Markets are called mixed this a.m. after a choppy mixed
overnight session.
When the overnight session ended corn was up 1 on the September
contract, the Dec was down 3 cents, KC wheat was up 1, MPLS wheat was down 1,
CBOT wheat was unchanged, the US dollar was up 225 points, crude is up a dime,
gold is off 3 bucks an ounce, and it looks like the DOW is going to open up
about unchanged with the DOW futures off 4 points.
It’s been about weather and the funds as of late. Don’t look for it to change; we will have a
USDA report August 12th; so look for more production forecasts to
come out from the various players in the trade.
But also look for some position squaring ahead of that report. Ideas as we sit right now from most are
increased corn yield while most are in the camp of decreased bean yield. It seems that we only have a couple bullish
cards left in the deck and I am not sure if they will ever hit the table.
The bullish cards I see out there include; early frost
concerns, China demand and the Chinese wheat situation, production concerns
someplace else in the world as we don’t seem to have those concerns here at
home. The other big bullish card is
always the “Black Swan” which could be a big bull card or a big bearish
card. Perhaps charts turn and funds
simply start buying and covering some of their shorts. Perhaps they look at corn versus crude and
say yep its plenty cheap. Maybe we see
ethanol policy change in a way that the present blend wall we are up against
goes away or gets bigger? Who knows in
our market?
The thing we need to keep in mind is that yes we could see
some bullish cards at any time. But as
it sits right now the big headline right or wrong is ideal weather and big
crops and carryout’s for corn and beans that are projected to be more than
double year over year. One must realize
that carryout numbers more than double is not bullish; sure we could run up for
any of a hundred reasons. But if you look
at simple ECON 101 and then look at our fundamentals you have to be a little concerned
on price.
I don’t want to promote more fear or panic selling; but I do
think one needs to be pro-active in getting comfortable. Be it making sales, getting protection, or
even re-owning sales via cheap call options.
To think that we couldn’t lose another buck or more is just unrealistic;
I am not saying it will happen but we have to realize that we are walking into
unknown territory with the funds and short corn. How far can they press it is not known. Having said that perhaps China looking for
some corn will hit the market and we will make our lows in the next few
days.
As for the weather card it still looks to be on the headline
as bearish. Cool and wet for the most
part.
Other news out there.
USDA reported sale of 120k tones of soybeans to unknown for 2013/14.
It sounds like South Korea cancelled a corn tender citing
prices too high or that they are looking for lower prices in the future.
Egypt bought some wheat, but looks like it was
Romanian/Ukrainian wheat. From what I heard
the US didn’t even offer and if we would have our HRW offers would have been 10-15
bucks a ton too high.
Not a lot else that I see today. It feels like wheat wants to and maybe has
made a bottom. If you look at the wheat
fundamentals year over year it is the only one of the big three grains that is
seeing things tighten up. So perhaps
wheat can help out our other markets?
Keep in mind that the 2007-2008 rally started with wheat. As did the 2010 to now bull run in the
grains. It started with wheat.
Please give us a call if there is anything we can do for
you.
Thanks
No comments:
Post a Comment