Tuesday, October 16, 2012

Morning Comments 10-16-12

Markets are seeing a small bounce on Tuesday a.m.

Around 9:20 we have corn up 6 cents, beans are up 11, KC wheat is up 7, MPLS wheat is up 6, and CBOT wheat is up 7.  Outside markets have a softer US dollar with the cash index at 79.428, crude is floating near unchanged, and equities are firmer with the DOW up 99 points.

First off crush sunflowers went down twice yesterday; first when they did normal bids; but then again at 5 the crush markets took bids down another 50 cents.  This a.m. with the small bounce in bean oil they are only down another 35-40 cents.  Bottom line is the sunflower market in general is seeing a little pressure; I don’t think it is from our area in general; but further North.   One good thing I see on the sunflower market is that many areas are getting close to being done so even though there is some pressure today it feels like we are getting near a support area.  I do think that producer ownership might keep a lid on things unless demand really picks up as it seems like everyone has way more sunflowers in the bins then they normally do.  So for sunflowers to run after harvest producers will have to be very tight fisted.

Not tons of new news out this a.m. it seem more like a dead cat bounce or Turn around Tuesday; our markets have been just a little over done the past couple of sessions.

We did fail to completely close the “gap” left on beans; so that has lead to a little more technical buying.  We also sold 110k tones of beans to unknown; once again most likely China.

Corn harvest was 79% complete; hopefully that means we are getting close to a seasonal bottom or have already made that bottom.  It does feel like basis wants to move higher; but buyers are very hit and miss with many starting to go more to a hand to mouth versus deferred ownership.  Many of our ethanol buyers just can’t lock in good margin on deferred slots so it doesn’t make sense to have tons of ownership at a loss.  Some buyers also think that many of the elevator piles this year might have to get picked up earlier because of condition.  That I would agree with.

Weather remains very dry in Australia; while most of South America is on the good to wet side.  So ideas remain that the Australia wheat crop is getting smaller; while prospects are for a huge South America Bean crop.  Now is it early for that?  Yes as they are just planting; but it is a headline and headlines are what we need to have the funds involved.

If we are going to turn this thing around we really want to see headlines switch to strong demand and I don’t think that has much of a chance of happening for anything other than beans any time soon.  So if we rally look for beans to lead the way.  Now after the first of the year perhaps that changes and demand for wheat or corn could lead us up then; but right now neither corn or wheat seem to be great candidates for leading our markets higher.  As they both lack demand; having said that they seem to have be near support areas too given the tightening balance sheets; so I don’t look for either of them to lead us much lower.  I think the next real big movement will be beans; up if we find solid demand or have any weather issues in South America or down should the crop be much bigger, demand slip, or we just fail to give the funds a reason to be long.

With the greatly volatile markets and unknown factors out there please give us a call if you want help doing a marketing plan or if you would like to have some offers out there.  And make sure that you are comfortable given the sever possibilities that are out there.

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


Jeremey Frost
Grain Merchandiser
Midwest Cooperatives

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