Thursday, April 19, 2012

open grain market comments - China buying US Corn again?

Markets are called better this a.m. behind a strong overnight session and talk of China buying corn.

In the overnight session corn showed good strength up 13 cents, beans were up 15, KC wheat was a dime higher, MPLS wheat was up 5 cents, and CBOT wheat was up 9 cents.  At 9:15 outside markets have equities a little weaker with the DOW off 54 points, crude is down about 50 cents a barrel, a US dollar that is near unchanged with the cash index at 79.53, and European wheat up about ½ of a percent.

We seen heavy volume last night as it appears that China is looking to buy 500,000 to 750,000 metric tons of corn.  No confirmation has been seen; but it appears that the run up last night was from Chinese interest.  Some mentioned that the Chinese Gov has standing bid that was very close to our level we were trading at.

This a.m. we did have export sales out and they were very disappointing for old crop corn, very good for beans, and ok for wheat.  The corn number failed to hit what is needed on a per week basis while wheat and beans were well above what is needed.

Overall basis feels firm as supply isn’t exactly coming out of the woodwork as producers in general are not selling or fear selling at least not yet.  Demand is overall good at these levels; but for commodities such as wheat it doesn’t feel like there is much improved demand no matter the price.  Overall I think wheat should be supported by corn and beans; but keep in mind we are just a few months away from new crop wheat harvest while there is a long time before fall harvest.  So it is possible that those grains continue to diverge.  Bottom line we really need to find some solid export demand for wheat if we want to get really bullish longer term. 

Watch the outside markets and look for confirmation on Chinese business for direction today.  Hopefully the markets have found a bottom; so with that keep in mind how we close today will be much more important than where we open up at.  The theme has been to sell the rallies and until we prove otherwise most thing that is still the way to go.

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

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