Grains 02 (Jan 14 - Dec 24)

[winston]

A picture perfect setup and how to take advantage of it now

Source: Daily Crux

http://thecrux.com/sjuggerud-a-picture- ... of-it-now/

[winston]

Soybean exports power US economy to best performance in two years

A surge in soybean exports after a poor soy harvest in Argentina and Brazil helped to shrink the U.S. trade deficit in the third quarter, giving a lift to growth.

U.S. soybean exports surged to a record 1.936 billion bushels during the 2015/16 marketing year that ended on Aug. 31, as harvests in key competitors Brazil and Argentina were hit by weather problems, forcing importers to buy more U.S. supplies than planned.

Economists said that soybean-driven export growth spurt could reverse in the fourth quarter,

Source: Reuters

http://www.thestar.com.my/business/busi ... two-years/

[winston]

Wheat ETF Hits New Low on a Bumper Crop Year

Aug 30, 2016

The lone wheat exchange traded fund slipped to a new low Monday as prices on the soft commodity plunged to their lowest in a decade on huge buildups in inventory around the world.

The Teucrium Wheat Fund (WEAT) fell 1.9% on Monday. WEAT has declined 20.0% year-to-date.

Meanwhile, CBOT wheat futures were down 2.6% to $3.9675 per bushel, the first time it has traded below $4 a bushel since 2006.

Driving down the price of wheat, large harvests are piling up in large growing regions across the world on extensive planting and favorable weather.

The International Grains Council recently raised its global wheat production forecast to a record 743 million metric tons, or up 1% year-over-year, reports Gregory Meyer for the Financial Times.

The recent U.S. winter wheat harvest came in at 45 million metric tons, or up 21% year-over-year. Merchants are also running out of room in silos and have been forced to let harvests sit outdoors.

In Canada, the government forecasts the second-largest wheat crop in 25 years of 30.5 million metric tons.

Russia is set to become the largest wheat exporter this year after harvesting more than 70 million metric tons, and the country is coming up against storage concerns as well.

“The world can source wheat from the northern hemisphere or southern, eastern or western. That increases the food security of the world a whole heck of a lot,” Ken Stein, co-manager of Kottke Commodity Capital, told the Financial Times.

Some may believe that the increased production may help diminish prices for end consumers, which may create more demand. However, Abdolreza Abbassian, grains economist at the UN Food and Agriculture Organization, argued that demand only tends to track population growth. Wheat production is expected to outpace consumption by 10 million tons this year.

However, some observers warn that the supply of high-quality wheat are less than people expect, which may open the wheat market for a potential rebound.

“While total supply gets the most attention, wheat’s real value is as a functional food ingredient, not as a bulk commodity,” US Wheat Associates said in a note. “When you dig a bit deeper, the total supply of milling quality wheat is much different — and it is tightening.”

Moreover, after the recent sell-off, WEAT is showing a relative strength of 22.05, which suggests that the market is oversold – the relative strength index measures the speed and and change of price movements, with readings below 30 signaling an oversold market.

Source: ETF Trends

[winston]

US files WTO complaint against China over grain import restrictions

USTR said it also is taking the next step in the complaint filed in September that China provides US$100 billion in excess price support for local farmers.

The Agriculture Department estimates China would have imported as much as $3.5 billion of additional crops last year alone if the so-called tariff-rate quotas were properly used.

Source: SCMP

http://www.scmp.com/business/commoditie ... ain-import

[winston]

Too Much Wheat Is Forcing Its Farmers to Other Crops

by Agnieszka De Sousa and Megan Durisin

Rabobank, JPMorgan say weather risk, fewer acres to lift price
Glut has spurred longest slump in decade as growers lose money

After four straight seasons of record harvests, bins are bulging from Kansas to Western Australia and prices are near the lowest in a decade.

But there are signs the glut may not last much longer, or at least that supplies may tighten enough to halt the four-year slump in wheat futures.

Global production will reach an all-time high of 751.3 million metric tons once the current Southern Hemisphere harvest is complete, leaving stockpiles at 252.1 million tons, the most ever

Russia, the world’s top exporter, said on Dec. 28 that its 2016 wheat harvest jumped 19 percent, more than analysts forecast.

Farmers in Argentina are harvesting what will probably be their biggest crop since 2012.

With the USDA predicting global wheat consumption rising 3.5 percent to a record 734.3 million tons in the 2016-17 season, JPMorgan says inventories will drop in 2018 to 228 million tons from an estimated 249 million this year.

Source: Bloomberg

https://www.bloomberg.com/news/articles ... ther-crops

[winston]

WA farmers deliver record grain harvest

West Australian grain growers have delivered the biggest grain harvest in the history of the state.

CBH Group, the state's grain growers' co-operative, said on Friday it received total deliveries of 16.62 million tonnes by the end of the 2016/17 harvest season, beating the previous record of 15.86 million tonnes set in 2013/14.

CBH also broke two grain transport records: shipping a record 1.88 million tonnes in January, and moving a record 831,000 tonnes of grain to port via rail in December.

The record harvest came despite widespread frosts in August and September, which caused significant crop damage in many regions.

"Some growers have suffered significant losses from the frosts, while other areas of the state enjoyed incredible yields," CBH general manager of operations David Capper said.

"Overall, it resulted in a 22 per cent increase in the total tonnes received compared to last harvest."

Source: AAP

[winston]

Chart of the day: Corn to turn the corner?

by Nicole Elliott

Over the past decade, Dalian corn futures prices have been on a roller-coaster ride.

