Unstructured Finance

Weather forecasts will drive grain/soy prices week of April 30

April 27th, 2007, filed by Christine Stebbins
    
    Rain is usually bearish for corn prices. “Rain makes grain,” runs an old adage on LaSalle Street — but not at planting time.
    Rain, and forecasts for more, had the bulls running in the CBOT corn market at mid-week as worries mounted that farmers would not be able to plant all the record-breaking acreage of corn they have planned for this spring.
    Midwestern farmers typically plant corn from mid-April to mid-May. But a wet, cold spring has really put them behind. The damper Mother Nature is putting on fieldwork this spring is especially critical this year with mushrooming demand for corn from ethanol plants projecting monthly records stretching years out into the future.
    However, with outlooks for drier weather heard on Thursday and Friday, corn prices fell back and closed the week only  3-1/2 cents per bushel higher.
    Weather and volatility should continue to go hand in hand, with volatility building as the season progresses. As one grain analyst said on Friday: “It’s going to be weird all summer.”
    All eyes will be on the government’s weekly crop progress report due on Monday afternoon. Traders expect USDA to report that about 24 percent of the corn crop is planted, behind the five-year average near 40 percent by the end of April.
    Wheat got a lift from concerns that dryness in Europe and a spring freeze across the U.S. winter wheat belt cut yields. The final answer will come at harvest which starts early June.
    In the meantime, doubts fed price volatility with Chicago wheat prices trading above $5 a bushel, and at premium to Kansas City — something that rarely happens since KCBT prices reflect a higher quality wheat than Chicago.
    The annual U.S. wheat quality crop tour begins next week. So millers, exporters, government officials, farmers and others will be walking wheat fields in the top wheat state of Kansas to see just how bad the crop was hurt by a hard spring freeze.
    They’ll also be checking for diseases as rains over the last couple weeks could be causing problems like fungus.
    Soybeans still just follow wheat and corn along. Bottom line for beans: if farmers can’t get all their corn acres in or they plow up damaged wheat fields to plant another crop, the result will surely be more soybeans planted than originally forecast. Soy planting starts after corn seeding ends.
    These same factors will play into the markets next week. Watch the latest weather forecast as it will dictate how the market moves. Most forecasters Friday were pointing toward a dry weekend. But there’s some question about next weekend.

–First day deliveries against the May contract are Monday. 
Weekly trade data issued Friday from the Commodity Futures Trading Commission showed that commodity funds remained net short by a small margin in CBOT wheat futures, increased their longs in corn, and cut their longs in soybeans. Fund trading positions were close to expectations, but they were a little longer in corn and cut their net long soybean position more than analysts estimated. That could lend some support to soy in Sunday night electronic trade. But the weather forecast will be the main driver of all Chicago markets.

Outlook for Chicago grains/soy for week of April 23

It is only mid-April and it’s already a full-blown weather market in grains. Prices of corn, wheat and soybeans gyrated all week based on the latest weather forecast — a trend sure to continue that will feed market volatility.
    Warmer, drier weather in the U.S. Midwest weighed on corn prices as the week progressed. The weather change gave farmers the break they needed to complete spring field work and start planting corn, which has lagged due to a wet spring.
    Rain is forecast for next week which could stir fresh buying in corn, where a 60-year high in seedings is predicted this year to meet unprecedented demand for ethanol for fuel.
    The wheat market also moved on the latest weather stories. Reports continued to float in about how much wheat was damaged from a Easter-weekend freeze — maybe 200 million bushels, or about 10 percent of the entire U.S. wheat crop.
    The southern Plains hard red winter wheat belt could get hit by a severe storm, raising more worries about crop damage. Central and western Kansas, northwestern Oklahoma and southwestern Nebraska are the key areas seeded to HRW, which makes up 45 percent of the total U.S. wheat crop.
    So weekend weather will likely be the main driver for CBOT prices on Sunday night and Monday morning.
    The other factor that will have a big impact on Sunday night prices will be any fall-out from expiration of CBOT May options on Friday. 
    Most floor talk centered on the $3.60 strike in May corn options, with traders on edge if they were vulnerable to delivering futures positions on options they had written. May corn closed down 10-3/4 cents at $3.60-1/2 on Friday.
    Traders on Monday will also be keying on guesses about the U.S. Agricultural Department’s weekly crop progress report due on Monday afternoon at 3:00 p.m. (2100 GMT).  
    Traders expect another drop in wheat condition — down about 3 to 5 percentage points after falling 9 points in good-to-excellent category last week. Corn seeding was expected to behind, with only 13 to 17 percent planted versus the average around 22 percent by the third week in April.
    
