closing grain market comments 1-2-2013 - horrible start for grain prices

Grain markets closed ugly today despite the fact that we did not go over the fiscal cliff.

When things where all said and done today corn was off 6-8 cents, soybeans were down 13-17, KC wheat was off 20 cents, MPLS wheat was down 24, CBOT wheat was off 23, equities bounced with the DOW up over 308 points, crude was up about a buck, and the US dollar was near unchanged.

Very disappointing day especially when you go searching for highlights on today’s melt down; as one couldn’t find much new fundamental information; as today’s melt down in the grains didn’t seem to have much to do with supply and demand but rather more fund technical liquidation.

The charts look ugly after today; last week we had some great wheat export sales and it looked like perhaps we had a bottom in place on the charts.  Now the charts remain wide open to the downside.

Part of the catalyst for today’s price action was the fact that as part of the “cliff deal” was a $1 tax credit for biodiesel that was retroactive for 2012 and set for 2013.  This lead to some spread traders on the wrong side as most of the market has been long soybean meal and short soil oil.  I think this pressure spilled over into the beans in a hurry and that pressure quickly moved to the other grains.  Once wheat got back to about unchanged it started to hit technical sell stops; as did the other grains.  Bottom line is when the day was all said and done we seen plenty of technical selling despite the supportive outside markets.  I wonder what could have happened to the grains today if we would have fallen off of the fiscal cliff?

The wheat charts all look like the saying “catch a falling knife” and what is scary is technically it’s not like we know we are even close to a bottom.  I would point out that fundamentally we are starting to see some small positive signs.  Such as this afternoon I had a buyer asking for an offer on a tender they have coming up.  Last week’s export sales for wheat where very strong.  So it appears that we are getting close to finding some demand.  But until the funds decide to stop getting short or find a reason to get long the path of least resistance remains to the down side.   Longer term the recent price break isn’t all bad because our supply story or horrible crop story is still out there; so if we can boost up some demand and then scare the market with a  fear of supply we could in turn someday have a bull market.

We do need to keep in mind that if wheat is going to have a bull market; it has no reason to do it now.  We are not going to run out of wheat anytime soon and unless we pick up demand it won’t matter how much we don’t raise next year.  Realize that shorter term we really need plenty of bullish factors for wheat to turn around.  Longer term plenty of positives remain; but the recent price break and talk of downside risk should remind us to use good risk management. 

Right now basis is fairly good so perhaps now wouldn’t be the worst time in the world to look at a min price contract.  Selling the cash grain and re-owning via a call option.  For some that might not be the worst option in the world if you are still worried about our economies despite the band aid fiscal cliff fix or if you are looking for cash flow yet are bullish.  Volatility is also on the low side so min price contracts or options in general are not too terrible expensive.

If you want more option on a min price contract or anything to do with futures or options please give me or one of the guys in the office a call.

As for other news out there today; I really didn’t see much.  Basis felt a little better today; but also still felt thin.  Plenty of buyers are still out; but volume did seem to pick up a little bit today for most of the commodities.

As for going forward if we are going to get a bull market one bullish card could come from the USDA Jan 11^th supply and demand report were we will get updated quarterly stocks, winter wheat acres planted, and updated S & D numbers.  Last year at this time the bullish thing out there was South American weather; so far no bullish card in the deck for weather.  Other possible bullish cards will be demand, and outside markets.  But those cards could easily turn up to be bearish cards.

It really feels like we are in the hope stage of marketing; and it is scary when one of the best reasons I can give for a bounce is just the fact that many are getting too bearish grains.  But that too is positive and perhaps the fact that our markets are a little unbalanced eventually leads to a positive turn around.  But for that turn around to be anything more than a short term turn around I am convinced we need one of two things, A solid demand and or B a headline story to get the funds acting impulsively and hopefully this time that impulsiveness will be on the buying side.

I seen an email today referring to 2012 versus 2013 on Dec corn.  It was kind of scary and interesting.  It showed that the Dec 2012 contract had made it’s high’s last year on the first trading day of the year.  Jan 2^nd; and slowly worked its way lower until about the middle of June when it bottomed and sky rocketed up on the drought.  The Dec 2013 corn contract is starting at about the exact same spot as the 2012 contract did a year ago.  I am not as bearish as some longer term because I believe the sub soil issue is for real and it will take plenty of water to fix our present drought situation that covers most of the corn belt.  But what could happen is also scary if we do have a perfect growing season.  The possibilities for new crop corn realistically range some place between 3.00 to maybe as high as 10.00.  I think I could argue plenty of numbers in between.  So proper risk management might mean that some want to get a little more pro active in case we don’t see that headline story that gives us a chance to sell better numbers.  I don’t mean to go out and say the sky is falling and you should have everything sold.  Because I for one do not know what will happen for sure; but I do know that having some small sales in place or having some put protection in place might not be the worst thing in the world for many operations.  If you need help with your marketing or would like to write up a grain marketing plan please give us a call.

Lastly I want to remind everyone that we are now offering free delayed price on winter wheat and spring wheat. 

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

Overnight Highlights for 7-18-2012 from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.289 at 83.321; NYMEX-WTI down $0.47 at $88.74; Brent Crude down $0.29 at $103.69; Heating Oil down $0.0058 at $2.8364; Cattle steadyish and hogs weaker; Gold down $12.10 at $1577.40; Copper down $0.0015 at $3.4530;  The Yen is firmer, but all other major currencies are firmer; Cotton and Lumber are firmer, but all other softs are weaker; S&P’s are down 4.50 at 1354.00, Dow futures are down 33.00 and Treasuries are slightly bid.

Financial markets are fairly subdued this morning as we await the second testimony in front of Congress from Fed Chairman Ben Bernanke.  At first, markets didn’t like the somewhat hawkish tone he took yesterday, and started to sell off.  By the close, however, investors seemed to realize his stance hadn’t changed all that much and instead focused on some better than expected Q2 earnings.  In other news, the Bank of England policy makers may reconsider the case for an interest-rate cut after assessing the European debt crisis.  They did vote to increase their bond buying program by 50 billion pounds.  The Czech Republic’s borrowing costs fell to an all-time low at today’s auction.  The average accepted yield on the 2021 security fell to 2.316%.  Their rating is A1.

