Morning Highlights


Highlights

  • Tensions in the Middle East remain high with equity markets expected to open lower. Iran said they will no longer abide by the 2015 nuclear deal and has vowed to retaliate against the U.S. Crude oil prices are expected to continue to climb in response to elevated political tensions.
  • Rains are being seen in the south eastern areas of Australian, bringing relief to the brush fires. Showers are being reported from Sydney to Melbourne in addition the region is experiencing cooler temperatures. The fires have consumed 23,000 square miles.
  • Bimbo Bakeries USA, a business unit of Grupo Bimbo, has acquired the Lender’s Bagels business from Conagra. 

Corn

  • The EIA reported weekly ethanol production decreased by 17,000 bpd to 1,066,000 bpd. Ethanol stocks dropped 500,000 barrels to 21.0 million barrels. Net ethanol margins were 11¢ lower at 6¢.
  • The March corn contract has traded in a 7¢ range between $3.85 and $3.92 since December 17th.
  • At the Dalian exchange overnight corn fell 2 ½¢.
  • A trusted industry source estimates the U.S. producer is 42% sold compared to 45% during the same period last year.
  • Funds are estimated to be short 84,900 contracts futures and options combined.
  • China’s corn market was up 2 ½ cents overnight.
  • Spreads: H/K 6 ¾ carry, H/N 13 carry, N/Z 1 ¾ carry. 

Outlook:  Prices are mixed ahead of Fridays reports. 

Oilseeds

  • Deliveries: Soybeans 214, Soymeal 1,357, and Soyoil 282 contracts.
  • South American weather remains mostly favorable for crop development over the next 48 hours. Above average rainfall is expected across the northern growing areas in Brazil. Argentina is forecast for average precipitation over the same period. Near normal temperatures are seen across the major growing areas.
  • Deliveries: 597 beans, 1,485 meal and 605 soyoil.
  • Palm oil futures were down 74 ringgits overnight at 3,042.1 Malaysian ringgits equals 0.24¢ U.S.
  • China markets were mixed overnight at the Dalian exchange. Soybeans rose 3¢, soymeal down $3.90, soyoil 3 points lower.
  • It is estimated that the U.S. producer has sold 41% of their soybeans versus 47% from the same time last year.
  • Funds are estimated to be short 30,100 soybeans and 27,400 soymeal futures and options contracts combined. Managed money remains long 124,500 contracts of soyoil.
  • Spreads: H/K 13 ¼ carry, H/N 26 ½ carry, N/X 4 carry, X/F 4 carry. 

Outlook: Lower. CONAB will released their production estimates on Wednesday. 

Wheat

  • Snow was seen over the weekend in western Ukraine with snow forecast this week in central, and the Volga Valley in Russian. The threat of winterkill is dissipating.
  • European wheat futures are under pressure after hitting a six month high last Thursday.
  • Funds are long an estimated 27,200 contracts.
  • Spreads: Mpls H/K 9 ¾ carry, Kansas City H/K 8 carry, Chicago H/K 3 carry. 

Outlook: Appears that the year end rally has lost steam, look for lower calls ahead of Fridays reports.