FCStone Blog: Posts http://www.intlfcstone.com/Blog/Lists/Posts/AllPosts.aspx RSS feed for the Posts list. Fri, 18 May 2012 18:18:37 GMT Microsoft SharePoint Foundation RSS Generator 60 en-US INTL FCStone Blog: Posts http://www.intlfcstone.com/Blog/_layouts/images/homepage.gif http://www.intlfcstone.com/Blog/Lists/Posts/AllPosts.aspx Good, old-fashioned weather market ahead – May 18, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4254 Body:

CORN: STEADY - BETTER
The market continued higher yesterday as rain chances dissipate for the weekend. A very strong cash market also supported the front end of the market. Funds were also noted buyers of 7K contracts. Overnight we opened lower and then traded higher in spite of weakness in the bean market. Technically, July has reached a short term goal of $6.30, but a close above $6.37 (the 100-day moving average) may bring out more enthusiasm. Support for July is $6.16 and then $5.90. Resistance is at $6.32 and then $6.58. Commercials and funds continue to be good buyers on breaks. Farmer selling is light in the old crop, but picking up in the new crop. It looks like we are heading into a good old-fashioned weather market.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/18/2012 8:54 AM
]]> Jill Borich Commodities; Grains and Oilseeds Fri, 18 May 2012 13:55:27 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4254 Morning Grain Comments – May, 18, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4253 Body:

Dalian soybean futures continued their month-plus decline overnight, now over the equivalent of $1/bushel off early-April highs; that has slowed CBOT beans’ momentum during a generally bullish week for the grain complex. The bulls have been pointing to rapidly warming U.S. growing area temperature forecasts this week, and this morning’s outlooks are certainly doing nothing to alleviate those concerns, particularly starting Memorial Day Weekend and beyond. One interesting point from the overnight session was the equality of CBOT corn, beans, and wheat in terms of trade volume; we’ve watched as soybeans have dominated trade (and subsequently led the grain complex) over the last couple weeks, but aggregate totals from all three commodities overnight were in the 21-23k range.

Argentina’s Ag Ministry yesterday cut their soybean production estimate by another 1.4 million tonnes, to 41.5 MMT; that’s still above the Rosario Exchange’s 40.9 MMT and the BA Exchange’s 41.0 MMT, but below the USDA’s 42.5 MMT number last week. 2011/12 corn output was trimmed by 200k tonnes to 20.1 MMT (the USDA also tops that estimate range, at 21.5 MMT), with the wheat harvest dropped by a similar amount to 13.2 MMT (the USDA remains up at 14.5 MMT).

Chinese researcher Grain.gov.cn said in a report today that the country’s soybean crush capacity would rise to 120 million tonnes in 2012, with 12.5 MMT of that added or under construction this year; of course only about half that capacity is utilized annually.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/18/2012 8:50 AM
]]> Jill Borich Commodities; Grains and Oilseeds Fri, 18 May 2012 13:51:19 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4253 Agricultural expert outlines ways to double food production by 2050 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4252 Body:

“Countries around the world need to increase agricultural production as soon as possible, as demand for food will double in coming decades, say a renowned international agricultural scientist.

Like countries throughout the world, Malaysia will need double its current food production by 2050 due to population growth and rising living standards.”

http://www.newstrackindia.com/newsdetails/2012/05/17/289-Agricultural-expert-outlines-ways-to-double-food-production-by-2050.html

Category: Agriculture
Published: 5/17/2012 5:35 PM
]]> FCSTONE\monica.knott Agriculture Thu, 17 May 2012 22:36:50 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4252 European Morning Comments – May 17, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4251 Body:

Energy futures fell again yesterday as continued banking problems in Greece caused the entire market to fall. The ECB confirmed yesterday that they have stopped providing refinancing to Greek banks and thus as a result they are undercapitalized. Adding to this is the fact that Greece will be having fresh elections next month where the likely result will be the more extreme parties continue to gain ground. The bearish DOE inventory report did briefly put crude prices in the black where inventories only rose by 2.1 million barrels against the 6.6 million expected but Euro-Zone fears dragged the price back down. Turning to last night’s closing levels, Brent crude closed out the session at $111.71 down $0.53. WTI crude closed out the session at $92.81 down $1.17. Gasoil closed at $931.50 down $0.75 while UK Nat Gas closed at £54.98, down £0.35.

The Euro is trading higher on Thursday, extending the bull momentum sparked after yesterday’s close in the NA session. News from the Greek front is posed to still dominate the markets today, as data in Europe will be absent due to Ascension Day. Spanish 2015 and 2016 bond auctions would also be in the investors’ focus of attention considering the higher yields as of late. EUR/USD is advancing 0.16% at 1.2743 as of writing, with resistance at 1.2759 (intraday high) ahead of 1.2800 then 1.2822 (Lower Bollinger) and 1.2870 (high May 15).On the flip side, a dip below 1.2682 (trend low May 16) would bring 1.2648 (low Jan.17) then 1.2624 (Low Jan.13) and 1.2600.

Equities closed lower across the board yesterday with the FTSE closing at 5405.25 down 32.37. The DAX which has just opened is trading at 6418.5 up 58.5 in early trading. In the US the DJIA closed at 12598.55 down 33.45 while the S&P closed at 1324.80 down 5.86. Gold is trading at 1551.20 while Silver is at 27.70. In economic data today we have only Spanish GDP data out in Europe due to a public holiday in many European countries. We also have a Spanish bond auction which should be interesting. Over in the U.S. we have Leading Indicators and the Philly Fed data.

For Brent crude we draw first resistance at $110.00 followed by $111.00. On the downside we draw first support at $109.00 followed by $108.00.

For Gasoil we draw first resistance at $930.00 followed by $935.00. On the downside we draw first support at $922.00 followed by $918.00.

Jaime Miralles

Category: Commodities; Europe; Grains and Oilseeds
Published: 5/17/2012 9:24 AM
]]> Jill Borich Commodities; Europe; Grains and Oilseeds Thu, 17 May 2012 14:25:47 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4251 Morning Dairy Comments – May 17, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4250 Body:

Markets:

AM price moves: USD +0.126 @ 81.650, Euro -15 @ 1.2709, Crude +0.14 @ 92.95, Copper +0.0310 @ 3.5160, Gold -10.7 @ 1,547.3,  Dow futures +16 @ 12,590, S&P +2.10 @ 1,324.50, NZ Dollar -4 @ 0.7626, Yen -11 @ 1.2448, Canadian -18 @ 0.9863

General:

  • Reports suggest the JP Morgan loss might grow- and in other news the sky is blue
  • Japan’s economy grew faster than expected with reported 4/1% annualized growth Jan-March
  • Draghi wants Greece to stay but they might be gone sooner rather than later- and this comes before even we thought someone would depart the EU- some say chances of “soon” are 60%
  • Spanish borrowing costs rose again
  • Today’s reports and the week ahead at a glimpse:

