Monday, December 17, 2012

closing grain market comments 12-17-2012 - grains close weaker - beans leave doji on charts - Van Trump & Cronin Speaking at 2012 Grain Marketing Seminar

Markets closed mixed to weaker today after being slightly firmer this a.m.

Corn closed down 6-7 cents, beans closed unchanged, KC wheat was off 8 cents, MPLS wheat was down 7, CBOT wheat was off 6, the US dollar is near unchanged with the cash index at 79.560, crude is up about 60 cents, and the equity markets closed firmer with the DOW up 100 points.

Rather poor performance for the grains today; before the 9:30 bell most of the grains where slightly positive; but once the pit opened wheat came under pressure and then corn followed to the extent that beans closed about 13 cents off of their highs leaving a doji on the charts.  The doji has to be considered a warning sign when you consider beans are now over 1.25 off of their lows from about a month ago.

Today was really a lack luster news day for the grains; which we should expect more of as we move into the end of the year.  The things that will drive us should be demand news, weather (mainly in South America but here in parts of the US as well), macro events and money flow by the funds(fiscal cliff).  The next major report and probable fundamental market changer will be the USDA report on Jan 11th.  I don’t know that I would look for the grains to be quiet; but I would look for our markets to be thin as we go into the holidays.  Many producers, buyers, and other participates will be in holiday mode for the next couple of weeks. 

Wheat is very over done on the downside; yet we still are not seeing any HRW export business come our way; we really need to find some export demand for our milling quality wheat and until we do the horrible conditions that we presently have with our wheat crop will likely take a back seat.  I have said many times I think wheat has ton’s of potential and I have noticed plenty talking about the 2008 wheat market.  But until we have some demand there is really no comparison.  I remember in 2008 when no one had any wheat left and when we where shipping train after train to the export market.  We have yet to ship a train this year to the export market.  In 2007-2008 we shipped train after train down to the Gulf and later in 2008 the mill market really had to pay up. 

As mentioned news was rather light and likely will be; but we did have export inspections out this a.m.

Corn came in at 15.01; which was slightly above trade estimates but still about 10 million short of what we need on a per week basis to meet current USDA projections.

Beans had shipments of 37 million bushels; which were the smallest since September and below estimates but still well above what we need on a per week basis.  So far we have 40% more shipped this year than a year ago.

Wheat shipments came in a t16.4 million bushel which was the best number we had seen in several weeks; but still short of the nearly 22 million bushels we need per week to meet current projection.

Basis is steady for most of the grains; but I also don’t see many end users looking very aggressively other then bean buyers.  I do get some calls from brokers for corn and wheat from time to time but not much interest from the ethanol plants nor the mills.  Birdseed buyers also look to be very quiet; but orders have picked up.

Railroads are not slowing down supply either which doesn’t help out basis. 

To get basis running we probably need to see some export demand to keep our domestic buyers honest.  On the flip side with producer selling limited to a few bushels to keep the tax man happy I don’t think end users could buy anything without a big jump in the board or a big basis push.  Bottom line is it is a waiting came; longer term unless we get demand I don’t want to get too bullish basis on many of the grains just because producers have strong hands.  I much rather be bullish from demand.

It was about a year ago this last weekend that the first bean bull story started as soybeans gapped up one Sunday night.  So far I am not seeing any bull story done there other then planting delays; which isn’t much of one.

As for marketing I have noticed over the past couple of weeks that many advisor’s services have made plenty of sales recently.  I noticed one that is 70% sold in 2013 new crop corn, which to me is a little aggressive.  I also have noticed another has some 2014 wheat sold.  I am not going to make no generic recommendation to have X sold or X not sold as I think that every situation is different with different goals, needs, and risk/reward objectives; but I do think that we should take note that the reason some advisors are making some deferred sales is because levels are historically attractive with good profit returns and there are huge unknowns.  Some of the unknown’s could be extremely bearish should things shake out; such as what happens to corn price should we plant a record amount and have trend line or better yields along with curbing demand?  Some are on record having predicted sub $4.50 corn on the board next year.  I do know that some of the unknowns could also be bullish; so I am not going to preach that the sky is falling and one needs to be aggressive making sales; but I am going to say that sometimes that first little bit of marketing really helps out the average and helps many get comfortable.  Part of risk management can be risk diversification; so don’t be afraid to spread out a little risk here and there at levels that are both profitable and historically good.

If you would like help writing a marketing plan or going over some grain marketing options please give us a call.

Also I want to remind everyone that we have our marketing meetings this week.  Both Kevin and Tregg can give some good information about the markets as well as some opinions on where this thing might be heading.

Grain Marketing Seminar 2012

We would like to invite you to our
free grain marketing seminars:

Dec. 19th, 2012 – 1:00 pm MST at the
Ambulance Building in Philip, Tregg Cronin Speaker

Dec. 20, 2012 – 10:00 am CST at the Ramkota in
Pierre, Kevin Van Trump and Tregg Cronin will be speaking on the grain markets.  Lunch will be served

Please RSVP for either location by calling
800-658-3670 or 605-258-2686

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