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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Where is the Chinese Soybean Demand?

Posted on 7/2/2015 1:18:12 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

In the last two weeks grain markets have been sharply higher on concerns about corn and soybean crop conditions.  In Illinois we have just seen the wettest May and June on record.  Many other areas are in the same boat (quite literally) or worse.  We have watched corn and soybean conditions drop steadily since the NASS started reporting and some serious questions have been raised about soybean planted acreage.  However, amidst the production concerns and the supply driven rally in prices there may be something the trade is overlooking for now - new crop export demand.

At this time of year the trade is usually focused on trying to guesstimate the size of the corn and soybean crops in the ground.  When we have a production concern the trade can act like it has blinders on and only pay attention to weather.  This is rightfully so and we have a term for it - a weather market.  In the case of this year we have one of the more unusual production concerns, too wet.  While I am certainly not trying to downplay the severity of the issue at hand, the market rarely has a sustainable rally based on too wet conditions.  More often than not too wet conditions abate and crop production estimates begin to rebound.

This year may be different however.  It is likely the case that there has been some irreversible damage done to both the corn and soybean crops.  This could be a very big problem for corn as the USDA was looking for a very lofty (second highest on record) national average yield and corn plantings are the lowest in five years.  Soybeans have also likely seen some loss in yield potential with the excessive rains and late planting.  However, there is a lot of soybean acreage with some more acres still getting planted.  Record demand in the last few years has the market nervous about any hiccups in production, but what if demand is cooling off a little?

New crop soybean export sales is becoming a growing concern for me.  We are currently well behind the pace of sales we have gotten used to over the past few years.  And, the biggest player - China has been noticeably absent from the new crop soybean sales sheet.  This begs the question - Why isn't China buying like they have in the last three years?  As I see it there are two possible answers.  One, China may still be convinced that prices will ultimately go lower and they are waiting to buy cheaper.  Or two, China simply does not have as many soybeans to buy this year.  Or, a combination of both.

While it is possible that China is convinced that prices will be lower after the US harvest and when the outlook for the South American crop is more clear, it is not typical of China to buy anything all at once.  China usually, or at least in the last few years,  has very large quantities to purchase and likes to scale in.  If this were the case they would likely have gotten more aggressive on new crop soybean purchases with the soybean crop concerns building in the US.  The fact that China has been completely absent from the new crop soybean sales sheet n the last two weeks is of major concern to me.

It is possible that after the double drought year in 2012 (SA drought followed by US) China had depleted the vast majority of their soybean reserve stockpile.  Since then they have likely been working to replenish those reserve stocks which could account for some of the record soybean export demand we have seen in the last three years.  However, what if China has reached it's target of rebuilding the reserve stocks and will only need to go hand to mouth this year?  If this were the case it could mean a significant reduction in Chinese demand for soybean exports this year.

Now, it is very early to be getting too concerned about soybean export demand for next year.  There is a lot of time for demand to show up.  Right now the market is focused on production, and rightfully so.  However, if and when the production concerns start to simmer down we may take a look at demand and we might not like what we see.  The bottom like is that if China and other global soybean importers really are caught up on rebuilding soybean reserves we could see a significant reduction in export demand.  This could mean export demand closer to wheat we say last year (2013/2014 marketing season).  If this were the case it could mean that the USDA is 100-220 million bushels high on the demand side of the balance sheet and could offset much or all of a drop in production.

Please give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action.  Ted Seifried - (312) 277-0113.  Also, 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.  Follow me on twitter @thetedspread if you like. 

July Corn Daily chart:

July Soybeans Daily chart:

July Wheat Daily chart:

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


Corn Market Starting to Worry about Corn Yield

Posted on 7/2/2015 12:06:44 PM by: Ted Seifried, VP, Ag Hedging @ Zaner. 312-277-0113.

For months now we have been talking about how difficult it would be this year to hit the USDA's target of 166.8 national average yield for corn.  Initially this assumption was based on statistical analysis but in the last 2 months weather has also given us reason for concern.  On top of the wet weather it also seems that with low corn prices some producers may have been a little less willing to spend the kind of money it took to grow last year's record crop.  So what does a lower yield mean for the corn market?

From a statistical point of view, we have seen corn yields fall 11-12 bushels an acre on average in years after setting a new corn yield record.  The last two examples, 2004 and 2009 were both followed up by national average yields that were about 12 bushels an acre lower in their respective follow-up years (2005,2010).  Short cuts on input cost may be an issue as well as some, certainly not all, producers may have had a hard time justifying some of the higher $ input costs.  So before we even started to plant corn this year the potential may not have been as good as last year's crop.  Then it started to rain and aside from a few brief pauses it has not stopped.  Crop conditions have fallen and planted acreage remains a question.

For corn a lower national average yield has a significant impact on production because of the fewer acres planted.  Currently we are running 3 balance sheet based on different yield estimates and slightly different demand structures.  The range of our ending stock estimates are 1.18 billion to 1.45 billion bushels.  This is with a range of yield estimates between 162 on the high end an 159 on the low end.  If yields were to fall much below 159 the corn balance sheet would get pretty tight.  Keep in mind that a 155 national average yield is slightly above the 10-year average.

