Friday, December 31, 2010

opening grain market comments 12-31-10

Markets are called firmer this a.m. behind a firmer over night session and a weak US dollar.

In the overnight session CBOT wheat was up a penny, MPLS wheat was up 3, KC wheat was up 3, Corn was up 4, and beans where up 11-12 cents.  At 9:20 outside markets have the equities weaker with the DOW down about 25 points, crude is off about 60 cents a barrel, European wheat is up 1.5-2.0%, and the US dollar is weaker with the March down 513 at 79.285.

Markets are only open until noon on the grains today as we close out the year.  Today looks like it could be another volatile and choppy trading day as many are not around and we don’t exactly have ton’s of hot news out there that should drive our markets one way or another.  It just depends what the funds want to do and where they want to see their books close out the year at.

Yesterday we have an all around sell off for commodities in general; with some of those commodities like crude under pressure and the fact that we have rallied so much over the past month some more potential profit taking is possible and weakness following up yesterdays weakness wouldn’t be a big surprise.

Beans did lead our strength in the overnight session and they continue to have weather concerns in South America which should continue to lend support.  It looks like we could see some snow in some of the southern parts of the HRW Belt and this could lead to a little pressure on wheat as that market has been adding in a weather premium for some time.

As the end of the year comes many have been making business decisions in regards to grain that they own and what they intent to plant along with locking in various parts of the agronomic side of farming.  I.E. prepaying seed, fertilizer, fuel, selling or not selling grain for tax purposes, or cash flow purposes; as many of those decisions are made makes decisions that effect where there bottom line ends up at and in some cases those decisions can effect one’s bottom line in slots where one doesn’t have a clue what they will receive for their grain unless they already have it marketed or protected in some shape or manner. 

One thing we will always try to promote is the managing the risk between grain prices and cost of production; i.e. trying to do both near the same time when they make good bottom line sense so that good grain sales or good agronomic purchases based on present conditions don’t turn bad.

In the grain division we try to help via promoting marketing plans and risk management; one thing that we have been working on is a grain marketing plans blog.  This is a site where we are trying to provide various information to help one write and implement solid risk diversified grain marketing plans.  The site is a work in progress but it is up and has some useful information as well as some various mock marketing plans that me and some of the other guys in the grain department have written and will be implementing.

The one thing that the weather has created is a little firmness in basis volatility due to freight.  It appears the spot floor is becoming very hot for some high pro spring wheat; if you have any offers on it please let us know and we can try to shop some around.

Please give us a call if there is anything we can do for you.


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