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.

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