2016 western hemisphere crop outlook€¦ · joined bloomberg in april of 2014. previously worked...

2016 WESTERN HEMISPHERE CROP OUTLOOK

May 2016

YOUR BLOOMBERG HOSTS

Sterling Smith, Agricultural Market Specialist Sterling Smith is an Agricultural Commodity Application Specialist for Bloomberg. In this role he interacts with many members of both the agricultural and Bloomberg Communities. Mr. Smith works directly with Bloomberg’s agriculturally oriented users to help them get the most from their terminals. He also works internally with his fellow employees to increase the understanding of both agriculture and agriculture as it applies to the Bloomberg terminal. Mr. Smith has spoken at many agricultural events over his 20+ year career and has made many media appearances discussing various issues in agriculture. Prior to joining Bloomberg Mr. Smith was the Agricultural Market Analyst at Citibank in Chicago where on daily basis he covered grains, oilseeds, cocoa, coffee, cotton, orange juice and sugar. Prior to Citi, he was a Senior Market analyst for CHS Hedging in St. Paul, MN. Prior to that, he operated an introducing broker at the Chicago Board of Trade. One of Sterling’s first jobs was detasseling corn in eastern Nebraska. Mr. Smith holds a degree in Communication/Journalism with additional concentrations in economics and sociology.

Matt Wietz , Commodity Advanced Specialist Joined Bloomberg in April of 2014. Previously worked in Global Supply Chain at Ann Taylor focusing on Raw Materials. Currently a member of the Bloomberg Help Desk focusing in Commodities, Derivatives and Bloomberg API. Graduated from King's College with degrees in Finance, Economics & International Business.

GUEST SPEAKERS

Dave Hightower, Founding Principal, The Hightower Report As a founding principal of The Hightower Report, Dave Hightower analyzes the energy, metal, index, currency & bond markets daily. Dave has over 30 years experience in the commodity and financial futures industry. Before starting The Hightower Report, Dave was the Director of Research for the (then) largest commodity brokerage firm in the United States, Stotler & Company. Prior to this, Dave was one of the first paid full time stock index futures analysts and has since covered the stock market on a daily basis. Dave has provided research interviews to CNN, Bloomberg Television, the Wall Street Journal, Futures Magazine and many other industry groups/publications. Dave has worked with regulatory agencies, exchanges and other industry players on a wide variety of research and trading projects. He also educates commercial traders in basic and advanced hedging techniques. Terry Roggensack, Founding Principal, The Hightower Report Terry Roggensack, another founding principal of The Hightower Report, analyzes the livestock, grain and soft markets. Terry has over 30 years experience in the commodity and financial futures industry. In the late 1980s, Terry briefly lived in London as acting Director of a new London clearing firm. For more than ten years, Terry was Director of Research at Stotler & Company before he picked his successor – David Hightower. Terry is frequently asked to present at CBOT press conferences when major fundamental shifts occur in the marketplace. During a dangerous monsoon season, he provided hedge strategies for the government of India. He provided an extensive hedge proposal for managing the government of Canada’s exposure to ongoing producer income support and subsidy programs in the grain and livestock sectors. Terry has provided hedge consulting to China’s national soybean buyer as well as cash grain strategies to the largest corn trader in the US.

AGENDA

North America | South America o New Terminal Functions o Late Planting Ideas o Market Conditions & COT

he Hightower Report o May 2016 Market Overview

2016 GRAIN & OILSEED OUTLOOK IB<GO> Bloomberg has a global anonymous agricultural chat room called The Barnyard. Nearly 300 members have joined in the first three months. Let us know if you would like to join.

2016 GRAIN & OILSEED OUTLOOK NEWC<GO> The NEWC Function on the Bloomberg is any easy place to find new items and receive alerts about new items that are on the terminal in the commodity space.

2016 GRAIN & OILSEED OUTLOOK NEWC<GO>

The new Launchpad WASDE monitor delivers basic balance sheets in an easy and quick format. Contact Sterling if you would like a copy.

GRAIN & OILSEED OUTLOOK NI DAYBOOK<GO>

An additional source for agricultural news covering Asia, Europe and the Americas.

GRAIN & OILSEED OUTLOOK NI DAYBOOK<GO>

This daybook aggregates all of the key news of the day in one easy to find location. This can be set up as a subscription or as an alert.

