Thursday, December 22, 2011

Grain Market thoughts opening comments

Markets are called steady to better this a.m. behind supportive outside markets and a mixed overnight session.

In the overnight session corn was up a penny, beans were 2 better, KC wheat was up 2, MPLS was unchanged, and CBOT wheat was also unchanged.  At 9:00 outside markets have the equities higher with the DOW up 50 points, crude is up a dollar, and the US Dollar is about unchanged.

The driving forces in the market the past week or so has been dry weather in South America and parts of Ukraine/Russia.  Ethanol production has been solid and some cold weather/snow in the south has helped out our demand for feed a little bit.

Export sales this a.m. were in line with expectations for beans and wheat, while corn numbers where slightly above.  Corn came in at 28.1 million bushels about 7 million above what we need on a per day basis to meet current USDA projections.  Wheat sales were at 13.3 million bushels which is a couple million more then we need on a per week basis to meet current projections.  Beans came in at 24 million bushels which is about 10 million more then what we need on a per week basis to meet current projections.

Volume has been light and will likely remain light threw the holiday’s; short covering should be the theme as we move forward.

Technically many of our markets have done a good job of building support or support bases.  That isn’t to say that the bottom’s are for sure in; but we have at least moved away from them for the time being and the further we get away from the support zone the more likely that the bottoms have been made.  Fundamentally the January crop report could change how things shake out for the next several months.

A couple good things that our markets have done technically is the fact that most of them have moved to the highest level in a couple weeks and most have also moved past 10 and 20 day moving averages; another good sign. 

On the flip side of things we are getting close to overbought and some of the analysts that we follow are close are have started to issue sell signals because of this.  With the huge amount of unsold inventory that producers have we have a risk of having plenty of selling above the market.

Basis is weak across the board; but part of that is the fact that we are in holiday mode and many are already gone.

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

Tuesday, December 13, 2011

Are you protecting your grain marketing risk? Closing Grain Market Comments for Tuesday

Markets closed firmer today.

Corn was up ½ on the nearby, NC 2012 corn was up 7 cents, beans where up 7 cents, KC wheat was up 4, MPLS wheat was up 6-7, CBOT wheat was up 6, the US dollar is firmer with the cash index up 730 at 80.310, crude was up a couple dollars a barrel, equities where weaker with the DOW off 67 points nearly 200 off of it’s highs.

Overall another decent day for the grains, the disappointment was we made our highs in the first few minutes of trading for most of the grains.  But we also managed to hold yesterday’s and Friday’s low’s while closing higher for all of the grains.

As for new news for the grains today was another dull day; dryness in South America was noted once again; Egypt bought 180 tmt of wheat; but once again none of it was US wheat and there Ukrainian announced that they would have an additional 2 mmt of grain to export (so much for the dry concerns)

Basis remains on the weaker side of things; but not due to heavy producer selling more so due to a lack of competition and freight/logistics not having their typical seasonal struggle.

Technically I thought holding the lows like we have the past couple of days sets up the stage that we might be trying to form some sort of bottom on the charts.  I hope it isn’t just my hope; because fundamentally we have plenty of grain in the world.

As for marketing I like being patient in hopes that this will be the start of some sort of rally; but over the next several days, weeks, and months there is just huge downside risk.  In the form of outside markets, big world supplies, and just ECON 101 (the high prices we have had over the past year indicate that we will grow more (weather permitted) and curve demand which we can see by our lack of exports and our export basis versus last year).  How ugly things could get should a perfect storm hit with acres, yield (weather), along with outside markets and growing world supplies, should the outside markets and economies of the world take another set back is so scary it is unreal.  To think that there is no risk at the prices can’t go down from these levels is just not true.  Hopefully they do hold and hopefully the future black swan events are positive to our prices; but they don’t have to be; nor do our prices even have to be at levels that allow one to be profitable.  Keep this in mind when you are doing your risk management, risk diversification, and overall grain marketing plans.  The worst thing about selling at profitable levels is you could have sold for more if you would have held up if we go up.

Don’t forget we have our marketing meeting in Onida tomorrow at 3:30; it usually lasts until 5:30 as we will go over some charts and do some mock trading.  We hope to see you then!


Monday, December 12, 2011

Closing Grain Market Comments

Markets closed mixed today despite the very weak outside markets.

Corn closed unchanged, beans were up 5-6 cents, KC wheat was off 9 cents, MPLS wheat was off 4 cents, CBOT wheat was off 2 cents, equities had the DOW off 163 points, crude was about a dollar and a half lower, and the US dollar is 900 firmer with the Dec dollar at 79.590.

