Monday, November 19, 2012

Closing Comments 11-19-12

Markets closed firmer today behind supportive outside markets.

Corn lead the way higher up 12 cents, beans were up 12, KC wheat was unchanged, MPLS wheat was up ½ cent, CBOT wheat was up 4, equities where firmer with the DOW up 208 points, crude up over 2.00 a barrel, and the US Dollar was weaker with the cash index at 80.852.

A nice little follow threw bounce for most of the grains following the mini bounce the grains had off of the lows from Friday.  Corn and beans started firm last night and stayed firm most of the session with corn leading the way.  Wheat didn’t seem to want follow despite the very bad conditions; this afternoon we had crop progress come out with a  2 % decline.

Wheat not following could be due to the technical weakness seen late last week as it broke support trading to new lows for the past several months.  Perhaps one positive could be the fact that wheat didn’t have huge follow through selling.

Export shipments came out this a.m. and the same story continued; poor for corn and wheat while very strong for beans.   Corn came in at 14.4 million bushels nearly 10 million less than they need per week to meet current USDA projections.  Wheat about ½ of what it needs on a per week basis coming in at 11.1 million.  While beans came in at 62 million nearly 3 times what we need on a per week basis to meet current USDA projections.

Look for markets to be a little on the slow side as we head into the holidays.  But that doesn’t mean they will be as tame as perhaps they should; but do look for them to be a little thin.

Basis feels a little firmer for all of the grains as producer movement is rather slow.  Many producers are very bulled up on prices; perhaps they should be but the fiscal cliff situation and outside markets in general should remind us that we never know if or when we will have another 2008 type of market.  So don’t be afraid to pull a little risk off the table with all of the unknowns we have.

As mentioned above wheat conditions continue to decline; I believe the worst on record for this time of the year.  But that still hasn’t lead to any new export business coming to the US; nor did it help wheat prices bounce today.  The market feels that the wheat crop isn’t made or broken in the fall; and that itself is correct; but the lack of emergence is rather scary.  But if you ask many advisor’s or analysts what comment is really needed for a bull market you will probably get the answer strong demand.  So far we lack that demand; and until that changes I don’t want to get too bulled up just because I look in our trade area and see a horrible dry situation.  A lack of supply is a good start of a bounce for prices; but it doesn’t create demand; longer term we need to see demand.  In marketing I think one needs to keep in mind that we are still a little high priced and not getting the business needed; so on a global front we are still too high priced.

The birdseed business remains slow with buyers showing very little interest.  I did talk to a couple guys today that indicated orders seem to pick up a little; but they were not sure if that was just pre-holiday ordering versus demand pickup.

One announcement; this week’s MWC Marketing Hour Round Table meeting will be on Tuesday at 3:30 in Onida due to the Thanksgiving Holiday.  Also MWC will be closed on Friday; if anyone is looking to do any marketing I will be available on my cell phone at 605-295-3100 as grain markets are open for a couple hours Friday.

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

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