Monday, August 22, 2011
Grain Market Comments close August 22nd another wild day for markets
Markets are called firmer this morning behind a firmer overnight session and supportive outside markets. MPLS wheat continues to lead the surge higher as spring wheat harvest continues to lag and be disappointing.
In the overnight session MPLS Sept was up 21, Dec 15-16 cents higher, corn was up 9 cents, KC wheat was a dime higher, CBOT wheat was up 12 cents, and beans where firmer by 13-14 cents.
Adding support to our markets has been weather; some are talking that the soybean crop has really missed moisture as of late and things are relative unsupportive to either harvesting or growing grain in many areas too wet in the North to harvest spring wheat and too dry in the south.
Pro Farmer does have a crop tour this week and it should help give additional market information with possible direction.
Once again I failed at my time delegation as I never got the comments sent out this morning. So as a recap of what happened in today’s session when all was said and done we ended up seeing corn up 9-10 cents, beans where up 15-17 cents, KC wheat was up 3-5 cents, MPLS wheat was down 2 on the Sept while the Dec was up 2-3 cents, CBOT wheat was a nickel higher, the DOW closed up 37 points nearly 170 off of it’s highs, the US Dollar is slightly firmer, and crude oil was up about 2.00 a barrel.
A mixed sort of session; one that saw the highs made in about the 1st five minutes of trading when we opened up this a.m. and then we slowly drifted lower. The MPLS market really turned around and left a candle on the charts indicating that perhaps we have at least temporarily ran out of buyers at least on the nearby month.
Technically it is always disappointing when one makes a new high for a move and then closes lower; sometimes it is referred to as a key reversal.
Fundamentally we had export shipments out this a.m. and they lagged the needed pace to meet current USDA projects for wheat which came in at 17.4 million bushels, beans which came in at 10.9 million bushels, and corn which came in at 29.5 million bushels.
Basis is also a little weaker on some various commodities; to arrive spring wheat bids where softer today as a couple major players even went no bid stating that they where overbought and plugged. Corn basis continues to soften with buyers showing coverage or at least acting as though they have the needed coverage. Could there be another spike in old crop corn basis? Depends when harvest get’s here; same answer as to if we see old crop sunflower price show a bounce; depends on when harvest hits.
Keep in mind that as buyers once harvest comes or heavy supply comes their job is to be as empty as possible when cheaper product becomes available; they don’t want to be long and wrong allowing competitors selling cheaper then them. Sometimes it works great for the buyers; but many times it is why you see a spike when the combines first hit; I would guess that stages are set for rather volatile cash markets depending on how and when harvest hits us.
This afternoon we did have a crop progress report update; it showed corn conditions down 3 % in the G/E, Spring Wheat down 4 %, and beans down 2%. Spring wheat is 29% harvested versus 56% on average the past 5 years. On the surface the conditions decreasing and the slow harvest rate sounds friendly the grains but with our price levels and the rather volatile outside markets we have to be cautious that any information that isn’t exactly new or different then the trade has been thinking could be information that is already built into the market. As example perhaps the reason we have corn and wheat at the levels we do is because it is dry in the South, Wet in the North, and overall yield outlook is softer; bull markets typically need to be feed a steady diet of good news.
For more info on the latest crop progress report check out Country Hedging’s info at http://www.countryhedging.com/media/Research/Archive/2011_08_22Crop%20Progress8-22-2011.pdf
The Pro Farmer Crop tour started today information on that should be updating as it happens; so far the main thing I have read is just volatility when it comes to yields. Here is a link http://www.agweb.com/profarmer/article/preliminary_day_1_observations_from_the_midwest_crop_tour/
Please give us a call if there is anything we can do for you.
Labels: Beans, charts, Charts and Strategies, commodity price risk management tools strategies grains futures options money cash flow, crop conditions, Delta Neautral Trading, Grain Commentary - Opening Grain Markets - Corn - Wheat - Soybean price calls, Leverage Optoins Futures, Marketing Tools, MWC Marketing Hour Round Table, opening grain comments, option selling, Price Management, USDA Crop Report Supply and Demand