Grain Closing Comments start of week March 21st

Below are closing comments as well as a

 forward from Brock With their Clear View and info from RJOMRT.com on US corn export sales.

In more choppy price action our grains closed the start of the week mixed; with old crop corn up 3, new crop corn was up 11, old crop beans where unchanged to up 2 cents, new crop beans where up 11, KC wheat was down 3 cents/bu, MPLS wheat was 2-3 better, CBOT wheat was down 2 on the nearby while deferred slots gained such as the July 2012 which was up 7 cents, the equities bounce with the DOW up 178 points pushing back above 12,000m the US dollar continued it’s weakness with the June Dollar at 75.685, and crude oil gained another dollar as it is now at 102.20 on the April contract.

All in all I am not sure what to make of the trading session today; it did seem a little quieter then what we seen last week; but it wouldn’t take much to tame that volatility as even though our markets where not as noisy today there was still plenty of price action as each of the big three (corn, wheat, and beans) saw at least 20 cent price ranges with a quarter being about the average price range.

To summarize the price action over the past several weeks I would say that just about that time one figured out what they thought would happen next was about the time the market said nope and did just the opposite.  As corn and wheat where making their highs many had jumped on the bull bandwagon and if they had sold now was the time they where looking to re-own.  Then many of those same participants jumped back on the go down bandwagon around the lows seen the middle of last week as in a heart beat the markets that looked like they wouldn’t ever stop free falling did a reversal without even a so much as a warning.   The scary thing is we are seeing these choppy volatile markets even before the time when we should see them.  During times of tight fundamentals or times when many decisions are made or simply during planting and growing season is when historically we see the type of price action we have seen lately happen.  So what does that tell us as we go forward?  It tells me that one shouldn’t even try to out guess the market and should focus on solid risk management with risk diversification that is bottom line focus thus allowing one to throw out a little of the noise here and there via having marketing objectives that are simply to achieve bottom line results that don’t have the stress and worry that other types of marketing styles may have.

That isn’t to say to have your blinders on to what is doing what in our markets and to why; it is more so trying to say not to get carried away in the headlines as at the end of the day fundamentals that where learned from Econ 101 in that high prices cure high prices as do low price cure low prices will rule out; it just sometimes is a matter of when and what levels are high and/or low.

Their was a reported sale of 116,000 tonnes sold to Unknown for this marketing year; many believe it is China; but some are mentioning that the # doesn’t fit with the number that China typically buys at. 

Last week the CFTC showed the biggest increase in commercial position since April 2007; perhaps indicating that the break was very heavy bought via end users.

The biggest thing that the market should see is

positioning ahead of the USDA planting intentions and quarterly stocks report.  We should see numerous guess start to hit the market over the next several weeks.  Depending on where the market positions them selves for that report and how that report actually shakes out will go along way in determining our price action and fundamental price direction for months to come.

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

Thanks

C) U.S. Corn Exports Remain Disappointing-Annual Estimate in QuestionFundamentals, March 21, 2011; 12:45pm

This week's Export Inspections report reflected another week of disappointing U.S. corn exports. As the weak export reports continue to mount, the likelihood of a reduction in the 2010/11 U.S. corn export estimate grows stronger.

U.S. corn exports for the week ended March 17, 2011 were reported at just 29.5 million bushels, down sharply from exports of the last two weeks of 38.9 million and 45.2 million bushels, and well below year ago exports this week of 45.4 million. Looking back over the last several months, eight of the last twelve weeks have seen U.S. corn exports fail to exceed 30 million bushels and reflected the lowest average weekly exports during the January thru mid-March period in six years. Cumulative U.S. corn export inspections currently stand at 917 million bushels, down 2.3% from last year's level at this time. The USDA's 2010/11 U.S. corn export estimate of 1.950 billion bushels reflects a 2% reduction from last year. While the current pace of exports relative to the USDA's annual projection may not seem all that concerning, a closer look at the data reveals our increasing expectation for a reduction in the annual export projection in the April supply/demand balance sheet updates.

The following chart looks at weekly U.S. corn exports during the 2010/11 marketing year, along with level needed to reach the USDA's current export projection of 1.950 billion bushels, as well as the 10-year average weekly level of exports for each week of the marketing year. Several factors stand out in the chart below. Based on the USDA's annual export projection, U.S. corn exports need to average roughly 41.9 million bushels/week each and every week for the remainder of the year. However, only 3 weeks out of the entire 29 weeks so far in the marketing year have reached that level. Additionally, the 10-year average weekly export data reveals U.S. corn exports tend to run in a rather steady fashion throughout the marketing year, and clearly do not have a bias for rising later in the year. We are also concerned that 23 of the 29 weeks so far in the 2010/11 marketing year have reflected weekly exports below the 10-year average level for the comparable week.



Looking forward, the following chart shows the average weekly U.S. corn exports from mid-March through the end of the marketing year over the last 30 years compared to the average weekly exports needed this year to reach the USDA's export projection. Again, of notable concern is the fact that only 3 of the last 30 years saw average weekly U.S. corn exports of 42 million bushels (the level needed to reach the USDA projection) or more for the remainder of the marketing year. Exports from mid-March through August during the last four years have averaged 38.5 million bushels. If comparable exports are seen during the remainder of the 2010/11 marketing year, total exports could fall as much as 75-100 million bushels below the USDA's current estimate.
China buys corn; will likely buy more!: An article from: Pro Farmer


Based on the pace of U.S. corn exports so far during 2010/11 and the likely, at least temporary, slowdown in exports to Japan, our largest single export destination, we feel USDA needs to lower their annual export projection by 25-50 million bushels in the April 8 USDA balance sheet revisions (WASDE). While this would obviously have the effect of raising 2010/11 U.S. corn ending stocks without any other balance sheet revisions, the massive unknown of potential feed usage revisions looms large. The March 31 quarterly Grain Stocks report will heavily influence the USDA's feed/residual usage estimate in the April 8 WASDE report. If larger than expected feed usage during the 2nd quarter is implied by the reported level of March 1 stocks, the expected reduction in exports could be offset by higher feed demand. However, if feed usage is implied at weaker than expected levels, it would only compound the potential increase in 2010/11 U.S. corn ending stocks from the lowering of exports. The March 31 reports will be absolutely critical in setting the market's tone for the coming weeks and, possibly, months