Markets closed ugly today with corn DOWN 3-7 cents, KC wheat
was off 11 cents, MPLS wheat was down 8, CBOT wheat was down 15, new crop
soybeans were down 2, the US dollar was unchanged, the DOW was off 46 points,
and crude was down 40 cents.
Grain markets really seem like they simply want to work
their way lower or at least that’s what the funds are drying to do is grind our
markets lower. It feels like we may
have had a little panic producer selling today and more and more are getting
bearish; so maybe we can eventually find a bottom. I guess it always feels darkest at the
bottom. But just the fact that the only
real positive we can talk about for the grain markets is the fact that everyone
is getting too bearish isn’t a good sign.
The funds have showed us many times over the years that they can really
extend price moves.
Don’t get me wrong
you can find a couple other positives; but nothing that is headline
leading or good enough to help our markets bounce. We still have the freeze card and slow
development of the crop card in the deck.
But the major card that lead our rallies the past two years simply hasn’t
shown up. As we have had plenty of
moisture (in most areas) and we haven’t had too much heat. Sure we could find more demand but many of
the pro’s are going to start arguing that if we don’t find demand in a hurry we
could continue under pressure and fundamentally it is hard to argue against
them.
Crop conditions this afternoon showed the headline why we
have been under pressure. As corn and soybean
conditions were both improved; it really appears we have had ECON 101 do its
job as the high prices have helped spark production both in the US and around
the world and demand is simply soft or at the very least not strong enough to
pull us higher at this time. Maybe end
users should be jumping on the prices we presently have? But most are not and that’s one thing that
adds to our markets over doing the moves.
End users don’t give the market support on the price breaks like perhaps
they should and producers tend not to sell as much as maybe they should on the
rallies. That along with the funds is
why our markets really tend to overdo price moves.
As mentioned this afternoon we had a crop progress
report. Here is the CHS Hedging comments
on it.
You will notice that both corn and soybean conditions jumped
1% in the G/E category; with both presently at 64% good to excellent. The other thing you will notice is we seldom
see conditions jump in August. Typically
as the crop progresses and matures conditions drop. But that wasn’t the case this last week.
Top Third’s comments from Mark Gold today mentioned it was
the first time he had ever seen the conditions improve in August. Bottom line is mother nature has been much
more friendly to our crops the past few months then it was the past few years
during this time period.
Here are Top Third’s comments referencing the conditions
improving.
The other piece of news this a.m. was export shipments. Which were good for wheat and corn and poor
for soybeans. Wheat came in at 25.5
million bushels, corn was 15.1 million bushels, and soybeans were 1.4 million
bushels.
The other info I seen out was INFORMA’s crop estimates. Not sure how important the actual numbers
are; but I think the trend is something to watch.
Corn yield they pegged at 158.6 bushels per acre; with total
production of 14.140 billion bushels. Basically
looking for an increase in production with bigger yields.
For soybeans they pegged it at 42.7 bushels per acre with a
total production of 3.266 billion bushels.
As we get closer to figuring out the crop size demand will
start to be important. As it sits now
many question if the presently forecasted demand can actually be hit. Plus many such as Mark Gold above think the
crops are actually bigger then some of the forecasted numbers. Many think we will be swimming in grains and that’s
just another reason we seem to be struggling.
Headlines of 2 billion bushel carryout or 14. Billion bushels of
production isn’t exactly a headline to get funds to buy.
Please give us a call if there is anything we can do for
you.
Thanks
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