Overnight Highlights from one of our speakers for this week (Tregg Cronin of CHS Hedging)

Below is a forward from one of our speakers (Tregg Cronin of CHS Hedging) for our meetings this week.

Grain Marketing Seminar 2012

We would like to invite you to our

free grain marketing seminars:

Dec. 19^th, 2012 – 1:00 pm MST at the

Ambulance Building in Philip, Tregg Cronin Speaker

Dec. 20, 2012 – 10:00 am CST at the Ramkota in

Pierre, Kevin Van Trump and Tregg Cronin will be speaking on the grain markets.  Lunch will be served

Please RSVP for either location by calling

800-658-3670 or 605-258-2686

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

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From: Cronin, Tregg
Sent: Tuesday, December 18, 2012 7:19 AM
Subject: Overnight Highlights

Outside Markets: Dollar Index down 0.097 at 79.486; NYMEX-WTI up $0.61 at $87.81; Brent Crude up $0.71 at $108.33; Heating Oil up $0.0230 at $2.9793; Livestock markets are all firmer; Gold up $2.20 at $1700.40; Copper down $0.0050 at $3.6610; Silver up $0.225 at $32.500; S&P futures are up 4.25 at 1431.00, Dow futures are up 37.00 at 13,221.00 and Treasuries are softer.  

Every head line on every financial media outlet has “markets rally on hopes of budget compromise,” so I think that about covers it.  The compromise involves tax rates increasing for individuals making over $400,000/yr, and in exchange Boehner and the Republicans get $1.2 trillion in revenue increases and spending cuts.  The spending cuts do include entitlements tied to Social Security, but not Medicare.  Markets obviously liked it yesterday and appear to like it this morning.  The IBEX-35 is up 0.78% and the NIKKEI closed up another 0.96% on prospects for more monetary stimulus by the BOJ.  Sanderson Farms reported earnings this morning of $0.41/share vs. estimates for $0.32 and -$5.74 LY, becoming the latest meat packer to post better than expected earnings.  Thank you SA corn.

Precip the last 24 hours was concentrated in the ECB and East Coast, while the Midwest was largely quiet.  There are scattered systems moving across the upper-Midwest this morning bringing light snow.  The next 1-3 days will see additional moisture hit the central and eastern corn belt with the heaviest totals around the Great Lakes region to the tune of 1.72”.  IA should also see decent totals, the majority of which should fall as snow.  Omaha, NE could see as much as 7”.  NOAA’s extended maps have turned much more generous, painting above normal precip across the majority of the Midwest during the 6-10 & 8-14, and is even pushing it as far south as TX, part of the reason behind the pressure in HRW.  Temps will be normal/below.  “The forecast sees a front to bring rains of .50-1", isolated to 1"+ to the Argentine growing regions today and tomorrow and then things to be fairly quiet for the rest of the week, with some more rains possible by Sunday and Monday of next week. Early estimates on totals early next week are in the .35-.85" range, with some isolated heavier totals.” – John Dee.

Weaker overnight led by the soy complex after trade failed to post a close above $15.00 which likely incited some technical selling.  Little on the newswires to help with direction, and that could be the problem: US grains still aren’t competitive into a lot of the swing destinations we need to be in order to justify current corn and wheat export forecasts.  That could be changing, however, as chatter this morning suggests US wheat is pricing itself into Brazil as Argentine supplies wither and quality becomes a problem on what supplies were harvested.  This after rumors Argentina may cuts its export quota on wheat to 3.37MMT from 4.5MMT.  The USDA is currently using 5.5MMT of exports.  Most analysts are counting on Brazil taking US wheat, so this wouldn’t be a complete surprise, just maybe more tonnage than originally anticipated.  Argy FOB offers on wheat this morning for Jan/Feb shipment are said to be around $370/MT compared with US-SRW at $321.47/MT and US-HRW at $354/MT.  Canadian wheat to Brazil has also been tossed around.

Japan is back in the mix looking for 121,026MT from the US and Canada with the majority US-origin.  These would be for shipment from Jan 16 to Feb 15 and arrival by March 31.  Other headlines included Russia’s grain stockpiles as of Dec totaling 29.7MMT, down 30% from 42.3MMT a year earlier.  The figure includes large producers who held stocks of 16.8MMT, down from 25.3MMT a year ago.  These figures don’t include small, private farms or household reserves.  YTD exports from Russia totaled 12.4MMT, down from 15.6MMT a year ago.  Palm Oil stocks in China could reach 1MMT in the near futures said a state government website.  Inventories last week were 890,000MT, up 50,000MT from a week earlier.  Little improvement is seen in demand as everyone wants meal right now.

Open interest changes yesterday included wheat down 500, corn down 4,500 contracts, soybeans up 5,610, meal up 2,680 and soy oil up 2,430.  More spec liquidation in corn while funds were probably adding length yesterday which is now underwater.  Chinese markets were mixed with beans up 8.25c, meal down $4.30, soyoil up 9c, corn unchanged, palm down 7c and wheat up 4.25c.  Malaysian Palm Oil was down 8 ringgit at 2,342.  Paris Milling Wheat is down 0.58%, Rapeseed down 1.13%, Corn down 1.11%, UK Feed Wheat down 0.92%, and Canola down 0.64%.  Also worth mentioning several private estimates flying around the trade about rising Brazilian soybean production.  Have seen several 81’s and 82’s and some larger.  Cordonnier unchanged at 80MMT but sees it larger if weather holds.

Call things weaker today as European prices dump, South American weather remains mostly beneficial in Brazil and is moderating in Argentina, demand for US grains remains slow and the light volume of this holiday trade allows prices to move pretty freely.  Longer-term, the sleeper in corn could be the feed/residual and harvested acres, but in the near-term, weekly data sets by ethanol and exports will keep the bias negative.  Wheat needs business bad.  Period.  Soybeans will struggle if grains can’t firm.

Trade as of 7:10

Corn down 4-6

Soy down 12-17

Wheat down 1-3 WW, up 1 SW

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax

www.chshedging.com

CHS Hedging, Inc.
The Right Decisions for the Right Reasons

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This material has been prepared by a sales or trading employee or agent of CHS Hedging, Inc. and should be considered a solicitation.  This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.  CHS Hedging, Inc. makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  There is a risk of loss when trading commodity futures and options.