Grains had Modest Gains in the Overnight

Grains posted modest gains overnight with soybeans leading the complex higher at one point up as much as 4 cents a bushel. In outside markets, S&P futures were sharply higher recovering from Friday’s sell off while crude oil was lower.

In Brazil, rains have become limited starting last week and into this weekend. While not widespread, the areas being affected with dry conditions are sizable enough to warrant some concerns by the market that the country will reach its full yield potential. The coming 7-10 day forecast shows limited rainfall. Much of the rain will not be enough to counter evaporation, but the mere timeliness of showers will help to slow drying rates and allow a little more time for better rain to fall before crops are seriously impacted.

Wheat continues to struggle with competition overseas. The Russian rouble has lost about 6% against the dollar since the start of December on sliding oil prices and triggered the rise in Russia's wheat export tax. Russia's Agriculture Ministry has proposed the government reduce or cancel its wheat export tax, Interfax news agency reported on Monday.

In crude oil, the market struggles with bearish oversupply issues, putting prices at their lowest mark in over a decade. Oil production is running close to record highs and, with more barrels poised to enter the market from the likes of Iran, the United States and Libya, the price of crude is set for its largest monthly percentage decline in seven years.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

—Kevin McNew