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

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