Ami Heesch

Feb 19, 2021

Highlights

Big say I the markets with the record production forecast for corn and beans and tighter ending stocks for “All Wheat”. Bouts of profit taking were noted in the corn and beans along with technical selling in the wheat market. The energy markets were weaker as things begin to become more operational after the massive winter storm blew through Texas and other southern states. Wall Street closed in quiet trade after investors stepped out of the big tech stocks and on easing virus concerns as the vaccine rollout continues to progress.

 

  • Cattle on Feed report was a bit negative: On Feed on Feb 1 at 101%, January placements at 103% versus trade expectations of 99% and January marketings at 94% versus trade ideas of 95%.
  • The energy markets were mostly weaker with crude oil down 1.51 at 59.01/barrel.
  • US$ finished the week easier, down 0.252 at 90.340, the gold market was up 6-7 bucks at 1781/ounce, and the CD$ is stronger, up 0.0039 at 0.79255 (high was 0.79405 versus high on 0.79440 on January 21).
  • DJIA up a hair at 31498, S&P down 11 at 3899, NASDAQ up 9 at 13874.
  • The next USDA S&D is scheduled for March 9 at 11 AM CST.

                                                                                   

    Corn

    The corn market finished mixed with strength stemming from a weaker US$ and decent demand. Prices were pressured from forecasts for a record crop this year (15.150 bb).  Improving conditions in SA lead to ideas of bigger production there, despite getting a late start to planting the 2nd corn crop. Profit taking was noted ahead of the weekend along with spread activity (selling corn and buying soybeans).

  • Closes: March at $5.42 ¾, down 7 ½ cents, July at $5.33, down 6 cents, December at $4.60, up ¾ cent.
  • Gulf premiums were a penny weaker February through May.
  • Weekly export sales were reported at top end of trade ideas (800 tmt-1.4 mmt.
  • Dec 21 through Mar 2023 were said to have made new contract highs, on ideas that a record crop this year might not allow stocks to resume to a more comfortable state for some time.
  • Spreads: H/K ¾ inverse......K/N 9 inverse........Z/H 7 ½ carry.

     

    Oilseeds

    Soybeans finished higher on noted spread trading against corn, weaker US$, slowed SA harvest and tight stocks I the US. Strong demand for beans and the products appeared to overshadow the USDA Ag Outlook Forums’ record production number of 4.525 bb. Buying soybeans could be a challenge on into the summer months.  

  • Closes: March at $13.77 ½, up 2 ¾ cents, July at $13.67 ¾, up 3 cents, November at $11.96 ¼, up 9 ¾ cents. The products were mixed with meal down 1-2 bucks and oil up 44 points.
  • Soyoil made new contract highs in most months.
  • Gulf premiums were mostly steady for F/M/A/M.
  • Weekly export sales were reported at 624 tmt, versus trade estimates of 350 tmt-1.2 mmt.
  • Spreads: H/K 3 carry......K/N 12 inverse......X/F 5 ¾ inverse......X/H 33 inverse.

     

    Wheat

    Wheat prices were mixed with Mpls gaining on KC and Chicago. A bout of profit-taking was noted in Chicago and KC from recent strength and easing concerns of crop damage to the winter wheat. Temperatures have improved this week and are expected to be significantly warmer over the weekend and next week. 

  • March closes: Mpls at $6.28 ¾, down 3 cents, KC at $6.31 ¾, down 5 cents, Chicago at $6.50 ¾, down 11 ¾ cents.
  • Paris milling wheat retreated from the recent multi-year highs on technical selling.
  • Tunisia bought 92k tonnes of Durum, 100k tonnes of SRW and 100k tonnes of feed barley.
  • Weekly export sales were reported at 613, in line with expectations (250-700 tmt).
  • USDA Ag Outlook sees “All Wheat” production nearly on par with last year at 1.827 billion bushels.
  • Spreads: Mpls H/K 11 ½ carry (70.5% of full carry at 16.29 cents)......favorable time to roll short hedges to the May if you have not done so already......running out of time on this one.....Kansas City H/K 6 ½ carry, Chicago H/K 4 ¾ carry. Mpls Mar sits at a 3 ½ cent discount to KC and a 21 ¾ cent discount to Chicago.