Markets closed down hard today in risk off trade.
Corn was off 12 on the May contract, New crop December corn
was off 18 cents, May soybeans closed down 18 cents, November soybeans were off
25 cents, KC wheat was down 21, MPLS wheat was off a dime, CBOT wheat was off
21 cents, crush sunflowers were down 30 cents a cwt, the equity market got hit
hard with the DOW off 265 points, crude is down 4.00 bucks a barrel, and gold
is off 149.00 an ounce.
Just a complete train wreck of a day; lead by fund selling
and risk off. Gold lead the pressure and
some of the reason being given include.
Weak chart action last week that lead to more technical selling today,
China’s GDP which came out Sunday night below estimates, rumors that Cyprus
will be selling gold to pay for their bills, talk that a couple big banks (Citi
and Goldman) told clients to sell and that the commodity run is over, and some talking
that perhaps gold just isn’t as good of a hedge as many had thought. Bottom line is the pressure from gold spilled
over into some of the other markets and our supply and demand fundamentals took
a back seat at least for a day.
Adding to some pressure at the end to the stock markets
might have been the reported bombings at the Boston Marathon.
The next couple days could get interesting as we could see
plenty of margin calls for those that were long gold and that probably means
selling something else that they own or simply cutting risk exposure.
The grain news today was mixed. First off we got another confirmation that
China bought US SRW; but this was really old news.
Next we seen export shipments and they were just horrible
for beans. The worst since harvest time
easily and below what we need on a per week basis for the first time in a long
time. So we added a negative fundamental
on top of the outgoing money flow.
Speaking of money flow; we need to realize that money flow
is, has, and will always be the biggest fundamental when it comes to grain
price movement. Sure actual product we
have or don’t have means something; but more days then not the biggest
fundamental is simply money flow.
Back to the grain news; shipments for wheat and corn were in
line with estimates with wheat a hair above what we need on a per week basis
based on current USDA projections and corn was just a hair under what is
needed.
This afternoon we had planting progress and crop
conditions. Corn planting was pegged at
2% versus 7 % on average and 16% last year.
Friendly; but not new news. Were
we are over the next month however could be a headline and a reason for the
funds to get back in; but keep in mind that if planting delays happen because
of moisture longer term that isn’t negative.
Now if the delays are from cold weather that is different. One other positive should be the swing states
like North Dakota appear to be losing corn acres; were they are going is up in
the air; as from what I read most producers might be skipping some spring wheat
too as it just doesn’t pencil that good.
Keep in mind that how big of a corn crop ND or SD grows won’t really
make much difference in the big picture.
This afternoon we also had winter wheat conditions that were
left unchanged. With the recent moisture
that might be considered a little supportive but we also had some areas that
could have had some frost damage; so unchanged is probably neutral. It does sound like there are some more cold
weather suppose to hits some wheat areas tonight. So perhaps we can see the freeze card laid out
on the table once more? Plus many are
still trying to determine what damage happened in the past couple of weeks.
Spring wheat planted came in at 6% versus 35% last year and
13% on average.
Here is more break down on this afternoon’s report; from CHS
Hedging
The other piece of news I seen today was the soybean crush
numbers. Which were overall rather bullish
as we need to cut usage versus last year by 20% if we are going to only hit the
present USDA numbers. The biggest year
over year cut during this upcoming time period has been 12%; bottom line is soybeans
need to curb more demand than ever. Perhaps the slow export shipments are the
start? Maybe China can wait until South
America gets things figured out with their logistics?
As for the next couple of days we need to see what money
flow will do. Will the outside markets stabilize
or is this just the start of a major melt down?
Overall grain fundamentals feel supportive; but not enough to take us
higher without some support from money flow and the funds. Plus if weather does break it won’t take long
for stuff to get planted and it also appears that our high prices have
encouraged more production around the world.
So then we will have to watch demand and that probably doesn’t get too
strong if we have poor outside markets.
Basis felt mixed today; bids on the spot floor for winter
wheat and spring wheat were thin. Most of the spring wheat bids have rolled to
the July futures and the recent snow storm in ND didn’t help speed up
movement. Corn basis felt thin also.
Birdseed market seems to have decent orders; but buyers are also
being patient.
Please give us a call if there is anything we can do for
you.
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