Brazilian Cash & Agricultural Fundamentals

OTC BR AGRI <GO>

Agency Estimates

Port Line-up Exports

Cash prices FOB Basis Research

MONITORING BRAZIL’S TRADING PARTNERS FOB VALUE & SHIPPED VOLUMES

XLTP XBREX<GO>

• China still accounting for nearly 80% of Brazil Soybean exports

COMT <GO> 5) Oilseeds 12) Soybeans

Comparing FOB Basis for Physical Flows

PRICE FORMATION: CASH PRICES

12

Gulf Argentina Rosario

Brasil Paranaguá

CBOT Corn July’16

U$ 3.86/bu U$ 3.86/bu U$ 3.86/bu

FOB Basis +U$ 0.45/bu +U$ 0.60/bu +0.40/bu FOB Price U$ 4.31 / bu U$ 4.44 / bu U$ 4.26/bu

Bushels to tons x 39.3

U$ 169 / ton U$ 174 / ton U$ 167 / ton

1

Where should I buy my corn from, Gulf, Argentina or Brazil ?

NORTH AMERICA The USDA sends the Soybeans into Overdrive

2016 GRAIN & OILSEED OUTLOOK BI<GO>

On the farm in the USA

The Kansas City Fed Index has been below zero since early 2015. However there has been some recent signs of improvement.

2016 GRAIN & OILSEED OUTLOOK GRPM<GO>

15


• The Bloomberg Terminal function GRPM allows for a high level view of prices and farm returns. Using USDA average cost and unadjusted board prices, this how things looked on February 29th, 2016. The second slide shows the improvement following the rally that is now in its 11th week.

EARLY 2016 GRAIN & OILSEED OUTLOOK GRPM<GO>

16


2016 GRAIN & OILSEED OUTLOOK GRPM<GO>

17

On the farm in the USA, Post report:

GRAIN & OILSEED OUTLOOK CPLY<GO>

18


• Things have changed since February, as the ratio has moved towards more soybean acres

2016 GRAIN & OILSEED OUTLOOK FDM<GO>

19

Corn • US corn ending stocks have been at elevated levels for the past four years,

and there is the potential to add to them. The corn number was on the low end of expectations but is still up from last year.

2016 GRAIN & OILSEED OUTLOOK FDM<GO>

20

Soybeans

• We have seen three years of consistent levels, this report saw a very wide range an a number on the low side of expectations.

GRAIN & OILSEED CORN PLANTING NI CORN<GO>

21

• Corn planting is off at to strong place this year, and is trending to be the third fastest in the last five years

CORN EMERGENCE NI CORN<GO>

22

• Emergence is inline with planting for corn

GRAIN & OILSEED SOYBEAN PLANTING NI SOY<GO>

23

• Soybean planting is in line with five year averages

2016 GRAIN & OILSEED OUTLOOK SECF<GO>

24


• Export Sales: Corn over the last five years

2016 GRAIN & OILSEED OUTLOOK SEAG<GO>

25


• Export Sales: Soybeans over the last five years

2016 GRAIN & OILSEED OUTLOOK COT<GO>

26

COT | Corn Net Position

• Funds (supplemental report)

2016 GRAIN & OILSEED OUTLOOK COT<GO>

27

COT | Corn Net Position

• Commercials (supplemental report)


28

COT | Soybeans Net Position

• Funds (supplemental report)


29

COT | Soybeans Net Position

• Commercials (supplemental report)

2016 GRAIN & OILSEED OUTLOOK FDM<GO>DAYBOOK

30

• Key takeaways from the May USDA reports:

• Both global and US soybean stocks are tighter then expected.

• The corn crop is already 2/3 of the way into the ground, and this cuts into the amount of acreage that can switched in the US.

• The US crop development for soybeans will be highly scrutinized, but it should be kept in mind that key soybean weather does not occur until August and September

• The next major US acreage report is June 30th.

2016 GRAIN & OILSEED OUTLOOK PLNA<GO>

31

• Planalytics

• National and state level production estimates for eight different grains and oilseeds.

• Allows for the drilling down to the district level for all items.

• Historical data is tickerized for easy comparisons year over year.

• Commentary and growing conditions is released every two weeks with graphical data that can be accessed at PLNA<GO> on the Bloomberg Terminal

The Market May 2016

David Hightower Terry Roggensack

Bloomberg: HTOW<GO> www.HightowerReport.com

800-662-9346

Free Trials Available at HightowerReport.com/commentary

Daily Commentary Our Flagship product. Individual traders to large institutions rely on our daily research to help them navigate today’s complex markets. Our commentary is sold by market segment or as a package so you can subscribe to what you need. • Morning Comments – Released

by 8:00am Chicago time – Grains, Livestock, Financials, Metals, Energy and Soft markets

• Evening Comments – Released by 7:30pm Chicago time – Grains, Metals, Energy and Soft markets

• Trade Strategies – When our analysts see an opportunity, they will let you know!