Some badly needed rains fell in parts of the northern plains last night with KELOLAND reporting 1.0” amounts in Winner, SD and as much as 3.0” between Aberdeen and Webster, SD.  Elsewhere, areas along the ND/MT border picked up between 0.10-0.50” with localized amounts near 1.0”.  That system continues to track across SD and MN this morning and should impact WI later today.  5-day forecasted precip maps show WI getting 1.4” by Monday while IN could see a broad 1.0” and areas SE of there should also see meaningful rainfall.  IA/IL/NE/MO should be quiet.  Not a ton of change on extended maps with the 6-10 seeing scattered precip across the Midwest, but nothing of huge totals.  The 11-16 calls for weak riding to bring average/below precip and average temps.  Dry weather continues to dominate Australian wheat growing areas and should continue to do so the next 10-days.  Most areas are in good shape following decent precip recently, but the forecast is not a good one.

Similar to the day before, grains are starting out on a weak note, enduring a bit of profit taking as prices pushed to either new contract highs yesterday or remained near the highs for the move.  Wire services continue to be flooded with stories about supply and demand, which is keeping grains uneasy enough at the moment.  Lots of price forecasts are being thrown out this morning including Newedge saying corn may rally to $8.50 as production continues to drop.  Their yield forecast fell to 134.9bpa.  Accuweather dropped their yield forecast to 138bpa.  It would seem corn prices above $7.50 are pricing in a yield below 140, but not quite towards 130bpa.  If we can’t get a pattern change over Iowa the next 10-days, we should make a push through all-time highs at $7.99 ¾.

Headlines last night included India saying it will consider limiting the quantity of food commodities that traders can stockpile as the weakest monsoon in three years fuels a food price rally.  At the same time, 60% of their growing region has received below average monsoon rains.  A survey for the Cattle on Feed Report Friday says feedlots placed 1.5% less cattle than a year ago, inventories will be 2.56% higher, and marketings will be down 5.977%.  Many think feedlots pulled back on the reigns already last month, but declining pasture conditions probably added more cattle than people realize.  The Australian Bureau of Meteorology said there is a 60-70% chance Australia will receive below-median rainfall the next 3-months due to El Nino.

Pork prices in China fell last week, but have been showing signs of stabilizing.  Average wholesale price was $3.20/kg, down 0.7% w/w.  Last week’s prices were still down 23.5% y/y.  As US pork prices continue to fall, may be easier for China to import pork as opposed to bring in feed supplies such as corn and meal.  In export news, Jordan once again canceled a tender for 100,000MT of wheat (second time now).  Japan was also said to have canceled a tender to buy 320,000MT of feed wheat and barley due to high prices, but have since retendered.  Russia harvested 17MMT of grain up to July 17^th vs. 14.64MMT last year as the drought ripened things faster this year.  O/I changes yesterday included an increase in corn of 11,970, wheat up 380, soybeans up 5,320, meal up 4,160 and oil up 1,060.  Chinese markets were slightly weaker overnight with soybeans down 6.50c, meal up $3.00, oil down 43c, corn down 3.50c, and wheat down 6.50c.  Paris wheat is currently down 1.50%, Rapeseed down 0.77% and UK feed wheat is down 0.91%.

Call things lower today as we chop around and continue to consolidate the recent gains.  It certainly doesn’t feel like the top is in considering the weather pattern is far from changed and the supply hasn’t stopped going down.  Demand stories are popping up on corn daily, but until we determine the supply, we can’t assume the rationing job has been completed.  Soybean and wheat have their own stories to keep them supported, but it does feel like one big trade.  Constantly assess available supplies and % marketed.

Trade as of 7:15

Corn down 2-5

Soy down 3-5

Wheat down 2-9    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Steinhoff's over night comments

Below is Country Hedging's Chris Steinhoff's overnight comments

Crude oil is 30 cents lower, ethanol is 2 cents lower…gold is down $10.00, silver is 28 lower…Dow, Nasdaq and S&P futures are weaker…US$ index is 0.270 firmer

Corn….two sided trade overnight but lower this morning on a bout of profit taking and appears to be sliding further as the work day begins

                …scattered but unconfirmed rumors of China cancelling corn cargoes

                …very little rain fell yesterday/overnight…temps heat back up

                …crop is most likely smaller today than it was yesterday….

                ….signs of demand slowing may not be enough, it may be a market where we need to  put people(end users) out of business

                What price is that? $8.00, $9.00 or even $10.00…may depend on how small this crop gets

Trading 4 to 8 lower…profit taking

Soybeans….not much rain and running out of time as the crop will be earlier than most think and rains may be too late when they come

                …beans also see supplies become tighter faster than demand slows

                …China is always a threat to buy something

                …US meal sales have been very strong….china crush margins have been negative for months

Trading 2 to 5 lower

Wheat…winter wheat harvest is on downhill slide with yield reports consistently a little better than expected

                …spring wheat harvest begins in earnest in SD and scattered in MN and ND

                …expectations are for a good yielding crop…..protein expected to be high

                …japan seeks 120tmt feed wheat

                …Australia sees 9 month wheat exports at 14mmt, up 16% from year earlier

Trading 5 to 10 lower…

afternoon grain market comments from Country Hedging's Tregg Cronin 7-12-2012

Below is from Country Hedging's Tregg Cronin

No full write up today, but some comments worth sharing:

First up, both weather services we use were less aggressive with rains in the central belt this weekend.  One is looking for spotty rains across E-IA/IL/WI/MI/N-IN now thought to be less than 0.20”.  The Northern Plains should be quiet the next 5-days.  The other said they reduced their 1-5 day coverage 5% to 40% through Monday.  Then the heat gets turned back on beginning early next week with Chicago forecast to hit 100* on Tuesday.  10-day highs for select cities below:

Sioux Falls: 87, 92, 91, 92, 92, 93, 89, 92, 94, 92

Omaha: 91, 95, 97, 95, 95, 95, 94, 95, 98, 96

Des Moines: 90, 93, 94, 96, 96, 95, 93, 98, 95

Decatur: 92, 90, 89, 93, 93, 93, 93, 92, 96, 95

Marshall, MN: 88, 89, 91, 90, 91, 88, 89, 93, 88

Indianapolis: 91, 85, 86, 90, 91, 91, 90, 89, 91, 94

Madison, WI: 91, 94, 92, 90, 94, 94, 91, 89, 93, 95

Very few overnight lows below 70* it should be pointed out, and even during the chances of rain for the ECB, most fail to move below 90* for a daily high.  Worth pointing out the sharp rebound in Nat Gas prices around midsession when the maps came out.  Hotter next week? 

