The grain markets are called firmer this a.m. behind very
supportive outside markets.
In the overnight session we seen corn up a dime or so, beans
about 26-27 cents, KC wheat was up 13-14 cents, MPLS wheat was up 10-13 cents,
and CBOT wheat was up 13 cents. At 9:00
outside markets have equities firm with the DOW up 230 points, crude oil is up
2.50 a barrel, the US dollar is getting smacked with the Cash index down 1.195
at 77.530, and European Wheat is about 1 % firmer.
The big thing in the markets appears to be the outside
markets that are showing lots of strength this a.m. Fundamentally it appears that much of HRW
area got a good shot of rain and I have heard comments of the drought being
broke. The other big thing will be a
USDA report which is out on Wed which should lead to some position squaring as
we head into it.
Last year the USDA mentioned how the reason for the high
Sept 1 stocks was due to new crop being harvested; will that be the reason this
year again? If it is will it give the
bulls what they need to give our prices some life? If not how much downside risk is there if the
report comes out even more bearish then the estimates? What about the fact that many producers have
stopped selling; is there that much more that needs to be priced in the near
future?
Estimates for this week’s report for yields are 148.7 on
corn and 42 on beans; versus 148.1 on the Sept USDA report for corn and 41.8
for beans. Carryout estimates are 804
million bushels for corn versus 672 last month, beans are pegged at 186 million
bushels versus 165 last month, and wheat is estimated at 753 million bushels
versus 761 in Sept.
With the recent drop in board basis has slowly been
improving for most of the grains; but the improvement hasn’t been one that I
would call a demand driven improvement; more supply cut. That is something to keep in mind as we go
forward. If supply starts to increase we
really need to have demand step up or ECON 101 says increased supply over
demand gives us lower prices.
The risk in the outside markets is still out there but most
are starting to feel that liquidation is close to it’s end for the grains. Only time will tell.
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