Markets closed on the weaker side today as the strength in the US dollar helped lead to a little profit taking in the grains.
Corn was down 7 cents, beans where off 8-10 cents, CBOT wheat was down 4 cents, MPLS wheat was down 7-12 cents, KC wheat was off 4 cents, the equity markets where firmer with the DOW up 20 points, and the US dollar showed some good strength presently the March is up 622 points at 77.900.
A somewhat disappointing day for the grains; as even though we where weaker in the overnight session some of the grains managed to trade in the green for some time; but we closed under pressure and failed to hold some of the resistance points that we had token out in the past couple of days. Still today’s price action looks more like a simple correction as it wasn’t like we have something fundamentally really change today. As a matter of fact we actually had rather impressive export sales for some of the grains today.
Corn had it’s marketing year high on export sales coming in above what is needed on a per week basis by about 50%; as it had 45.9 million bushels. Beans where also very good coming in at 37.9 million bushels and while wheat as on the poor side versus trade estimates it still came in at 19.6 million bushels which was about 6 million more then what is needed on a per week basis to hit the current USDA projections.
As mentioned above it was a little disappointing that we couldn’t hold some levels that we took out yesterday; in particular 10.00 on MPLS March, the Aug 6th highs on CBOT March Wheat, and the 6.66-6.67 ½ area on March corn. I did attach about 12 charts which should help give a little more information on the technical picture going home today.
The one thing that technically we will want to watch is how we close out the week; as we really wouldn’t want to see us end up lower on the week after making new contract highs (nearly across the board) as something like that could open the door to a little fund liquidation.
Basis is firm; yet rather on the disappointing weak side of things. To explain basis is firm overall for nearby but most of that firmness is from logistics (cold weather) not really extra demand or a lack of supply. The bad thing about logistically driven basis appreciation is it typically leads to that much extra pressure as buyers tend to get double booked.
As for marketing and risk management the big picture really looks great for the grains. But take a look at some of the monthly charts or weekly charts attached or any of the charts that show an extended period of time and recall the mindset and or fundamentals at those times. It shows or tells me that yes things look good to great; but that is typically when some unknown or known yet unexpected happens and we turn prices around and reverse without so much as a courtesy notice.
In closing we are now once again nearing the time when we pay our patronage checks out and have our annual meetings. I want to encourage our producers to be involved and want to thank you for your patronage; as it looks like we will once again have some rather impressive patronage checks. When you look at the patronage checks and returns that some will be getting for grains, fuels, and agronomic inputs it makes me (I should note I am bias) wonder why one would do much business with private’s that they aren’t vested in.
Please give us a call if there is anything we can do for you.
Thanks
Jeremey Frost
Grain Merchandiser
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