Monday, April 29, 2013

Opening Grain Market Comments 4-29-2013 VERY Firm Markets


Markets are  called better this a.m. on firmer overnight markets lead by weather forecasts and the delayed planting progress.

In the overnight session new crop corn lead the strength up 14, while nearby corn was up 12 cents, soybeans ended the overnight session unchanged to off a couple pennies, KC wheat ended the overnight session up a nickel which is about a dime off of its overnight session highs, CBOT wheat was up 7, and MPLS wheat was up 5-7.  Outside markets look to be supportive this a.m. with Gold up 15 bucks an ounce, crude up 70 cents a barrel, the US dollar off about 190 ticks with the cash index at 82.190, and equity futures are pointing towards an up 50 or so start for the DOW.

Same news that producers were talking about and scratching their heads on why on our markets were going down at times last week has helped our markets bounce some in the overnight session.  Adding some fuel to the fire has to be the most recent 6-10 day 11-14 day forecasts that call for much of the corn belt to be cool and wet. Going home late last week some of the forecasts had provided a window of getting some field work done.  We already know that we will be very far behind in this afternoon’s crop progress/condition update but some forecasts indicate that many areas (primarily the corn belt) could fall further behind.  Sitting here today it might not be a major concern; but in a couple weeks talk will be of losing acres as well as the yield drop that typically goes with late planting. 

For marketing the question we really have to ask our self is what does this do to the big picture.  First off losing acres means we need to have higher yields; the less acres we have the more important yield becomes.  But secondly we have to ask our self how much will the big picture change?  If we lose acres because of too much moisture will the other acres more than help offset via having better moisture profiles?  I guess this is really debatable; but keep in mind that if some places are not planting because of too much moisture other areas might be getting ideal moisture.  The idea of losing corn acres also leads to the thought of increased soybean acres and that should make it no surprise that beans are struggling while corn is up double digits.  Third is our possible production cut in corn material?  Or is it needed to prevent the balance sheet from getting too burdensome?  Meaning have we dropped below a 13 billion bushel production yet?  If we haven’t doesn’t that mean we still need to find nearly 2 billion bushels of demand to keep our balance sheet unchanged from this year?  Have we ever found 2 billion bushels of demand year over year?  No.

Bottom line is if this rally can get some legs to it; don’t be afraid to take some risk off.  Yes you want to ride it and given were the funds are the upside could have plenty of room; but at some point typically fear rallies need to be sold.  Not right when they start but typically at the point when guys all get bulled up.  I can stand here today and mention the bearish points; so everyone isn’t bulled up.   But if this bounce can get us back up to 5.00-5.50 or so cash new crop corn; taking some risk off the table will just be good risk management.  It doesn’t mean one has to make big sales or many sales; but with rallies one wants to get them back to a comfortable spot be it making sales or the use of futures or options.

Other news out includes the wheat tour which starts today and with twitter and other internet sources we should see lots of info and plenty of pictures.  I believe the actual production estimate will be out on Thursday. 

We will have export shipments out at 10 this a.m. and crop progress/conditions out at 3 this afternoon.

The Chinese markets are closed though Wednesday.

First notice day is tomorrow; so it will be interesting to see what shakes out with the May contracts and see how strong the cash markets actually are.  Many will say that the July contract should drift up towards the level that the May go off at.

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

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