Monday, January 10, 2011
OPENING GRAIN COMMENTS 1-10-2011
Markets are better this a.m. behind a firmer overnight session and mixed outside markets.
In the overnight session corn was up 5 cents, beans where up 5, KC wheat was 2-4 better, MPLS wheat was 2-4 better, and CBOT wheat was unchanged to 4 better. At 8:55 outside markets have crude up a little over a dollar, the US dollar is slightly firmer with the March at 81.40, European wheat is up about 1/3 of a percent, and equities are softer with the DOW down 85 points.
Talk this a.m. continues to be on fund re-balancing and the upcoming USDA report. More estimates are coming out by private firms and most appear to still be shooting for a fundamentally bullish report.
Technically we have some interesting things happening as we appear to have the dollar trying to break threw the upside as it is challenging some resistance points; while the grains have opened the doors to talk that possible reversals are in as some of the grains did fail to hold support levels last week. Perhaps this week report ends up being the catalyst the ends up telling us if the recent price action is that of a corrective nature or if we have seen a reversal.
Speaking of the USDA report out later this week; below are the trade estimates and thoughts on the report.
Average Range 2010 Seedings
All Winter Wheat (14) 41.219 39.377-43.200 37.335
Hard Red Winter (13) 30.241 28.900-31.138 28.553
Soft Red Winter (13) 7.281 6.232-8.533 5.274
White Winter (13) 3.545 2.986-3.700 3.508
Average Range USDA USDA
Corn (20) 0.778 0.681-0.884 0.832 1.708
Soybeans (20) 0.158 0.113-0.200 0.165 0.151
Wheat (19) 0.842 0.733-0.923 0.858 0.976
The other thing that will be closely watched will be the crop size or estimates for the likes of
Australia, China, EU, Russia, Brazil, …..etc. Argentina
Just generically speaking it when we see the funds at or near record long, have historically high values, have the overall market thinking rather bullish, and we have a report out that could change the fundamental picture we do have stages set where we could see some sort of a major reversal. Much like we have the last couple years coming out of this report. It doesn’t mean it will happen but at these levels and with the place where the market is at we have a lot of risk out there going into this report. On the flip side we could see our price levels more then justified and potentially add even more fundamental justification to go higher; after all if we are going to run out of a commodity such as corn; what is the limit? My guess is that spring wheat in 2008 showed us that there really are no upside limits; at least in the short term if we are going to run out of a raw commodity.
As for what to do ahead of the report; simply try to have a good solid risk management plan; it doesn’t make sense to panic do something; but it might make sense to have a solid marketing plan or a risk management plan which could involve having some protection in place ahead of the report.
As for some possible trading thoughts on protection and re-ownership ahead of the report please check out http://www.grainmarketingplans.blogspot.com/ as we have some trades and marketing plans on the blog that will be updated in the next day or so ahead of the report.
Please give us a call if there is anything we can do for you.