Opening Grain Market Comments 5-15-12

Markets are called better behind a better overnight session; while outside markets are mixed and could lead to a little pressure with ideas that the grains open a little softer then where the overnight left off at.

In the overnight session corn was up 5, beans where up 18 on old crop, new crop beans where up 15, KC wheat was up 8-9 cents, CBOT wheat was firmer by 8, and MPLS wheat was 6 higher.  At 8:50 outsides are mixed; EU wheat is up about 1 %, equities are near unchanged with the DOW up 5 points, crude is off about a dime, gold is off 8.00 an ounce, and the US dollar looks like it is making another move up with the cash index at 80.903.

Yesterday we had a crop progress report; that basically showed the majority of the row crops planted with good emergence and a good wheat crop.  We really lack weather premium right now as headlines lately have been great big crops coming.

Basis remains firm for corn and beans; perhaps firming a little bit.  Yesterday we saw open interest in soybeans go up which indicates good commercial interest and end user pricing; not bad thing to happen.

One thing that has been on the headlines lately is the issues in EU.  If it leads to more macro liquidation then the grains could struggle; if not it feels like basis and demand are strong enough that the grains have a chance to bounce from these areas.

I have heard talk of higher protein getting harvested down south.  I seen a train of 13.76 pro yesterday and heard most of 12.5.  Overall higher protein isn’t exactly the best thing.  It acts as a replacement for spring wheat if it is high enough and then it doesn’t get feed and doesn’t help our export program out.  So I think a higher pro crop down south hurts demand a little bit and I think demand is really what wheat needs if we want to have a bull story at some point down the road.  I would also have to think that a higher pro crop means yields are off a little from what was expected……typically pro and yields go hand in hand in a reverse relationship.

One thing we need to watch going forward is the inverse in the grains.  Most have a big inverse between old crop and new crop so if you are storing grain your cost is very high.  It is a good demand sign when things are worth more today then they are tomorrow so to speak but it is also a huge risk when marketing grain as a general rule you don’t want to sit on product threw an inverse.  Every day that goes by we get closer to new crop and the risk becoming greater as along as the inverse is out there.  Bottom line the markets are close to saying if you want to own the grain own it on paper as it doesn’t make sense to sit through the inverse.

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But Everyone already knew! So why was Wheat price down so hard today?

But everyone already knew that Russia was going to have a better crop then a year ago and everyone already knew that they where going to be back into the export market.

That was the cry the bull's had today as our markets got smack on what was suppose to be news that really wasn't a suprise.  So why did our markets get smacked so hard today?

Maybe the charts below will shed a little light on it; maybe they will just make one wonder even more?  The one thing that is clear is that technically the CBOT wheat's price action as well as KC price action really left some clues last week in the form of near doji's left on the charts as well as failures at resistance levels.  The MPLS chart below isn't as clear and to me looks a little more freindly then it's wheat sister's in CBOT and KC.

Opening Comments 5-31-11 Grain Market Called weaker on Russia News to lift export ban

Markets are called mixed this morning behind a volatile over night session and supportive outside markets. 

When the overnight session was over old crop corn was up 2 cents, new crop corn was down 4, MPLS wheat was off 11 cents, KC wheat was down 17, beans where up a penny, and CBOT wheat was down 18 cents.  At 9:00 outside markets have European wheat up about 1 % (after being off nearly 5% yesterday), crude is up about 1.80 a barrel, and the equities are firmer with the DOW up 100 points.

The big news over the weekend was Russia lifting their wheat export ban; effective July 1^st.  Some rumors are already out there on business done because of this.  Many have expected this in the market for some time now; but the actual news lead to a hard sell off in the European wheat market; as yesterday European wheat lost nearly 5% which on 8.00 wheat is 40 cents and 10.00 wheat is 50 cents.  Last night our markets opened down rather hard on this news and the European weakness as we seen wheat down 35 cents or so on the CBOT; while the hard wheat’s where down nearly 30 at their lows. 

Despite the weakness seen where the overnight left off things at one time where quiet a bit worse as even old crop corn was 15 cents off of it’s overnight session lows.

We will have a crop progress update this afternoon which is expected to show corn planted in the 82-90% area and rather little change expected in spring wheat planting.  Crop conditions will also be out in this afternoon’s update.

This a.m. we will have an export inspections report out showing export shipments.

 Please give us a call if there is anything we can do for you.