Thursday, June 20, 2013

Opening Grain Market Comments 6-20-13

Markets are called weaker this a.m. in a general risk off trade.

In the overnight session old crop corn was down 7 cents, new crop corn was down 9 cents, KC wheat was 9 lower, MPLS wheat was 2-3 cents a bushel lower, July soybeans were down 15 cents, November soybeans were down 17 cents a bushel, and CBOT wheat was down a dime a bushel.  Outside markets turned very ugly after or as the grains closed yesterday and are following that up with more weakness this a.m.; yesterday the DOW was off 200 points, and this a.m. the stock market futures are pointing towards another 125 point lower opening on the DOW, gold is down 80 bucks an ounce, crude is down 2.50 a barrel, and the US dollar is up 460 ticks with the cash index at 81.88. 

This a.m. at least to start it’s all about the weak outside markets; with firmer US dollar.  Why?  First off from a technical perspective the US dollar was very oversold and do for a bounce.  But the catalyst for the dollar movement up and pressure on the stock market and commodities such as gold, silver, and crude was comments from the FED yesterday.  The comments made the market think they might take the foot off of the money printing sooner than expected; and quanitive easing may end sometime in the future.  From what I heard it would be a slow down over the next several months and a hope to have it completely gone by the end of 2014.  I am by no means an expert in interpreting what the FED does or doesn’t do; but it is a headline that might be the focus of the fund managers.

Yesterdays strength in our markets seemed to come from technical trade and weather.  Some talk of prolonged heat maybe spooked the shorts and helped lead to more technical buying.  Plenty of the deferred forecasts have plenty of areas above normal for temps.  For some that would be good; but an extended period reminds guys of last year.  The KC wheat market seemed to lead the technical up push; via making new yearly lows a few days ago it managed a reversal type action on the chart, then took out a trend line and some moving averages.  Similar type action was noted on the December corn contract; making new lows for about a month and then bouncing taking out some resistance areas that further lead to short covering.

Most indicate yesterdays price action was mainly via short covering.  The old trading saying is that short covering rallies are short lived.  That means we might need some follow up good bullish fundamental information if we really want to see our markets rally.

We did have export sales out this a.m.; nothing great to report on that line.  Wheat at 15.9 million bushels which is above the 12.6 needed on a per week basis.  Corn was weak at 5.3 million bushels, but that’s what we need on a per week basis to meet the latest lowered USDA number.  New crop corn was horrible at only 3.1 million bushels sold.

Soybeans were also poor at only 1.9 million bushels of old crop soybeans sold and 4.0 million bushels of new crop soybeans sold.

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