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http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012095.pdf

5/16 Class III Futures:  Volume: 1,361 Open Interest (OI) Change: +105 Total OI: 26,709

5/16 Class III Options:  Est. Put Volume: 340 Total OI:  34,351  Est. Call Volume:  255 Total OI:  31,583

5/16 Other Dairy Futures Volume:   Butter: 67 Dry Whey: 77 NFDM: 75 Class IV: 22 Cheese: 123

5/16 Individual Class III Futures Prices, Change, Volume & Open Interest

May 12               $15.26             UP 1             Vol: 34           OI Change:              DOWN 12

June 12              $15.25            UP 38            Vol: 807            OI Change:             UP 36

July 12               $14.84             UP 11            Vol: 357            OI Change:             UP 46

Aug 12               $15.19            UP 7               Vol: 102            OI Change:              UP 22

May to July Class III Avg.        $15.12            UP $0.17

May to July Class IV Avg.        $13.64 UP $0.02

Dairy: Class III and Cheese

Spot Markets:
 

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The charts look like they might be forming a bottom. The rally however looks like a lot of short covering in Class III and Cheese futures. Nearby months (really only June) are moving aggressively, all others are stagnant of appear to be dragged along kicking and screaming; like a child who has gone boneless not wanting to walk but is being dragged along by a parent. 59% of yesterday’s Class III volume was in June but OI only moved up 36 contracts. We don’t see this really as long term sustainable and neither do the futures based on the action described above. Milk is still abundant, global prices are still under pressure and schools let out soon.

Overnight 25 Class III contracts traded with June up a penny, May down 10, and July down 8. Cheese futures traded 3 times steady to slightly lower and Class IV traded four times at unchanged.

We look for class III futures to open mixed.

NFDM, SMP, WMP:
CWAP number reported to you yesterday morning caused a flurry of futures trades (75) and falling prices. Traders realized the rumored “tightening” last week is unlikely and prices remain under assault in order to move volumes of significance- it’s still a bear out there in powder land. People are buying discounts and it is taking big discounts to get it moved and we fervently believe inventories are still growing.

We look for NFDM to open lower.

Butter:

The spot butter market has moved 5.5 cents from its $1.30/lb bottom but yesterday it finally found sellers as it gained on the day but closed off its highs. Weekly cold storage holdings increased for the 7th straight week. Buyers have come in buying the substantial price break seeing attractiveness relative to budgets, CWT has contributed to the rally as well but CA milk plants are still full…enough said.

We look for butter to open weak.

Dry Whey:

We look for dry whey to open mixed.

Grains:
USDA said private exporters had reported sales of 900,000 metric tons of corn to China, including 180,000 metric tons for 2011-12 and 720,000 metric tons for 2012-13. Most of that volume was revised from previously reported unknown destinations, but 240,00 metric tons were new sales. Increased ethanol production added support. And on that news the grains bounced upward again. It is a rally we feel to be sold but $6.00 July corn and $5.00 Dec corn are going to be tough levels to break and remain below- end users should be buying some calls on pressured price days.

We look for corn to open 1 to 2 lower, soybeans to open 6 to 8 higher, meal to open 1.0 to 2.0 higher and wheat to open 2 to 4 higher.

Robert Chesler

Category: Commodities; Dairy
Published: 5/17/2012 8:33 AM
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]]> Jill Borich Commodities; Dairy Thu, 17 May 2012 13:34:38 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4250 Wheat continues to rally on weather concerns – May 17, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4249 Body:

WHEAT: HIGHER
Yesterday got the attention of traders and producers alike as wheat rallied over 28 cents and broke through the $6.50 level in the Kansas City July contract. Overnights did not give up, adding another 3 ¼ cents. This morning look for wheat to continue to rally on weather concerns. At this stage of the crop season, the market has become primarily a weather sensitive market. With a dry, hot outlook the bulls are wondering how high this market can go, as we are still waiting on what should be a very strong crop, historically. Continued rumblings on poor conditions in Europe have many lowering estimates on what is looking like a gloomy season. Strategie Grains lowered their EU soft wheat estimate to 122.7 MMT, down 4.2, because of frost and dryness for most of the region. Look to sell rallies as wheat should remain favorable on lingering weather concerns.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/17/2012 8:17 AM
]]> Jill Borich Commodities; Grains and Oilseeds Thu, 17 May 2012 13:18:21 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4249 Morning Grain Comments – May 17, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4248 Body:

The grains finished mixed this morning but it was a well-supported overnight session in general, following yesterday’s closing rally; hot and (in places) dry U.S. weather forecasts are already raising anxiety, with 30+ million acres of corn & beans still to plant. The U.S. did lose out on some export business overnight, but the ’11/12 contracts remain hot commodities.

Tokyo-based import execs said that Japan has only covered one quarter of its feed corn needs for July-Sep, with traders hesitant to buy due to high prices; they did purchase 500k tonnes of South American corn for July-Sep today, though, with more purchases reportedly in the works. Japan took 300k tonnes from Brazil and 200k from Argentina, with Brazil cheaper than U.S. supplies for that period, and Brazil likely to be the origin for any upcoming lots as well.

Philippine importers bought three cargoes (162k tonnes) of Australian feed wheat at $271-272/tonne for Sept-Oct shipment; Japan bought 159k tonnes of milling wheat in their regular weekly tender as planned, including 106k tonnes from the U.S., 21k from Canada, and 32k from Australia; and Jordan bought 50k tonnes of optional-origin wheat in a tender for 100k this morning.

China will sell 600k tonnes of beans from reserves a week from today, as part of a previously-announced plan to drop 3 MMT of ‘08-10 beans from stocks.

Strategie Grains cut their European Union soft wheat estimate by another 4.2 MMT due to frost and dryness damage, to 122.7 MMT; it was the third straight monthly decline, down from their initial 133 MMT. The USDA has the soft wheat crop pegged at 132.0 MMT. Germany’s harvest received. Strategie’s steepest cut, down 1.6 MMT, with Poland down 1.4 MMT and France losing 600k tonnes. EU-27 corn output was increased slightly (+200k tonnes) to 65.6 MMT due to some higher plantings replacing winter wheat; total grain production of 278.8 MMT was down 4 MMT from last month.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/17/2012 8:06 AM
]]> Jill Borich Commodities; Grains and Oilseeds Thu, 17 May 2012 13:07:31 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4248 Seeds boost to increase food production in Kenya http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4247 Body:

“KENYA will be among eight countries that will benefit from an alliance seeking to strengthen the capacity of seed industries in Africa. The move will see farmers access affordable, reliable, high quality seeds and quality planting materials.”

http://www.the-star.co.ke/national/national/75869-move-to-strengthen-seed-industries