Given the outside markets today’s price action for the grains wasn’t the worst in the world; given the negative report on Friday and the negative outside markets today I thought the price action was good for beans, MPLS wheat, corn, and CBOT wheat.  KC wheat was a little negative; but it did at least hold Friday’s lows.  You know they say a trending market is one that makes new lows or highs for the move; and at least for today the weakest of our grains didn’t do that.

As for other positive news out there; it is lacking.  Dry weather concerns in South American and wet weather concerns that might possibly leading to quality issues for Australia’s wheat crop where noted today; but overall markets are rather quiet and seem to be in holiday mode.

Basis is defensive for wheat as we simply have too much supply for the demand we have out there.  The winter we have had so far hasn’t helped basis out or slowed supply nor freight either.  Typically winter basis rallies happen due to supply slowing because producers can’t move product or the railroads are not able to move trains.  I am not so sure that this hasn’t been the best winter (so far) that we have seen in terms of rail cars at our locations. 

Export inspections where out this a.m. wheat came in at 16.5 million bushels which is about 44 million bushels behind last year’s cumulative exports due date.  It is was slightly above the 14.8 million bushels that we need per week to meet the current projections.  One positive that wheat should have going for it is the fact that with the cut in exports we probably don’t have much of a risk in not hitting the present export number projected. 

Beans came in at 29.7 versus the 22.1 that we need on a per week basis; the scary number is the nearly 200 million bushels we are already behind last year’s at this time. 

Corn came in at 35.7 million bushels which was also ahead of the 30.6 that we need on a per week basis to meet present projections.  Versus last year we are about 55 million bushels behind.

The next big known news will not be until the Jan crop report; keep in mind that report has really help set the price stages for several months the past couple of years.  Anyone remember the 2008 report in which we saw spring wheat shoot up towards $25 quickly after?  Or the 2009 or 2010 report in which we saw corn limit down as the numbers came in bigger than expected.  Last year it was the report that saw limit up and set the stages for us to continue the rally we started back in July of 2010. 

I would encourage one to have a solid marketing plan in place ahead of that report; which might mean having some sort of protection in place for those that are undersold.

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

Don’t forget we are still offering free delayed price for wheat

Friday, December 9, 2011

USDA Crop Report Dec 9th

Markets are called weaker this a.m. behind an overall bearish USDA report.  One that was very negative our world fundamentals.

In the overnight session we seen grains mixed with corn up a penny or two and wheat off a couple pennies.  Calls this a.m. range from 5-30 lower on most of the grains.

Here is a recap of the report.
US Carryover

Friday       Nov
            2011-12      2011-12
            estimate     estimate

Corn         0.848     0.843
Wheat        0.878     0.828
Soybeans     0.230     0.195
Soyoil       2.280     2.080
Soymeal    300,000   300,000
Rice          37.5      37.5
Cotton        3.50      3.80

USDA World Carryover

            Friday       Nov
            2011-12      2011-12
            estimate     estimate

Wheat         208.5       202.6
Corn          127.2       121.6
Rice          99.51      100.57
Soybeans       64.5        63.6
Soymeal        8.28        8.75
Soyoil         2.64        2.41
Cotton         57.7        55.0

USDA World Grain Production

                    Friday       Nov
                    2011-12      2011-12
                    estimate     estimate
China corn            191.8      184.5
South Africa corn      12.5       12.5
Argentina corn         29.0       29.0
Australia wheat        28.3       26.0
Argentina wheat        14.5       13.0
EU 27 wheat           137.5      137.5
Canada wheat           25.3       24.2
China wheat           117.9      117.0
Russia wheat           56.0       56.0
Ukraine wheat          22.0       22.0
Brazil soybeans        75.0       75.0
Argentina soybeans     52.0       52.0
China soybeans         13.5       14.0

The biggest negative is probably the wheat carryout for the US going up 50 million bushels as exports where decreased by 50 million bushels.  Versus estimates by the industry ahead of the report we seen corn at 848 million bushel carryout versus a 830 ish average trade estimate, beans at 230 verus about 215 avg guess, and wheat at 878 versus about 830 on average. 

The positive I see on the report despite all of the very weak opening calls is the fact that many of these numbers where expected.  China raised it’s corn estimate earlier this week, Stats Canada had raised their estimate, and even the Australian wheat crop was pegged bigger this week.  So personally I am not going to jump all over the very weak opening calls that some have indicated; I think the news could quickly become old or in a sense was already old going into the report.

Outside markets are firmer at 9:20 and they could add a little support.

The one thing that this report should continue to tell us is the fact that our S & D is overall bearish for the grains, it is increasing year over year and has really increased versus the tightest we have seen earlier in the past year or so.

