The grain markets closed mixed today in choppy trade. MPLS wheat helped pull the other wheat
markets back into positive territory and we did have corn bounce into the close
well off of its lows.
When the grain markets closed we had July corn down 7 cents,
September corn down 4 ½, December corn was down 2, KC wheat was up 2 – 3 cents,
MPLS wheat was up 5-6 cents, CBOT wheat was up 2-3 cents, July beans down 31
cents, and November soybeans down 14 cents closing just above the 13.00
level. At 2:45 outside markets have a
very weak US dollar down 300 some points at 80.640 on the US Cash Index, gold
down 10 bucks an ounce, crude up 70 cents, and the stock markets have a big
bounce going on right now with the DOW up 180 points.
The positive today has to be the little mini reversals for
the wheat markets in CBOT and KC. The KC
July wheat contract hit its lowest level in about a year before turning around
and closing positive. Some would classify
as a key reversal in that it made a new low for the move and closed higher;
other technical books would just consider it a reversal because we didn’t close
above the previous sessions highs.
Either way it is a positive; it might not last but is really the first positive
we have seen on the wheat charts for some.
MPLS wheat continued to hold support around the 8.00 level
on the July board; another positive. I
do question if we see some pressure against that support should we get all the
spring wheat in; but the chart looks to be holding up so far.
CBOT wheat flirted with its lows from late in May but also
managed a little reversal type action on the charts. It also looks like we have a little bullish
divergence in momentum on the CBOT July Wheat chart. Meaning when we made our low back in late
May STOCH got down to the low teens and now even though we are near that same
level STOCH is in the upper twenties.
I don’t want to read too much into the wheat price action today;
but I thought it was overall positive.
We have the funds short plenty of wheat and we have everyone talking
about the big world supply and yesterday we had production come in higher than
expected on the USDA report. But despite
all of this the CBOT wheat market is a few pennies higher then it was when
right before the USDA report came out at 11 a.m. yesterday the 12th.
So my hope is that we have finally made a low and got some
of this negative information priced in.
The only thing I would say is that hope and greed are not very good
emotions to have when it comes to marketing.
As for news today I did see that SovEcon raised their Russian
wheat crop to 52 MMT from the 50 MMT they had.
But is still below the USDA number of 54 MMT that the USDA had
yesterday.
We did have export sales out this a.m.; nothing super
bullish here. Good for wheat but not off
the charts at 15.7 million bushels. Our
commitments for the year are at 272 million bushels versus only 203 last
year. Perhaps why the USDA increased our
export forecast yesterday?
The corn and bean export sales were very light. Not where we need to be to meet current USDA
projections for the old corp. The new
crop corn was horrible while the new crop bean sales where so-so.
The support in MPLS wheat today came from forecasts and
thoughts of acre loss. I did see this
comment in another market summary today.
“===Central and eastern Kansas wheat fields expected to possibly see
80+bpa wheat cut as evidently the 5 frost events in April and May did less than
expected/reported damage”
Maybe that is what the USDA seen when they raised our wheat production
yesterday? The thing that we have to
keep in mind in regards to a frost is the fact that sometimes the damage doesn’t
show up until the combines roll. (80
bushel straw with 20 bushel wheat????) I
guess we will find out over the next several weeks.
I did see a comment that Goldman lowered their price
forecast for the grains for the next twelve months. Citing favorable weather conditions and
growing supplies. I don’t care to argue
the point; most producers I know would argue it; especially those in Iowa or ND
where they can’t get the crop in the ground.
The point I want to take from it is the headline that the
funds or “big money” see. That headline
is bigger supplies as noted in yesterdays USDA report. If we truly want a bull market and higher
prices we need to give the funds or “big money” a reason to enter. That reason can be inflation or some other
black swan event not directly tied to our fundamental supply and demand or it
could be our carryout levels/production levels.
Right now the USDA reported forecasts for balance sheets are not a
headline that say……..BUY…….BUY………..BUY……….if anything they are headlines that
say……. SELL………SELL……….SELL.
Bottom line is we need something to change; maybe a policy
change that helps increase ethanol usage or ethanol blend? Maybe inflation talk? Maybe confirmation of a huge loss of acres
and yields? I don’t know what it needs
to be but we need some story that is buyable material for the funds. It doesn’t have to be accurate and make sense
to everyone; we just simply need a story that tells the guys with the money to
buy.
Elsewhere we have been trading some sunflower offers the
past couple of days. Mainly for deferred
slots like Jan-March of 2014. If you
have some interest now might not be the worst time to have some offers out
there. Buyers are concerned about the loss of acres in North Dakota.
I have seen some signs that old crop millet might be finally
done going up as I have had several brokers start to indicate offers back to
me. That type of volatile price action tends
to come at the end of a move. I guess in
this case it will really depend on when and how harvest shakes out. Will it be early? How empty will bins be waiting for it?
Please give us a call if there is anything we can do for
you.
Thanks
