Tuesday, November 8, 2011

opening grain market comments day ahead of USDA report

Markets are called mixed this morning a day ahead of a USDA S & D report behind another choppy overnight session.

In the overnight session corn was up 2 cents, beans where up 7, KC wheat was off 2, MPLS wheat was off 2, and CBOT wheat was 2 lower.  At 9:05 outsides are supportive with the DOW up about 50 points, crude up about a dollar a barrel, and the US dollar softer with the Dec down 340 at 76.80.

Not much for news out this a.m. and with outside markets a little on the positive side; but not really moving much many expect a quite day ahead of the USDA report.  I should remind everyone that the last time we saw a big move was the day before the last USDA report in Oct; (not the actual report) so just because everyone continues to expect choppy sideway’s price action doesn’t mean that is how it pan’s out.

Basis remains firm on winter wheat, spring wheat, soybeans, and corn.  I like basis offers especially if I am bullish because of how the basis – futures – cash price relationship typically works. 

Overall markets feel like they are sellers markets; but I am not sure that is from super demand.  More the reason I call our markets sellers markets is the fact that producers are simply not being forced to move product at this time.  Eventually that could change and if export demand doesn’t pick up or we don’t find some type of end user competition our markets could quickly turn to buyers markets.  The world grain markets all appear to be buyers markets where the business typically goes to whoever will undercut the other the most.  I.E. we have plenty of grain in the world at this time.

Keep in mind we are offering free delayed price for both winter wheat and spring wheat.

Spread price action should be interesting and has been interesting; the tightening of spreads is an indication of demand especially if spreads tighten up during index fund rolling periods; where the index fund is selling the front end.

It looks like the USDA report will be out like scheduled Wed; despite some asking to move it back because of the MF Global issues.

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

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