Wednesday, April 25, 2012
Opening Grain Market Comments 4-25-12 15.00 beans? China buys corn!
Markets are called mixed to better this a.m. behind the firmer outside markets and firmer overnight session. We also received some confirmation of the corn in the last day or two.
In the overnight session corn was up 5-6 on old crop, new crop corn was up 3, beans where very strong with the old crop up 28-29 cents a bushel, new crop beans were 17 cents better, KC wheat was up 6-9 cents, MPLS was down a penny to unchanged, and CBOT wheat was up 5-6 cents. At 8:50 outside markets have equities firmer with the DOW up 88 points, Nasdaq up over 2.5 %, the dollar is slightly weaker with the cash index at 79.081, crude is up about 30 cents a barrel, and gold is down about 5 an ounce.
The USDA did announce some corn sales to Unknown as well as China this a.m. This along with the announcements yesterday are now well over 1 mmt since Friday in the daily reporting system. Most has been to unknown which typically ends up being China or at least the market will guess it is China. This a.m. announcement finally had quite a bit of new crop which makes more sense given the huge inverse between old crop and new crop.
Yesterday the USDA confirmed the 4th case of mad cow or BSE after the grain markets closed. Despite this the markets rallied very strong last night with beans leading the way. I read something this a.m. that had a projection for the South American/US bean balance sheet to be tighter then it was in 2009 and that our March 13 stocks could be the tightest ever. There is now some weather talk of possible freezes in Argentina damaging late maturing beans.
Yesterday we had Stats Canada come out and they report wheat acres at 24.324 million versus last year at 21.464. Canola was 20.372 versus 18.862. The estimates were in line with expectations for the most part; the market does appear to think we could add a little more Canola and take off a little wheat as we go forward or get more updates. The big difference from a year ago is the acres that didn’t get planted last year and look to get planted this year. This is also the big difference in the US; a lot less prevent plant acres. The report I seen for the Canadian acres showed an increase for every single crop listed.
The stock market strength is on the heels of Apple who reported better than expected earnings after the close yesterday. On the early going it is up over 9% or $50 plus a share which has the Nasdaq up over 2.5%.
After cattle being limit down yesterday from the mad cow announcement they are bouncing today. Keep in mind that softer livestock prices don’t exactly support higher feed costs for feed grains.
Basis for corn and beans remains very firm; with more demand then available supply or supply that is for sale at these levels. It still feels to me that producers own plenty of grain but they are also doing a great job in not having to market it. At the end of the day the discipline they have is helping out our prices; but it is also the big risk that is out there. What happens if everyone has to run to the exit door at the same time to make sales? Nothing good for basis or the board. So don’t forget to have a solid good risk management approach in your grain marketing one that might include a little risk diversification and making sales during the seasonal times that one is really suppose to.
Don’t forget that we will have our weekly MWC Marketing Hour Round Table this afternoon in Onida where we will be going through some charts as well as overall discussion on our markets and possible strategies to use.
Please give us a call if there is anything we can do for you.
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