Monday, April 1, 2013
Opening Comments 4-1-2013
Markets are continuing the pressure this a.m. from the melt down on Thursday’s USDA Stocks report.
At 9:15 nearby corn is off 32 cents, new crop corn is unchanged, Dec 2014 corn is up a nickel, soybeans are presently down 13, KC wheat is off 6 cents, MPLS wheat is down 5, and CBOT wheat is down a dime. Outside markets are choppy with the equities near unchanged with the DOW up 7 points, the US dollar is weaker and that should be supportive with the cash index off 331 at 82.74, gold is up 3 bucks an ounce, and crude is down a buck a barrel.
Market is trying to determine where it needs to be after the report on Thursday that showed 400 million bushels more corn stocks then the average estimate. Some now have carryout numbers in the 850-1.0 billion range with thoughts that it could be higher. So basically our carryout nearly doubled on Thursday and that is why we have so much pressure. The other reason for the sever pressure is the fact that the funds had loaded up looking for a bullish report. When we didn’t get that we quickly made it so anyone that had got long in the past several months
Markets have made another leg down at 9:45 with corn now off 42 cents on the nearby. Margin call selling? Simply liquidation as anyone that got long any time the past couple months or basically since June sometime is now in the red.
Export shipments will be out at 10:00; but don’t look for anything earth shattering………. I think we simply need to get through the next couple of days and see where end user demand shakes out.
Basis surprisingly is still on the weak side of things so far today. I do look for it to bounce but so far there is still a lack of homes out there for both nearby wheat and nearby corn. End user pricing should be happening; but they might wait until they see something stabilize.
Going forward for old crop to really bounce we will need to see very good demand or find a reason for the funds to decide to get long. New crop should be a weather story; but keep in mind that a bigger old crop balance sheet also gives us a bigger starting spot for new crop. One of the 2013/2014 balance sheets I seen from one advisor was over a 3 billion bushel carryout. Ouch. Not that I think that is probable and I would question how possible; but it is and will be our risk.
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