Markets closed mixed today in another volatile session for the grains.
Old crop corn continued it strength with old crop corn up 5 cents, new crop corn was down 2 cents as we now have Dec corn 1.30 below the July contract, old crop beans where up 10 cents, new crop beans where up 4, KC wheat was down 1 on nearby while deferred slots where off 2-7 cents, MPLS was down 2-7 cents, CBOT wheat was off 7 in the nearby while some of the deferred slots where off as much as 14 cents, crude oil was up over 3.50 a barrel and presently is now over 100.00 a barrel , equity markets where softer with the DOW down 168 points, and presently the US dollar is up 139 points at 77.06 on the March contract.
Today was another great day in that the grain markets showed plenty of resiliency; corn especially as it made new high closes in a couple months with the front month at it’s highest level in over 30 months. MPLS wheat didn’t close firmer but it did trade fairly well despite the weakness that CBOT wheat showed. Basis for spring wheat continues to be strong; I would really recommend having basis offers out and probably in slots as far out as new crop. The strength in spring wheat basis seems to becoming from a combination of protein spreads, freight, and demand both domestic flour pricing and a steady diet of export business.
If basis was just logistics then we would see basis under severe pressure when double bookings start to hit and more then likely some of that will also happen. But the basis appreciation that I am seeing in spring wheat seems to have a little more behind it. Heck it is almost starting to feel like winter wheat basis is moving the right direction for once. The one thing I can’t tell is how much of the basis appreciation is simply because of the protein and how much is demand. I do know that if one took the spot values of 14 pro and the spot values of 12 pro and then used scales from 14 down to 12 you would be close nearly 30-40 cents per 1/5.
Technically the corn market continues to look very strong; right now the big resistance is the highs from about a week ago; while some of the other markets look a little weak or at least sideways.
I do have a couple birdseed buyers looking for some offers on various products and it sounds like we could see a more aggressive new crop high oleic act of god program out for sunflowers in the next couple of days.
Be sure to sign up for our marketing meetings and workshops that will be next week in Ft Pierre on Monday at the American Inn and in Philip on Tuesday.
Below is a forward for another marketing workshop; this is one that I believe could have great value for some. It is from K-State and it tells of a online workshop or webinar that is scheduled for March 11th; I would recommend that many take a look at it before making the final crop insurance decisions.
Please give us a call if there is anything we can do for you.
Price Volatility Creates New Opportunities as Evaluated in a new KSU Webinar
Dear Recipient,
Options premiums are very “high” because of currently “high” price volatility, so is it possible to sell those options? What additional risk is being accepted by selling options in return for the possibility of additional profits? Famers selling options may cover those sales with forward contracted bushels, bushels exceeding expected production, and Revenue Protection (RP), i.e. the new revenue insurance contract.
With current higher market prices, there is a significant amount of price protection built into RP. The Webinar will explain how to separate the premium cost for yield risk, downside price risk and increasing price risk. In many (most?) cases corn farmers are paying less than 2 cents per bushel for the yield adjusted put option built into RP vs. 75 cents for CME puts. This is also true for sorghum, soybeans and wheat. However there are significant differences between the Chicago and Revenue Protection options and a focus of the discussion in this Webinar.
Webinar participants are expected to learn the following:
1. Understand what is a yield adjusted Asian (YAA) option built into RP.
2. How to calculate the YAA option premium cost set by the Risk Management Agency in your RP insurance contract and then compare YAA option premiums with Board traded options.
3. Compare the difference in price protection provided by YAA options vs. Board traded American options in Chicago , Minneapolis or Kansas City
4. How farmers with option trading experience can use the RP contract to write covered options and possible gain additional profits.
The Webinar is scheduled for Friday, March 11, 2011 at noon central standard time. The Webinar will last about an hour with additional time for participants to ask questions. For those who have other commitments at the time of the live presentation, they may request a recorded copy and a copy of the handouts.
The Webinar registration fee is $25 per line. Those who register will receive handouts in a PDF format. Registered Webinar participants may also request a recorded copy of the presentation. The recording and other material will be available following the presentation for the same $25 fee. The number of Webinar lines are limited so early registration is encouraged. To register, one needs to go to our online registration and use a credit card. The registration link is: http://commerce.cashnet.com/ksuagecon
Webinar participants who want to pay by check will need to call Rich Llewelyn at 785.532.1504 or email: rvl@ksu.edu.
The KSU Ag Econ web page is located at:
If you have any problems with the website downloading a paper then Dr. Rich Llewelyn can probably help you.
His email is rvl@ksu.edu or phone 785.532.1504.
If you have other comments, please email me at: abarnaby@agecon.ksu.edu
Thanks
ART
Note: Please email me to have your email address added, deleted or changed.
Rich Llewelyn
Extension Assistant
Dept. of Agricultural Economics, KSU
303A Waters Hall
785.532.1504
rvl@ksu.edu
www.AgManager.info
Jeremey Frost
Grain Merchandiser
No comments:
Post a Comment