Wednesday, April 11, 2012

Opening Grain Market Comments 4-11-12

Markets are called mixed to better this a.m. after we seen a bounce in the overnight session and a bounce in the outside markets.

In the overnight session corn was up 2-3 cents, beans where up 1-3 cents, KC wheat was up a nickel, MPLS wheat was up 4, and CBOT wheat was up 5-6 cents.  At 9:10 outside markets have European wheat up about 1 %, the dollar is weaker with the cash index at 79.601 down about 300, equities are bouncing with the DOW up over a 100 points, crude is up about 50 cents a barrel, and Gold is near unchanged.

Not much for new news out this a.m.; the main talk is still of yesterday’s report.  Heard many comments from the bulls that go to argue the USDA carryout for old crop corn.  Robbing Peter to pay Paul; in regards to the comments that the USDA had for the early corn crop going to be used instead of old crop corn.   I think that their comments tell us that the pipeline is very tight and if we see the crop start developing slow (which isn’t the case today) things could get very tight towards the end of our marketing year.  They also have it penciled in that demand will really come down going forward and more wheat will be used instead of corn.  All of these might happen; but if we stay low we won’t exactly be rationing demand and that might cause none of them to happen. 

The last time corn was down towards these areas China came in and bought; hopefully that will happen again and was certainly talked about a lot yesterday. 

As you can tell by the above comments I am a little friendly old crop corn; but still proper risk management is needed and recommended.  If we do make it to next years crop and it get’s as big as some thing there is no telling how low corn could get behind a huge crop.  One of the advisors I follow yesterday had a target of 3.50 on the board.    Personally I think that there is plenty of work needed and things need to shake out perfectly for us to see that type of pressure; but the reality is that is a risk wether I choose to think it can happen or not there is a risk that our corn carryout becomes massive because of huge acres and good yield.

Wheat is also on a danger spot on the charts; some of them are very close to breaking the bottom end of the ranges we have had the past couple of years. 

For more on the charts and possible strategies don’t forget we have our weekly meeting today in Onida at 3:30.


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