Published Friday morning, 11/2/12

 

The overnight markets are easing due to the fact that FCS issued its estimates yesterday afternoon and to no surprise the bean yield was raised to 39.1 with overall production at 2.959b. The corn yield was also raised to 124 which is a bit surprising with overall production at 10.884. The markets as of 8CST are trading down 7-8 in the old crop beans while new crop is up 3, meal is down .50-$1, oil has eased by nearly 50 points, corn is down 2-3 and wheat is still hovering around unchanged.

 

The weekly sales data for beans once again exceeded the expectations with 741.0mt being sold, the US continues to far outpace what needs to be done to achieve the USDA projections. The corn was lethargic once again but this comes as no surprise with only 168.0mt sold, this figure could start to change quickly in 4-6 weeks as it is generally thought that SA will be tapped out and US will once again be competitive.

 

The weather in SA is something to monitor with forecasts today showing improvement in nearly every corner, the dry areas are expected to get rains while the wet areas are to dry out, the only issue with the wet areas is that the 6-10 forecast has rain returning. The basis levels in both beans and corn are back on the rise which also indicates that the US is still on the radar screen for doing business, even the wheat markets are getting closer to being competitive.

 

The outside markets are improving since the employment figures. The equities are higher, crude oil is down .62, natural gas is down .02, cotton is up .05, gold is down $7, $index is gaining, the DCE is higher in beans, lower in meal and oil and flat in corn, the Matif is lower in all markets.

 

The OI in corn is up 7650, wheat is up 486, beans are up 1622, meal is up 171 and oil is up 5520.

 

The option markets showed some life yesterday, especially in beans where there was nearly 10k SH 17 calls purchased, this seemed to be attached to the ideas of some fund having their marketing year start on November 1st and allocating $ into the ag space, the only problem is that it takes 10k contacts to get the volatility improve by 1.5%. The BOH on the other hand continues to hemorrhage with downside puts at 17%, look to buy the BOH 50 puts and sell SH 14 puts and collect $, do the math on this and with SH at $14, crush at 50 cents and oil share at 36% BOH would be trading near 47 cents. The corn premium increased a bit yesterday on the winds of beans but with the flat price moving back into the middle of current trading ranges this could be short lived with the hope of improvement based on next Fridays USDA report. The wheat is still at a 4% premium to corn and for those who think these need to move closely together look to own the corn straddles vs. the wheat straddles.

 

This weekend is day light savings time in the US, we roll our clocks back so instead of having 51 hours off, this weekend we get 52 hours.

 

 

Editor’s Note: Daily Grain Commentary readers who are equity investors/traders only can gain access to the grain markets through the following exchange traded funds (ETFs).

Grain Markets/Indexes

ELEMENTS MLCX Grains Index Total Return ETNN (GRU, quote)

iPath Dow Jones-UBS Grains Total Return Sub-Index ETN (JJG, quote)

Power Shares DB Agriculture Trust (DBA, quote)

Corn

Teucrium Corn Fund (CORN, quote)

Wheat

Teucrium Wheat (WEAT, quote)

About OTC Global Holdings

Formed in 2007, OTC Global Holdings is headquartered in Houston and New York, with additional offices in Chicago, Jersey City, London and Louisville. It is a leading independent interdealer broker in over the counter commodities and the largest liquidity provider to CME ClearPort and ICE Clear U.S. Through its subsidiaries the company holds a dominant market share in the U.S. and Canadian natural gas markets, the U.S. power markets, crude oil and crude oil options, crude oil products and crude oil product options, agricultural and soft commodities, as well as structured weather and emission derivatives. The company serves more than 250 institutional clients, including 45 members of the Fortune 500, and transacts at over 150 different commodity delivery points. To learn more about the company, please visit www.otcgh.com or go to http://bit.ly/OTCYouTube.

 

 

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