Thursday, September 20, 2012

Morning Update

Markets are choppy this a.m. with a lack of new news.

Around 8:45 markets have corn off a nickel, beans are off 9 cents, KC wheat is about unchanged, MPLS wheat is up a penny, CBOT wheat is off 2 cents, the US dollar is very strong and that is adding a little pressure to the grains up 500 points or so with the cash index at 79.587, equities are a little weaker with the DOW off 40 points, and crude is off about 30 cents a barrel.

We did have export sales out this a.m. and they continue the same trend; good on beans and wheat while horrible for corn.  Corn sales where horrible at 2.8 million bushels; by far the worst ever for this week in a marketing year; the previous low was 19 million bushels.  Bottom line harvest is typically a time when we see a little export demand; but not this last week for corn.

Soybeans are a whole different story; they were 26.2 million bushels and only 2 weeks into the marketing year we already have 75% of the total year’s goal on the books.  This is very bullish but is also known and part of the reason beans are where they are at.

Wheat continue to be in line to slightly better than expectations; but slightly below what is needed on a per week basis.  Keep in mind that most of our wheat exports are not suppose to hit until the Black Sea area runs dry on what they have.

Keep in mind that some of the headlines the past couple weeks haven’t changed.  First off we still have very tight balance sheets; projections are that we will need to curb demand historically because of the small crops from the drought.  The world wheat situation continues to tighten up with many exporters getting close to running out or projected to run out……….maybe run out isn’t the correct phrase but have very tight stocks that leave them uncomfortable.   Demand remains very solid for beans as shown by today’s export sales.  Ethanol demand has picked up a little bit; yesterday’s production numbers where the highest in 11 weeks.  Profit margins for some of the livestock industry are very good for some of the deferred slots.

The above are just some of the positive or bullish things out there; most of them in my opinion don’t say the markets need to go up today; or anytime soon.  They just paint a bullish picture out several months down the road should things not change or should we do something to take away from supply or add demand.

Also not changing much have been the headlines causing weakness lately.  Harvest progress is going great; with yields generically better than expected and no weather issues.  Funds remain long; probably too long and we have seen some technical selling along with fund liquidation.  Issues over sea’s that could lead to possible trade disputes between us and China; the Japanese Chinese conflicts.  Idea’s that acres are increasing based on higher FSA acres.

Bottom line is we can see both some positive and negative things in our markets; so at the end of the day our recommendation is going to stay the same of getting yourself and your operation comfortable.  If you need help with your marketing plan please give us a call.


Jeremey Frost
Grain Merchandiser
Midwest Cooperatives
605-295-3100 (cell)
605-258-2166 (fax)

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