Thursday, May 16, 2013

Closing Market Comments 5-16-2013


Markets closed mixed today in choppy trade.

Old crop corn was off 9 cents, new crop corn was down 8 cents a bushel, July soybeans were up 15 cents a bushel, new crop soybeans were up 8 cents a bushel, KC wheat was down 8 cents a bushel, MPLS wheat was unchanged, CBOT wheat was down 6 cents a bushel, stock market closed down with the DOW off 42 points, the US dollar finished near unchanged after being down earlier (presently at 4:30 the cash index is at 83.74), gold off about 12 bucks, and crude was up 90 cents.

Fairly poor day for the grains; one that seen some technical damage done to some of the charts also.  First off we had KC and CBOT wheat make new lows for the month and we have December corn within a penny of last week’s lows and Dec corn also made its lowest close since April 26th.  On the positive side MPLS wheat did hold its support area and July soybeans had their highest close since March.  The bigger technical negative might be the US dollar price action; it had a pause today; but overall it has been on super strong and is flirting with last week’s highs.  A break of last year’s highs will open the door to a technical test of the 2010 highs.  Keep in mind that when the US dollar made its highs in 2010 nearby corn futures got down to about 3.25.

We did have exports out this a.m. and they were good for soybean meal.  But otherwise fairly quiet; at least they were not bullish enough to get the funds interested in buying.  Wheat numbers were very poor and have some in the industry questioning if we can hit the USDA projection.

I did see some rumors about a possible port strike in Brazil and that seemed to give some life to the old crop soybean market; the actual exports of old crop beans were very poor.

Seen another couple comments on twitter in regards to wheat.  One mentioned a much smaller Russian wheat crop estimate then what the USDA presently has; which would be positive; but the other was some talk that Russia was looking to sell some more old crop wheat.  They haven’t been in the headlines under cutting our wheat for some time; but that talk has resurfaced.

One other thing leading to some pressure in our markets is the idea that we could potentially see a record amount of corn planting this week.  I would think that would be a stretch; but I guess we will find out Monday.  The bigger question should be will it matter to the funds or what would cause the funds or market in general to want and have prices run up?

The wheat markets did bounce decently in the close; talk of fund buying.  If I was a fund manager I would be nervous playing wheat form the short side simply because of the United States crop; small crops typically get smaller; not bigger and I expect further production reductions in the months ahead.

One of our local ethanol plants dropped their corn basis bid by a dime or so today.  Sounded like he got a bunch of stuff bought today; plus they are simply nervous owning inventory going into the July-September inverse.  As I have mentioned many times they can’t sell ethanol out there.  This is good and bad; first off look for basis to be very choppy and volatile.  Secondly having nothing bought when you use 4 million bushels a month?  Good risk management?  I don’t think so; to me it feels like they got so burnt last year via having ownership when basis crashed that they are setting themselves up to get burnt the opposite direction this year?  The problem with it is simply the spreads between the nearby and deferred futures months.  I know as an elevator I can’t carry length threw the inverse.

Spring wheat firmness seemed to be coming from weather as parts that are not planted might get slowed down.  Other parts such as our area and those to the North and West of us will welcome moisture.  But in talking to my contacts many indicate spring wheat is not completely planted in the heart of spring wheat country in ND.

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