More and more anecdotal reports from the WCB about how dry things are getting with S-SD talking of chopping silage already before nitrates move into the plant and render it useless.  SW-MN is also hurting bad for a rain, and according to boots on the ground need one in the next 10-days or else….  Scattered headlines had the wheat market moving higher today including the Russian Grain Union stating the entire Russian grain harvest would be below 80MMT.  This likely implies a wheat crop around 46MMT vs. the USDA’s latest guess at 49MMT.  Paris Milling Wheat finished up 3.0% today, and one trader said there was talk of Black Sea export controls, but those seem unlikely at the moment.  Keep in mind, however, it was late July/early August when Russia banned exports in 2010.  We made our blow off top the first week of August, sold off until November before rallying into the 2011 highs near $9.00 basis Chicago Wheat.   There were also rumors running around Indian wasn’t going to allow wheat exports, presumably because of high food inflation.  Lastly, contacts suggested China was sniffing around for cash wheat for feed stock, but basis moves didn’t imply same.

Corn yield ideas continued to move lower today with Rosenthal Collins dropping their estimate to 135bpa while NewEdge cut theirs to 139.9bpa.  As noted in yesterday’s commentary, RJ ‘O Brien’s two analysts are using 140-141, but both said when taking a look at state yield data, it doesn’t take much imagination to move it below 140bpa.  Another interesting tidbit from today’s session was DTN took a look at comparable drought year’s and the differential between planted and harvested acres.  In 1988, 2002 and 2005, harvested acres were typically 10% less than planted vs. the current year’s 9.2%.  If the 10% is used, another 312mbu can be shaved off our production.  For every half a million acres which come out of the harvested column, subtract 73mbu if we take the 146bpa as fact.

As noted in this morning’s comments, China did hold a successful state reserve auction on soybeans overnight where 99% of the 394,000MT offered were purchased at a price between $16.87-17.11/bu.  Their markets were down 41c.  This is the function of the market: go to a price which discourages the buying of US soybeans.  As evidenced by Brazilian basis levels today, up 20c to +200Q, it will be US beans they have to stop buying as South America doesn’t have any.  Speaking of exports, soy complex exports continue to be incredibly strong.  In the last week, exporters sold 12.2mbu, way above the 2.5mbu needed per week.  The USDA will have a difficult time justifying further demand cuts if this keeps up.  Bean Oil and Meal were also very strong, wheat was mediocre and corn was weak.

Traders were making note of RIN prices today, which have rallied to $0.0345/gln from around $0.01/gln at the June lows.  When these start approaching $0.10/gln it will be significant and worth noting as the rationing process of corn rolls on.  Barge freight continues to push higher as low water inhibits grain movement.  CIF corn bids were slightly weaker on the front end, but 1c firmer for new crop.  More chatter about Brazilian maize trading into South Carolina with the first vessel said to be on the move.  Again, more instances of rationing.  The spread between live cattle and feeder cattle continues to blow wider thanks to rallying corn, improving cattle crush calculations.  Still not a business a guy wants to leap in to with both feed, but better than something that isn’t so great.

If you noticed yesterday in the comments, any and all protein premiums have been wiped out of spring wheat.  Right now, wheat is wheat.  ND weather has been a bit cooler/wetter than SD weather, so possible high protein isn’t uniform, and Canadian weather likely less threatening than ND for same reasons.  Scales in the country are around -2/+2c a 1/5.  It would seem the elevators in the northern plains are content to let the farmer store grain when there are no carries on the board, and the farmer wants to utilize his new storage.  With that in mind, expect limited carries and small inversions to persist in Minneapolis wheat as has been the case the last several months.  As the market wants the wheat it’s going to have to bid for it and keep spreads firm, but farmers aren’t being paid to store spring wheat, and that is something they should realize.

Grains are up nicely on the week, and should try to carry gains into the weekend tomorrow.  I don’t know too many who want to be short going into a weekend in which rain chances are iffy at best.  Our markets don’t feel like they’re done going up just yet, but the demand destruction taking place is clear and present.  When it matters, it’s really going to matter.  Keep making sales, especially on wheat as historically these prices are near the upper 10-15% of historic ranges and at harvest no less.  A couple pictures to follow:

   

North East, IA near Decorah.

Sláinte.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Country Hedging Mid Day in the Markets 7-12-2012

Midday In The Markets

GRAINS

Grains and oilseeds are climbing higher as we wonder just how small the corn and bean crop are going to be. We’re seeing plenty of buying today; it appears no one wants to be short. Export sales were good for beans. Wheat continues to follow row crops also finding extra support from production problems in the Black Sea and Japanese buying. Soybean spreads are still weaker. Soybean fundamentals are still bullish, but the elephant in the room is how much will China pay for beans if their economy is slowing down? China sold 390,090 mt of beans from reserves today.

Export Sales: In thousand tons

                Old         New

Corn:     172.7     492.1

Wheat:                 311.8

Beans:  332.1     427.1

Meal:    95.7        74

Oil:         34.4        -0.5

LIVESTOCK

Once again higher corn prices and slow demand for beef continue to put pressure on cattle. Weekly export data showed a net sales of 17,300 tons, down 2,600 tons from last week. With a stronger dollar and a majority of “grilling” holidays behind us, exports will continue to hold sway over the market. Also, an abundance of supply as more cattle come off drought-ravaged pastures into the market will be detrimental to prices as well. Lean hogs are trading higher today on firmer cash prices and as packers buy hogs to fill out the week’s slaughter quota. Yesterday’s average cash hog price form Iowa/ Southern MN was $97.30, up $2.26.

ENERGY & FINANCIALS

Stocks continue to fall as investors lose hope of QE3. Not even the good economic data was able to revive their spirits. US jobless claims were down 26,000 to 350,000. Global economic growth is still weighing on the markets as investors wait for Friday’s reveal of more Chinese numbers and any further developments in the euro zone crisis. Gold is down $8.90 at $1,566.80. Crude is down $0.67 at $85.14. The Dollar is up $0.12 at $83.85. It looks like the dollar may be shaping into a “head and shoulders” pattern, so that should give us something to watch as well.

