Markets closed firmer today.
Corn was up 5-6 cents, beans up 12-13, KC wheat 10-11
higher, 8 for MPLS, CBOT wheat was up 11, DOW Jones was up 133 points,
crude over 3.00 a barrel higher, and the US dollar was off slightly.
Election day. A good bounce lead by wheat and it’s
struggles in the US as well as the world. Wheat conditions horrible in
the US along with contract highs for Paris Milling wheat helped push markets
higher. Wheat conditions are at or near the worst in history. Keep
in mind things are early and the potential is still there but a small crop
along with a smaller world carryout and you have a potential bull market out
there.
After the election is over hopefully we can get some fund
involvement into our markets. A tie or something that is undecided could
make markets nervous; but just knowing what the playing field will be should be
supportive to our markets or at least no longer be a reason to have risk off.
We will have a USDA report out on Friday. Market is
looking for an increase in corn carryout despite the market looking for a
decline in production via less harvested acres. The increase in carryout
is coming from soft demand. There seems to be some potential for some
corn export business later in the marketing year with some of the “cheap” corn
offers coming up. We are no longer seeing Argentina corn coming into the
US and there is some chatter that the US will later be in the game; but today
we are not getting any business so ideas are that the USDA cuts exports and
potentially ethanol demand behind poor margins. Now if they do cut them
on this report and we see a major price break perhaps that doesn’t allow the
cuts in demand to happen. Bottom line is market should still be range
bound; tight enough supplies to keep a major price break yet not enough demand
or headline story for the funds to really run things up. At least not
yet.
For wheat on the report the market is also looking for a
slight increase in carryout; via soft demand. We simply haven’t got much
exports and wheat’s premium to corn should slow down any wheat feeding.
The world numbers could tighten up behind a smaller Australia crop; so overall
market is looking for a neutral type report maybe slightly negative US numbers
and slightly positive world numbers.
For the beans the market is also looking for a somewhat
bearish report. But for a different reason then the corn and wheat
markets. The expectations are for an increase in soybean production; most
of which likely will see demand off set; but overall a small net increase in
carryout is the expectation. There is some talk that with the ideal
weather that parts of South America will have that we could actually see an
increase in production down there as well; but I have also seen plenty of other
reports of too wet and areas too dry that cause me to think the USDA won’t do
much with that crop as of yet; after all I think their production numbers are
fairly aggressive especially when you consider the fact that many of their
increased acres are not exactly the best acres either.
As for marketing our markets have been rather sideways for
some time. Don’t be afraid to take a little risk off the table near the
top end of the recent ranges. For wheat that means making some cash sales
between 8.50 and 9.00 or so. For corn 7.00-7.25 should be a good spot to
make some cash sales. I think all of our grains have some potential but
there are always black swans plus as we sit today we have no head line story
for the funds nor do we have the demand to really take this thing explosively
higher. So don’t forget to get yourself comfortable in your grain
marketing.
Please give us a call if there is anything we can do for
you.
Thanks
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