    –Trade data from the Commodity Futures Trading Commission released on Friday afternoon showed that managed funds cut their net long positions in corn, soybean oil and soybeans in the week that ended on Tuesday, April 17. Funds continued to liquidate their longs in all three markets after Tuesday, traders said. Commodity funds continued to hold a net short position in CBOT wheat as of April 17 but were likely net long now after this week’s weather-related rally, they added.
      
    –The U.S. Census Bureau issue its March crush data on Thursday.

Let’s try harder — for dad

    Think you buy your father the perfect Father’s Day present? Well, odds are you don’t.
    In a new survey, 53 percent of fathers said they have never gotten a good Father’s Day gift. That represents a pretty large disconnect from what children think about the gifts they give. Nearly 67 percent of respondents believed that their fathers were generally pleased with the gifts they received.
    Moms are much easier. Of the 3,632 Americans who responded to the online poll conducted by ShopLocal, a multichannel shopping service company, only 18 percent of mothers did not like the gifts they received for Mother’s Day and nearly 60 percent said they always loved what they received.
    “Most people find that dads are a lot more finicky and less inclined to tell someone what they want, which could explain why more money is spent shopping for Mother’s Day than for Father’s Day,” said ShopLocal’s Eva Yusa in a news release about the survey.
    According to ShopLocal, $11.4 billion is spent on purchases for Mother’s Day while only $8.6 billion is spent on Father’s Day.

C’mon people! It’s Mom!

Do men love their mothers more than women do?

According to a National Retail Federation survey about Mother’s Day spending, men will spend $172.91 on average for mom compared to the $107.18 on average that women will shell out.

The survey, conducted by market research firm BIGresearch, found that younger people spend more on mom, too. Seems that as dear old mom gets older, the average ticket price of her gift gets lower — shoppers 35 to 44 said they’d spend $147.30 on Mother’s Day, while those ages 55 to 64 said they’d spend $138.14, on average.

Shoppers, who are expected to spend $15.73 billion this year on Mother’s Day, will gravitate to the old standbys of flowers, jewelry, luxury spa treatments and special meals, the survey found.

Outlook for Chicago grains/soy for week of April 16

tractor_web.jpgApril 13th, 2007 filed by Christine Stebbins

Chicago Board of Trade grain and oilseed markets reacted to weather conditions in another volatile week. The jitters started with the opening bell on Monday after a weekend freeze clamped down on the U.S. winter wheat crop. Analysts and traders batted around ideas that 100 million to 200 million bushels of U.S. winter wheat could have been lost. But by week’s end wheat specialists were still assessing the damage.
Corn was also driven higher by delayed Midwest planting due to the cold, wet spring. Muddy, cold soils have a lot of drying out and warming up to do before even basic fieldwork in Illinois and Iowa, which together produce a third of U.S. corn and soybeans.
If U.S. farmers plant less corn than forecast and spoiled wheat acres are plowed under to seed other crops this spring, the result will undoubtedly be more soybean acres. That factor overhung soybean prices all week.
Given Friday’s weather forecasts, there’s no reason to believe the market won’t see more of the same in the week ahead. Price action will depend on the latest forecast.
How much will traders be watching the weather this season? Fabled Chicago meteorologist Tom Skilling — who many Chicago traders swear by — has decided to add an additional weather broadcast on WGN television news starting Monday at 5:55 p.m. Chicago time (2355 GMT) — just before the CBOT agricultural markets open for electronic trading at 6:30 p.m. (0030 GMT)
Another pointer next week will be the U.S. Agricultural Department’s crop progress report on Monday afternoon at 3:00 p.m. (2100 GMT).
Traders are expecting the government to report that the condition of the wheat crop as fallen by 5 to 10 percentage points from its 64 percent in good-to-excellent rating the week before. Corn plantings are also expected to lag, with only 5 to 7 percent of the crop seeded compared to an average of 10-11 percent by mid-April.
The heart of the Corn Belt is soggy and cold. Soil temperatures need to be 50 to 55 degrees Fahrenheit for corn to germinate. So far, the ground is only warm enough to germinate corn in Missouri and next week’s cool weather will not be raising soil temperatures much, said forecaster Mike Palmerino with DTN Meteorlogix this week.
Bottom line: “It’s the weather,” said analyst Mario Balletto with Citigroup. So stay tuned.