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


Thursday, December 8, 2011

day ahead of Dec USDA report - closing grain market comments

Markets closed mixed on the eve of another USDA Supply and Demand report that will be out Friday December 9th.

At the end of the day we saw corn close down 8 cents, beans up 1-2, KC wheat off 3, MPLS wheat off 2, the Sept/Dec 2012 contracts in MPLS where down 10-12 cents, CBOT wheat was off 4, crude was off a little over 2.00 a barrel, equities ended in the red with the DOW down 199 points, and the US dollar is up about 300 with the cash index at 78.812.

Overall not a bad day for the grains with us able to close well off of their lows despite the weakness seen in the outside markets.

Here are the estimates for tomorrow’s crop report.

                        U.S. ending stocks 2011/12

                                                    Wheat   Corn  Soybeans
Average trade estimate     0.830   0.831   0.214
Highest trade estimate       0.867   0.899   0.255
Lowest trade estimate        0.731   0.712   0.165
USDA November estimate 0.828   0.843   0.195

Basis is a little defensive on most of the commodities as we lack demand and seem to have producer movement a little heavier then normal due to a nice winter (so far).  Railroads are performing well and supply is simply outweighing the demand due to a lack of export-domestic competition.

The feel in the markets is a little better then it was a couple days ago; and today’s technical price action in corn indicates that we might be trying to form a bottom on the charts.  In the last three days we have had a key bullish key reversal and then today we had an outside bullish day.  Perhaps something we can build on?  I guess tomorrow’s USDA report will likely be the catalysts that ends up pushing us higher or leads to head fakes or bull traps. 

The birdseed industry appears to be super slow; very slow in applications and bids are not easily found.  Coverage or lack thereof is one thing that we do have going for us.  Most buyers in most of the industries have very little coverage and are hand to mouth.  On the flip side of that most producers have more inventory un-priced then ever before.  Could become a cat and mouse type of poker game on basis because of this.  For the producers to eventually win we will really need some export competition to show up.

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

Tuesday, December 6, 2011

grain market comments dec 6th

Markets where called weaker this a.m. behind a weak overnight markets that saw corn break major support.

In the overnight session corn was down 9 cents, beans were off 4 cents, KC wheat was 6 cents lower, MPLS wheat was off 6, and CBOT wheat was 7 lower.  At 9:20 outside markets have the equities slightly positive with the DOW up 35 points while crude and the US dollar are about unchanged.

The markets then opened up a little weaker then where the overnight session left off; but as the day moved on we slowly gained ground and found our markets positive when all was said and done.  We left a bullish key reversal on the corn charts (a key reversal would be making a new high or low for a move and then reversing and closing the opposite) in today’s price action we saw the March corn contract get to its lowest level since last March and then we managed to reverse the day closing up 5-6 cents or about 17 cents off of its lows.

Besides corn closing up 5-6 we seen new crop 2012 corn up 2, beans up 3, KC wheat up 3-4, MPLS wheat up 1, and CBOT wheat up 1-2 cents.  Outside markets have the dollar near unchanged with the cash index at 78.519, crude also was near unchanged presently Jan is trading about 101 a barrel, and the equities closed firmer with the DOW up 52 points.

Overall a decent day for the grains; nice to see the markets turnaround from the lows put in early in the session.  Perhaps some of the bad news that we have seen recently is finally build into the prices?  (China corn crop bigger, South American crops bigger, Australian wheat crop bigger, blenders tax credit ending, massive world supplies that seem to get bigger daily, etc)

I guess only time will tell if some of the recent bearishness that has surrounded our markets has lost it bang so to speak and selling has become exhausted.

Later this week we will have a USDA report; ideas are for the corn carryout to show little changes, beans to see a small increase in carryout, and wheat to see little changes.  Overall estimates are 845 million bushels for the corn carryout versus 843 million last month, beans 211 versus 195, and wheat 830 versus 828.

Overall bias is for a slightly weaker USDA S & D report due to weak demand.  Perhaps at some point the recent price break helps out that demand but as of now we really are not seeing super great export demand; perhaps due to the big crops from our competitors.  The risk is that see our competitors continue to act like Wal-Mart so to speak in that no matter how cheap we try to sell grain for they are sitting there with so much supply that they will sell it lower.  Eventually that should end and perhaps with the Ukraine wheat crop getting projected lower it is sooner than later. 

Basis is a little defensive as many producers have done a good job locking some of it in and we simply lack export to domestic competition for most all of our grains.

Quality concerns have been talked about with the Australian wheat crop; but all that really does is create even more competition for our corn via more feed wheat. 

Don’t forget that tomorrow we will have another MWC Marketing Hour Round Table where we will go over some charts and do some mock trading. 

Also we are still offering free delayed price for both winter wheat and spring wheat.