• Daily Recaps are included with any subscription.

Weekly Market Letter Released Friday afternoons to give you up-to-date ideas and strategies to start the next trading week. Ideal for hedgers, traders, investors and everyone in between. • Timely information and trade

ideas. • Succinct articles with specific

trade strategies • Market-by-Market Summaries,

with long/short indicators • Major Economic Events – and

how they will impact the markets.

• Overvalued/Undervalued Markets – Fundamental and Technical

• Longer Term Trade section • Technical Trade of the Week

Research Center The most comprehensive commodity research for commodity markets available. This product is geared towards professional traders, brokers and researchers who needs access to historic information. You will receive morning, mid-day and recaps on all the major markets. In addition, you will have access to our coverage of major industry reports like USDA Supply & Demand, EIA Weekly Energy Stocks, and USDA Cattle on Feed.

Free Trials Available at HightowerReport.com/commentary

Trial Access to HTOW <GO> Call 800-662-9346 for 2 Weeks Free Access on your Bloomberg Terminal!

Current Situation • Dollar Trend Bearish Looming Hike/Growth • Partial Reflation • EIA gasoline demand - Oil Production • Pattern of Declining Grain Ending Stocks • World Veg Oil - Palm to Bean oil to La Nina • Sugar & Gold Reflation Candidates • Corn & Soybeans - Smaller S. America boosts

US usage and tightens stocks

7.50

8.00

8.50

9.00

9.50

10.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

Barr

els

/ D

ayEIA Gasoline Demand

Current Year vs. Last Year vs. Average

2016 Last 10 Yr AvgMost Recent: 9.502 on 04/29 Source: EIA

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Gold - COT - Futures and OptionsNon-Commercial and Nonreportable Combined Net Position

Number Of Contracts

The Hightower Report | Source: CFTCMax: 330,795 (8/2/2011) - Min: -85,267 (4/6/1999) - Most Recent: 323,460 (05/03/2016)

Energies • Need record implied gasoline demand • Need another supply threat • Way overdone net spec and fund long • Buy Aug Crude $45.50/$43.50 bear put 130. • Low part of the upcoming range $40.10 July

USDA SUPPLY/DEMANDUS CORN May May May

USDA USDA USDA M ore Weather08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 Likely Issue

Planted Area (M Acres) 86.0 86.4 88.2 91.9 97.3 95.4 90.6 88.0 93.6 92.6 92.0Harvested Area (Acres) 78.6 79.5 81.4 83.9 87.4 87.5 83.1 80.7 85.9 84.9 84.4Yield (Bu/Acre) 153.3 164.4 152.6 146.7 123.2 158.1 171.0 168.4 168.0 163.0 158.0

Beginning Stocks (M Bu) 1,624 1,673 1,708 1,128 989 821 1,232 1,731 1,803 1,803 1,803Production 12,043 13,067 12,425 12,314 10,755 13,829 14,216 13,601 14,430 13,842 13,330Imports 14 8 28 29 160 36 32 55 40 55 50 Supply, Total 13,681 14,749 14,161 13,471 11,904 14,686 15,479 15,387 16,273 15,700 15,183

Feed & Residual 5,133 5,101 4,777 4,519 4,315 5,040 5,323 5,250 5,550 5,550 5,550Food, Seed & Industry 5,025 5,961 6,425 6,424 6,038 6,493 6,560 6,610 6,670 6,670 6,670 Ethanol for Fuel 3,709 4,591 5,019 5,000 4,641 5,124 5,200 5,250 5,300 5,300 5,300 Domestic Total 10,159 11,062 11,202 10,943 10,353 11,534 11,883 11,860 12,220 12,220 12,220Total Exports 1,849 1,979 1,831 1,539 730 1,920 1,864 1,725 1,900 1,900 1,900 Use, Total 12,008 13,041 13,033 12,482 11,083 13,454 13,748 13,585 14,120 14,120 14,120Ending Stocks 1,673 1,708 1,128 989 821 1,232 1,731 1,803 2,153 1,580 1,063

Stocks/Use Ratio 13.9% 13.1% 8.7% 7.9% 7.4% 9.2% 12.6% 13.3% 15.2% 11.2% 7.5%

2016/17 "What If's"

158 Yield is not Bad: Would Cause “Tight” Ending Stocks

110

120

130

140

150

160

170

180

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Bush

els

/ Ac

re

US Corn YieldActual vs. Various Trendlines - No 2012

20 Year 10 Year Actual

Updated: 05/10/2016 The Hightower Report

While World Stocks Record High, So Is Usage with Demand Uncertainties

40

60

80

100

120

140

160

180

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Day

s

Crop Year Beginning

World Corn - Days of Supply

Most Recent: 74.45 As Of 05/10/2016 The Hightower Report

0

25

50

75

100

125

150

175

200

225

250

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Mill

ion

Met

ric

Tonn

es (M

MT)

Crop Year Beginning

China Corn - Domestic Usage

Feed OtherMost Recent: As Of 05/10/2016The Hightower Report

Surge in Pork Price, Ethanol Expansion After 9-year ban – China Usage?

