Tuesday, May 21, 2013

Closing Comments 5-21-2013


Markets closed mixed today in rather choppy to mainly weaker trade.

Old crop corn was down a dime, new crop corn was unchanged, KC wheat was off 7 cents, MPLS wheat was up 2, new crop spring wheat was down 2 cents a bushel, old crop sold beans were up 14 cents, new crop soybeans were down 4 cents, CBOT wheat was down a nickel, the US dollar ended near unchanged well off of its high, the stock market made more new all time highs on the DOW up 52 points, crude was off 55 cents, and gold was down 6 – 7 bucks an ounce.

I thought new crop corn had a great day today.  We had news that had some saying that new crop corn was done; but we managed to shake off the negative news of the best corn planting weak ever and close unchanged.  We held last Junes lows on the charts; we made new lows for the move and left a positive candle on the charts.  Now I don’t want to get super bulled up; but it did look like some seen the new crop corn as holding some value down here.  I know I had a couple different feeders trying to place orders to buy some new crop corn.

As for the fundamentals yesterday told us that almost 42 million acres should hit pollination around the end of July.  That maybe makes the market a little nervous as we have a lot bet on weather for that period. 

Technically July beans had a new high close for the year; making that chart look friendly.  We are just a few cents from the high trade of the year.  I have heard numerous comments that the old crop bean situation is simply not one that can be solved.  Some others comment that eventually we will import some soybeans and that will solve things?  Bottom line is the old crop soybean situation is very tight and the trend is up.

Otherwise not a lot of new news out today.  I did think today’s price action should remind us that the markets we trade are futures markets; so when we get news like best planting pace ever; but that news was expected we don’t have to have the type of price move that one would think.  With today’s technology news is instant and can be instantly priced into our markets.

That gives me some hope for new crop prices.  Everyone (advisors and others in the industry) is rather bearish new crop prices; because of our present fundamental outlook.  But is that already priced into the market?  The advisors will make the argument that guys will be forced to sell with the big crop coming; but will the guys?  Producers are in better situation then before; they have more bins then before.  Just because we grow more supply doesn’t guarantee that we will have more supply for sale; unless of course the price is right.

Having said that I really don’t want to get super bullish prices either; I think the right move has and will continue to be to make sales or get protection in place on rallies.  At least enough so that one is comfortable and doesn’t put themselves into have to sell situations.

Tomorrow we will have our weekly marketing meeting in Onida at 3:00.

As for news; tomorrow we will have ethanol numbers out and Thursday will be export sales.  Monday brings another update to crop progress; but otherwise weather and money flow should dominate our markets.  I don’t know what will get the funds interested in buying grains; but hopefully something can interest them.  On weather I think it is hit and miss what is bearish and what is bullish.  Might just depend what money manager wants to look at it first and what they see.  Will they say rain makes grain or will the focus be on the fact that North Dakota is only ½ planted on spring wheat and it doesn’t look like much if any is getting done this week.   Will they look at the fact that we still have about 28 million acres of corn let to plant?

A lot of unknowns out there and some of those could turn out to be bullish……but keep in mind that unknowns should be adding or keeping a little premium in our market.

Elsewhere basis felt mixed today; overall maybe a little firmer for corn, winter wheat, and spring wheat; but also hit and miss.  One local ethanol plant is indicating that he is covered until August and others don’t seem to need much for nearby corn.  They still struggle to sell ethanol in the Aug-Sept slot; which has basis defensive or at least choppy.  Shuttle bids seem to be much better for those slots; but yet our corn almost has to go to the local ethanol plants or if they do run someone will get paid fairly well on basis.

The birdseed market feels a little better; as we did trade some new crop flowers as well as summer slot offers today.

Don’t forget we are offering free delayed price on most all of the old crop grains and we have room at most of our elevators.

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

Thanks

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