The bottom line is that we could still have what should be considered a very good corn crop yet still have a tight balance sheet.  There is still a lot of time for weather to get better, but we may need to see a near perfect rest of the growing year to avoid having a tight balance sheet.  At this point most of the trade is now seeing what we have been saying for a while -  that the USDA's 166.8 national average yield estimate is likely too high, maybe much too high. 

Please give us a call if you would like more info on the strategies we are using or if you would like to set up an account to put a plan in action.  Ted Seifried - (312) 277-0113.  Also, 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.  Follow me on twitter @thetedspread if you like. 

July Corn Daily chart:

July Soybeans Daily chart:

July Wheat Daily chart:

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


06/30/2015 Beans have a buy signal

Posted on 7/1/2015 1:23:12 PM by: Larry Baer, Market Strategist @ Zaner. 312-277-0112.

Call me for trade



06/30/2015 Beans have a buy signal

Posted on 7/1/2015 1:23:04 PM by: Larry Baer, Market Strategist @ Zaner. 312-277-0112.

Call me for trade



GRAIN REPORT BULLISH FOR BEANS AND CORN WHILE BEARISH FOR WHEAT BUT:

Posted on 7/1/2015 6:52:46 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  OVER 41 YEARS AND TRUST NO ONE MORE THAN TED AND HIS GROUP.

 

 

Sharply higher closes for Minneapolis, Kansas City and Chicago wheat along with oats, corn, soybeans, soybean meal and soybean oil off the acreage and grain stocks. However, the wheat was not bullish and the estimates for the grain complex were within the ranges forecast. The one thing that helped the grains go further than they normally would have is the announcement that the there will be a resurvey in Kansas, Missouri, Texas and Arkansas which will keep us guessing on the planted area estimates longer than normal. With that being said, technically you can add the wheat complex, corn and rice to my BUY SIGNALS. I feel this is a gift to wheat farmers to add on to their hedges . I foresee the wheat complex coming  back down with the bean complex lagging behind. Naturally, weather will continue to play a part in this scenario. I feel we need to see the action for a little while in order to, hopefully, get a better handle on what lies ahead. Either way, you can't really go wrong doing some hedging if the pricing is right for you. Trying to catch tops and bottoms is more luck than anything else as far as I'm concerned. Oats are now in a good looking resistance area and need to close over three dollars for a longer term move in my opinion. Rice had a great close but also is in some resistance making we want to see a settlement over 1070 first. Corn broke through quite a lot of resistance and now needs to settle over 450 which is where our hedge department thought it could go to. I now need to see the beans  settle over 1040 based on its weekly chart not trusting them to go too much further and then eventually drop back down. Meal has led the way up recently and should eventually lead the way back down. Oil has been dragged higher lately. To repeat, I would wait probably at least a week to get a better handle of the where the grain complex is possibly headed so as not to get faked out. Of course, this plan of action is easier said than done! BUY SIGNALS FOR MINNEAPOLIS, KANSAS CITY, CHICAGO WHEAT, SOYBEANS, SOYBEAN MEAL AND SOYBEAN OIL ALONG WITH OATS, CORN AND ROUGH RICE. For additional charts, quotes, news, commentary & more, sign up for a FREE 30 -day trial to markethead.com.

 


GRAIN REPORT BULLISH FOR BEANS AND CORN WHILE BEARISH FOR WHEAT BUT:

Posted on 7/1/2015 6:52:33 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  OVER 41 YEARS AND TRUST NO ONE MORE THAN TED AND HIS GROUP.

 

 

Sharply higher closes for Minneapolis, Kansas City and Chicago wheat along with oats, corn, soybeans, soybean meal and soybean oil off the acreage and grain stocks. However, the wheat was not bullish and the estimates for the grain complex were within the ranges forecast. The one thing that helped the grains go further than they normally would have is the announcement that the there will be a resurvey in Kansas, Missouri, Texas and Arkansas which will keep us guessing on the planted area estimates longer than normal. With that being said, technically you can add the wheat complex, corn and rice to my BUY SIGNALS. I feel this is a gift to wheat farmers to add on to their hedges . I foresee the wheat complex coming  back down with the bean complex lagging behind. Naturally, weather will continue to play a part in this scenario. I feel we need to see the action for a little while in order to, hopefully, get a better handle on what lies ahead. Either way, you can't really go wrong doing some hedging if the pricing is right for you. Trying to catch tops and bottoms is more luck than anything else as far as I'm concerned. Oats are now in a good looking resistance area and need to close over three dollars for a longer term move in my opinion. Rice had a great close but also is in some resistance making we want to see a settlement over 1070 first. Corn broke through quite a lot of resistance and now needs to settle over 450 which is where our hedge department thought it could go to. I now need to see the beans  settle over 1040 based on its weekly chart not trusting them to go too much further and then eventually drop back down. Meal has led the way up recently and should eventually lead the way back down. Oil has been dragged higher lately. To repeat, I would wait probably at least a week to get a better handle of the where the grain complex is possibly headed so as not to get faked out. Of course, this plan of action is easier said than done! BUY SIGNALS FOR MINNEAPOLIS, KANSAS CITY, CHICAGO WHEAT, SOYBEANS, SOYBEAN MEAL AND SOYBEAN OIL ALONG WITH OATS, CORN AND ROUGH RICE. For additional charts, quotes, news, commentary & more, sign up for a FREE 30 -day trial to markethead.com.

 


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