–Friday’s weekly trade data from the Commodity Futures Trading Commission showed that managed funds expanded their net long positions in corn and soybean oil but cut their longs in soybeans and soymeal in the week ended April 10. Funds also cut their net short wheat position. Most of the numbers were close to what traders expected. The exception was soybeans which showed a bigger reduction in longs than expected.

–The National Oilseed Processors Association will release its monthly crush data on Monday.

Directing the millions

   tgt.jpg    You would think giving away $3 million a week might be easy for a company. But for Laysha Ward, who helps make the decision on where retailer Target Corp. sends its charitable contributions, the job includes some delicate choices. 
    Ward, Target’s Vice President of Community Relations, oversees Target’s domestic and international grant making, sponsorships and volunteerism. The company gives away 5 percent of its taxable income to support communities where it does business.

    Right now, Target supports programs ranging from giving grants to school teachers so they can take students on field trips to sponsoring free days at museums across the country.
    Ward said part of her job entails deciding which programs make sense for Target to get involved with.
    “You have to balance the community and business interest,” she said. “We try to do things that make sense for a company to do.”
    She added that you have to ask: “Who are you stake holders?”
    For instance, while a foundation might sponsor a 10-year study to derive in-depth knowledge of its cause, Target is looking for projects where it can get involved immediately and make an impact.
    She also said Target has a delicate line to walk when it comes to advertising its corporate sponsorship of events or items.
    While she said it is important not to turn off recipients by plastering the red Target bulls-eye logo all over a donation, she also said that consumers want to know that the places where they shop are giving back to the community. So she said that at times, it makes sense to incorporate the Target name or logo into a media campaign or on to a donation — but always discreetly.
    She also said that, with the prevalence of the Internet and the ongoing media focus on corporate governance, today’s younger generation of shoppers is much more aware of corporate responsibility and using that information to make decisions about where they want to shop.
    “There is a heightened awareness around the importance of giving,” she said.
    Next up for Ward and Target is national sponsorship of National Volunteer Week, which kicks off April 15. It includes a print campaign encouraging people to call 1-800-VOLUNTEER for suggestions on ways to get involved.

Sales March on, but could head for April fall

easter.jpgJust about everything that could go right for retailers did in March — warm weather early in the month, the move of a big apparel-buying holiday into the reporting period and a shift in the National Retail Federation’s sales reporting calendar.
And retailers reaped the reward, with almost all sectors posting better-than-expected sales in March at stores open at least a year.
“Warmer temperatures across much of the country following a cooler than normal February leading to pent up spring demand, tax refunds, an earlier Easter holiday, NRF calendar shift, a solid underlying jobs market, and modest March comp expectations all led retailers to a robust positive surprise this morning,” Ken Perkins, president of Retail Metrics, said.
Sixty-nine percent of the retailers the firm tracks beat expectations, Perkins said.
But pitfalls are already on the horizon. April is expected to be a tougher month and not just because all the Easter-related sales moved to March. Kohl’s Corp. notes that April got off to a cold start. That could crimp spending on spring items.
Wal-Mart Stores Inc. said the tough sales outlook for April would make it hard for the world’s largest retailer to meet its quarterly earnings forecast, even after March sales exceeded expectations.

==================================================

The following table lists select U.S. retail companies that have reported March sales at stores open at least a year, a key retail measure also known as same-store sales.

