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Combined corn and soy acreage estimates are now closer to 178 million to 180 million rather than 183 million-plus two years ago, keeping primary crop acreage somewhat competitive. Fertilizer prices remain high but have eased since last fall, favorable for corn profitability prospects so long as corn prices do not significantly decline. Insurance price for spring wheat is also set during February, and half of the U.S. spring wheat crop is planted in North Dakota. The state’s spring wheat plantings ended higher than original intentions while corn and soy acres ended lower. Still, U.S. spring wheat acreage in 2022 was down from both intentions and the previous year.
All U.S. winter wheat area is estimated at an eight-year high. Wheat health is better in key soft red winter wheat states like Illinois and Missouri, where GE this week covers 69% and 68% of the crop, respectively. But only 5% of the country’s winter wheat has been sown in these states. Winter wheat at the U.S. level was 34% GE and 26% PVP in the last assessment at the end of November. Hard red spring wheat accounted for 28%, soft white winter 20%, soft red winter 9%, and durum and other wheat accounted for 5% of inspections.
New gross longs were the primary reason for the move, as has been the case in most recent weeks when funds were net corn buyers. CBOT corn ended at $6.83 per bushel Friday, up 5% from the month’s low and stronger than the year-ago $6.36. Most active CBOT wheat futures fell more than 2% in the week ended Jan. 24, including a 16-month low of $7.12-1/2 on Jan. 23. Most-active CBOT wheat had traded between $4.16 and $4.37 per bushel in April 2017. Their net long fell to 135,503 CBOT soymeal futures and options contracts from the all-time high of 150,939 a week earlier.
As of Jan. 19, U.S. soybean sales for 2022-23 totaled 46.5 million tonnes, up 5% from a year earlier. Robust sales are not necessarily needed from here as only 7.6 million tonnes stand between Jan. 19 sales and USDA’s full-year forecast. Net U.S. soybean sales to unknown destinations in 2022-23 are record-large for the date at 4.6 million tonnes. Sales to China of 28.2 million tonnes as of Jan. 19 are up 11% from last year. Some 129,000 tonnes had been sold to China in the week ended Jan. 19, revealed in Thursday’s weekly export sales.
That mildly increases the chance of a bountiful U.S. corn crop, but a disaster cannot be ruled out. La Nina and its warm-phase cousin El Nino usually peak in strength during the U.S. winter. La Nina is on its third consecutive season, but its departure could be near. Although it varied greatly by state, U.S. farmers on average did not produce a stellar corn crop in 2022 due to drought in the west. Recent years where an early-year La Nina gave way to El Nino by year’s end include 2018, 2009 and 2006.
Ongoing drought in Argentina also enticed fund buying last week in corn, soybeans and soybean meal, forcing another managed money record in the latter. Money managers' extension of net longs in CBOT corn, soybeans and meal in the week ended Jan. 17 was the result of new gross longs, which were especially numerous in corn and beans. Managed money net position in CBOT soybean futures and optionsOpen interest in CBOT corn futures and options is at 13-year lows for the time of year after hovering a bit below average during mid-to-late 2022. Through Jan. 17, money managers boosted their net long in CBOT corn futures and options to 192,137 contracts from 149,605 a week earlier. In the last three sessions, most-active CBOT soybean futures fell 2.2%, corn fell 1.3% and soymeal shed 3.6%.
Brazil’s corn exports should wind down in the coming months, inviting the possibility that China turns to the U.S. market. SHRINKING SHIPMENTSThe 2022 U.S. corn crop was smaller than expected and lighter than in the two prior years, curbing export potential. 2 shipper Brazil has the United States in serious jeopardy of losing its corn crown, something many believed could not happen this soon. For context, Brazil’s corn exports first topped 10 million tonnes in the 2010-11 trade year, and they broke 26 million tonnes two years later. Brazil’s 2022-23 corn crop is seen at a record 125 million tonnes, nearly a quarter larger than the recent average.
Most-active CBOT corn futures had declined more than 2% through Jan. 10, and CBOT soybeans fell fractionally. Corn and soybean futures both rose about 3% from Wednesday through Friday. However, strength in corn and soy, along with much lighter-than-predicted Dec. 1 U.S. wheat stocks, allowed CBOT wheat to rise 1.6% in the last three sessions. The managed money net short in Minneapolis wheat futures and options decreased slightly through Jan. 10 to 2,704 contracts. wheat futures and optionsKaren Braun is a market analyst for Reuters.
Harvested corn acres were primarily lost in western states including Nebraska, Kansas and South Dakota, where drought hit hard this summer. Corn yield came in 0.8 bushel above the average trade guess, which is analysts’ worst performance in the 2022 season. The best analog for 2022 corn production may be 2002, which also featured a western drought. WHEAT AND SOY MISSESDec. 1 U.S. soybean and wheat stocks were both the most bullish versus market predictions since at least 2005. Wheat stocks came in 5% below trade guesses and soybean stocks were 3.6% below.