Category: Agriculture
Published: 5/16/2012 5:07 PM
]]> FCSTONE\monica.knott Agriculture Wed, 16 May 2012 22:08:26 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4247 Africa Must Increase Food Production To Keep Up With Economic Growth: Report http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4246 Body:

“A report released Tuesday by the United Nations Development Program (UNDP) argues that Africa must increase its agricultural productivity in order to keep up with promising rates of economic growth. Africa has seen economic progress in recent years, reports the World Bank. In 2011, GDP in sub-Saharan Africa expanded by an encouraging 5 percent across the region. A growth rate of 5.5 percent is expected for 2012, and exports are on the rise. Furthermore, the UNDP notes that sub-Saharan Africa has an abundance of natural agricultural resources.”

 http://www.ibtimes.com/articles/341351/20120515/africa-food-development-agriculture-un-report-famine.htm

Category: Agriculture
Published: 5/16/2012 5:06 PM
]]> FCSTONE\monica.knott Agriculture Wed, 16 May 2012 22:07:52 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4246 USD’s strength causes problems in commodities – May 16, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4245 Body:

SOYBEANS: LOWER
The USD’s strength is causing problems in commodities. Crude is diving down, headed for $90? The USD index is above 81. December 2011 is the only spot higher in almost the last two years and that was only 0.300 ticks higher than where we have been today. More panic or prudent movement from the Euro to the USD can easily get us there. Greece is on the cusp of leaving and/or defaulting. Brazilian prices continue to encourage sales there and additional bean acreage next year. Spreads are attempting to make it to a carry market in early new crop spots. Old crop is taking a little off the top on the inverse, but with lower prices and additional Chinese business, that is likely an anomaly. Basis should continue to firm with exports and likely increases in hog and chicken production. Finally, we have returned to our daily dose of Chinese business, only it is corn this time. Beans may get a sympathetic rally from corn. OI: B/+4,602; M/+3,189; O/+6,346. OC: B/-10 to -13; M/-3.5 to -4.0; O/-0.75 to -0.90.

Overnight trade settled 16 lower in SN12.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/16/2012 8:20 AM
]]> Jill Borich Commodities; Grains and Oilseeds Wed, 16 May 2012 13:21:08 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4245 Morning Dairy Comments – May 16, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4244 Body:

Markets:

AM price moves: USD +0.120 @ 81.500, Euro -9 @ 1.2727, Crude -1.29 @ 92.69, Copper -0.0500 @ 3.4720, Gold -20.6 @ 1,536.5,  Dow futures +10 @ 12,605, S&P +4.40 @ 1,332.60, NZ Dollar -31 @ 0.7651, Yen -30 @ 1.2429, Canadian -36 @ 0.9911

General:

  • Crude oil futures continue to plummet along with most ‘things’ as the USD remains strong amid EU concerns
  • Greece continues to dominate the headlines and trigger a stronger USD and weaker stocks in the EU, this time the country is at an impasse on a governing coalition. A problem which could delay international aid and has increased fears of Greece exiting the EU
  • The Bank of England increased their inflation outlook, targeting an increase above 2% over the next year which is higher than expected a few months ago
  • A bit of good news as UK unemployment benefit claims fell 13,700 to 1.59 million the largest drop in nearly 2 years; unemployment came in at 8.2% a slight decline from the previous 8.4%
  • Today’s reports and the week ahead at a glimpse:

clip_image002

http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012094.pdf

5/15 Class III Futures:  Volume: 758 Open Interest (OI) Change: +50 Total OI: 26,605

5/15 Class III Options:  Est. Put Volume: 186 Total OI:  34,391  Est. Call Volume:  117 Total OI:  31,573

5/15 Other Dairy Futures Volume:   Butter: 93 Dry Whey: 49 NFDM: 6 Class IV: 28 Cheese: 206

5/15 Individual Class III Futures Prices, Change, Volume & Open Interest

May 12           $15.25           UP 1            Vol: 88          OI Change:             DOWN 27

June 12          $14.87           UP 17           Vol:  357           OI Change:            UP 28

July 12           $14.73            UP 6            Vol: 183            OI Change:            UP 23

Aug 12           $15.12            DOWN 1          Vol: 43          OI Change:           UP 11

May to July Class III Avg.        $14.95             UP $0.08

May to July Class IV Avg.        $13.62 UP $0.13

Dairy: Class III and Cheese

Spot Markets:
 

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Class III futures were nearly silent over managing just a handful of trades leading into the day session. 758 contracts managed to trade in a missed session that saw only the August contract settle with a loss, dropping just a penny. The remainder of the 2012 contracts settled between one and 17 cents higher with June the big winner.

The trading volume tapered off significantly past the August contract, as the market was content to remain within yesterday’s trading range for most of the monthly contracts. The spot cheese session did little to sway traders as both the blocks and barrels closed out the day unchanged with just a single trade posting in the barrels. The cheese futures traded in much the same fashion, failing to post any big moves either direction. The cheese market finished mixed with settlement prices ranging from down ½ cent in September to up 1.6 cents in June. Could this be the calm before a storm? Only time will tell, but these markets look poised for a breakout move in the coming days.

While Class III was nearly unanimously higher cash cheese futures were mixed with nearby months June, +0.016 and July +0.010 while deferred contracts were almost all lower. Only Nov closed higher by 0.001 and other months from August through February were -0.002 to -0.005 on solid volume of 206 contracts. Class IV saw a large bounce with May through September up 12 to 19 cents and Q2 of 2013 up by 6 to 13 cents with volume at 28 total trades.

Overnight Class III futures were 3 to 9 higher on slow volume of just 10 total trades by 6:30 Chicago time.

We look for Class III futures to open mixed.

Results of the GDT auction:

Prices below reflect the value across all contracts:

· Anhydrous Milk Fat (AMF) average price:  $2,499 /MT ($1.1335/lb.) ($0.9086 /lb., adjusted to 80% butterfat equivalent)

· Butter Milk Powder (BMP) average price:  No Product was offered

· Cheddar average price:  $2,857/MT ($1.2959/lb.)

· Milk Protein Concentrate 70 average price:  $3,940 /MT ($1.7872 /lb.)

· Rennet Casein average price:  $6,244 /MT ($2.8323 /lb.)

· Skim Milk Powder average price:  $2,573/MT ($1.1671/lb.)

· Whole Milk Powder average price:  $2,546/MT ($1.1549/lb.)

​​​​

NFDM, SMP, WMP:
Not much action again in the NFDM market as only 6 contracts managed to trade on the day. Of the four contract months able to show some life, prices all fell lower. Price drops ranged from .500 cents in June to down 2.5 cents in November. The results of the GDT auction reflected the sentiment that we have held for quite some time that the NFDM market is inherently bearish, with further declines expected in its future. The skim milk powder GDT price fell 7.12 cents from May 1st auction, while the WMP price dropped 10.43 cents. While GDT was unsupportive the CWAP numbers were flat out bearish. The weekly price came in at $1.1574 a massive 9.57 cent decline (-7.6%) week over week. Total volume was back above the 20 million pound mark as well at 20.5. That pricing announcement trigged heavy volume overnight as 25 total trades have occurred by this morning and prices are steady to 2.00 cents lower from May through September.

