Markets followed up yesterdays weakness with more weakness
today.
Corn was off 8 cents, beans were off 29 cents, KC wheat was
off 12 cents, MPLS wheat was off 6 cents, crush sunflowers where unchanged,
CBOT wheat was down 15 cents, equities were unchanged as the DOW was unchanged,
the US dollar was near unchanged to up slightly, and crude was off about a
dollar a barrel.
Not a lot of new news today; just more of the same from
yesterday. Light harvest activity and hedge pressure, ton’s of fund
liquidation along with technical selling, trade dispute between China-Japan and
just a lack of overall new bullish news. Nothing has really changed from
a week or two ago other then maybe yields are slightly better than expected on
potentially a few more acres. But fundamentally have we seen a major
change; I would say no we haven’t. First of if and it is a big if our
supply is bigger it can easily be offset with the rather robust demand we have
seen; keep in mind that the USDA is saying on paper that demand is cut big time
and we really haven’t seen that yet.
Now keep in mind there are some arguments out there that the
funds still have plenty of ownership and some ideas are the crop is a lot
bigger than the USDA pegged it at. I am not in that camp but keep in mind
things tend to get over done especially in our markets. So over the next
month or two a further and possibly accelerated price break can’t be ruled
out. So as always make sure to practice good risk management that leaves
you comfortable at the end of the day; after all we are still at rather good
prices and just because one didn’t pull the trigger at the highs doesn’t mean
that one’s game plan going forward should be a deer in the headlight style; it
still needs to be pro-active. After all if anyone knew for sure what
these markets where going to do on a daily basis they wouldn’t be where they
are at. So getting one’s self comfortable no matter the future price
direction is very important; if for nothing else peace of mind.
As for other news out there we have seen harvest start to
progress; corn in the US is 26% harvested and starting to pick up speed with no
real weather threats to slow it down. Locally we are taking in a lot of
13-20 moisture corn; with yields near expectations. It does feel like
basis is slightly firmer for corn in many areas.
Wheat basis is firmer the past couple of days with the
declining board; but I still haven’t seen the great export demand that we need.
I did see a comment that Russia may discuss a duty on grain
shipments that would take at a predetermined price level. It should also
be noted that many of the estimates for wheat put the exporting countries at
the tightest stocks to usage ratio since 2007/2008. Bottom line is we are
getting closer to export business and this should help out basis and
potentially leaves wheat with a major bull story as we move into the new
year. But before one gets too bulled up remember this not new news it is
part of the reason we traded 9.00 plus wheat last week and before we can make a
major leg up we really need to see the demand show up. Plus this is one
that we simply have too many too bullish; in one of the commentaries I read I
seen where the funds had 100% long in KC wheat versus 0 short. That just
doesn’t work; you have to have some balance and some arguments on both sides of
the fence or you will eventually run out of buyers and then they typically all
become sellers.
The birdseed market has been choppy the past couple of
days. Millet market is on fire; we now even have some very attractive new
crop bids. I even have a couple of buyers that might look at an act of
god contract for millet planted early to be harvested in July or August next
year. Talking to some of them they are afraid that these high millet
prices could really wreck demand.
Sunflower prices should benefit from the high millet prices;
it should add more demand to sunflowers. But this won’t be an overnight
thing; it will take some time. Most sunflower buyers still think they
will buy cheaper at harvest on idea’s of a big crop. I agree the crop is
ok and good further north. But I really think the buyers are
underestimating the current situation of most of the American Farmers.
The financial situation is better than ever before and many have really
increased on farm storage. I think the days of weak harvest basis and
harvest pressure are gone or at least not nearly as bad as they used to
be. The game has changed and this should and will continue to add to the
volatile price patterns we have seen. This doesn’t mean to get all bulled
up on the ideas that producers control the markets; it just means to keep in
mind that the game changes every year as do the playing conditions and the
players. It means good risk management needs to be done; for both
producers but for buyers too. An end user not using good risk management
also helps create lots of volatility to our grains.
Don’t forget we are offering free delayed price on some of
the row crops; make sure to give us a call for more info.
Lastly a few weeks ago we starting sending out a mid day
voice update. If you want to get on this list please give us a call; it
is a quick 90 second update on where the markets are and some of the reason
behind the price moves.
Please give us a call if there is anything we can do for
you.
Thanks
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