The ever-important U.S. corn crop may be most primed for a market miss due to an alarmingly low range of guesses. YIELDSAnalysts’ range on U.S. corn yield is a seven-year low and for soybeans it is at least a 13-year low. U.S. farmers did not have a banner corn crop primarily because of drought in western areas. The 2021 corn yield last January was unchanged from November, but otherwise the trade is looking for the smallest January move in corn yield in 14 years. Argentina’s corn crop is seen falling more than 5% to 52 million tonnes from 55 million in December.
The United States was gripped by a frigid Arctic blast in late December, affecting transportation and commerce. The U.S. Department of Agriculture already projects 2022-23 U.S. wheat exports at a 51-year low of 21.1 million tonnes (775 million bushels). That volume is 26% lower than in 2016-17, the last time the United States was the world’s leading wheat exporter. Through the first half of 2022-23, which began on June 1, U.S. wheat exports covered 54% of USDA’s December forecast. U.S. wheat supplies have contracted after two disappointing harvests, driven by both low area and yield.
CORN, SOY, WHEATCBOT corn, soybean and wheat futures declined notably on Jan. 3, the first trading day of 2023. Through Jan. 3, they cut about 3,500 contracts from their stance, resulting in a net short of 52,715 CBOT wheat futures and options contracts. Investors may have reduced CBOT corn length late last week with futures down 2.5% between Wednesday and Friday. Most-active CBOT soybean futures were unchanged over the last three sessions given the poor conditions in Argentina and possibly unfavorable weather in Brazil’s southernmost state offsetting U.S. demand concerns. They expect U.S. corn, soy and wheat ending stock estimates to rise along with Brazilian corn and soy crops, though a sizable decline is predicted for Argentina’s harvests.
Most-active corn futures’ worst recent January performance came in 2010 with a plunge of 14%, and most-active soybeans suffered the same fate that year, falling 13% during the month. That happened in January 2010, when decently bullish speculators heavily sold corn and soy futures in the weeks after the USDA report. Corn & soy futures in JanuaryUSDA INFLUENCEThe January trend in CBOT corn and soybean futures usually mimics price action on the month’s U.S. Department of Agriculture report day, so long as futures move by at least 1% on that day. But corn and soy futures have been uncharacteristically quiet on January report days in the last few years, making it harder to anticipate the trend going forward. January 2021 was the last time most-active corn futures spent more than one day below $5.
But Argentina is starting in a significant moisture hole given that La Nina, the cool phase of the equatorial Pacific Ocean, is hanging around for a third consecutive season. Monthly precipitation in ArgentinaDrought and heat cut Argentina's 2022 soy and corn yields to four-year lows, but the crops are in worse shape now. GOODBYE LA NINA? The calendar year of 2022 was the driest in Argentina’s grain belt since 2008, which started with a strong La Nina that had begun in mid-2007. Weather will matter for Argentina's soy and corn through at least March given the later development.
The managed money meal net long of 129,989 contracts, up about 8,700 on the week, rivals May 2018’s high of 133,549. That is supported by a heavier managed money net long: 128,616 futures and options contracts now versus about 98,000 a year ago. Most-active CBOT soybean futures on Friday settled at $15.24 per bushel, their highest since June. CBOT soybean oil futures expanded 13.3% in 2022 after increasing by a third in 2021, though they declined 3.5% in the latest three sessions. Open interest in CBOT wheat futures and options had ended 2021 at the lowest point for the date since 2008.
Historically, ratios below 2.3 are supportive of corn planting and soybeans dominate around 2.5 and above, but the middle can be gray. The U.S. Department of Agriculture recently slated 2023 corn acres at 92 million, up from 88.6 million this year. Soybean plantings were seen at 87 million acres in 2023 versus 87.5 million in 2022. Prices as of February should better dictate U.S. farmers’ 2023 planting intentions, but for now, corn’s supremacy has slipped. Unsurprisingly, bean acres were higher and corn acres lower than the earliest ideas that year.
That was apparently not what the Boies and Moskowitz firms were hoping. In mid-November, the firms filed the first of their three FTX lawsuits in federal court. On Nov. 21, the Boies and Moskowitz firms filed a second FTX class action, this time on behalf of non-U.S. FTX customers. The day after Bloom’s assignment to the case, the Moskowitz and Boies firms voluntarily dismissed the two previously-filed FTX class actions before Moore and Gayles. “As we got more cases, we filed more cases,” Moskowitz said.