Jenna Roe

800 328-6530

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The Right Decisions for the Right Reasons

Overnight Highlights from Country Hedging's Tregg Cronin 7-12-2012

Outside Markets: Dollar Index up 0.181 at 83.749; NYMEX-WTI down $1.00 at $84.81; Brent Crude down $1.18 at $99.05; Heating Oil down $0.0416 at $2.7202; Cattle are lower, hogs are firmer; Gold down $11.40 at $1564.10; Copper is down $0.0510 at $3.3965; The Yen is firmer, but all other major currencies are weaker; Softs are mostly weaker; S&P’s are down 10.25 at 1326.00, Dow futures are down 87.00 at 12,449.00 and Treasuries are a bit better.

Grabbing headlines this morning is the weakness in the EURUSD cross which has pushed the euro down to the lowest level since June of 2010 at 1.2189, while the US Dollar makes 2-year highs.  Nice if you’re going to Europe in the next year.  The other striking thing is how investors are still searching for short term safe havens.  German, Dutch and Swiss 2-year treasury yields are now negative, meaning you’re going to pay those governments interest to hold on to your money just so you know you’ll get it back in two-years.  After early gains, Spanish 10-year yields are back to 6.69% and Italy at 5.87%.  The data out of Europe this morning was factory orders which showed a 0.6% rise in May from April, but France and the Netherlands were weaker than expected.

Rains have fallen across the Dakotas in the last 12 hours, and continue to work East across both states this morning.  Totals so far look like a trace to possibly 0.25” with heavier amounts in the NE portion of both states.  Otherwise, additional rain fell across the Delta, putting the 4-day total at 0.75-3.0” in most areas.  5-day forecasted precip is showing continued rainsa cross the Delta with the northern tip of this system reaching up to S-IL/S-IN/OH and bringing anywhere from 0.50-1.50” in the heaviest areas.  ND and N-MN could also see more rain by the end of the weekend.  The 6-10 day models remain highly divergent with the American showing widespread rain across the Midwest, but the Euro limiting rains to the Delta/TN/KY with some chances in the far NW-Corn belt, but nothing organized.  Continue to stick with the euro until proven otherwise.  The 11-15 shows rains in the central Midwest, bringing rains to most corn belt areas.  Temps should remain above normal throughout the period with warmer temperatures in the upper-Midwest.

After the incredibly volatile session yesterday which saw prices hit lows and then rally slightly into the close, that momentum is carrying into the overnight and early morning session with corn up double digits, wheat up around 7-9c and soybeans posting very slight losses.  It looks clear the selloff was overdone yesterday, especially as the rumors Sec Vilsack was going to address the RFS mandate proved to be false, but the technical damage had already been done.  Fortunately, markets are focusing on the bullish fundamentals this morning.  A further correction shouldn’t be ruled out as these markets can easily set back further while keeping the uptrend in place, but these markets should remain supported by fund interest and eager end users to extend coverage on any big break.

Overnight headlines included Pakistan resuming wheat exports after almost a year as its grain becomes internationally competitive.  Small volume were sold for spot shipments to Malaysia and Indonesia.  13.0% milling wheat is being sold around $295-298/MT C&F.  Pressuring a bit to soybeans was China selling 390,090MT of soybeans from government reserves in an auction Thursday to sharply better demand according to CNGOIC.  The government sold 379,488MT at CNY 4,005 ($17.11/bu) in provinces with a heavy crush presence.  This is the function of the market: get China to sell its reserves down and stop buying US beans.  We’re not at that price yet.  Strategie Grains downwardly revised its EU 12/13 grain harvest by 2.4MMT to 278.8MMT.  Corn and wheat were both cut.

From Morocco we learn their wheat crop has dropped 40% y/y to 5.1MMT due to drought.  Imports are expected to pick up.  In tender results, Japan bought 131,379MT of US milling wheat from the US for Aug 21-Sept 20 shipment.  Our favorite investment bank ($GS) raised their price forecasts on corn to $6.90/bu, their wheat forecast to $7.70/bu and soybeans to $16.25 due to drought concerns.  Their corn yield estimate is now 143.5bpa.  There were 25 Chicago wheat re-deliveries overnight as well as 462 soybean oil.  Open interest changes during yesterday’s session included an increase of 17,070 corn, 16,440 beans, 2,120 meal and 2,370 oil.  Wheat was up 6,810.  Chinese beans were down 41c, meal down $13.10, oil off 122c, corn down 1.50c and wheat down 8.50c.  Paris Milling wheat is up 1.42%, Rapeseed down 0.88%, Canola down 0.83% and UK feed wheat is up 0.60%.

Call things better to begin with today as cooler heads prevail and the bullish fundamentals matter.  Rains this weekend will be falling in areas which could help the soybeans still, but questions have to be raised about the corn, and the WCB crops don’t look on tap for a soaking rain just as temperatures build back above 90 degrees.  Yesterday’s price action caught a lot of people off guard, so make sure you level marketed is where you want it based on your production prospects.

Trade as of 7:05

Corn up 11-14

Soy up 2-5

Wheat up 7-9

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Morning Note - From Country Hedging's Joel Fitch 7-12-2012

Good morning,

Markets are rebounding after yesterday’s report.  Again for the corn it felt like the USDA was being pretty realistic for what we know.  On the beans I think that they are underestimating old crop exports and could be underplaying new crop demand.  Little more bullish wheat news out of Russia as the Stavropol region is worse than previously estimated. 

Weather today is dropping some moisture in the Delta and up into Tennessee.  There could be light chances in IL, IN, and Kentucky, but Friday is the more likely chance to get anything.  It feels like it only really matters for the beans in a lot of locations.  The 1-5 and the 6-10 are still for above average temperatures and for limited chances of rain in the ECB.  The delta should be improving with the weather pattern. 

Estimates for the corn crop are now ranging between the high 130s and the low 140s.  As we continue to tighten the corn market I think that there is more potential demand to ration.  We traded a good portion of last year with a carryout of near 800 mb and traded below the current corn price. 

Corn spreads have become quite minimal with the tightening of the supply.  This market should invert shouldn’t it.  Especially for the western corn belt, you are going to have to manage with inverses or at least very limited carries.  Depending upon profitability of the ethanol industry corn should want to move East more than usual with Chicago Beyond and the river being a good market.

Export sales were good for old crop soybeans again, we just haven’t stopped demand at these prices and that suggests that new crop demand could be stay robust at these prices as well.  Corn sales were okay 173 tmt old/ 492 tmt new.  Wheat was 312, kinda poor. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

Morning Note from Country Hedging's Joel Fitch - USDA Report Recap

Below is from Country Hedging's Joel Fitch

It has a recap on the USDA report that was out this a.m.

