Monday, February 11, 2013

Closing Comments 2-11-2013

Grain markets closed under pressure today as spillover pressure from Friday’s report and technical selling lead our grain prices lower.

When things were said and done corn closed down 7 cents, soybeans closed down 21 cents, KC wheat was down 11 cents a bushel, MPLS wheat was off a dime, CBOT wheat was lower by 15 cents a bushel, crude oil was up about a dollar a barrel, gold was off about 18 an ounce, the US dollar was up slightly and equities closed down slightly with the DOW off 22 points.

We took out some important technical support on the charts today that lead to some fund selling and possibly more fund selling in the days to come.

Weather was mixed; with Argentina a little wetter then expected; but much of the HRW area didn’t get as much rain as expected.

We did have 10 year USDA Ag Projections out today; and they reminded us that we have some work to do for corn fundamentals not to be considered bearish for new crop.  The numbers the USDA used are not new info and didn’t cause much extra pressure if any; but the headlines are bearish should they shake out as projected.  Yield of 163.5 bushels an acre; with a corn carryout projected to be over 2 billion bushels. 

The bean number had ending stocks at 185 million bushels; which isn’t bearish; but gives us some cushion versus this year.  The wheat carryout is projected at 733 million bushels; which like the bean number has be considered neutral overall.

A couple other highlights I took out of the report; the huge increase year after year for Chinese soybeans.  They are projecting 63 million metric tons of imported beans for China in the 2012-2013 marketing year; while in the 2022-2023 marketing year they are projecting 102.9 million metric tons of beans to be imported.  That long term is bullish; the other thing that I didn’t notice was other countries showing the same type of demand increase for soybeans.  So what could happen if that same type of demand hits some other nations???

The other negative that stood out to me on the 10 year projections was the fact that ethanol usage is not expected to get back above 5 billion bushels until 2019-2020; it was just last year that we used a little over 5 billion bushels.  Bottom line is it appears that the demand rationing has took place and that the USDA thinks that demand will take a while to bounce.  On the other hand they have trend line yields basically showing a 2-3 bushel yield increase. 

Now you can’t put too much into the report as it is early estimates and really doesn’t mean much as so many factors will change things as we go by; but it is interesting to see the thoughts the USDA has and that could help lead us to seeing why they might have various changes as we go forward.

Basis felt a little better on all of the grains today; mainly because of the soft board.

The birdseed market remains on the slow side; but the next few days could see a pick up from the latest snow on the east coast.

I guess the thing we really need right now is a bull story or a headline to get the funds back involved without it we still have a strong old crop balance sheet; but I don’t know that it is strong enough for us to have a major rally. 

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