Thursday, December 23, 2010

Merry Christmas !! Grain market comments 12-23-10

want to wish all a Merry Christmas; make sure to drive safe.

Rather short comments today and no markets again until Sunday Night.

We don’t have the final settlements yet; but he grain markets just closed and it looks like we will see old crop corn up 3-4 cents, new crop Dec 2010 corn unchanged, Beans up nearly 20 cents, KC wheat up about a penny, CBOT wheat off about a penny, and MPLS wheat near unchanged.  At 1:20 outside markets have the equities near unchanged, crude is up a dollar, European wheat was up about 1/3 of a percent, and the US dollar is showing a little weakness down 243 on the March at 80.835.

I have heard many comments how this price rally this last few months has been a great Christmas gift for the producers.  However you want to look at it the price movement that we have seen to over the past 6th months is much different that most thought it would be back in early June.  Back then most where talking about how horrible the wheat prices where coming off the combine down south (where many reported getting
under $3.00 for low pro winter wheat) or how we could see corn LDP’s.  But things changed and we seen Russia go from under cutting ever sale to potentially needing to buy grain; we see a crop that went from huge to not nearly as big as needed for the corn.  We had some soybean projected carryout numbers in the 350-450 million bushel area; while some where talking about corn approaching a 2.0 billion bushel carryout.  Keep in mind that over the past year we have seen more then 1 big swing on USDA S & D/Stocks reports.  It has seem that last January we found 300 million bushels, only to lose them in June, then find them again in Sept, only to lose again a week later. 

Nearly all of the above has changed today; fundamentals and prices both as well as the profitability that goes along with it.  Today we have people talking about $8.00-10.00 corn; and $10.00 plus wheat; sure we have the bear’s that that think we fall apart but we also had plenty of bulls at the lows we seen back in June. 

Are the stages now set to see a massive turn around as we go forward or are stages simply set that we move higher and see an acre war like never before?

Only time will tell where we go from here; part of my screams that what ever way it ends up being the move will be big; but as the market showed us back in June when the sky was falling; the market doesn’t always do what one thinks it should; especially when the it isn’t what one thinks it will do but all.  So keep the fact that big bull markets always look the best at the top and therefore proper risk management/diversification is probably the right way to go.

As for news in the market place today; we really didn’t have much.  Many are gone and trading has been on the thin side of things.  There has been talk of index fund reallocation and having to sell off plenty of corn after the first of the year; but many think that trend following funds will more then offset any index fund allocation.

Weather remains dry in parts of Kansas, while it appears dry weather will allow more Australian wheat harvest to progress; the weather and how it shakes out over the next several months will really end up being on of the biggest factors to our prices as it ends up relating directly to supply.

Export sales where nothing special today; but in line with estimates and above what is needed on a per week basis to meet current USDA projections.

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