CORN AND WHEATMoney managers’ net long in CBOT corn futures and options is now the smallest since the early days of the recent rally in September 2020. Managed money net position in CBOT corn futures and optionsThat was the largest weekly net reduction in corn since August 2019. Most-active CBOT wheat futures lost nearly 7% in the week ended Dec. 6, reaching their lowest level since October 2021. Money managers increased their net short by more than 9,000 to 63,382 futures and options contracts, the most bearish since May 2019. March Minneapolis wheat also notched four-month lows on Dec. 6, and money managers pushed their net short position past 3,000 futures and options contracts.
Nine vessels totaling 606,540 tonnes of Brazilian corn were set for sail to China this month, according to Tuesday’s shipping lineup from Williams Shipping Agency. Phytosanitary requirements prevented China from importing much corn from Brazil before last month, when Beijing approved several Brazilian corn traders for export. China’s remaining U.S. corn balance is thin, with unshipped 2022-23 sales at 1.8 million tonnes as of Nov. 24. Exporter association Anec on Wednesday pegged Brazil’s December soy exports at 1.7 million tonnes, below the five-year average of 2.5 million. China and unknown destinations, frequently assumed to be China, purchased 1.9 million tonnes of U.S. soy in the week ended Nov. 10.
Chicago wheat futures are still elevated versus most years, though they are slipping significantly versus prices elsewhere and against competing grains, even as supplies remain tight. Most-active CBOT wheat settled at $7.29 per bushel Tuesday after hitting a 14-month low. By the first week in March, most-active CBOT wheat had surged more than 50% within 10 sessions. Through Tuesday, CBOT wheat's 10-session decline totaled 11%, almost a record for the time of year. CBOT wheat usually sits at a premium to CBOT corn, but it has lost significant ground to its yellow grain competitor.
[1/2] The logo of FTX is seen at the entrance of the FTX Arena in Miami, Florida, U.S., November 12, 2022. Ellison, who ran trading firm Alameda Research, has hired Washington-based law firm Wilmer Cutler Pickering Hale and Dorr to represent her, a source familiar with the matter told Reuters. Semafor previously reported Mills' advisory work for Bankman-Fried. FTX secretly transferred customer funds to its affiliate Alameda Research to fill a shortfall at the crypto trading firm, Reuters has previously reported. The Wall Street Journal has previously reported that Ellison and senior FTX officials knew the crypto exchange had dipped into its customer funds to help Alameda meet liabilities.
That resulted in a corn net long of 191,631 futures and options contracts, a three-week high. Managed money net position in CBOT corn futures and optionsFunds covered gross shorts in both corn and soybeans through Nov. 29, though the addition of new longs was the more prominent feature. Open interest in corn futures and options was down 14% on the year as of Nov. 29, and for soybeans it was down 9%. Corn futures lost 3.5% in the last three sessions, on Friday hitting the most-active contract’s lowest levels since August before settling at $6.46-1/4 per bushel. CBOT soy product futures were up in the week through Nov. 29, soyoil to a larger degree at 2%.
Forecasts suggest La Nina may fade into a neutral phase midway through Argentina’s growing season, but it is too early to say with certainty. Current trade wind and ocean temperatures, including those in the Indian Ocean, could support further strengthening of La Nina in the coming weeks. But that should not necessarily heighten concerns since crop impacts are not perfectly correlated with La Nina strength. Rain during the 2008-09 growing season was less than two-thirds of normal, resulting in terrible crop yields, particularly for soybeans. Growing season rains were a third heavier than usual, and soybean yields were very good, but corn was excellent.
Although most-active CBOT corn futures were unchanged in the week ended Nov. 15, the contract had traded down more than 2% by Nov. 15 before rallying back late in the session. Money managers axed more than 78,000 gross CBOT corn longs in the two weeks through Nov. 15, the most for any two-week stretch since July 2016. The U.S. Department of Agriculture released its monthly supply and demand and U.S. crop production reports during the week ended Nov. 15. Most-active CBOT wheat futures were also unchanged in the week ended Nov. 15 but had been down more than 3% at one point. Money managers were more active on the downswing, reducing their net long by about 11,000 to 92,965 CBOT soybean futures and options contracts.
China accounts for 60% of global soybean imports, and upon arrival, the beans are crushed into protein-rich hog feed to support the country’s strong appetite for pork. When soybean imports are strong, that often indicates healthy feed demand and a sufficiently large hog herd. China substantially upped pork imports in 2019 after disease spread through its hog herd starting in 2018, potentially killing up to 40% of the country’s pigs. China’s pork imports have risen a bit since the mid-year slump due to a notable increase in Brazilian shipments since the beginning of this year. Through October, China’s 2022 soybean imports of 73.2 million tonnes were down 7.5% on the year.
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