We look for NFDM to open lower.

Butter:

The spot butter market continues to defy logic by posting yet another gain, this time in the amount of 1.25 cents, to settle at $1.3525. The spot session triggered reactive buying that pushed the futures between .750 cents to 2.5 cents higher throughout all of the 2012 contracts on 93 total trades. Much like with the NFDM market, fundamentally, one would tend to believe that all the excess milk production of late would have been driven towards the more storable products, such as butter, thereby increasing the available supply and pushing prices lower but sellers on the CME spot market seem to be very willing to let the price move higher while they can. That should be coming to an end soon as the GDT auction tells the story. The AMF average price lost 11.9% across all contracts from the previous auction while, when adjusted for an 80% butterfat equivalency, posted a loss of 12.84 cents and falling sharply below $1.00. We still believe that the current rally is nothing more than an ideal opportunity for market shorts as prices should resume their downward tract in the coming weeks.

We look for butter to open mixed.

Dry Whey:

We look for dry whey to be mixed.

Grains:
A hectic day for the grains markets as the entire complex came into the day posting higher pricing established in the overnight session on concerns of a dry forecast for the U.S. Once the market opened for the day session, the grains gave back much of the overnight gains, with corn actually turning negative, if but only for a moment. The July corn closed out the day up 14 ¼ cents at $5.97 ¼, triggered by technical buying interest and strong feed demand. The July beans jumped 26 cents higher to settle at $14.13, paving the way for the surge higher in the grain complex. The July wheat closed 10 ½ cents higher at $6.08 ½. Traders will be keeping close watch on the weather forecasts over the next couple weeks as continued, above normal temperatures will cover much of the U.S.

We look for corn to open 2 to 5 lower, soybeans to open 12 to 17 lower, meal to be down 3 to 5 and wheat to open steady to 3 lower.

Robert Chesler

Category: Commodities; Dairy
Published: 5/16/2012 8:03 AM
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]]> Jill Borich Commodities; Dairy Wed, 16 May 2012 13:04:50 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4244 Morning Grain Comments – May 16, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4243 Body:

Beans remain the clear leader of the grain complex, taking back a chunk of yesterday’s turnaround with a double-digit decline overnight and twice the volume of corn. The dollar is nearing a 20-month high, crude continues to struggle at a 6+ month low, and China soy futures reverted to a two-month bottom; ‘12/13 global production is off to the best start possible.

South Korea bought 60,000 tonnes of optional-origin corn from Marubeni overnight, at $259.50/ton, for delivery by December—it’s the lowest price they’ve paid this year, below yesterday’s purchase of U.S. Nov corn at $276.

Indonesia is once again issuing feed corn import permits due to inadequate supply, after two months of no imports amid the country’s harvest; 200k tonnes are set to arrive from India in the next months. Indonesia’s annual corn imports have increased to 2-3 MMT in recent marketing years, though very little of that has been shipped from the U.S. (including none in 2011/12).

The CNGOIC sees Chinese corn production at a record 197.5 MMT in 2012, up 3% from 2011, with acreage up just short of 3% at 34.3 million hectares (84.8 mln acres); wheat and rice output were also seen slightly higher in this season’s initial estimate, though the soybean crop is expected to drop 7% to 13 MMT in ‘12/13. 2011/12 soybean imports were estimated at 58 MMT, up 11% from last year’s 52.34 MMT, with ‘12/13 imports totaling 60 MMT; corn imports are seen at 5.5 MMT in ‘11/12 and 6.0 MMT in 2012/13.

Mexico’s Ag Min sees total corn output for 2012/13 at 22.56 MMT, up sharply from LY and 1.6 MMT above the USDA; spring/summer corn is seen up 13% this year to 16.8 MMT, with fall/winter harvest up 32% to 5.76 MMT.

Oil World yesterday pegged global ‘12/13 soy production at 274.3 MMT, nearly 3 MMT above last week’s initial USDA, and 16% above the 237.5 MMT 2011/12 crop. Oil World has Brazil output at 78 MMT next year, even with the USDA and up 19% on the year, with Argentina at 55 MMT, also matching the USDA and a full 14 MMT above the 2011/12 crop. 2012 U.S. acreage is seen well above the USDA at 75.8 million, with production at 88.7 MMT (3259 million bushels), 1.5 MMT (59 mbu) above the initial USDA.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/16/2012 7:50 AM
]]> Jill Borich Commodities; Grains and Oilseeds Wed, 16 May 2012 12:51:31 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4243 UK science base insufficient to meet food security challenge, report warns http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4242 Body:

“Sustainable Food, a report by a group of cross-party MPs, said the government must take a more active role in directing research to ensure we have the science base to deliver food security and sustainability.”

http://www.fwi.co.uk/Articles/14/05/2012/132873/UK-science-base-insufficient-to-meet-food-security-challenge-report-warns.htm

Category: Agriculture; Europe
Published: 5/15/2012 5:44 PM
]]> FCSTONE\monica.knott Agriculture; Europe Tue, 15 May 2012 22:45:18 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4242 Dryness in forecast prompts wheat markets – May 15, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4241 Body:

WHEAT: HIGHER
Wheat traded both sides of the market yesterday closing positively with a 4 ½ cent gain. Overnights built on yesterday’s momentum, nearly doubling gains at 8 ½ cents. There has been concern over areas of dryness and with little significant moisture in the current forecast, it is prompting the markets as well as predicted conditions. This week the USDA lowered its winter wheat good/excellent three percentage points down 60% (still 10% better than the five-year average). Kansas took a large blow in conditional rating, losing 8%, now at 52% through the state. This is enough to help give wheat a little boost and entice some producer selling as we enter the early stages of harvest. Crude seems to have leveled off (at least for the moment), showing a 41-cent gain, and the USD is just slightly higher.

