Thursday, October 25, 2012

Market Comments 10-25-12

Markets are trading choppy Thursday morning.

At about 8:45 we have corn off a penny, beans off 4 cents, KC wheat up 3, MPLS wheat up 2, and CBOT wheat up 2.  Outside markets have the equities bouncing with the DOW up 60 points, crude up 50 cents a barrel, and the US Dollar unchanged.

Another news lacking day today; other then export sales.  Which came in at 21 million bushels for wheat, 5.6 million bushels for corn, and 19.2 million bushels for soybeans. 

Wheat numbers where above expectations as well as what we need on a per week basis to meet present USDA estimate.  The best wheat export sales in 11 weeks.

Beans were also solid over 2 times what we need on a per week basis with us now up to 919 million bushels of commitments only 2 months into the marketing year with the US projecting exports at 1.265 billion bushels; or nearly 73%.  Perhaps continuing to open the doors for the demand number to be moved up.  I would note that on the negative side is the fact that the market was actually looking for a little bit better sales then we got.

Corn sales were once again horrible and below the low expectations.  So far we are 48% off of last years commitments at this time.

The USDA did report a sale of 120k tones of soybean to unknown this a.m.

Wheat basis is a little defensive on the spot floor the past couple of sessions; both winter wheat and spring wheat with more producer movement as well as elevator movement with fall harvest winding down.  If we want to see basis and flat price firm up we really will need to good export sales continue as we move forward.  We need to get to the point where we actually see some domestic – export competition.  So far I haven’t seen much if any of our wheat flow to the export market.

The birdseed market remains very slow; not much interest from buyers.  But producers are not exactly running to the door to sell either.  I think for that market to stabilize or bounce we need to see a couple things happen. 

First we need to see beans stabilize; which some believe they have made their seasonal low.  If beans can take off and continue to stair step up that adds support to the crush market which in turn makes the birdseed market have to pay more.  The birdseed market can’t afford to let too many sunflowers go to the crush from area’s that are suppose to supply the birdseed or they may have to really pay up later.

Bigger then beans stabilizing will be the actual birdseed demand.  Prices have been a little high the past couple of years and that has lead to more price increases on the shelves.  So we have higher prices which don’t help demand especially if the economy is struggling and we need to have solid demand which probably needs to come from a wet snowy winter on the east coast.

If we can see some demand and have beans stabilize move higher there is plenty of potential for the birdseed sunflower market; but limiting the upside should be the huge amount unsold sitting in producers bins.  I think there could be more then ever sitting un-priced just looking for a rally.  With all that product overhead a rally to some of the levels seen the past couple years just might not happen.  I do think should demand be strong that the birdseed market lacks coverage; but they also have no reason to get any coverage until demand picks up.  Bottom line is demand and bean complex will determine next price move; longer term it will be a stand off between the buyers and producers………..which have to sell or buy first.

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