Markets closed mixed to weaker today after being slightly
firmer this a.m.
Corn closed down 6-7 cents, beans closed unchanged, KC wheat
was off 8 cents, MPLS wheat was down 7, CBOT wheat was off 6, the US dollar is
near unchanged with the cash index at 79.560, crude is up about 60 cents, and
the equity markets closed firmer with the DOW up 100 points.
Rather poor performance for the grains today; before the
9:30 bell most of the grains where slightly positive; but once the pit opened
wheat came under pressure and then corn followed to the extent that beans
closed about 13 cents off of their highs leaving a doji on the charts. The doji has to be considered a warning sign
when you consider beans are now over 1.25 off of their lows from about a month
ago.
Today was really a lack luster news day for the grains; which
we should expect more of as we move into the end of the year. The things that will drive us should be
demand news, weather (mainly in South America but here in parts of the US as
well), macro events and money flow by the funds(fiscal cliff). The next major report and probable
fundamental market changer will be the USDA report on Jan 11th. I don’t know that I would look for the grains
to be quiet; but I would look for our markets to be thin as we go into the
holidays. Many producers, buyers, and
other participates will be in holiday mode for the next couple of weeks.
Wheat is very over done on the downside; yet we still are
not seeing any HRW export business come our way; we really need to find some
export demand for our milling quality wheat and until we do the horrible
conditions that we presently have with our wheat crop will likely take a back
seat. I have said many times I think
wheat has ton’s of potential and I have noticed plenty talking about the 2008
wheat market. But until we have some
demand there is really no comparison. I remember
in 2008 when no one had any wheat left and when we where shipping train after
train to the export market. We have yet
to ship a train this year to the export market.
In 2007-2008 we shipped train after train down to the Gulf and later in
2008 the mill market really had to pay up.
As mentioned news was rather light and likely will be; but
we did have export inspections out this a.m.
Corn came in at 15.01; which was slightly above trade estimates
but still about 10 million short of what we need on a per week basis to meet
current USDA projections.
Beans had shipments of 37 million bushels; which were the
smallest since September and below estimates but still well above what we need
on a per week basis. So far we have 40%
more shipped this year than a year ago.
Wheat shipments came in a t16.4 million bushel which was the
best number we had seen in several weeks; but still short of the nearly 22
million bushels we need per week to meet current projection.
Basis is steady for most of the grains; but I also don’t see
many end users looking very aggressively other then bean buyers. I do get some calls from brokers for corn and
wheat from time to time but not much interest from the ethanol plants nor the
mills. Birdseed buyers also look to be
very quiet; but orders have picked up.
Railroads are not slowing down supply either which doesn’t
help out basis.
To get basis running we probably need to see some export
demand to keep our domestic buyers honest.
On the flip side with producer selling limited to a few bushels to keep
the tax man happy I don’t think end users could buy anything without a big jump
in the board or a big basis push. Bottom
line is it is a waiting came; longer term unless we get demand I don’t want to
get too bullish basis on many of the grains just because producers have strong
hands. I much rather be bullish from
demand.
It was about a year ago this last weekend that the first
bean bull story started as soybeans gapped up one Sunday night. So far I am not seeing any bull story done
there other then planting delays; which isn’t much of one.
As for marketing I have noticed over the past couple of
weeks that many advisor’s services have made plenty of sales recently. I noticed one that is 70% sold in 2013 new
crop corn, which to me is a little aggressive.
I also have noticed another has some 2014 wheat sold. I am not going to make no generic recommendation
to have X sold or X not sold as I think that every situation is different with
different goals, needs, and risk/reward objectives; but I do think that we
should take note that the reason some advisors are making some deferred sales
is because levels are historically attractive with good profit returns and
there are huge unknowns. Some of the
unknown’s could be extremely bearish should things shake out; such as what happens
to corn price should we plant a record amount and have trend line or better
yields along with curbing demand? Some
are on record having predicted sub $4.50 corn on the board next year. I do know that some of the unknowns could
also be bullish; so I am not going to preach that the sky is falling and one needs
to be aggressive making sales; but I am going to say that sometimes that first
little bit of marketing really helps out the average and helps many get
comfortable. Part of risk management can
be risk diversification; so don’t be afraid to spread out a little risk here
and there at levels that are both profitable and historically good.
If you would like help writing a marketing plan or going
over some grain marketing options please give us a call.
Also I want to remind everyone that we have our marketing
meetings this week. Both Kevin and Tregg
can give some good information about the markets as well as some opinions on
where this thing might be heading.
Grain Marketing
Seminar 2012
We would like to
invite you to our
free grain
marketing seminars:
Dec. 19th,
2012 – 1:00 pm MST at the
Ambulance Building
in Philip, Tregg Cronin Speaker
Dec. 20, 2012 –
10:00 am CST at the Ramkota in
Pierre, Kevin Van
Trump and Tregg Cronin will be speaking on the grain markets. Lunch will
be served
Please RSVP for
either location by calling
800-658-3670 or
605-258-2686
Great post with the great content…I was looking for something like this…I found it quiet interesting, hopefully you will keep posting such blogs….Keep sharing.
ReplyDeleteOptions Trading