FCStone Grain Recap October 1, 2015

Transcription

1 CORN: A choppy but firm market today. Today starts the march of the private crop estimates led off with FCStone s number this afternoon. Export sales reported today showed net bookings of tmt as of Thursday last week tmt of those sales were to Mexico. New crop sales were 53.1 tmt. Commitments to date are still running quite a bit behind what they need to be. Currently commitments versus last year are down 27% from a year ago. The USDA is only expecting a 1% decline year over year. The EIA produced its monthly ethanol production report yesterday afternoon which shows calendar year to date production running 2.2% ahead of last year. Year over year corn usage for ethanol would imply the USDA upped its efficiency conversion for 2014 in order to get the 5205 mln bushel number. One item that may have been overlooked in the EIA s biodiesel report was corn oil used for biodiesel tied for the second biggest usage in a month since records began in According to the EIA corn oil for biodiesel usage for July was 106 mln lbs tying August The only higher month of corn oil usage was July of 2013 at 108 mln lbs. Though only ¼ of the quantity of soy oil used for biodiesel, the corn oil category is one of the few feedstocks used for biodiesel that has increased over the 5 year timespan. This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any particular trading strategy, promotional element or quality of service provided by IFFI. IFFI is not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact FCStone designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by FCStone, LLC.

2 Funds credited with buying 4000 contracts in today s session. SOYBEANS: Futures strong out of the gates but weakened quickly midday to close 14+ cents lower for the session. Export sales were much above expectations with mmt sold last week. Of the 2.5 mmt, 1.78 was sold to China and 827 tmt was sold to unknown destinations. 16/17 crop sales were a light 4.4 tmt in today s report. The trade was estimating at most a 1.7 mmt export number in today s report. None of this sale was from the mmt agreement signed last Friday. The US has had the most competitive offer to the world at the PNW port and the Chinese have been very active buyers. The Brazilians and the Argentinians are on the sidelines until February for further sales. Brazil reported it exported 3.7 mmt of soybeans in August today. The Meal numbers in the Export Sales report were also above the trade range by a small margin tmt were sold compared to the high end of the range estimate of 225 tmt. Oil had another strong week. Even though it was within the range, the 32.5 tmt 15/16 sale kept beanoil the strongest futures of the soy complex in today s action. There is no disputing the large sale of 2.5 mmt this week but last year the prior week the US also sold 2.56 mmt. The sluggish exports couldn t be expressed by the updated graph of Soy sales to China. We are still running 50% of what we were committed to shipping to China last year. Overall soybean commitments are 28% below last year. The USDA also announced an additional 120 tmt was sold to China for 15/16 in the last 24 hours. Page 2

3 The changes made in yesterday s stocks report in which the government not only changed yield but changed the 2014 acres brings up more questions than what it answers. On its face the revision of planted acres brings the 2014 right in line with the historical margin between the FSA and the USDA as shown in the table below. As the USDA had left it in 2014 the margin between the USDA and FSA planted acres for soybeans was 2.3% compared to the historical %. With the new revision the margin has been reduced to 1.8%. The wheat experienced the same thing for the 2015 acres. The USDA left 2014 USDA-FSA margin at 5.7% compared to the historical % and with the 2015 revision it went from 6.9% to 4.4%. Will 2014 corn acres stand as they are? Will 2015 corn acres stand as well? 2014 acres were at a margin of 4.5% margin compared to a % historical range. The 2015 margin stands at 5.2% margin as of September. The next update from the FSA is October 14 th but the USDA is likely to have those numbers in the October 9 th report if they want to make any changes. To bring corn acres in line with history, the USDA-FSA margin would have to shrink 1.5 mln acres nominally. Page 3

4 FSA vs USDA Sep Sep Alt Final planted mln acres Corn USDA FSA Soybeans USDA FSA Wheat USDA FSA USDA FSA Difference Corn Nominal Percentage 3.2% 3.3% 3.2% 3.1% 4.5% 7.4% 5.2% 3.6% Soybeans Nominal Percentage 1.4% 1.6% 1.7% 1.6% 1.8% 4.2% 4.3% 1.9% Wheat Nominal Percentage 5.2% 4.6% 4.9% 4.3% 5.7% 5.9% 6.9% 4.4% Deliveries against the October contracts comprised of 110 contracts of meal and 979 contracts of bean oil. Funds were credited with selling 10,000 soybean contracts, 4000 meal, and were inactive in oil. WHEAT: Values finished firm on technical buying. Export sales were not supportive this session as only 77 tmt were marketed last week compared to expectations that at least 250 tmt would be booked. Commitments to date lag last year by 18%. The USDA is currently estimating a 5% YOY increase. As I discussed in the Soybean section, the treatment of Soybean and Wheat acres by the USDA poses more questions than it answers. The soybean production obviously had to be reduced as residual stands out as a lonely category in soybeans whereas its hidden in the feed category of corn and wheat. The revision in 2014 soybeans brought acres back into line with the margin associated the history between the USDA and FSA numbers. The USDA elected to do the same for 2015 wheat acres. With a change from 56.1 mln acres to mln acres the margin between the USDA and the current FSA numbers when from a 6.9% number to a 4.4% number (historically its 4.3% to 5.2 excluding 2014 at 5.7%). Does this imply that 2015 and/or 2014 corn acres will be revised as well??? The Russian Ag ministry kept its grain production forecast level at 100 mmt due to several areas that struggle with drought. Last year production was 105 mmt. Weather forecasts are not looking good for the winter grains areas of Russia. The next 10 days have little to no rain in the forecast. The 30 day forecast shows below normal temperatures which should retard the development of the Page 4

5 FSU region s wheat and increase the % of winterkill expected. Australia s forecast also dry for the next 10 days. Funds were credited with buying 4000 contracts of Chicago wheat today. FOB NOLA US SPOT PRICES CORN SOYBEANS SRW + 58Z + 95X + 65Z FOB TEXAS GULF US SPOT PRICES HRW N/A ECBOT HIGH LOW CLOSE CHANGE Dec Corn Mar Corn Nov Beans /4 Jan Beans /4 Dec wheat /2 Regards Bevan Everett Page 5