Monday, March 12, 2012

Market Comments China buying corn?

Markets where called mixed this a.m. behind a mixed overnight session and mixed outside markets.

IN the overnight session old crop corn was unchanged on the front month, July corn was off 2 cents, New Crop Dec corn was off 3, beans where off 1-2 cents, KC wheat was up ½, MPLS was 2 lower, and CBOT was down 2.

At 9:15 outside markets have crude down about 1.50, equities are firmer with the DOW up about 20 points, the Cash dollar index is trading about unchanged at 80.025.

As for new news out there it is very little.  There still remain rumors of Chinese interest in US corn and this is what helped the markets out on Friday despite the rather non-event USDA report.

One thing the markets do have going for them is uncertainty as producers start to focus on the field it is become unknown where end users can source product.  The has the corn market inverted with the March leading the May and the May leading the July contract.  It is a sign of more demand then supply; now perhaps the supply is there and just not for sale?  But perhaps it is a way the market tells us that producer simply are not having to sell.  Bottom line is there are debates as to why the market is inverting; is it the producer situations that are much improved and not being forced to sell or is it simply strong demand?  Will we see a massive movement sometime in the near future from the farm to the market place or is the USDA overstating our supply and or understating our demand?

The March 31st report should give us a good idea of what the case is; as it will be our quarterly stocks report.  Market mover?  Typically a big market mover plus this report will have planting intentions.  Don’t be afraid to take a little risk off the table as we head into this report as it is probably simply the correct move.

Today’s market did open along the same ideas as where the overnight session left off; but we quickly moved into positive territory on more talk of China buying old crop corn.  It appears that the cheapest spot to buy corn is the board in many places.  The market has really took out the incentive to store corn which is a strong demand sign.

At the end of the day corn was up 15 on the May; July corn was up 10, new crop corn was up 6, beans where down 3-6 cents, KC wheat was up 12 cents, MPLS wheat was up 15, and CBOT wheat was down 8.  Outside markets where mixed with crude off about a dollar, the US dollar was softer down to 79.85, and equities where slightly firmer with the DOW up 38 points.

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