Monday, April 8, 2013

Opening Comments 4-8-2013

Markets can now have opening calls again as today is the first day of the new trading hours.  The hours are a start at 7:00 p.m. each night; and then a break between 7:45 and 8:30 a.m.  So basically the pit will open at 8:30 a.m. central time and close at 1:15 p.m. central time.  For guys like me that means a lunch before 2 in the afternoon.  It could mean some elevators won’t be buying when the market is closed but I guess that will be up to the risk management departments.  Hopefully it adds back a little liquidity that it seemed to take away from being 22 hours a day.

Markets are called better this a.m. behind last night’s overnight strength that saw corn up 4 cents with the May-Dec spread firmer by a nickel.  Soybeans were up 11 when the overnight session paused.  KC wheat was up 7 cents a bushel, with MPLS up 4, and CBOT wheat up 3 cents a bushel which was nearly 7 cents off of its highs.

News today that we will want to watch include export shipments that should be out at 10 a.m. and then this afternoon we will have a crop progress/condition update.  I haven’t seen much improvement in the SD wheat.

Weather seems to be playing bullish a bullish card and bearish card.  The bullish card is delays and cool weather that isn’t helping planting progress.  On the bearish side of things many areas including ours have some moisture in the forecast.

Friday’s Commitment of Traders showed that the funds sold nearly 100,000 contracts of corn in the last week.  Which was perhaps even slightly more then what the trade thought.

The bird flu in China is still leading some headlines.

The big thing this week should be the USDA report.   Estimates are for a big increase in the carryout; mainly in corn with estimates in the 820 or so area.  If you throw out the couple estimates that are unchanged-lower despite the bearish stocks report you have estimates closer to 850-900 and to me it feels like the trade as been trading a 850-900 type number.  So hopefully any carryout that the USDA throws our way under 850 million bushels can be considered friendly versus what the trade has been trading. 

Here is a recap from last week for this week’s Supply and Demand report estimates

                             Wheat    Corn  Soybeans
Average trade estimate       0.727   0.812     0.136
Highest trade estimate       0.755   0.925     0.160
Lowest trade estimate        0.700   0.625     0.107
USDA March                   0.716   0.632     0.125

One scary thing has to be the fact that we have a 300 million bushel range.  If all the estimates were at 800-1 billion we might have a better chance to have a nice report.  But the estimate of 812 seems to be a little light of what the trade has been talking about.

I have mentioned many times of some of the bullish possibilities that could come out of the report; but the bottom line is the bullish scenarios are not very likely and if the trade isn’t looking for super bearish number it also becomes harder for us to see a bullish reaction and that is what we are really hoping for.  A bullish reaction; not simply bullish numbers as those are not going to be easy.

Lastly don’t forget what time of the year it is.  It is the time when we typically see some weather premium added into the market and seasonally a time when we should be looking to make some sales on the rallies; trying to take a little risk off the table.

Please give us a call if there is anything we can do for you.


1 comment:

  1. It seems that you have nicely covered the updates about all the Grains related commodities.