Monday, December 3, 2012

Morning Market Thoughts

Markets are bouncing to start the month.

At 8:20 we have a little bounce happening in the grain markets this a.m.; corn is up 9, beans are up 17, KC wheat is up 8, MPLS wheat is up 9, and CBOT wheat is up 11.  Outside markets have DOW futures firmer by 50, US Dollar is weaker with the cash index at 79.972, crude is up about a dollar a barrel, and Gold is also up 4.50 an ounce.

Markets firmer on a combination of things this a.m., including some wet weather preventing planting in parts of Argentina, a Egypt tender that saw the US get a big piece of business, strong demand for soybeans and products, and perhaps a little fresh month buying that is supporting our markets as well as outside markets.

Egypt bought 165tmt US soft white and 115tmt US soft red wheat for January-February shipment. They also bought 60tmt Romanian and 60tmt French. Prices were $20 to $40 per tonne cheaper than Black Sea.  This is good news; but keep in mind we need to have some of this just to meet present expectations; so by no means is this totally bullish; it is news that could easily be buy rumor sell fact.  We need to have this happen more often than not; and it appears we are sitting in a good spot to get more; but more than what the USDA has already penciled in?  What about more then what the market has penciled in?

HRW area remains very dry; but we won’t have a crop condition update for several months; some individual states will do updates but nothing for the US in whole.

We need to watch the fiscal cliff headlines and developments as we don’t need or want to see the funds having another reason to hit the exit door.  Despite the huge sell off’s they still own plenty of grain; not so much soybeans but they are still long beans and long plenty of corn.  Last week they added to corn and wheat positions while they were sellers of beans.

The CME Group did complete the acquisition of the KCBT.

Wheat deliveries remain strong which isn’t the best demand sign.

Not sure what to think of basis this a.m. I did notice lots of rail cars around which probably keeps some pressure on things as bids roll from the Dec to the March; I guess it will really come down to demand.  Right now that seems to be hit and miss; ethanol margins are not the best and you will notice the US got some wheat business to Egypt but none of it was HRW or DNS; but rather SRW and White wheat.

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wed 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.

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


Jeremey Frost

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