Markets are called mixed this a.m. behind a mixed overnight
session.
In the overnight session corn was down 4-6 cents, KC wheat
was off ½ of a cent, MPLS wheat was unchanged, CBOT wheat was up 1 ½ cents,
August soybeans were up 11, and November soybeans were up a penny. At 8:10 outside markets have the US dollar
slightly softer at 82.739 on the cash index, crude is up a buck now over 109 on
the August contract, the Sept crude contract is at 108.67, gold was up 6 bucks
an ounce, and it looks like a weaker start for the stock market with the DOW futures
off about 30 points.
Another day same story.
Weather and the funds. The
forecasts that I seen this a.m. see a little more moisture in a little bigger
part SD & NE; while MN and IA look a little drier in the 1-5 day
forecast. While the 6-10 look at little
cooler.
Here is CHS weather link.
It does a good job of showing present forecast along with old forecast. https://www.chshedging.com/UserFiles/Documents/2013/Research/Weather/7.19.13%20agtraderbriefusacountryhedging.pdf
For weather it is all over the board; I do think the stages are
set for some volatile markets come Sunday night depending on what the forecasts
end up showing.
I do think we have to ask the question what type of weather
and weather forecasts will it take to get the funds back involved in a way that
helps our prices. What does it take to
get the funds to cover shorts and what does it take to get the funds to want to
get long.
One positive or reason the funds might look to get long is
the price relationship between say corn and crude. Could that attract some sort of buying for
our grains????
The other thing I noticed this a.m. was more talk of China
and the grain they are buying. More rumors
of them buying both wheat and some corn.
Sounds like they might have bought Australian wheat, French Wheat, and
some US wheat. Bottom line is that China
still seems to be a wild card and potentially bullish card. It seems like China wants to support these
type of price levels; does that mean we are near a bottom on the board????
Egypt has also been back in the game buying wheat again; it
had been several months. It doesn’t look
like the US got any of the business; but at least they are back in looking to
buy. The business yesterday looked like
it all went to various black sea countries.
Old crop corn basis remains extremely volatile; but also
very inverted. As example some of the
bids are much stronger for nearby corn then for August or September. For us as an elevator it makes it tough
because of the fact that we have a wheat harvest starting. We can only ship out so many cars and you can
only get so many trucks underneath product.
So the fact that we can’t get corn in and out today or yesterday and if
we ship product couldn’t ship it until late August or maybe even early September
makes bidding for old crop corn very tough.
But I would say having offers out is probably the right
thing to do. Things are hot for old crop
corn and with every day that goes by we get closer to new crop. One day a cliff will happen for basis; but we
really won’t have big yellow warning signs.
Those signs are already out there just from how volatile basis is; plus
how some end users are bidding big inverses; while others have small carries or
flat markets. Other e-plants say they
are about covered. Corn is going into
areas that it maybe typically doesn’t.
It feels to me like we have one last panic push by the market. If we see successful pollination over the
next couple of weeks I think many producers will start to let go and once this
corn market basis is over it could be over in just a few hours. It literally should be that volatile; where
one afternoon someone trades just a huge number; but in the morning the only
bid left might be new crop values.
Bottom line is use caution holding old crop corn basis too
long and realize it is very much like playing a high stakes poker game. When it’s over it won’t be fun; in the
meantime the path of least resistance will be up.
Please give us a call if there is anything we can do for
you.
Thanks
No comments:
Post a Comment