acreage and this could further cut into the production number.  If this were to be the case, could we expect a mid-harvest rally off of lows?
 
If we were to get a mid-harvest rally off of lows it may be an opportunity for producers not only to sell cash corn higher but maybe to also add to the bottom line of sold bushels as well.  It is always a very tricky proposition to try to pick a top or a bottom in any market, however, and you would have to play your cards just right.  For this reason a more limited risk option strategy may be a useful tool.  If it is possible to spend 8-10 cents on a long options or long vertical spread trade that has a potential value of 60 cents this may be an interesting thought.  If you can define your risk to no more then 8-10 cents per 5,000 bushel and have a realistic 25-50 objective it may be a reasonable risk/reward proposition.  Keep in mind however, this is not a true hedge for producers.  It will not help protect the downside.  But, these are interesting times for grain marketing and if you can live with the risk it may be a way to add pennies (hopefully dimes) to corn bushels.
 
We currently have a strategy that we are looking at for producers who are looking for ways to do something like this.  Right now we think it is too early for something of this nature as we still have a big harvest in front of us.  However we do think this could be an opportunity at some point in the near future and we do have a specific set up we are looking for.  Give us a call if you would like to hear more about it.
 
Feel free to give me a call or shoot me an email if you would like to talk about your marketing plan, the markets, weather, or just to visit.   
 
December Corn Daily chart:

November Soybeans Daily chart:

December Wheat Daily chart:

All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.

In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!

Ted Seifried (312) 277-0113 or tseifried@zaner.com

Additional charts, studies, and more of my commentary can be found at: http://markethead.com/2.0/free_trial.asp?ap=tseifrie


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