Monday, December 3, 2012

Closing comments - Grains 12-3-12

Markets closed mixed today despite the firmer start this a.m.

Corn was up 1-2 cents, KC wheat was off 7, MPLS wheat off 5, CBOT wheat off 3, soybeans up 15, the DOW was down 60 points, crude was unchanged, and the US dollar ended softer.

Rather disappointing day for wheat today; as we finally got some export business; yet we sold off with KC wheat closing 17 cents off of it’s highs.  Not a good day when you get good news yet can’t close firmer.  There is an old saying sometimes it’s what the market can’t do.  Bottom line I didn’t like the price action for wheat at all today.  Does that mean the bottom will fall out of it…….no.  But today has to be a rather negative red flag.  I think that great potential remains for wheat; but right now all I see is great potential.  We need to have much more demand and some of that demand has to be for milling wheat.

The other thing we have to watch out for is if more demand comes; will it trade like old news.  The market has been talking about the fact that the US is the only wheat game left in town for some time.  So will exports be a big enough headline news to have our markets rally? 

One thing that I don’t care for is the fact that soybeans recently traded down to their May highs; while wheat is still a good 1.25 to 1.50 above it’s early spring highs.  Maybe that means soybeans have got too cheap recently; but it also should tell us despite wheat’s horrible crop condition there remains plenty of price risk.  After all look at what happen to beans; great demand yet a huge sell off.  So even though I don’t think wheat will sell off and have the bottom fall out of it; we need to realize that these price levels do have downside risk.  After all today we got export news and sold off; perhaps the market is tired of this news.  Perhaps to really rally we need a new fresh piece of news for the bulls????

Bottom line make sure that you are comfortable in your marketing as today’s price action should remind us that the futures market as well as the funds have their own minds.

We did have export shipments out this a.m. and the same theme continued; great for beans over 50 million; horrible for corn under 10 million; and poor for wheat around 14 million.  Beans 2-3 times what we need on a per week basis while corn and wheat remain 1/3 to 2/3 of what we need on a per week basis to hit current USDA Projections.

As for USDA reports; we will have one next week Tuesday; but most don’t expect major changes until we get to the Jan report; which will include final production as well as quarterly stocks.

Weather in parts of Argentina remains too wet to allow them to prevent planting soybeans.  But that also means some areas have very good moisture profiles.

Basis felt a little defensive today for all of the grains.  Lots of applications happening with the start of the month.  Railroads (at least locally) are not having much for issues as some cars are actually coming early.  Plus no winter to speak of hasn’t exactly slowed down the rail like it typically does this time of the year.

Weather also hasn’t helped out any birdseed demand.  Business remains on the slow side; I have seen a few orders for cars before Christmas but no real uptick in demand.  Producer selling is soft and bean oil complex is adding some support but the birdseed sunflower market is no run away.  I would say the market isn’t super deep; I don’t think a lot of pounds can be bought cheap; yet I don’t think bids would stand in there even at current levels for tons of pounds either.

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wednesday’s at 3:30.  Also make sure to mark your calendars for Dec 19th and Dec 20th for our marketing meetings in Philip and Pierre where we will have Tregg Cronin and Kevin Van Trump speaking.

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

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