Overnight trade settled 8 ½ higher in KWN12.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/15/2012 8:37 AM
]]> Jill Borich Commodities; Grains and Oilseeds Tue, 15 May 2012 13:38:17 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4241 Morning Dairy Comments – May 15, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4240 Body:

Markets:

AM price moves: USD -0.008 @ 80.740, Euro +5 @ 1.2850, Crude -0.05 @ 94.73, Copper -0.0165 @ 3.5375, Gold +0.6 @ 1,561.6,  Dow futures +58 @ 12,713, S&P +7.20 @ 1,341.30, NZ Dollar -25 @ 0.7736, Yen -9 @ 1.2516, Canadian +22 @ 0.9985

General:

  • The Dow fell yesterday for its 8th time in 9 sessions
  • It was a risk off day amidst a string of such days and thus the trend has definitely changed- a bounce should be coming and we feel it would be wise to sell such an event
  • Euro zone GDP came out steady on a quarterly and yearly basis, saved by Germany returning to growth of 0.5% in Q1 vs. the last quarter of 2011
  • Japan’s CPI to turn positive in 2013 according to Credit Suisse estimates ending a streak of declining prices seen since 1994
  • Filings from China show that 45% of companies are showing a slowdown in activity leading to weaker earnings or projected losses for the first half of the year
  • Gold futures at lowest levels in 4 months; and the charts point to further declines
  • USD sees longest rally since 2008 (11 straight gaining sessions), just look at the weekly chart below:

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  • Today’s reports and the week ahead at a glimpse:

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http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012093.pdf

5/14 Class III Futures:  Volume: 978 Open Interest (OI) Change: +107 Total OI: 26,556

5/14 Class III Options:  Est. Put Volume: 166 Total OI:  34,374  Est. Call Volume:  344 Total OI:  31,584

5/14 Other Dairy Futures Volume:   Butter: 42 Dry Whey: 35 NFDM: 1 Class IV: 0 Cheese: 247

5/14 Individual Class III Futures Prices, Change, Volume & Open Interest

May 12         $15.24          DOWN 2          Vol:  47            OI Change:           DOWN 11

June 12        $14.70          DOWN 19        Vol:  439           OI Change:            DOWN 24

July 12          $14.67          DOWN 22        Vol: 327           OI Change:            UP 142

Aug 12          $15.13          DOWN 9           Vol: 71            OI Change:            DOWN 10

May to July Class III Avg.        $14.83             DOWN 18

May to July Class IV Avg.        $13.49 UNCHANGED

Dairy: Class III and Cheese

Spot Markets:

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Monday started with a whimper:

Milk and cheese futures started up Sunday night and faded gently into Monday morning’s session. Losses were exasperated when spot cheese failed to continue its price increases from last Friday. We’ve said it before and we’ll say it again; bulls need to be fed- and Monday’s action did not feed any bulls. However, it was what we would call an inside day in many contracts, meaning that price action did not break out above or below the price range from the previous day’s session and that can “negate” the trading merit. If you follow that path then Tuesday should return to the upward and we don’t doubt its possibility in the short term- this is a bounce, we see it as an opportunity. Strong demand over the last couple months should be seen as inventory building in many respects and not bullish consumptive patterns to be carried through unless we get some serious heat we will still have milk backing up for some time. For now the market is consolidating before the next big move; GDT could be a market influencer later today.

Overnight the market was relatively quiet as 11 trades have taken thus far across Class III futures and prices are steady to 7 higher.

We look for milk to open mixed.

NFDM, SMP, WMP:

NFDM traded only one time yesterday in a mixed price session. We’ve seen the bounce, we think it was a bit of a dead cat and now we look for more market moving intel; we suspect that today’s GDT will be one of those factors and we are bearish on SMP on GDT.

We look for NFDM to open soft.

Butter:

Spot butter continued its recent climb upward and futures climbed along; as much as 2 cents (July) but on light volume. With all the milk going into full butter plants and all the butter that has made its way into the cooler of late we wonder why the market is moving upward; we’ll write it off as a sell side opportunity as $1.30 is now major support.

We look for butter to open steady.

Dry Whey:

We look for whey to open firm.

Grains:

Risk off and new crop corn found its water mark nearing an even $5.00/bu. Beans plunged early and rebounded and plunged again only to find buying late in the day as funds are active in an extreme liquidation scenario; corn never really had too much pressure and we anticipate a short term pop here with July potentially testing the $6 mark again- but we see longer term weakness still to come. Even the crop progress reports out late couldn’t force early overnight pressure upon the grain markets. Corn was reported at 87% planted vs. 71% last week, 56%b last year and 66% on average. Beans came in 46% planted vs. 24% last week, 17% last year and 24% on average. We have an ideal planting scenario.

We look for corn to open 4 to 6 higher, for beans to open 15 to 20 higher, for meal to open 5.0 to 8.0 higher and for wheat to open 8 to 10 higher.

Robert Chesler

Category: Commodities; Dairy
Published: 5/15/2012 8:09 AM
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]]> Jill Borich Commodities; Dairy Tue, 15 May 2012 13:09:51 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4240 Morning Grain Comments – May 15, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4239 Body:

It’s no surprise that the Monday/Tuesday overnight session action once again completely defied yesterday’s Crop Progress results (save for a winter wheat condition decline); ideas of a perfect start for the nation’s crops has given way to dryness/drought concern this morning, though the rally doesn’t feel like it has a whole lot of momentum behind it at this point.

Japan issued a regular tender today for 158,753 tonnes of milling wheat, including 106k tonnes from the U.S., 21k from Canada, and 32k from Australia.

South Korea bought 56k tonnes of U.S. corn for November arrival this morning at $275.65/tonne, along with 55k tonnes of wheat as well.

The CNGOIC estimated that Chinese corn acreage will rise 2% in 2012, to 34.2 million hectares (84.5 million acres).

UkrAgroConsult reported Ukraine’s April grain exports at 2.06 MMT, down from 2.7 MMT in March; April corn exports fell from 1.9 MMT to 1.4 MMT.

The USDA continue to report a impressive planting and emergence numbers this week, pegging corn planting at 87% done yesterday and emergence at 56% (double the five-year average); bean planting nearly doubled both last week and the 5YA to 46% done, with emergence of that crop also well ahead of pace at 16% as of Sunday night. Spring wheat planting is crushing the 5YA pace at 94% this week, with emergence at 68%, compared to 32% on average. The nation’s winter wheat condition rating did drop three points this week to 60% good/excellent, though that’s still ahead of 32% LY and the 50% 5YA.

April NOPA soybean crush came in at 131.7 million bushels yesterday morning, down from 140.5 mbu in March, but ahead of 121.3 mbu last April, and the average estimate of 131.1 mbu. Cumulative Sep-April sits at 1090 mbu, just a few bushels shy of last year’s pace through 2/3 of the marketing year, with the USDA now expecting only similar slight 3 mbu YTY crush decline.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/15/2012 7:52 AM
]]> Jill Borich Commodities; Grains and Oilseeds Tue, 15 May 2012 12:53:16 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4239 Cuba to invest $450 mn to boost rice production http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4238 Body:

“Cuba said it plans to invest up to $450 million over the next few years in a program to increase domestic rice production, which remains insufficient to meet the demand on the island, state television reported.”

http://latino.foxnews.com/latino/news/2012/05/11/cuba-to-invest-450-mn-to-boost-rice-production/

Category: Agriculture
Published: 5/14/2012 5:59 PM
]]> FCSTONE\monica.knott Agriculture Mon, 14 May 2012 23:00:11 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4238 Under pressure, corn showing some strength – May 14, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4237 Body:

CORN: STEADY – BETTER

Early calls on corn are steady to better. The USD is higher, crude is lower. Markets continue to be under pressure with corn showing some strength compared to beans. The break in beans is an emotional, technical-type trade because fundamentals are still bullish, and with the strength in the USD and uncertainty in the Eurozone, the trade is in “risk off” mode. Below normal rainfall and higher temperatures in the U.S. corn belt will have traders keeping an eye on the forecasts. The mild winter can see above normal temperatures for the summer. May spiked back up in the overnight with the May/July trading back up to +41 inverse. May contracts go off the board today. ICE exchange started trading overnight, a total of 5 July corn traded. Look for a two-sided trade today with the bias of outside markets overshadowing and fundamental factors in the corn market for now.

