Morning Highlights


Highlights                

  • Goldman Sachs has decided to cut back on commodities trading, particularly in metals, citing poor returns and that it can tie up too much capital.
  • Little if any fresh news on the US/China trade situation. Senior officials will hold another round of talks in Beijing next week.
  • USDA will release the regular Feb S&D report this Friday 2/8/19 along with the delayed January reports, including the Dec quarterly stocks report, and winter wheat planting intentions, and final corn/bean production yield estimate.
  • Asian markets are closed for Lunar New Year.
  • The CFTC did put out weekly position data for the period covering Dec 31st.
  • U. S. Dollar index +.107 @ 96.182, Dow futures -10 @ 25,315, Crude Oil futures -.11 @ $53.56.

        

Corn

  • Based on older USDA data, US ethanol corn use was down 2.2% from the previous year first quarter.
  • CH/K ranged from -8.5 to -8.0 yesterday.
  • Trade estimates for Dec 1 quarterly stocks on corn range from 11.940-12.400 bil bushels, with average guess at 12.092 bil.

 Outlook: lower early, then quietly firmer into the close yesterday. Still relatively little feature in the corn trade. Index roll order flow may pick up the spread trade at the end of the week.  Calls: slightly lower

 

Oilseeds

  • Parts of Brazil remain dry, however NE Brazil does have rain in the 10 day forecasts. Early bean harvest pace is one to two weeks ahead of average in most areas.
  • Stats Canada Dec stocks report had canola at 14.5 mil tons versus trade estimates at 14.7 mil.
  • SH/K spread was at -14, while the SH/X is showing -40.Big carries in the bean board.
  • Trade estimates for Dec 1 quarterly stocks on beans range from 3.414-3.872 bil bushels, with average guess at 3.743 bil.

Outlook: Big export sale daily announcement yesterday of 2.6 mil tons beans to China, plus 274k tons to unknown. But beans spent most of the day lower, selling the fact perhaps. We did get a bit of a lift going into the close, as SH19 managed to close back above its 10 day moving average [$9.19]. Calls: 1-2 lower

 

 Wheat

  • Texas state wheat ratings were out, showing winter wheat G/E ratings at 27% [vs last Nov at 48%], fair at 52% [vs 36%], poor/very poor at 21% [vs 16%].
  • KWH/K continues a firmer tone, trading to -5.5, with WH/K pushing to -1.0 . One of the big HRW spread movers has been the KWN/Z. In early Nov it was -36 and now has traded in to -21.5.
  • Stats Canada all wheat stocks came in at 23.233 mil tons versus estimates at 23.4 mil.
  • Weekly deliverable wheat stocks report: KC 107.297 mil bu [-1.247 mil] year ago @ 109.1 mil, Chi 64.643 mil bu [-1.187 mil] year ago 81.6 mil, Minn/Dul 17.189 mil bu [+130k] year ago 22.019 mil.
  • Trade estimates for winter wheat acreage average 32.128 mil acres [HRW 22.579, SRW 5.963, SWW 3.488]. 2018’s final plantings were at 32.535 mil acres.The USDA report is out this Friday.
  • CME Black Sea wheat futures this week have seen outright trades for the first time. Previous transactions had been all ‘block trades’ between prearranged buyers and sellers cleared on the platform.

Outlook: wheat markets took an early dive, but then quietly recovered by noon. Trade talk that USDA reports on Friday may cut export demand and thus increase US carryout may have contributed to the negative tone. But longer term ideas are still kicking around the possibility of lower winter wheat planted acres on the USDA report. By the close, the HRW and SRW spreads were the feature, as some shorts must be getting nervous waiting on the index roll this week. Narrowing spreads have taken some of the cash carry out of the market, and commercial HRW sellers are now poking into the export markets, while SRW CIF remains looking for offers. Calls: mixed to a couple lower