Monday, January 23, 2012

Opening Grain Market Comments - Chinese New Year

Grain Markets are called better this a.m. behind a firmer overnight session and supportive outside markets.

In the overnight session corn was up 6-7 cents, KC wheat was up 5, MPLS wheat was up 5, CBOT wheat was up 7, and beans where up 15-16 cents.  At 8:40 outside markets have the US Dollar under a little pressure down 465 at 79.753 on the cash index, the equities are basis unchanged with the DOW up 4 points, and crude is up about 90 cents a barrel.

Firmness in the overnight session was partially due to SA weather where they didn’t get as much rain coverage nor amount as what was expected over the weekend. 

Basis has started to firm since the USDA report; so much so that it has spilled over to help out the board and the spreads.  Export sales have also picked up on the price break and now some are talking that we could see balance sheets tighten up a little as we move forward.  I even seen one tidbit that mentioned China had bought some US corn last week.  The more of this that happens that better for us longer term for our fundamentals.

Most of the Asian markets are closed this week for the Chinese new years.

There is sort of a debate out there as to why basis is firming and what is really what with our markets.  The two main arguments are that A) producers simply are not selling as they don’t need to and B) is that the product just isn’t their; that some of those that forecasted our yields much lower then the USDA are actually correct.  Either way I think that the market as a whole needs to be careful not to price themselves out of the market longer term as the world really does have plenty of supply.  I think our market as a whole needs to take a little advantage of the fact that South America is struggling to get product out.

Don’t forget about our upcoming Grain Marketing Workshop that we are sponsoring Feb 2nd.  Also each we are still doing our weekly MWC Marketing Hour Roundtable meetings each Wed at 3:30 in Onida in which we go threw various charts, fundamental news, option strategies, and mock trading; everyone is invited!

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

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