Overnight trade settled unchanged in CN12.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/14/2012 8:40 AM
]]> Erin Olson Commodities; Grains and Oilseeds Mon, 14 May 2012 13:41:03 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4237 Morning Grain Comments – May 14, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4236 Body:

July soybeans were clearly the focal point of the overnight session, falling sharply again after a disastrous technical day Friday, with funds exiting long positions that had hovered at or near a record all month. The soybean complex had 2 1/2 times the trade volume of corn overnight, with July accounting for the bulk of that, and the products no slouch in that department either. With rapid planting and emergence numbers expected this afternoon, clear weather for the remaining planting this week, and a key rain possible for next weekend, the ball is definitely in the bears’ court today.

South Korea’s largest feed grain buyer tendered for up to 210,000 tonnes of corn for November/December delivery, along with up to 70k tonnes of wheat.

China’s Comm. Min. sees May soy imports at 5.63 MMT, above 4.88 MMT in April but slightly below the CNGOIC’s 5.7 MMT May estimate last week.

Friday’s traditional CFTC Report showed slightly higher overall net fund positions across the grains as of last Tuesday than what daily trade estimates had expected, with corn up 6.6k to 158,572 net long overall, and beans down 8.8k to 249,923 net, less than 10k off the recent net record long. Oil lost 13k on the week and wheat dropped 19.4k net as of 5/8. The Disaggregated Report had producers and merchants cutting just a bit from their corn and KC wheat net longs, with the rest of the grains adding to theirs—beans up 12.5k net, oil up 21.3k net, CBOT wheat up 24.9k, and meal up 1.8k net last week.

April NOPA soybean crush is expected to come in at 131.1 million bushels this morning, down from 140.5 mbu in March, but ahead of 121.3 mbu last April; trade estimates range from 128.5-135.3 million bushels.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/14/2012 8:37 AM
]]> Erin Olson Commodities; Grains and Oilseeds Mon, 14 May 2012 13:38:37 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4236 Morning Dairy Comments – May 14, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4235 Body:

Markets:

AM price moves: USD +0.331 @ 80.735, Euro -54 @ 1.2870, Crude -2.04 @ 94.09, Copper -0.0745 @ 3.5740, Gold -21.0 @ 1,563.0,  Dow futures -82 @ 12,706, S&P -12.30 @ 1,337.70, NZ Dollar -71 @ 0.7753, Yen -25 @ 1.2498, Canadian -43 @ 0.9947

General:

  • China cuts bank reserve ratio to stimulate economy following data signaling economic slowdowns (3rd cut since Nov)
  • Goldman reports it expects China to spend more on infrastructure to support growth
  • New elections loom in Greece after failed attempt to form a coalition
  • European stock markets fall as much as 2% on Greek issues
  • Moody’s targets Spanish banks as “vulnerable” following new rule implementation
  • Saudi comments help push crude lower: concerns over Greece, rising inventories etc.
  • Plain and simple; today is another “risk off” day as the USD surges for the 10th session and most “things” all on someone’s foot and hurt
  • Today’s reports and the week ahead at a glimpse:

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http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012092.pdf

5/11         Class III Futures:  Volume: 1,387 Open Interest (OI) Change: -62  Total OI: 26,451         

5/11         Class III Options:  Est. Put Volume: 448 Total OI:  34,249   Est. Call Volume:  207 Total OI:  31,507

5/11         Other Dairy Futures Volume:   Butter: 37  Dry Whey: 35  NFDM:  49  Class IV: 0  Cheese: 241

5/11         Individual Class III Futures Prices, Change, Volume & Open Interest

May 12   $15.26     UP 2                        Vol:   103                OI Change               DOWN 77

June 12   $14.89     UP 47                      Vol:   572                OI Change:              DOWN 65

July 12    $14.89     UP 35                      Vol:   415                OI Change:              UP 32

Aug 12    $15.22     UP 40                      Vol:   111                OI Change:              DOWN 19

May to July Class III Avg.                  $15.01                     UP 26

May to July Class IV Avg.                   $13.49                     UP 2

Dairy: Class III and Cheese

Spot Markets:

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Thursday the class IV markets found a bid and Friday the spot cheese market came along. The blocks gained ¾ of a cent after having lost 4.25 cents earlier in the week and the barrels gain ¼ of a cent after falling 2 cents earlier in the week. The spot cheese support combined with the sizable rally seen in the dry whey market triggered class III gains. Futures closed double digits higher from June through the end of the calendar year gaining 13 to 47 cents on strong volume of 1,387 contracts- but note that for the 2nd time in two weeks we have had a big spike up in price with an OI decline, last time we followed it up with a sharp selloff... Some tightness and drop off in milk production was being reported to us in the Midwest though that was very isolated and didn’t seem to be the reasoning behind the rally. The story seems to be the same that cheese is stable to in balance and some product is moving via exports while firm domestic demand has not allowed for a drop in pricing. The charts are beginning to look as though they have rounded a bottom here with the May to July pack up 55 cents on the week to 15.01 while the second half finally turned around and closed up 36 cents at 15.44. As noted above though much of those gains can be attributed to the strength in dry whey futures and in the nearby months partially to a discounted market relative to the spot prices.

Throughout the week we noted a number of coops were moving to enforce hard caps on milk production or impose price penalties on anything over quota and while the class III market never fell to the depths that the class IV market did perhaps that is why such strong gains were seen in the class IV products relative to the cheese market late in the week. Many of these changes however are likely to line up with the end of the school year starting in June and July and while we think this can be more bullish longer term the market is still very exposed to another decline in pricing in the coming weeks as schools close for the summer. Producers must still be on guard for further declines early this week additional protection should be sought out.

Cash cheese saw sizeable gains on Friday with the support garnered from the spot session gains. From June through October prices were higher by 1.000 to 2.500 cents and volume was very strong at 241 contracts. Participation in this contract continues to push open interest higher as we ended the week at 10,056 contracts vs. just 2,074 a year ago and a new record.

