Monday, August 8, 2016

Grains: Ahead Of This Week's USDA Reports

Last Chg
Corn 335-6+1-4
Soybeans 981-4+7-0
Wheat 420-0+4-0

From Agrimoney:

AM markets: signal from futures gap helps wheat gain again

As one door closed a bit on a wheat bulls, another one opened.

The question of whether wheat prices have set a seasonal low has been one of the big ones for grain investors (along with those of US corn/ soybean yield prospects, of course).
And one potential signal, the gap between Kansas City hard red winter wheat versus Chicago soft red winter wheat, had (as reported) been looking positive, in turning from a discount to a premium – until late last week.
Last session, it fell back into an, unusual, discount, of $0.04 ¼ a bushel, which it extended further on Monday.
This despite the ongoing concerns over the quality, as well as quantity, of the French crop, besides a touch of disappointment over the hefty Russian harvest too.
Terry Reilly at Chicago broker Futures International noted official Moscow data showing that "70% of the 11.3m tonnes of grain surveyed as of July 30 was of milling quality, down from 83% they surveyed a year ago".
Calendar spread
Still, back in US markets, another signal is showing green for bulls, in terms of as reversal in the discount between September and December futures contracts.
That had been widening for the past year, as growing ideas for supplies, both in the US and worldwide, prompted the market to encourage producers to delay selling, offering an increasingly favourable price (relatively) for more distant contracts.
However, in the last session it reversed by $0.05 ¼ a bushel to $0.22 a bushel in Chicago, showing a smaller narrowing in Kansas City too, and extended the process on Monday.
Tobin Gorey at Commonwealth Bank of Australia flagged that this could be a bullish signal.
"The spread has been stuck at lows for quite some as the futures shapes itself to carry surplus hard red winter wheat," he said.
If the spread makes narrows further, "it could mean that the trade has managed to move the excess wheat forward in time"....MORE

...And this when the USDA's next monthly Wasde report is looming, on Friday, which is widely expected to show some upgrade to the current official estimate of 168.0 bushels per acre for the domestic corn yield.
Upbeat talk
But will the Wasde really be that bearish?
"Short covering ahead of USDA's crop production and supply and demand next Friday will be supportive trade this week," said Benson Quinn Commodities.
"The market has rightfully had a lot of bearish stones heaped upon it, but the wild yield expectations of just a couple weeks ago seem to be backing off a bit as of late," said ag advisory group Water Street Solutions....