Sean K. Treasure
All eyes are watching Mother Nature in anticipation of the cold front expected next week that may have the potential to do some serious damage to the winter wheat crop. The freeze is expected particularly in the eastern Corn Belt but some models have very cold temperatures into west Texas. For those areas that have already come out of dormancy, there could be problems. Let’s not count our chickens here, there’s some winterkill every year and every year the trade hypes it up more than it should. However, if the cold temperatures arrive as expected, I wouldn’t be surprised if this year was particularly bad.
I haven’t talked about the Baltic Dry Index (BDI) for several weeks. As I recall, it was somewhere around 750 the last time I mentioned it, and that wasn’t too terribly long ago. Well, today it closed at 530 points. To put that in perspective, have a gander at the 12 month chart:
The low spot back in July of last year was 732 points. In fact, the BDI is as low as it’s been in 5 years. As I’ve mentioned before, it should give greater incentive for importers to buy bulk commodities. Since the BDI is indicative of the cost of shipping bulk grain, the net cost of a cargo is cheaper on a landed basis all else being equal. I think the US will participate in that business to some degree so export sales should continue to come in at the high end of expectations. However, the continued strength of the US dollar will put a cap on our export potential.
Speaking of export sales, yesterday’s report showed decent but uninspiring totals. All wheat sales totaled 409,300 MT with HRW and SWW posting somewhat impressive numbers. Remember, HRW has had some disappointing figures lately so the bump in this week’s total is not something to get excited about. Corn sales totaled 1,003,100 MT and soybeans were 745,400 MT. Sorghum is still on fire; net sales of 322,400 MT bringing the total for the current marketing year to 7,401,775 MT. Wow.
Futures action was largely sideways for the week with nearby contracts of all three wheat contracts as well as corn and soybeans closing modestly higher. It may just be the market taking a breather and unwinding the oscillators. Technically, wheat still doesn’t look real good; I suspect though that the market will remain sideways until we can get a better idea of what how cold temperatures will get too next week. No need to be a hero here yourself, I’d even up flat positions on Monday. It’s almost an afterthought at this point, but deferred contracts in the wheat pits were down. Like I said last week, the market is sending a clear signal to sell cash longs nearby.
Bids are generally firmer into the export market though, containerized shippers remain in a bind and are largely bid-less at the moment. The port situation is causing some sleepless nights for those guys. Despite the absence of bids for containers, domestically basis levels remain firm. LA 12 pro HRW is bid ~170H and 14 pro DNS is north of 2.00H into Minneapolis. Spot bids as follows:
Chicago Gulf PNW
Soybeans .05H .83 H 1.15 H
Corn: .12 H .57 H 1.10 H
SRW: .05 H .80 H N/A
HRW: N/A 1.05 H (12 pro) 1.20 H (11.5 pro)
DNS 14 pro: 1.20 H N/A 2.80 H
SWW: N/A N/A 1.58 H
Export trade was busy this past week, due at least in part to low shipping costs. Here’s what happened:
· Japan bought the full menu of wheat from the US, Canada and Australia, totaling 129,395 MT, mostly for April shipment.
· Morocco announced a tender for 360,000 MT of milling wheat and 300,000 MT of durum wheat for May shipment, optional origin.
· Bangladesh announced a tender for 100,000 MT of wheat.
· I haven’t confirmed this but evidently the CCC is looking for 24,000 MT of HRS wheat for Tanzania. Mar 16-26 shipment. Leave it to Uncle Sam to give away the most expensive wheat we’ve got. Offers due 2/18
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
Sean K. Treasure
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this wire and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
All eyes are watching Mother Nature in anticipation of the cold front expected next week that may have the potential to do some serious damage to the winter wheat crop. The freeze is expected particularly in the eastern Corn Belt but some models have very cold temperatures into west Texas. For those areas that have already come out of dormancy, there could be problems. Let’s not count our chickens here, there’s some winterkill every year and every year the trade hypes it up more than it should. However, if the cold temperatures arrive as expected, I wouldn’t be surprised if this year was particularly bad.
I haven’t talked about the Baltic Dry Index (BDI) for several weeks. As I recall, it was somewhere around 750 the last time I mentioned it, and that wasn’t too terribly long ago. Well, today it closed at 530 points. To put that in perspective, have a gander at the 12 month chart:
The low spot back in July of last year was 732 points. In fact, the BDI is as low as it’s been in 5 years. As I’ve mentioned before, it should give greater incentive for importers to buy bulk commodities. Since the BDI is indicative of the cost of shipping bulk grain, the net cost of a cargo is cheaper on a landed basis all else being equal. I think the US will participate in that business to some degree so export sales should continue to come in at the high end of expectations. However, the continued strength of the US dollar will put a cap on our export potential.
Speaking of export sales, yesterday’s report showed decent but uninspiring totals. All wheat sales totaled 409,300 MT with HRW and SWW posting somewhat impressive numbers. Remember, HRW has had some disappointing figures lately so the bump in this week’s total is not something to get excited about. Corn sales totaled 1,003,100 MT and soybeans were 745,400 MT. Sorghum is still on fire; net sales of 322,400 MT bringing the total for the current marketing year to 7,401,775 MT. Wow.
Futures action was largely sideways for the week with nearby contracts of all three wheat contracts as well as corn and soybeans closing modestly higher. It may just be the market taking a breather and unwinding the oscillators. Technically, wheat still doesn’t look real good; I suspect though that the market will remain sideways until we can get a better idea of what how cold temperatures will get too next week. No need to be a hero here yourself, I’d even up flat positions on Monday. It’s almost an afterthought at this point, but deferred contracts in the wheat pits were down. Like I said last week, the market is sending a clear signal to sell cash longs nearby.
Bids are generally firmer into the export market though, containerized shippers remain in a bind and are largely bid-less at the moment. The port situation is causing some sleepless nights for those guys. Despite the absence of bids for containers, domestically basis levels remain firm. LA 12 pro HRW is bid ~170H and 14 pro DNS is north of 2.00H into Minneapolis. Spot bids as follows:
Chicago Gulf PNW
Soybeans .05H .83 H 1.15 H
Corn: .12 H .57 H 1.10 H
SRW: .05 H .80 H N/A
HRW: N/A 1.05 H (12 pro) 1.20 H (11.5 pro)
DNS 14 pro: 1.20 H N/A 2.80 H
SWW: N/A N/A 1.58 H
Export trade was busy this past week, due at least in part to low shipping costs. Here’s what happened:
· Japan bought the full menu of wheat from the US, Canada and Australia, totaling 129,395 MT, mostly for April shipment.
· Morocco announced a tender for 360,000 MT of milling wheat and 300,000 MT of durum wheat for May shipment, optional origin.
· Bangladesh announced a tender for 100,000 MT of wheat.
· I haven’t confirmed this but evidently the CCC is looking for 24,000 MT of HRS wheat for Tanzania. Mar 16-26 shipment. Leave it to Uncle Sam to give away the most expensive wheat we’ve got. Offers due 2/18
Please don’t hesitate to contact me with any questions or comments. [email protected]
Happy trading!
Sean K. Treasure
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this wire and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
