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.

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