Good morning,

Here is the quick and dirty from the report.  The expectations are located below.

Corn ending stocks were raised for old crop to 903 from 851 on a cut to exports of 50 mb.  That is the only change for old crop.  It increases carrying by 50 mb.  For new crop the USDA cut yield down to 146.0 and harvested acres to the expected 88.9 million acres.  Feed and residual was cut by 650 mb down to 4.8 bb still bigger than last year.  Ethanol was cut 100 mb to 4.900 bb and exports were cut down to 1.6 bb.  So they cut demand by 1,055 mb and ending stocks are 1,183 mb.  These demand numbers seem more realistic to me given the likely pricing of this crop. 

World ending stocks were dropped 21.7 mmt.  US is the only major change to production.  Domestic feed, domestic use, and exports fall. 

Bean ending stocks were lowered by 5 mb because exports were raised 5 mb.  This is quite surprising and seems far too small a gain in exports.  Ending stocks for new crop fell 10 mb to 130 mb.  Yield was lowered to 40.5, but the acres jumped as the June 30^th report indicated – even though this number is too big due to the drought.  Demand was reduced.  Crush was cut by 35 mb and exports were lowered by 115 mb.  This is probably possible because of the high prices we are achieving in beans.

World ending stocks fall 3 mmt to 55.66 mmt.  12/13 World production is down 4 mmt from last month with the US being the only major change.  Demand categories fall here as well.

Wheat ending stocks were raised for 11/12 by 15 mb.  Minor changes.  12/13 ending stocks were cut to 664 down 30 mb from last month.  Supply change is negligible, but demand is altered feed is cut 20 mb and exports are raised 50 mb to 1.200 bb.

World wheat ending stocks are projected down 3 mmt to 182.44 as production falls 4 mmt in Russia, 2 mmt in Kazhakstan.  Demand projections fall slightly with feed, domestic use, and exports being cut.

By class wheat shows ending stocks tighter in 12/13 for HRW at 266 mb, SRW at 143 mb, and white wheat at 60 mb.  Ending stocks are projected to loosen for 12/13 in HRS at 155 mb, and Durum at 40 mb.  HRW 20% stocks/use, HRS 33% stocks/use, SRW 28.5% stocks/use, White 21% stocks/use, Durum 37% stocks to use.

Overall, while these cuts seem realistic to the production for corn as well as the demand side I think that the USDA is saying that these prices are doing enough to ration demand at the current levels of estimated production.  Soybeans production is too high by 40 mb to 80 mb because of the drought and double crop acreage.  Demand is hard to know on beans.  Price typically rations demand, but with China being the only major demand and the US being the only major supplier it is hard to guess what happens.  We should be back to looking at weather. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

mid day update from Country Hedging's Chris Steinhoff 7-10-2012 day ahead of USDA report

Crude oil is down $1.00…US$ is 0.200 firmer…DJIA is  up 4 points…grains-can’t be up everyday

Corn---can’t be up everyday as traders think to tomorrow’s USDA and square up and take profits. Tomorrow report may be irrelevant as traders may not agree with USDA anyway….. Rain seems to stay 7 days out, and we now needed it last week.  Get to July 30 and rain will not make much of a difference and we will transition to a demand market. Markets are at the highs when news is at its worst…can news get much worse??? The US corn crop is smaller today than it was yesterday. Period…but we need to remember we have already rallied $2.00+…. So something is factored in. Hearing ethanol plants being told by management to cut grind 30% immediately. Talk of selling contracts back to elevators and no new DDG sales! Also hearing farmers on the fringes of the “new” corn belt realizing they can not grow dryland corn as weather doesn’t allow it…there was a reason the old timers grew wheat. Because the rain was Nov to May, Not may to July!!!!!!!!!!!!!!! Spreads are slightly weaker. We are beginning to see major signs of a demand slowdown. Farmgate offers now well above the market as many open orders have been achieved. Much speculation on the mandate and whether uncle sam ever considered what happens when the US sees a drought.

Soyabeans---world demand remains strong. Mainly China. US crusher watches beans go by door to the export market. Dryness hurts the beans to as beans are losing yield potential daily as well in many areas, but there remains time to still have a good crop. Where moisture allows there are still double crop beans being seeded, but those areas are scattered. Total planted/harvested acres may not be as high as predicted as summer dryness hurts the double crop option. New crop export book is large but then again there seems to be plenty of old crop book too yet to execute. SX:CZ is 2.14:1, so there is room for beans to run on the spread.

Wheat---SRW and HRW harvest moves fast as the crop is now 75+% in the bin. Spring wheat is coming on fast as warm and dry weather brings it early and harvest will be sooner than we think. Still has great potential but could use a few cooler temps and a shot of rain. MT has a few issues. MGEx is flat, KC and CME are carries…World still experiences a few production issues but Canada looks mostly OK and the US skated by without any major, major issues. Black Sea region has a weather issue as their production is still in question, which in turn brings into question their ability to export. USDA report tomorrow may not really mean much

***new crop train values are slashed as all the grain seems to be in the WCB and the RRs want this new grain to move to the PNW and the export market. Farmer selling is quiet and they are now bullish again…World has experienced drought in Russia, Ukraine, Argentina, S Brazil and other areas the past 12 months!!! Will the highs be seen in July????? Call if you need anything

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Overnight Highlights from Country Hedging's Tregg Cronin 7-10-2012

Below is overnight highlight's from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.050 at 83.111; NYMEX-WTI down $0.21 at $85.81; Brent Crude down $0.82 at $99.50; Heating Oil down $0.0060 at $2.7430; Fat cattle are weaker, feeders firmer and hogs softer; Gold up $7.40 at $1596.50; Copper down $0.0015 at $3.4300; The Euro and Franc are a hair weaker while all other major currencies are firmer; Coffee is the only weaker Soft commodity this morning; S&P’s are up 4.25 at 1353.50, Dow futures are up 52.00 at 12,737.00 and Treasuries are weaker.

World equity markets are trading firmer this morning after the Eurozone drew up a Spanish aid blueprint for €100 billion bank bailout, a deal which is expected to see the first €30bn from the eurozone’s €440bn rescue fund.  The bailout will come with conditions such as stress tests for 14 of Spain’s largest financial institutions.  Other news included Chinese export and import growth both slowing in June, signs China could still be heading for a hard landing.  Exports rose 11.3% y/y, down from 15.3% in May.  Imports were up 6.3%, half of May’s 12.7%.  China’s trade surplus was $31.7 billion.  The other big news headline was word of PFGBest’s trading accounts being frozen on ideas customer seg funds could have been mismanaged.  Still in the early going for this story.

