Tuesday, March 5, 2013
Closing comments 3-5-13
Markets closed firmer today in rather choppy price action.
Corn was up 6 cents on the May contract, new crop corn was up 2, KC wheat was up 7, MPLS wheat was up 4, crush sunflowers were down 5 cents a cwt, soybeans were up 5, equities were firmer with the DOW up 125 closing at new all time highs, and the US dollar was a little softer.
Not a bad day for the grains; but some of the markets such as soybeans did close well off of the highs. Wheat actually showed good strength in the last minutes of trade; but beans close 15 off of their highs.
News was on the quiet side today; but we did sell some more beans to China which is what lead to most of the early strength.
Other news out was more estimates for Friday’s report. I mentioned this morning that the estimates are basically calling for very little changes; slightly higher corn and wheat carryout numbers from the idea of slow export demand. While beans are looking for a slightly decreased balance sheet via the demand that doesn’t seem to slow down. The latest South American estimates are also on the slightly smaller side; but rather wide in ranges.
The birdseed market is rather slow; but some flowers are moving to the crush market. I view anytime product goes to the non-typical buyer as a bullish thing. The crush typically isn’t going to buy sunflowers from central South Dakota in the spring time; so if enough can trade it there it could help out our over supply problem. Bottom line is if we can see a lot of product move down to the crush the birdseed market might have to pay up later; but if producers continue to sit on product the birdseed buyers will have the upper hand and prices likely drift unless demand can really pick up. We just simply have a little too much supply for the amount or should I say lack of demand we have.
Wheat basis continues to be on the firm side; as was corn basis in some markets today. But some of the local ethanol plants are showing more and more signs of coverage. Look for basis to continue to strength; but the really demand isn’t for upfront rather for deferred slots. So if we see a rush of corn to move nearby you could see a little setback; the bigger question will then become if a little correction or softness in basis will have a domino effect? The inverse in the board makes corn look rather expensive even in our area versus the July or September futures.
Railroads have been slow in most areas and that has helped out spring wheat basis.
Don’t forget our harvest 4 hunger program has opened up. Please give us a call with your bushel donations.
With the strong equity markets one has to wonder what will happen with money flow as we go forward. Will guys that have been out of the stock market since the 2009 lows decide to get back in? And if we can have another leg up in the stock market will guys decide to pull money out of the commodities or look more to a risk on attitude and talk of inflation?