-280,000

-210,000

-140,000

-70,000

0

70,000

140,000

210,000

280,000

350,000

420,000

06 07 08 09 10 11 12 13 14 15 16

Corn - COT - Futures and Options CITNon-Commercial - No CIT - Net Position

Number Of Contracts


35

40

45

50

55

60

65

Mar-31 Apr-21 May-12 Jun-2 Jun-2310 Yr. Avg. Last Yr. Current

Winter Wheat Conditions - Good / Excellent - Select

Most Recent Value: 62% on 5.8.2016Source: USDA

USDA Key Points • Trade expected record world corn stocks but

lower to 207 mmt; Brazil 3-4 mmt lower, US could easily drop 15 mmt (more likely) and watch China weather

• With China selling 3.0-3.5 mmt soybeans from reserve: could see bullish demand tone subside China imports 78.3 YA, 83 this year 87 next

• With cheap corn, will China use less meal?

Short-Term Forces • If meal is up 29.8% off April low on possibility of

7-9 mmt losses in Argentina, oil should also see strong gains

• Argentina largest world soyoil exporter with over 50% of world market; 49% meal

• Palm oil production to drop harder in this quarter than 1st quarter so replacing 4-5 mmt losses in palm to be difficult

• Euro rapeseed and Canadian canola important • 10.7% old crop stocks/usage points to 8-16 cent

discount of July to Nov soybeans – at 17 inverted

USDA SUPPLY/DEMANDUS SOYBEANS May May May

USDA USDA USDA Good Bad08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 Weather Weather

Planted Area (M Acres) 75.7 77.5 77.4 75.0 77.2 76.8 83.3 82.7 82.2 83.5 83.5Harvested Area (Acres) 74.7 76.4 76.6 73.8 76.1 76.3 82.6 81.8 81.4 82.6 82.6Yield (Bu/Acre) 39.7 44.0 43.5 42.0 40.0 44.0 47.5 48.0 46.7 47.5 44.5

Beginning Stocks (M Bu) 205 138 151 215 169 141 92 191 400 400 400Production 2,967 3,361 3,331 3,097 3,042 3,358 3,927 3,929 3,800 3,923 3,675Imports 13 15 14 16 41 72 33 30 30 30 30 Supply,Total 3,185 3,514 3,497 3,328 3,252 3,570 4,052 4,150 4,230 4,353 4,105

Crushings 1,662 1,752 1,648 1,703 1,689 1,734 1,873 1,880 1,915 1,915 1,915Exports 1,279 1,499 1,505 1,366 1,328 1,638 1,843 1,740 1,885 1,885 1,885Seed 90 90 87 90 89 97 96 95 95 95 95Residual 16 20 43 -2 16 10 49 34 30 30 30 Use, Total 3,047 3,363 3,282 3,159 3,111 3,478 3,862 3,750 3,925 3,925 3,925Ending Stocks 138 151 215 169 141 92 191 400 305 428 180

Stocks/Use Ratio 4.5% 4.5% 6.6% 5.4% 4.5% 2.6% 4.9% 10.7% 7.8% 10.9% 4.6%

2016/17 "What If's"

3%

5%

7%

9%

11%

13%

15%

17%

19%

0

1

2

3

4

5

6

7

8

9

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16Stocks / U

sage Ratio

Endi

ng S

tock

s (M

MT)

Crop Year Beginning

World Palm Oil - Ending Stocks vs. Stocks / Usage Ratio

Ending Stocks Stocks / Use RatioMost Recent: As Of 05/10/2016The Hightower Report

1.089

18.000

5.980

25.750

0

5

10

15

20

25

30

96 98 00 02 04 06 08 10 12 14 16M

illio

n M

etri

c To

nnes

(MM

T)Crop Year Beginning

Vegetable Oil Exports Comparison

US Soybeans Malaysia PalmArgentina Soy Indonesia PalmMost Recent: As Of 05/10/2016

The Hightower Report

If Per Capita Stays in Uptrend; Massive Usage

35.858

22.720

14.563

0369

12151821242730333639

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Mill

ion

Met

ric

Tonn

es (M

MT)

Crop Year Beginning

Vegetable Oil - Major Consumers

China India United StatesMost Recent: As Of 05/10/2016The Hightower Report

24.808

16.723

43.426

0

5

10

15

20

25

30

35

40

45

50

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16K

ilogr

ams

Crop Year Beginning

Vegetable Oil - Per Capita Consumption

China India United StatesMost Recent: As Of 05/10/2016The Hightower Report

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

$ /

Ton

Rott

erda

m

Cash: Weekly Vegetable Oils - 10 YearsRotterdam

Soybean Rapeseed Sun Palm Data As Of: 04/28/2016

-35.

