opening comments 2-15-11

Markets are called mixed to weaker this a.m. behind a weaker overnight session.

Yesterday we saw the grains open firmer but by the end of the day all of the grains had given back much if not all of their gains; we started the overnight session a little firmer; but when the overnight session paused at 7:15 we have corn off about a penny, beans are down 6-7 cents, KC wheat wad down 7, MPLS wheat was off 8, and CBOT wheat was down 8.  At 9:20 outside markets have European wheat down about 1.2 %, equity markets are under a little pressure with the DOW down 60 points, crude is mixed with the March up about a quarter a barrel, and May down about a quarter, the US dollar is softer with the March down 137 at 78.580.

Yesterday we saw the USDA baseline number come out

 and did help put a little pressure on the markets.  As the ideas where that we would see big increases in acres; overall the numbers where friendly in that carryout remains tight all around with ending stocks under 1 billion bushels for the coming crop year.  (This is backed up to present USDA balance sheet.)

Also the past few days we have been hearing some comments that indicate some ethanol plants have slowed production.  One rumor stated that an ethanol plant in the Midwest dropped production by to 60% and another rumor out there is that a plant in NE sent employees home due to lack of profitability.

Basis remains on the firm side for most of the grains; but most of the firmness is logistic related.  It is highly likely that basis comes under severe pressure once the rail cars start coming with a little more normal frequency.  Part of the reason is the fact that many mills and buyers in general end up getting double booked when freight slows down.

Don’t forget the annual meeting is in Pierre tonight and Philip tomorrow.  Hope many of you are able to make it to help support your Cooperative.

Markets have opened now and are under a little more pressure; currently corn is down 4-5 cents, beans are off about 20, and wheat is down 11-15 cents.  Let’s hope these grains can try and turn things around a little bit.  Technically we have yet to break any major trends but we are showing signs that at least someone is willing to sell and as far as charts go this isn’t always a bad thing as we want to see some corrections here and there if we want to keep moving higher.  The scary thing is that at anytime the weakness or corrections could turn into additional weakness especially when we look at how long and bullish everyone is.  Eventually we could run out of buyers if everyone has already bought.

Please give us a call if there is anything we can do for you.