Class IV prices stabilized late in the week as a bid came back into the market with pricing rebounds for the products. Despite the large gains seen in the products class IV futures actually saw lower pricing last week with the May to July pack down 19 cents to 13.49 while the second half pack lost 48 cents to 14.03.

Overnight Class III traded 79 contracts with June the most active (61 trades) and up the most (12 cents). Cheese futures traded only 1 time in June slightly lower, all other dairy markets were silent.

We look for milk to open firm but weaken into spot. 

NFDM, SMP, WMP:
NFDM continued the late week rally on Friday closing higher from June through November by 0.500 to 3.500 cents on firm volume of 49 trades. On the week the May to July pack average gained 2.25 cents closing at 117.167 while the July to Dec pack was up 2.033 cents to 119.871. The market turned around mid-week with a flurry of pricing reports; the Western Mostly midpoint price was 3.00 cents lower at $1.1250; CWAP was $1.2531, up 1.89 cents from the previous week and weekly NDPSR pricing was down 0.0006 cents to 1.2169. While none of those reports was particularly bullish the lack of sharper declines turned discounted futures higher. The question now is have we bottomed? We certainly don’t think that will be the case. On Thursday and Friday, the two days which saw significant price gains, volume was 67 total trades as bids seemingly disappeared however open interest increased by only 6 contracts so it looks to us as though this is more of a short covering rally. With GDT coming Tuesday the market may find more fuel to the bullish fire or the rally may more likely be extinguished.     

We look for NFDM to open firm.

Butter:

The rebound in spot butter Thursday extended into Friday as the spot market gained 1.75 cents to 1.3200 triggering another bounce in butter futures as well. Only one month settled lower Friday, Aug down 1.100 while other contracts from June through Jan 2013 were higher by 0.750 to the limit 5.000 cents in June. The $1.30 mark appears to have held and become strong support now with the big bounce in futures. On the week the May to July average was up 3.258 cents to 133.000 while the second half pack was up 1.596 cents to 140.758. The situation with butter seems to be much the same as with non-fat as on Thursday and Friday when prices were rebounding the total volume was 68 contracts and open interest actually fell by 4 contracts between the two days. Perhaps buyers will enter the market and continue the rally but for now we’ll chalk this up to a short covering rally as well and look to GDT Tuesday morning for a sign of continued weakness of global fat pricing.

We look for butter to open firm.

Dry Whey:

We look for whey to open steady.

Grains:
Friday saw a massive reversal of the bullish USDA soybean report as technical weakness combined with a record long fund position triggered a massive selloff. July beans closed down 49.25 cents at 1406, while new crop beans were down 37.75 at 1321.25, July corn closed 6.5 lower at 581 while new crop lost 2 cents to 505.25 and July wheat closed down 4.25 at 597. Corn and soybeans have broken through longer term technical support levels on old crop as the old crop/new crop spreads correcting. We continue to expect further fund liquidation in the coming weeks provided the weather continues to cooperate this spring. It seems to us that soybean acreage could be expanded sharply by the June report as early planting as well as a big change in the soy/corn relationship has occurred since USDA’s last acreage estimate. While the current USDA carryout to use ratio is the tightest ever the increase in acreage could serve to alleviate that concern. Weather is now likely to be the key fundamental driver as we move past spring planting and into the summer growing season.   

We look for corn to open 2 to 4 lower, for beans to open 22 to 25 lower, for meal to open 7.0 to 8.0 lower, and for wheat to open 2 to 4 lower.

Robert Chesler

Category: Commodities; Dairy
Published: 5/14/2012 8:35 AM
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]]> Erin Olson Commodities; Dairy Mon, 14 May 2012 13:36:38 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4235 Super weeds no easy fix for US agriculture-experts http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4234 Body:

“A fast-spreading plague of "super weeds" taking over U.S. farmland will not be stopped easily, and farmers and government officials need to change existing practices if food production is to be protected, industry experts said on Thursday.”

http://www.chicagotribune.com/business/sns-rt-us-agriculture-weedsbre8491jz-20120510,0,5250971.story

Category: Agriculture
Published: 5/11/2012 3:56 PM
]]> FCSTONE\monica.knott Agriculture Fri, 11 May 2012 20:56:39 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4234 Beans drag grains lower – May 11, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4233 Body:

CORN: EASIER
Early calls on corn are two to three lower this morning. The USD is higher, crude is lower. Markets were lower overnight as macro markets are again negative. The JP Morgan loss of 2 to 5 billion on a bad derivative CDS trade is weighing on all markets. Beans are also dragging the grains lower. Trade is still digesting yesterday’s crop report; new crop balance tables are very bearish and old crop does not show much support, but I continue to focus on the cash markets. The Gulf market was down 10 to 15 cents the last few days, but domestic markets are all firming as producer selling is nil on the flat price break. Cash markets will still need to source old crop corn and the break in futures is giving end users pricing opportunities. It is interesting to listen to the weather report this morning, and there is no rain in the forecast for the next 6 to 10 days for the Corn Belt. Planting will get done, but now we will need to start talking about production potential if the weather pattern turns out dry.

Kyle Smith, Mike O'Dea, Ben Parks, Collin Hulse, Ingrid Gronlund

Category: Commodities; Grains and Oilseeds
Published: 5/11/2012 8:25 AM
]]> Jill Borich Commodities; Grains and Oilseeds Fri, 11 May 2012 13:26:30 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4233 Morning Dairy Comments – May 11, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4232 Body:

Markets:

AM price moves: USD +0.033 @ 80.290, Euro +2 @ 1.2955, Crude -0.89 @ 96.19, Copper -0.0440 @ 3.6475, Gold -13.0 @ 1,582.5,  Dow futures -81 @ 12,753, S&P -5.40 @ 1,352.20, NZ Dollar -14 @ 0.7828, Yen -6 @ 1.2512, Canadian -28 @ 0.9951

General:

  • JP reports $2 billion loss- and it looks to get a lot worse (at least $1 billion worse). They traded 7% lower quickly after the announcement and took everything down with them as the S&P sank 13.25 to 1344.00 at one point
  • China’s consumer inflation eased in April (as expected)
  • In general China’s April data is being in large as “weak”
  • Equities are lower, the USD is barely higher after having surged big time early last night, energies, metals, softs, livestock are all lower
  • Today’s reports and the week ahead at a glimpse:

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http://www.cmegroup.com/daily_bulletin/Section04_Agricultural_Soft_AltInvestment_Futures_2012091.pdf

5/10         Class III Futures:  Volume: 876 Open Interest (OI) Change: +89  Total OI: 26,526           

5/10         Class III Options:  Est. Put Volume: 193 Total OI:  34,200   Est. Call Volume:  204 Total OI:  31,309

5/10         Other Dairy Futures Volume:   Butter: 31  Dry Whey: 43  NFDM:  18  Class IV: 27  Cheese: 234

5/10         Individual Class III Futures Prices, Change, Volume & Open Interest

May 12           $15.24             UP 12              Vol:   199                OI Change               DOWN 47

June 12          $14.42             UP 4                Vol:   285                OI Change:              UP 21

July 12           $14.54             UP 19              Vol:   171                OI Change:              UP 25

May to July Class III Avg.                  $14.74                     UP 12

May to July Class IV Avg.                   $13.51                     UNCH

Dairy: Class III and Cheese

Spot Markets:
 

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We are fearful that the financial district of Chicago might look like the above image next week and the week after. The NATO meeting is to be held in our wonderful city and the protestors are preparing to make it unpleasant. What are they protesting, why are they protesting? It does not matter because the CBOT and the Fed Bank Buildings are right where it will go down. We will be accessible to you no matter what as we prepare for the worst but hope for the best.