From a record low of just over 1,000 yuan (US$145.21) per tonne, they peaked dramatically at 2,770 yuan.

Trending down in erratic steps within a trend channel since then, they have spent the past seven months trying to base against Fibonacci retracement and secular support between 1,375 and 1,500 yuan.

The big hammer candle a fortnight ago, following the bullish Marabuzo candle from trend channel support, adds upside pressure to the neat little rounded bottom that has been forming since December.

As and when resistance between 1,630 and 1,670 yuan breaks, expect a rush to 1,750 yuan and then 1,850 yuan.

Source: SCMP

http://www.scmp.com/business/commoditie ... urn-corner

[winston]

Grains piled on runways, parking lots, fields amid global glut

By P.J. Huffstutter and Karl Plume

World stockpiles of corn and wheat are at record highs. From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for basic foodstuffs.

Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tonnes going into the next harvest - the third straight year of historically high surplus, according to the U.S. Department of Agriculture (USDA).

That's enough to cover demand from China for about a year.

Source: Reuters

http://www.reuters.com/article/us-usa-g ... SKBN17D0EO

[winston]

Chart of the day: Sharp swings in Dalian soya bean futures

Dalian soya bean futures have had a torrid time this year, soaring to 4,470 yuan (US$650) per tonne early on, only to slump to a low of 3,635 yuan this week.

Not surprisingly, historical volatility is well above the very long-term mean and was almost two standard deviations above it late last year.

Given that there were small signs of divergence in MACD and stochastics over the past fortnight, we look for an interim base to form.

This is because the drop from secular trend-line resistance has retraced a Fibonacci 61 per cent of the previous rally and this area coincides with a rising Ichimoku cloud.

The lagging line might also benefit from the sharply rising candles of 26 weeks ago.

Source: SCMP

http://www.scmp.com/business/commoditie ... an-futures

[winston]

Destructive weed threatens US corn fields

A US government program designed to convert farmland to wildlife habitat, has triggered the spread of a fast-growing weed that threatens to strangle crops in America's rural heartland.

The weed is hard to kill and, if left unchecked, destroys as much as 91 per cent of corn on infested land, according to the US Department of Agriculture (USDA).

It is spreading across Iowa, which accounts for nearly a fifth of US corn production and in 2016 exported more than $US1 billion ($A1.3 billion) of corn and soy.

The federal Conservation Reserve Program pays farmers to remove land from production to improve water quality, prevent soil erosion and protect endangered species.

The destructive weed - Palmer amaranth - has spread through seed sold to farmers in the conservation program, according to Iowa's top weeds scientist, Bob Hartzler, and the conservation group Pheasants Forever.

"We are very confident that some of these seed mixes were contaminated," Hartzler said.

Hartzler, an Iowa State University agronomy professor, said one seller was Allendan Seed Company, the state's largest producer of local grass and wildflower seeds for conservation land.

In written responses to questions from Reuters, Allendan said it was "possible that pigweed seed ... was present in some mixes".

Palmer amaranth is a type of pigweed. Allendan did not confirm it had found the seed in any of its supplies. It said outside labs that the firm hires to test seed quality had been unable to distinguish Palmer amaranath from other pigweeds.

The company said it started using a new DNA test in February to check its seed for Palmer amaranth.

Many farmers joined the conservation program in the past year as prices for their crops tanked amid a global grains glut.

The weed can be killed, but the cost of clearing it would be another hit to the cash-strapped farming community in the United States, the world's top corn supplier.

The program is managed by the Natural Resources Conservation Service (NRCS) and the Farm Service Agency (FSA), units of the USDA. NRCS officials have acknowledged that contaminated seed mixes for conservation land have spread Palmer amaranth.

In another state, Minnesota, authorities are also investigating whether the conservation program inadvertently introduced the weed to that state.

Keith Smith, a corn and soybean farmer in Gladbrook, Iowa, said he yanked Palmer amaranth out of land he set aside in the conservation program after finding the weeds last year.

He doused them in diesel and torched them with old tyres.

Smith now regrets joining the program.

"I thought I'd help out the Earth," he said.

The NRCS and FSA denied responsibility for the infestation because they do not supply or test the seed that farmers use to turn cropland into a refuge for wildlife. Landowners are responsible for finding their own seed.

None of the companies or organisations involved in the program should be blamed, said Jimmy Bramblett, the NRCS's deputy chief of science and technology.

"It's just something that happened," he said.

The NRCS is nonetheless considering giving financial assistance to Iowa farmers to help control the weed and is working with the farming community and other government agencies to control it, Bramblett said.

Palmer amaranth, which is native to the southwestern United States, grows up to 5 cm a day and can reach a height of 3 metres. It produces up to 500,000 seeds the size of a pepper grain, which travel easily on the wind, in manure or stuck to farm equipment and vehicles.

Midwest farmers now face increased costs for the herbicide and labour to eradicate the weed.

Fighting Palmer amaranth has doubled or tripled annual herbicide and labour costs to between $US60 and $US80 per acre (0.4 hectare) for cotton farmers in Georgia, said Stanley Culpepper, a weed science professor for the University of Georgia.

Iowa farmers currently spend between $US35 to $US40 per acre on herbicides, Iowa State University research shows. If Palmer amaranth is firmly established, costs could increase by up to 50 per cent, Hartzler said.

Palmer amaranth first arrived in Iowa in 2013 but exploded across the state in 2016, spreading from 5 to 48 of the state's 99 counties, according to Iowa State University.

In at least 35 of those counties, the weed was found on land in the conservation program.

Source: AAP