Before getting to specific weather, the National Climatic Data Center said the first six months of 2012 were the warmest of any year going back to 1895.  Drought now covers more than half the contiguous 48 US states.  The national temperature was 52.9 degrees through June, or 4.5 above average.  Rains in the last 24 hours were confined to the southern plains and delta where many states received 0.10-0.50” with localized amounts of 1.0”.  Nothing in the main corn belt states received rain.  Showers continue to work across the southern plains, Delta and SE-US this AM.  5-day forecasted precip is showing 0.4-0.8” totals for the Dakotas, nothing for IA/NE/WI/MO/KS, but IN/OH could still see some 1.0”+ total amounts.  The heaviest rains will fall in LA/AR/MS/AL/TN/GA/SC/NC with 1.5-6.3” possible.  That rain in IN/OH would be welcome.  Overnight 6-10 day maps are keeping the door open for more storms in the ECB on one model but not the other.  The Dakotas will be quiet.  The 11-15 has lots of rain in the central Midwest but needs verification.

Grains are trading weaker on a bit of profit-taking, led by wheat as the story remains a row crop one.  Between what looks to be already factored in crop condition ratings, and the PFGBest brokerage mishandling of customer accounts, both seemed like good enough reasons to set back a bit overnight.  Weather remains the dominant factor, and there are a bit better rain chances at the end of this week and in the extended maps, but this has been the case for much of June and July so far to no avail.  We are still trying to “realize” how small this crop actually is, and it doesn’t appear we’ve done that yet.  Already this morning, some are talking of national yields in the 130’s.  Today could also see some additional de-risking in front of tomorrow’s USDA report which could be bearish.

Overnight headlines included several from China which said summer grain output would hit a record 129.95MMT, up 2.8% y/y.  Of course it is.  June soybean imports were up 31% y/y and 6% from May at 5.62MMT.  Jan-Jun imports totaled 29.05MMT, up 22.5%.  In exports news, South Korean flour mills bought 26,500MT of US wheat from STX for Sept 15-Oct 15 shipment.  The wheat included 8.5-9.5% soft white at $301/ton, 11.5% HRW at $314/ton and 14.0% DNS at $368/ton, all FOB.  Japan is tendering this week for 131,379MT of US-wheat for Aug-Sep shipment.  According to yesterday’s COT report, speculators increased bullish bets on commodities by the most in 2-years.  Ethanol prices rose to the highest level in 7-months to $2.504 yesterday, thanks to rallying corn prices.

Open interest changes yesterday were rather impressive in corn, up 34,100 contracts with fresh money pouring in as the market hit limit up.  Wheat was up 710 contracts, beans up 890, meal down 3,420 and soy oil up 3,880.  The soybean stat is a bit concerning as the 40-60c rally clearly saw big changes in ownership, possibly from the commercials to the specs.  There were 220 redeliveries in Chicago wheat overnight.  Chinese beans were down 10.25c, meal up $5.20, corn down 2.50c and wheat down 3.75c.  Paris Milling wheat is down 1.1%, UK feedwheat down 1.08%, Paris Rapeseed down 0.58% and Canola is down 0.24%.  Corn export basis backed off at both export fronts and at most ethanol plants yesterday as demand continues to wane.  I’ll detail the COT in this afternoon’s writeup.

Call things weaker in the early going, but don’t rule out two-sided trade today.  Our limit up move yesterday clearly priced in part of the 8% drop in corn conditions and the 5% drop in soybean conditions.  That doesn’t mean we’ve penciled in the smallest crop size as little rain is on tap this week.  Still, we’ve likely earned some more choppy trade at least.  Review % sold ahead of tomorrow and especially with this latest brokerage debacle getting going.  USDA releases their WASDE at 7:30 CDT time tomorrow morning.

Trade as of 7:00

Corn down 6-8

Soy down 8-10

Wheat down 8-15    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

What's now in store for the grain prices?

What's next is the for the grain prices is the question.

The answer.

Well to be honest I don't know the answer; I can give you a lot of different theories or possiblities but at the end of the day I don't know for sure what our grain prices will do.  There so many factors that make out guessing our prices nearly impossible.

So with that I will just point out some of the good and bad things I am seeing for grain prices; both bullish things and bearish things.

First off we are coming off the strongest 3 week rally ever for corn.  Now that is saying something.  First that is rally is powerful and that there is something behind it; but also that we are very overdone and we likely have started the rationing process in a hurry.  Also opens the door for a massive correction.

Just a few weeks ago before this rally started we had some ethanol plants talking about and idling some plants; and since then we have rally the most ever in a 3 week period.  

I should note that when I looked at a monthly chart the move is very simliar to last year's July - August move; which was followed up by a Sept move that took out the whole gain.

I think everyone knows what is behind this rally; but to sum it up it is weather and row crop yield.  Crop conditions have been dropping very hard each week with many comparisons made to the 1988 drought.

Balance sheet projections on corn have quickly move from the 1.8 billion bushel carryout that the USDA had in their June S & D report down to some talking yield low enough to leave virtually no carryout.

Here in lies some of our biggest risk for prices.  Has the drought news been built into the prices already?  How much higher can this news carry us?  First off if we have demand; which is a big if; there is really no limit how high we could go as the last person needing it could pay a very high price.  But back to the carryout the latest estimates I have seen for the Wed USDA Supply and Demand report are calling for a 600 million bushel reduction down to about 1.2 billion bushels on average for 2012-2013 ending stocks.

Based on the previous USDA reports I think we have some risk come Wed that the USDA still doesn't acknowledge that their 166 bu yield is out of whack.  I don't think anyone believe that they will once again leave corn yield unchanged with the declining conditions; but there is the chance they don't lower it nearly as much as the market thinks or the markets.

There is also the risk that if they do lower the corn yields that they lower the demand nearly as much.

I guess you can see that i am leaning towards a bearish USDA report because of the fact that the market is expecting so much.

Does it mean you should be selling?  Yes and No......It means that you should be comfortable because these grain prices could pay out a couple different ways and those could be huge moves.  

I don't think 10.00 corn or 10.00 wheat is a super strech today; but then again the end users that are losing money today might not agree with me.  There in lies another risk that our high prices curve demand faster then the supply has dropped.  Is it possible?

