Monday, May 2, 2011

Opening Grain Market Comments May 2nd - Mixed Calls, wheat firmer, row crops steady to weaker

Markets are called mixed this a.m.; wheat slightly firmer with row crops slightly negative.  In the overnight session corn was down 5 on old crop, new crop corn was off 3 cents, beans where down 5-6 cents, KC wheat was up 2, MPLS wheat was up 4, and CBOT wheat was up 4.  At 9:20 outside markets have turned supportive with the US dollar now slightly weaker, equity markets are firmer with the DOW up 54 points, crude which was off 2.00 plus a barrel is now up 30 cents or so, and the European wheat market is with Paris Milling wheat up about 1 %.

Weather continues to be volatile and helping add volatility to our grain markets.  Latest forecasts provide a little field work action in the 1-5 day; while some of the 6-10 day forecasts look to be on the wet side.  The one comment seen and heard a lot about has been the cold weather. 

This afternoon we will have a crop progress report as well as an updated condition report.  Locally and most of the Western Corn belt appear to have had a very good week of progress with another good week expected.  From a risk management standpoint don’t forget what type of profit levels we are at as once we get the crops in the ground I think we might find producers a little more tuned into the prices and with the length of the funds we have the chance to see selling pressure explode on any given day.  The other side of that coin should continue to be the tight situation with overall good demand that we have for grains.  Because of the last couple of statements that is why I would think a diversified risk management plan wouldn’t be a bad idea and it should help ease some of the volatility we have seen.

Basis for HRW continues to be firm and perhaps this is a sign of underlying commercial demand.  The one thing that isn’t showing great demand has been the spreads between months; as example the July-Dec spread in KC is out to about a 40 cent carry.  If demand is that great why is the market paying so much for one to store the grain?  Perhaps it has something to do with the variable storage programs that are out there. 

Birdseed business appears to be a little on the slow side as we simply haven’t had many buyers calling whether it be for shipping or purchasing.   The good thing is there isn’t much if any product for sale so this should help keep things on the firm side if/when business picks up or product on the books gets low.

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

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