Thursday, April 5, 2012
Opening Comments 4-5-12 - Strong Export Sales for Corn, Soybeans, and Wheat
Markets are called mixed to better this a.m. behind a choppy mixed overnight session, good export sales, and mixed outside markets.
In the overnight session corn was off a penny on old crop, new crop corn was down 3, beans where up 3 on old crop, new crop beans where off a penny, KC wheat was up 2, MPLS wheat was unchanged, and CBOT wheat was up a penny. At 9:00 outside markets have European Wheat up about 1%, gold up $18 an ounce, equities weaker with the DOW off 32 points, the US dollar is firmer with the cash index back above 80 at 80.039, and crude is up about 50 cents a barrel.
With the good export sales most calls are better then where the overnight session left off at; but I think we need to be careful for profit taking ahead of the long weekend as there are no markets in tomorrow. Plus we have a crop report out on Tuesday that will have updated supply and demand numbers; so we could see some position squaring heading into that. I also will note that the outsides and just the overall money flow feeling has me a little nervous that we don’t quiet see the strength that many would think because of the solid export sales.
One thing is for certain is the fact that it is great to see export sales firmer; shows that the breaks are really supported. Keep in mind these are the export sales for last week.
Yesterday we had ethanol production numbers out and that trend of lower production has continued; it should be a little concerning and a reason not to get over bulled up. Also margins for other end users and spreads between corn and other grains like KC wheat have become very tight and could lead to less demand for corn as we go forward or lead to a switching from feeding corn to feeding wheat. This has been talked about a lot lately because it appears we have a big wheat crop coming on down south as those areas continue to get moisture; it also indicates a lower pro wheat crop making it more competitive into the feed rations with corn. Look at the KC July wheat versus July corn; it is now under a 30 cent spread after historically being a dollar or more and just before the last USDA report the spread was nearly 70-75 cents. Bottom line is corn has quickly become a little expensive versus CBOT and KC wheat; or maybe the market is just trying to tell us that wheat is too cheap?
As a reminder no markets tomorrow; they won’t open up again until Sunday night.
Watch outside markets and see if we can get some follow threw off of the good export sales.
I have seen some bids on the west coast start to roll from the May to the July for corn; if this starts happening a lot you could see the May-July corn spread get rather wild.
As for marketing grain keep in mind where this market was just before the last USDA report; very nervous and much lower. So don’t be afraid to take a little risk off the table when we see rallies like we have recently.
Please give us a call if there is anything we can do for you.
Labels: Beans, charts, Charts and Strategies, commodity price risk management tools strategies grains futures options money cash flow, crop conditions, Delta Neautral Trading, Grain Markets and Grain Closing Commentary, Grain Markets Comments, Leverage Optoins Futures, Marketing Tools, MWC Marketing Hour Round Table, opening grain comments, option selling, Price Management, USDA Crop Report Supply and Demand