That i don't know for sure; but I think it is possible that the USDA curves demand nearly as much as they curve supply.

Bottom line is our markets have plenty of risk either direction; look at the US dollar which at calendar year highs.  As is corn.  Can both of them hold?  History has told us no that we can't have super strong grain prices with a strong US dollar.  

So what happens if come Wed we start seeing some forecasts changing for cooler weather with rains and we get a USDA report with a 1.5-1.8 billion bushel carryout?  Will the rains be too late if they ever do come?  Will the market believe a bearish USDA report should it happen?  What about if one is in the drought them self and are wondering if they went from 50% sold to 100% sold; what do you do know?

You find a way to get yourself comfortable.  Whether corn rallies another couple of dollars or gives up a couple of dollars.  Find a way to feel comfortable on what you have or haven't sold.  Generic things like making small sales, using re-ownership strategies like min price contracts or buying call options, or buying puts should work for some. But getting comfortable in grain marketing isn't the same for everyone.  So do your homework and decide what it is that you need to do depending on the various possibly outcomes and keep in mind that even though things look bullish today one of those outcomes has to be a possible bearish out come.  

In other words don't get yourself comfortable via being bullish because you know prices will go up.  Get yourself comfortable by doing the right marketing that you know you should.  If you need help or want suggestions feel free to give me a call.

Overnight Highlights 6-7-12 - from Country Hedging's Tregg Cronin

Below are the Overnight Highlight's from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.226 at 82.095; NYMEX-WTI up $0.78 at $85.70; Brent Crude up $0.30 at $100.94; Heating Oil up $0.0043 at $2.6760; Livestock markets are mostly firmer; Gold down $15.90 at $1616.90; Copper down $0.0015 at $3.3775 (but rallying); The Yen is weaker but all other major currencies are firmer; All of the softs are up, led by Cotton which is up 4.7% after being limit up yesterday; S&P’s are up 9.25 at 1324.75, Dow futures are up 60.00 at 12,479.00 and Treasuries are flat.

A host of economic data overnight with the most important being the People’s Bank of China moving to cut their benchmark interest rate by 25bp to 6.31% with their one-year deposit rate at 3.25%.  This is the first time China’s central bank has reduced rates since 2008.  This seems to be the responsible thing to do with growth still at 8.1% to prevent a harder economic slowdown than economists were forecasting.  Across our other pond, the Bank of England chose to leave its bond-buying program on hold and leave the key lending rate at a record low 0.5% where it has been since March 2009.  The decision was a close one with economists expecting the minutes of the meeting to show support for additional monetary easing.  Weekly jobless claims for the US at 7:30 CDT.

Rains in the last 24 hours were confined to N-TX and OK as well as some scattered showers in ND, W-SD and W-NE.  Radar returns this morning show the system in TX/OK as well as some rains working across SW-MN and ND.  Rains the next 5-days will finish up in TX, but also see 1-2” amounts fall across spring wheat areas of the US and Canada.  Overnight weather maps look to have a wetter touch this morning with the 6-10 still showing showers for a good swath of  the WCB.  This rain is expected to bring 0.50-0.80” with broad coverage Monday and Tuesday, although follow up rains later on in the week are being downplayed.  The 11-15 is putting rain in most of the upper-Midwest, although confidence is low.  70’s and 80’s should be the norm for Sunday to Friday, although heat is back by Sunday.

Grain markets are adding to their impressive gains from yesterday with additional strength this morning.  Interestingly enough, the soy complex is leading the way higher but seemed to do so around 4:00am, well before the news of China cutting interest rates hit newswires.  Basis is really firming, especially off the PNW where one major commercial elevator is thought to be caught short on some basis with limited supplies left in the country to cover it.  Corn basis is also getting hot with interior locations paying at or above record levels.  There are two schools of thought about remaining grain supplies in the country: 1) the farmer has the grain and is being very patient marketing it, or 2) he doesn’t have it and basis is reflecting it.  Both have implications for the June 29^th stocks reports.

The CNGOIC was out last night estimating June soybean imports at 6MMT, but also saying May and June imports likely exceeded 12MMT.  They are still forecasting crop year imports, which began on Oct 1, at 58MMT vs. the USDA at 56MMT.  In other export news, Japan bought 100,190MT of feed wheat and barley, and issued a tender for another 320,000MT for shipment by Sept. 30.  Taiwan bought 48,750MT of US milling wheat from Toepfer at prices ranging from $255.80-331.82/MT FOB.  Grades were DNS, HRW and WW.  In a state reserve auction, China sold just 13,902MT of soybeans out of a total of 600,000MT offered.  This is a big slow down from last week now that imported beans are near the same price, but domestic bean quality is much poorer due to the beans being from 2008.  South Korean flour mills are seeking 23,000MT of US origin milling wheat for Aug-Sep shipment.  Lastly, Japan bought 180,537MT of US, Canadian and Australian milling wheat.  The US share constituted 61,701MT while Canada sold 80,431MT.  Ukraine upped spring grain planted area by 17.1% thanks in large part to winter kill damage of wheat.  Much of the increased acres are thought to go to corn.

Open interest changes yesterday included wheat up 6,360, corn up 1,180, soybeans up 6,950, meal up 2,830 and oil up 3,570.  All of that is supportive given the firmer board yesterday.  Volumes look a bit light on the corn, but heavy on soybeans and wheat which again is a supportive input.  Chinese markets were mostly firmer last night with soybeans up 5.50c, meal up $5.50, oil up 47c, corn up 1.25c and wheat down 1.75c.  For the week, soybeans are up 29.50c so far.  There seems to be growing concern in the North China Plain, where they are harvesting wheat and grow a lot of their soybeans, about persistent dryness.  It is difficult to get an accurate assessment of Chinese growing conditions, but a forecast of record grain production for the 5^th straight year seems a bit of a stretch.

Call things better today given the friendly macro environment, the firm cash markets and tightening spreads.  Export sales this morning could offer a bit of pause because corn isn’t likely to best expectations.  We had no daily sales announcements, and basis hadn’t really began firming up prior to last Thursday’s cut off.  Next week could be a different story.  The other one to watch will be soybeans as week after week of more sales than needed will keep downward pressure on old crop soybean carryout estimates.

Trade as of 7:05

Corn up 4-7

Soy up 18-22

Wheat up 3-5      

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Grain Market Comments June 5th - Old Crop New Crop Corn Spreads wild; have you locked in basis?