The table includes the range of mean estimates* given by analysts polled by Reuters, the average of those means#, and the actual change in same-store sales reported by the companies^.

Outlook for Chicago grains/soy for week of April 9

April 5th, 2007 filed by Christine Stebbins

The name of the game in Chicago Board of Trade grain and oilseed markets this week was volatility. Corn, soybeans and wheat saw wide price swings, continuing to react to last week’s government report forecast of the highest U.S. corn plantings in 60 years. But a forecast is one thing, reality is another, traders calculated this week.
Farmers need to see a drastic improvement in cold rainy Corn Belt weather to get all those intended corn acres planted in this spring. Iowa and Illinois alone account for a third of all U.S. corn and soybeans, and both saw sub-freezing temps far below normal for fieldwork, let alone putting seed in the ground.
That reality check should keep market volatility high and lead to some dramatic price swings in the weeks ahead. If they had a choice between planting corn vs. soybeans, farmers would still turn to corn hands-down due to its profitability. But as a rule of thumb, farmers who haven’t planted corn by mid-May lose about a bushel and acre on yield for evert day thereafter of delay. Beans can go in the soil in June or even later.
So weather reports will have a rising daily impact on price direction — a trend that will only heighten as the growing season progresses. So far, forecasters are calling for unseasonably cold weather in the Midwest through the Easter weekend then rain is supposed to move back into the region again next week. Both are bad for planting, keeping traders edgy.
“It’s a weather market in April — its a little early to be trading weather, but it is cold,” one CBOT trader said late Thursday.
There were also worries about cold weather damaging the soft red winter and hard red winter wheat crops, both now coming out of winter dormancy and trying to kick start the normal spring growth spurt for early summer harvest. The return of wintry cold helped wheat rally on Thursday ahead of the three-day weekend. The markets are closed on Good Friday.
The weekend weather and Monday’s forecasts will likely be the driver in CBOT markets on Sunday night and Monday morning.

Other than weather there’s little to get traders excited.

–The Commodity Futures Trading Commission will release its weekly trade data on Friday afternoon. Traders expecting commodity funds to cut their longs in CBOT corn futures/options and increasing their shorts in wheat after the recent dive in prices. The soy complex is hard call as the net position could be close to unchanged.
–USDA issues its monthly supply-and-demand report on Tuesday. Traders aren’t expecting many changes, if anything wheat stocks could shrink and corn stocks grow a little to reflect more wheat being fed to livestock. High corn prices during the first quarter of 2007 was encouraging livestock producers to cut back on feeding corn.

Outlook for Chicago grains/soy for week of April 2

The long-awaited government acreage report was finally released on Friday. Traders have been talking about it for months — anticipating bigger corn acres and smaller soy plantings.
    But they were quite surprised to see USDA’s forecast for 90 million corn acres — the most land planted to corn since 1944. Soy projected plantings fell 8.4 million acres from a year ago.
    It appears that farmers really liked the price of corn, which hit a 10-year high this winter boosted by demand for corn by ethanol producers.
    As soon as the Chicago Board of Trade markets opened Friday, corn dived the 20-cent trading limit and sat their the rest of the day. The implied futures closing price based on options was $3.60 per bushel — 14-1/2 cents below Friday’s settlement for May corn. Given that, traders expect a weak open in corn on Sunday night which could spillover to the other CBOT grain/soy markets.
    From now through the rest of the growing season, weather will be key. It’s the only thing that matters as Mother Nature will need to cooperate if farmers are really going to plant 90 million corn acres. Any delays will mean less corn and more soy.
    “Every week, every weather report will play a very important role. Anything other than warm, dry weather will not be greeted kindly,” said analyst Gavin Maguire with Iowa Grain.
    The U.S. Midwest is trying to dry out after a wet winter. So field work is already delayed and farmers are getting anxious.
    Traders will also keep an eye on the South American harvest. But big crops are expected and export business is shifting to Brazil.
    Friday’s trade data from the Commodity Futures Trading Commission confirmed that large speculators trimmed their long positions in CBOT markets over the past week. Additional long liquidation occurred on Friday as the markets tanked.

  •