Tuesday, March 19, 2013

Closing Comments 3-19-2013

Markets closed firmer for the most part in decent price action.

Corn closed up 8 – 9 cents a bushel, KC wheat was up 8, MPLS wheat was up a dime, CBOT wheat was up 9, outside markets had a bounce in the US dollar,  and stock markets were mixed with the DOW up 4 points.

Not a bad day for corn and wheat; charts look like they could inspire a little more bounce.  Wheat is up near resistance that if we can break threw could spur additional short cover from the funds.  This happening at a time when demand has been solid.

Corn basis feels ugly; I can’t find much of any bid for movement anytime soon.  PNW markets are soft a good 10-15 cents weaker than a week or two ago.  Bids haven’t dropped a ton in the country; but I think that is more due to elevators being competitive as corn basis is soft and coverage by end users feels heavy at least for any nearby slots. 

Corn charts have opened up a little bit on old crop corn too; but with the basis weakness I am seeing and the lack of volume I am not super convince that the rally has much life left.  It also looks like the funds have done a good job of already trying to get long ahead of next week’s stock’s report.  I guess caution is the word I would use for the corn rally.  The one positive has to be that we haven’t seen much negative corn demand headlines.  Sure exports are still horrible; but nothing worse than they have been and the really only demand headlines seem to be that of increased demand or ethanol plants looking to re-open. 

More talk of planting delays has been out lately; but that hasn’t helped out new crop corn yet.  Locally planting delays would be welcomed if the reason for them was too wet; but when the only reason I have seen is too cold of ground temps.  Other areas are also cold but most of the places east of us seem to have had a little relief to the dry weather talk.

Outside markets or the stock market in general didn’t have the worst close in the world; but the Cyprus drama has to make one a little nervous.  The VIX index was up and overall I don’t think grains really need to see a big money out flow.

Wheat basis was really undefined today; with very little on the spot and I didn’t hear of much for to-arrive trading.  It had felt weaker last week; but rail road slow performance probably has stopped the bleeding short term.  I would guess however that a 20-50 cent bounce will buy plenty of wheat and even though our demand is better than it was it still isn’t that of a super strong bull market.  There is plenty of wheat elsewhere and India seems to be a seller on a bounce. 

I do like how the wheat charts look, the fact that the funds are still short and the fact that demand has increased thus I look for a continued bounce.  But I do also think that should we get that bounce it needs to be rewarded with some sales.  With implied volatility rather low and basis strong if one wants to stay in the wheat game perhaps a bounce would be a time to look at selling the cash and buying a call option or  do a min price contract?

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