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!
Labels: Beans, charts, Charts and Strategies, commodity price risk management tools strategies grains futures options money cash flow, crop conditions, Delta Neautral Trading, Leverage Optoins Futures, Marketing Tools, MWC Marketing Hour Round Table, opening grain comments, option selling, Price Management, USDA Crop Report Supply and Demand