The grain markets closed mixed to weaker today.

Old crop corn was about unchanged, but new crop corn was off 16 cents behind some moisture in some of the recent forecasts, soybeans where up 8-10 cents, KC wheat was off 17-20 cents, MPLS wheat was 12-14 cents lower, CBOT wheat was off 14-16 cents, equities where mixed to slightly firmer with the DOW up 26 points, crude was near unchanged, and the dollar was firmer with the cash index at 82.77.

Some better yield reports in KS for wheat harvest and better moisture forecasts helped the grains come under some pressure. 

Technically the Dec corn had a rather bad session; putting in an outside bearish day this helped pressure the July corn to close near unchanged after being stronger for much of the session.  Yesterday’s crop conditions that came in unchanged for corn didn’t help either as the market was expecting a decrease in conditions behind the weather we have had lately.

Helping keep the July contract firm is basis; which is very strong for old crop corn.  Buyers lack summer coverage still and the weakness in the board the past couple of weeks has slowed producer selling to about zero.  I would note that the spreads widening is a good sign of up front demand out pacing the up front supply but it is also a great risk that many have.  Sitting on product threw an inverse is more then costly.  Cash bids have around a dollar spread between old crop and new crop corn price; so if nothing else don’t forget to look at locking in the basis on the old crop corn at some point in the near future.  We do allow you to lock in the basis versus September or December contract also.  One other possibility is a min price contract.  Bottom line is that with old crop corn so tight; there is great potential; but with that great potential you have just huge risk.  If you need help managing it please give us a call; you don’t want to give up that big inverse.

Wheat basis remains steady and actually feels a little firmer as selling isn’t happening off the combine down south.  I wouldn’t say demand is robust by any means.  The fact that basis is holding in there despite it being gut slot harvest is a good sign; but not a great enough sign to get too bullish wheat.  Weather in Russia and the conditions across the world leave me slightly friendly the wheat market.

The outside markets have been on the stable side the past couple of days; yet our grains really haven’t done anything.  We blamed the outside markets for the fall apart the past couple of weeks as funds have been aggressive sellers; but despite the fact that the equities and US dollar really haven’t done anything the grains still struggled the past couple of days.  That in itself is not good and the fact that the corn crop conditions didn’t show a decline really caught people off guard today and unchanged crop conditions when rated very high isn’t what you would expect with all the dry and hot weather talk.

Watch for weather and the funds to continue to dictate price direction as we move forward.  With wheat harvest very near look for some local basis pressure as producers look to move product to empty bins.  This probably makes basis rallies hard to happen until we get threw wheat harvest.  This probably effects all of the grains as there just doesn’t seem to be enough demand to offset the supply that wants to move before wheat harvest.  Sunflowers are a great example; every day I get a couple producers calling to move product just to help get bins empty short term.

Depending on how much grain gets moved here in the short term things could be much different when producers get out of the have to move or have to sell mode.   But the fact that short term we are likely to struggle and the fact that outside markets are (should) be reminding us of 2008 price collapse tells me that proper risk management is still needed as we are still at rather profitable levels; so don’t get yourself in a have to sell situation.

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

Thanks 

Closing Comments- Wheat Charts 5-29-2012

The grain markets closed mixed today; with beans holding in there while corn and wheat had plenty of downside pressure as money flow continues to hit the exit door.

Old crop corn was 16 cents, new crop corn was off 4 cents, beans where up 5 cents, KC wheat was 22 lower,  MPLS wheat was off 15 cents, CBOT wheat was off 23 cents, equities where firmer with the DOW up 126 points, crude near unchanged, and the US dollar near unchanged.

After our markets closed we did have crop conditions that came out.  They showed a decline in conditions; perhaps a little more then what was expected.  Here is Country Hedging’s link to an the updated crop progress and conditions report. 

http://www.countryhedging.com/media/Research/Archive/2012_05_29Crop Progress5-29-12.pdf

The big highlight was a 5 % decrease in the G/E corn crop conditions; down to 72% in the G/E.  Now it is really early and history has shown us that these conditions don’t always give us the yield we are expecting; but it is something the market will watch.  Bottom line is it could give us a chance that we have seen the biggest crop if conditions continue to go backward.  More important then this afternoon’s report will be the weather as we go forward.  Will the crop get bigger or smaller then the present USDA yield of 166 per bushel?

Corn price outlook really should be that simple; if we get a big yield or see an increasing yield trend we probably see prices trend lower.  If the yield gets smaller and macro’s, outside markets, or some Black Swan event don’t cause demand to curve the price outlook with smaller supply should be firmer. 

I would say that longer term to get bullish one much prefers demand over supply destruction as supply destruction has the ability to curve demand a little too much.  I would reference spring wheat this past year as case in point what can happen when we see smaller supply; as the spring wheat price really didn’t do much of anything as we simply failed to have the demand despite the smaller crop and less bushels.

The millet market has firmed up lately; we have had several buyers looking for offers.  Please give us a call if you would like us to offer some out.  It is almost starting to feel like buyers are realizing that millet might not have much for acres.  Not sure if they are in panic mode or not.  But they are looking for millet so don’t be afraid to have your offers out there.

It also felt like the sunflowers had a little upbeat today.  Perhaps it has something to do with a lack of coverage and the bean oil market stabilizing the past few sessions? 

The sunflower market and the old crop corn market really look like Mexican Standoff’s to me; lots of upside potential should the cards fall one way but lots of downside direction should the cards fall another way.  I guess most of the grain prices are like this; which is why practicing good risk management is simply the correct thing to do. 

You can find hundreds of people that can give you hundreds of reasons for corn price, wheat price, or grain prices in general to go up or to go down.  But not one of them can ever accurately predict on a day to day basis what it will do.  Sure sometimes guys will look like they know what is going to happen and plenty of times analysts or farm advisors get it right; but plenty of times they also get it wrong.  They too are guilty of selling fear and buying greed.  With this known the only thing I can preach is to practice good risk management in your grain marketing in a way that leaves you comfortable whether grain prices are going up, going down, or doing nothing at all.

Different things get different people comfortable.  Not everyone has the same goals or needs; sometimes making a good profitable sale with get a producer comfortable while other times just having some put protection might be what it is for some.  Bottom line in grain marketing get yourself where you want to be.  If you need help please feel free to give me our one of us in our grain department a call.

Attached are some wheat charts.

Thanks