The block/barrel spread widened ever so slightly but made no major moves and thus milk futures shrunk their discount to cash markets but closed mostly off their highs amidst still subpar volume on another up day. Slaughter under federal inspection was down 0.2%, at 52,700 head, compared with the same period the previous year. This is the first drop versus 2011 since the week ending March 3. Year-to-date slaughter levels are 1.6% higher than 2011 levels, with 1,034,800 head slaughtered. Milk is cheap and available out in the country and now we hear that another major coop is going to be paying 60 cents under Class III in many Midwest states for an estimated three months; it’s a trend and we follow those.

Now to tend to a pressing matter that some of you may be aware of: last week during the time period of the ADPI conference days there was a presentation on Dodd-Frank regulation organized by the innovation center and during that presentation there was talk of the proposed 85/15 rule which stipulates that if more than 15% of the futures volume is done via block trades, the contract will be delisted and become a swap only. This 15% was understood by many we have talked to to mean any non-exchange traded volume- including OTC’s, EFR’s, EFP’s, forwards etc. We have done our due diligence and talked with representatives from the CME. We can tell you that the rule is not set yet and the percentage spilt might change. Whatever is passed will be applicable to all commodities, not just dairy. The intent is for the 15% to be applicable only to block trades and nothing else. For dairy, only the cheese futures allow block trades and much, much less than 3% of the volume has been done via block trades. Feel free to call with any further question on this matter.

Overnight Class III traded a whopping 9 contracts with prices three lower, cheese was silent, butter traded 5 times in July at a penny higher and NFDM was as much as 2.475 higher as three months traded a total of four times.

We look for milk to open firm.

NFDM, SMP, WMP:
NFDM caught a bid Thursday lifting prices between .52 and 2.50 higher through November.  18 contracts traded as what could aptly be called short covering.  With an abundance of bearish news still swirling among powder/butter discussions, Thursday’s trade gives pause to a comment we heard long ago; “leave the top and bottom 10 percent of a market to the amateurs”. 

The Western Mostly price, reported yesterday, was 3.00 cents lower at $1.1250 this week. California’s Weighted Average price was $1.2531, up 1.89 cents from the previous week.

We look for NFDM to open firm-- as it appears shorts are covering already. 

Butter:

Butter futures also had a respite from selling yesterday as light volume (31 contracts) pushed prices between unchanged and 3.75 cents higher.  Here too we saw some profit-taking as the CME spot market was bid up .25 to $1.3025.  So far the $1.30 area of psychological support has held.  Commercial buyers are also looking out to the 4th quarter and beyond as prices there are at – or just above – historical 5 and 10 year averages.

We look for butter to open firm.

Dry Whey:

We look for whey to open mixed to firm.

Grains:
The USDA offered up something for everyone in their Crop Production Report released yesterday morning.  Of course, “something for everyone” depended on which market of the grain complex you were watching.  The report was bearish for corn and bullish for beans.  July corn fell nearly 20 cents breaking the prior year-long low of $5.91 on the news.  Beans rallied 20 to 25 cents.  Look for a continuation of this trend for corn.  Beans ought to catch up once they’re 70 percent planted.

A closer look at the numbers if you missed them:

Corn figures were larger than expected in every supply category. Old crop corn stocks were increased by 50 million bushels to 851 million bushels, 90 million bushels larger than the trade expected. New crop corn production came in at a whopping 14.790 bln/bu from 95.9 million planted and 89.1 million harvested acres and a national yield of 166.0 bushels per acre.  U.S. corn ending stocks for 2012-13 came in at 1.881 billion bushels compared to the average trade estimate of 1.686 billion bushels.

Bean numbers were in line with expectations. Old crop U.S. bean stocks were reduced by 40 million bushels to 210 million bushels, compared to 215 million expected by the trade. New crop bean production came in at 3.205 billion bushels from 73.9 planted and 73.0 harvested acres and a national yield of 43.9 bushels per acre.  Bean ending stocks for 2012-13 came in at 145 million bushels compared to the average trade estimate of 172 million bushels.

We look for corn to open 4 to 6 lower, for beans to open 12 to 15 lower, for meal to open 4.0 to 5.0 lower and for wheat to open 2 to 4 lower.

Robert Chesler

Category: Commodities; Dairy
Published: 5/11/2012 7:59 AM
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]]> Jill Borich Commodities; Dairy Fri, 11 May 2012 13:00:22 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4232 Morning Grain Comments – May 11, 2012 http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4231 Body:

Soybeans dragged the grain markets lower overnight after an initial boost, down double-digits on a generally negative outside market environment; weather forecasts are a bit uncertain into the end of the week, but containing nothing as of yet to put a damper on strong USDA crop forecasts.

Macquarie pegged the ‘12/13 Australian wheat crop at 25 MMT this morning, down from a record 29.5 MMT last season, and a million below the USDA number yesterday due to less favorable weather and acreage loss to canola.

Conab raised their ‘11/12 soy forecast by slightly over a million tonnes yesterday, to 66.7 MMT, right as the USDA was lowering their estimate of the crop by 1 MMT to 65.0 MMT. Conab has corn output pegged at a record 65.9 MMT, up 800k from April but still below the new USDA 67.0 MMT number.

The Buenos Aires Exchange sees a 13% drop in Argentine wheat plantings in 2012/13, to 4.0 million hectares, matching the USDA’s initial number yesterday; other estimates have the YTY acreage drop at 15% or more this season.

The Rosario Exchange yesterday pegged ‘11/12 Argentine soybean production at 40.9 MMT, with corn at 19 MMT, both well below April estimates.

May CBOT Deliveries: beans 2 & 5/1; bean oil 308 & 5/10; wheat 89 & 5/1.

Matt Zeller

Category: Commodities; Grains and Oilseeds
Published: 5/11/2012 7:53 AM
]]> Jill Borich Commodities; Grains and Oilseeds Fri, 11 May 2012 12:54:13 GMT http://www.intlfcstone.com/Blog/Lists/Posts/ViewPost.aspx?ID=4231