Tuesday, December 21, 2010

opening comments 12-21-10

Markets are called mixed to firmer this a.m. behind choppy overnight markets and mixed outside markets.

In the overnight session corn unchanged to up a penny, KC wheat was up 4 cents, MPLS wheat was up 3 cents, CBOT wheat was up 1-2 cents, and soybeans where unchanged to up 2 cents.  At 9:15 outside markets are
not giving much for direction; as the US dollar is near unchanged (which is a big bounce off of their lows), equities are slightly firmer with the DOW up 37 points, crude is up about 15 cents a barrel, and European Wheat is slightly firmer.

Today looks to be another choppy day as markets continue to move into Holiday mode.  Look for continued positioning ahead of end of year and positioning ahead of the January USDA report.

There has been some talk out lately that is indicating the Australian wheat crop bigger then what many had been estimating it at; the last USDA report had it pegged at 24 MMT; but many estimates out lately have been in the 25-26 MMT; but the amount of feed wheat is still very high.  Keep in mind that the couple back to back droughts in 06-07 and 07-08 are really what helped lead to the explosion for wheat in 2008; those crop sizes where down to 10.8 and 13.6. 

Along the same lines as what happened back then is the talk of Russia perhaps needing to extend its export ban further then July; it will really depend on weather as we go forward; but I have heard some talk about the possibility that we see Russia become a net importer.

If we are seeing the Australia crop bigger then expected previously; but with poor quality wheat we need to keep in mind that what we are actually doing is creating more feed supply.  There has been talk that the wheat out of Australia has been working into SE Asia; replacing corn.

Basis is very hit and miss right now; many buyers for the various contracts are covered unless freight slows down.  Others are simply gone.  Bottom line is right now today most products are not leaving a feeling of strong nearby fundamental demand; most of the demand seems to be logistically related; off setting a little is the fact that overall demand has been good and supply in general is smaller then what was anticipated a few months ago. (I guess less supply with good demand should equal higher prices.)

As for how we end off the year watch weather, the funds – dollar flow, and how estimates and guess come in for fundamental position ahead of the USDA report.

Right now most in the market fear weather will cause more damaged to quality or not be good enough to get enough quantity, most think that the fund money flow will be into commodities and investments alike thus some are trying to front run things a little bit, and so far I haven’t seen many thoughts that are anything other then bullish in regards to fundamental outlook – supply/demand that the USDA will give us on their January crop report.

Very similar to last January heading into the end of the year; hopefully our results this January will be closer to the 2007-2008 marketing year that saw us simply take off to new highs versus the last couple of years that saw some major pressure.

Also I did want to note that some of us in the grain department have started a blog; this blog is mainly focusing on grain marketing plans.  We will be working on putting some mock marketing plans up on the site as well as other good important information that one might want to consider when writing a grain marketing plan.

To check it out go you can go to http://www.grainmarketingplans.blogspot.com/

  This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

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