Wednesday, May 23, 2012

Market Comments - 5-23-12 - What used to be open grain market calls!

It is about 8:45 and presently we have the grains weaker along with outside markets weaker.

Presently we have corn off about 4 cents, KC wheat off about 15 cents, MPLS down 13 cents, CBOT wheat off 19, and beans off 25 cents.  Outside markets have the cash dollar index about unchanged, EU wheat lower, equities a lower with the DOW off 80 points, and crude is down 60 cents.

One comment I had from a buyer today was is wheat really down 15 cents?  With the real lack of volume do the present prices mean much?  Yesterday it was like that as we seen big movements at 9:30 for the grains and seen volume really pick up and then really die off at 1:15.  So I guess it will be a learning lesson for many on all sides in the industry.

Technically things have turned a little ugly; we commented yesterday how the bean chart really looked ugly and how corn was just back towards the bottom end of it’s nearly 8 month range.  Wheat now weaker looks like we maybe put in a top on Sunday night; I guess it still goes back to how we close out in the next couple of days.  Was the correction the dollar rally wheat seen in it’s prices or is the 40-50 cents we are off of the highs from Sunday night the correction in the start of a bull market.

Forecasts are calling for some moisture in Russia and that has helped push the markets weaker.  But I also seen a comment this a.m. that Ukraine rain won’t help wheat, National Meteorology Center Says today. "As much as 30 % of the grain harvest in E and S Ukraine may be lost". 

We have seen Russian wheat production lowered by a couple different analysts the past few days.  So Hopefully the price action we are seeing in wheat is that just of a correction as the dollar rally in less then a week might have been a little much.

The other side of that is there are analysts out there that thing and feel wheat is just a feed grain and that it can’t hold it’s recent rally versus corn. 

When markets have so many factors and variables like our markets do; plus the fact that the funds are just huge players and make money flow be the biggest fundamental at times out weighing actual supply and or demand when it comes to marketing the only thing I can preach is to practice good risk management.  As I can give you possible outcomes where we are much higher; but I can also give one possible outcomes where the grains are much lower.  So finding a way to be comfortable whether the markets are falling out of bed or exploding higher really is key in having a grain risk management plan. 

Please don’t forget we do offer a Country Hedging Branch that can help you utilize futures and options when putting together your grain marketing plan.

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

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