75-1

4.00

-21.

75-4

0.00

-45.

00-2

1.00

-33.

00-4

.50

-29.

75-4

2.00

-19.

50-1

8.00

-16.

75-1

0.00

-28.

00-1

9.50

-2.2

58.

00-7

.75

-14.

00 -4.0

07.

25-1

6.00

3.00

-11.

00-2

1.25

4.50

0.25 5.

751.

00 8.50

-32.

75-9

.75

-15.

00 -5.5

015

.37

4.50

-10.

00 -0.7

519

.00

0.00

-6.7

5-3

0.00

-5.5

08.

00

18.6

2%18

.34%

17.8

9%17

.25%

16.9

8%16

.42%

16.4

1%15

.70%

15.6

1%14

.59%

13.9

8%13

.65%

13.4

2%13

.42%

12.7

9%12

.43%

11.8

9%10

.88%

10.7

0%10

.68%

10.6

7%9.

75%

9.47

%9.

43%

8.84

%8.

56%

7.87

%7.

85%

7.80

%7.

61%

7.19

%7.

10%

6.71

%6.

56%

6.39

%5.

98%

5.40

%5.

37%

4.90

%4.

65%

4.55

%4.

54%

4.49

%4.

45%

2.60

%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

-220

-200

-180

-160

-140

-120

-100

-80

-60

-40

-20

0

20

40

60

80

100

12020

0619

8419

9019

7919

8019

7519

8219

7420

0519

8719

9419

9119

9819

9219

8919

8119

7319

8820

1519

9919

9319

8319

7819

7720

0020

0419

9519

7020

1619

9719

7620

0120

0720

1020

0219

7119

9620

1120

1419

7220

1220

0820

0920

0320

13

Ending Stocks / Usage Ratio

Spre

ad

Crop Year Beginning

Jul - Nov Soybean Min Spread vs. Ending Stocks / Usage

Spread is lowest value next calendar year soybeans. For Example: 2010/11 Crop Year -> 2011 Soybean Spread

Active Spreads are as of 5/10/2016

-160,000

-120,000

-80,000

-40,000

0

40,000

80,000

120,000

160,000

200,000

240,000

06 07 08 09 10 11 12 13 14 15 16

Soybeans - COT - Futures and Options CITNon-Commercial - No CIT - Net Position

Number Of Contracts


Grain Trade Ideas • Buy December Soyoil at 32.90 with an objective

of 38.93. Risk to 31.88. • Sell the July/Nov soybean spread at +17 with an

objective of -9. Risk 7 total. • Sell 1 August Soybean oil 34.00 put near 140 and

buy 2 Aug 36.00 calls at 80 each. Net +20 points with objective of +340 on spread. Risk total of 95 points.

• Buy December corn at 377 with an objective of 438. Risk to close under 368.

With World Demand Up 75K / Year Need More Production

Tightening Supply but COT Overbought

Cotton Issues • US soil conditions • Texas not irrigated • Polyester impact • China selling

reserves • China owns 58%

world stocks • No global tightness • 8-year highs for US

stocks

Other Trade Ideas? • Buy Oct sugar near 15.52 with an objective of

17.49. Risk 55 total. • Sell December cotton at 62.22 with an

objective of 58.96. Risk to 63.05. • Buy December cocoa at 2998 with an

objective of 3298. Risk to 2914.

QUESTIONS? Sterling J. Smith Agricultural Market Specialist

(212) 617-4211 [email protected] Julio Aprarecido Latin American Commodity Specialist

55-11-2395-9059 [email protected] Matt Weitz Commodity Advanced Analytics Specialist (212) 617-6648 [email protected]

mailto:[email protected]



QUESTIONS? Jeff Doran Senior Business Meteorologist (610) 407-2914 [email protected] 800 662 9346 Bloomberg PLNA <GO> The Hightower Report David Hightower Terry Roggensack (800) 662 9346 Bloomberg HTOW <GO>


2016 western hemisphere crop outlook€¦ · joined bloomberg in april of 2014. previously worked...

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