Grain markets are called mixed this a.m. after a mixed
overnight session; that saw corn down 3 ¼ on old crop, new crop DEC corn was
off 1 ¾, KC wheat was down 2 ½, MPLS wheat was down ¾ of a penny, CBOT wheat
was down ½ of a cent, old crop beans up 8 ¼, and new crop beans down ¾ of a
cent. At 7:50 outside markets have the
US dollar up slightly with the cash index at 78.838, the DOW Mini futures
pointing towards a positive start of about 20 points, crude down around a buck
at 103.04 on the May crude oil contract, and gold down 35 bucks an ounce on the
May Gold Contract at 1291.90.
Three big things driving the market lately, weather being
the biggest. But demand and the Russia Ukraine
situation also grabbing some headlines.
As for weather; mother nature remains very challenging in
efforts of producing crops. The western
winter wheat areas remain very dry and now they have also seen some cold
weather hit. Low twenties in some areas
as far south as parts of Texas have been reported. Big debate as to what damage if any has and
will happen because of the stage of the crop; many report it is 2-3 weeks
behind. But this did help the wheat
market bounce yesterday.
Here is CHS Hedging Crop Progress report link.
The Russia – Ukraine situation appears to have escalated a
little bit and anytime that happens our markets can add some premium in a
hurry. Same thing here will it lead to
any actual increase in business for the US?
Still unknown.
Lastly is the debate for demand and supply. We had a friendly USDA report last week; but headlines
lately are questioning if the demand that is now penciled in can actually
happen. Another big unknown.
Bottom line is our markets have added some fear premium because
of the unknowns. Could this unknowns
all end up positive and push our prices much higher. Without a doubt; but they also could also end
up just being fear’s that don’t turn out.
The rail situation remains a big struggle. My elevators continue to be very far behind;
it is so challenging that last week our general manager testified before the
STB in Washington DC. Who knows how this
will shake out; some indications are that these struggles could continue for
some time to come? But that is really an
unknown; too many factors to know as everyone is working on improvements and
maybe a little help in the form of warmer weather can go a long way to helping
the railroads catch up?
The one thing that the rail movement does do is effect
basis; as trading grain is not easy to do when you don’t know for sure when you
can ship it. When producers ask when can
I get a grain in it is hard for us to give an honest answer because we just don’t
know how the rail will shake out. Same
thing when we try to sell a grain; it is hard to determine when we can honestly
tell a buyer he will receive his product.
This makes things challenging and volatile.
My only recommendation as to marketing is to have offers out;
so if we get fortunate enough to get some cars that maybe we can hit some spot
sales and pass on some good values.
Longer term I have to wonder if the rail situation will add
to our carryout? I know of some ethanol
plants that haven’t been able to run at full speed because they couldn’t get
empty ethanol tankers back fast enough.
What about export business? Was
there some that we missed because we didn’t get the product out fast enough or
when the demand was there? I know of a
couple birdseed plants that have had to pause production because they couldn’t get
the product in. Will any of this lead to
a bigger carryout in any of the different grains????
Below is some more market info from CHS Hedging’s morning highlights.
Morning Highlights
By Christopher Steinhoff
- Ukraine
begins a military backed “anti – terrorist” operation in its eastern
region where pro-Russian militants have seized buildings.
- As of
7:00am CDT: Gold is down $22.00, crude oil is down 80 cents, US$ index is
0.087 firmer. Hang Seng was down 1.6% and Nikkei is up .6%.
- USDA
reported corn planting at 3% complete vs 6% on average but ahead of last
year’s 2%. LA, MS, GA and AR are the leading states, followed by TX, NC
and KS. ILL and NE are 1% planted.
- Weather is
to remain cold for a few days before a return to more seasonable
temperatures.
- Russia
declares Ukraine on the brink of civil war. Political uncertainty and
economic sanctions could lead to a disruption in exports from Ukraine
and/or Russia.
- CK/CN
carry trades in 6 x 6 ¼ overnight range.
Oilseeds
- CONAB’s
recent upward revision of Brazil production to 86mmt was a result of a
lower yield but an increase in safrinha soybean acres.
- Recent
heavy rains/flooding in Argentina may lead to a production decrease of 1
to 3mmt. USDA is currently at 54mmt while other guesses range as low as
52mmt.
- Spreads:
K/N is firm near a 13 ½ inverse, with an overnight range of 14 ¾ to 13.
The N/X is 6 ½ firmer.
- News about
China defaults/imports is quiet.
- Malaysian
palm oil is up 29 ringgits.
Wheat
- Ukraine/Russia
situation causes uncertainty for Black Sea export capabilities.
- As of
6:00am CDT, temps across KS and OK were mainly in the high 20s to low 30s.
KS reported 31% of the crop jointed vs 47% average.
- USDA
pegged winter wheat conditions at 34% g/e vs 35% last week. They rate the
p/vp at 32% vs 29% last week. Winter wheat headed was at 5% and spring
wheat seeding was estimated at 6% complete.
- Japan
seeks 136tmt in its weekly tender.
Grain
Merchandiser
Midwest
Cooperatives
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