Wednesday, March 13, 2013

Morning Thoughts 3-13-13

Rather choppy quiet markets this a.m.

At 8:45 we have a mixed bag; May corn is off a penny, July corn is up a penny, May Soybeans are down 14, KC wheat is unchanged, MPLS wheat is off 2 cents, and CBOT wheat is also unchanged.  Stock markets are choppy with the DOW off 30 points, the US dollar is up strong, crude is up 50 cents, and gold is up a buck.

Not much for news out this a.m.  But it is a little disappointing to see corn spreads a little weaker.  Basis also feels a little weaker for corn; and local ethanol plants have very good coverage. 

It sounds like the USDA is considering intervening in the US Sugar market.  Prices presently are below loan value and rather than own a bunch of corn it sounds like the USDA is looking at buying about 400k tons of sugar to help push the price back above loan.  This might go into some US ethanol plants; but it also sounds like some plants might not want to increase sugar usage because of the income they lose off of the byproducts.

Sounds like some milo was sold to unknown this a.m.  That first off is good for milo; but secondly it shows that end users are still looking for alternatives to corn because of the very tight supplies.

We have had a lack of soybean exports the past couple of days; and bull markets really need bullish news.  So a lack of the bullish news isn’t helping soybeans out at all.  Spreads are also weak on beans.

Sounds like Ukraine’s production is expected to have a big jump; one forecast for 2013/2014 has a jump to 55 MMT from 46 this year.

As for driving the grain market price direction going forward we need to watch a couple things.  First off will be the March stocks and acre report.  That really helps set the stage; if old crop remains tight or gets tighter then you have firework potential later.  The more acres the less need for great yields; the less acres the bigger the need for higher trend line type yields.  After the report we really should turn into a weather market; especially for new crop.  We will have some planting delays?  Probably can’t afford too many of them with the tight old crop situation that might need to get bailed out via new crop.

The other major thing we need to watch is the funds.  Right now the US dollar seems to be very strong; if that continues I don’t look for a huge risk on type of attitude from the funds; plus it fundamentally isn’t good for the grains that we export a lot of such as wheat.  If we really want to see bull markets a weak dollar helps; but at the very least we need to have some sort of headline to get the funds interested in pushing prices up.

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