Opening Comments Grains for 5-14-2012

Markets are called mixed this a.m. behind continued soybean fund liquidation, a choppy overnight session for wheat and corn, and rather weak outside markets.

In the overnight session corn was unchanged on the July contract, new crop Dec corn was up 2, old crop beans were down 25 cents, new crop beans were down 17 cents, KC wheat was unchanged, MPLS wheat was up ½ of a cent, and CBOT wheat was down 3.  At 9:10 outside markets are showing risk off and liquidation presently the equities are weaker with the DOW off 140 points, crude down a little over 2.00 a barrel, the US dollar up nearly 400 at 80.654 on the cash index, and gold is off about 28 an ounce.

Scary outside markets this a.m. and fund liquidation on beans is the story.  The cash story for grains hasn’t changed much; it is still very hard to buy corn and basis is still very strong.  May contracts go off the board today; but in the overnight May corn was up 16 cents. 

With the latest USDA report out of the way we should really turn into a weather type of market.  Good weather probably causes our prices to continue to erode and weather that stresses our crops maybe gives us a weather scare rally at some point.  

Beans showing weakness really doesn’t have much to do with the fundamentals as the last USDA report was not bearish.  But it shows us how important money flow is and the fact that everyone can’t be bullish and long as eventually we ran out of buyers.  Now longer term a price break that helps demand isn’t the worst thing in the world and it maybe gives us a chance to bounce later. 

Until weather or some other story gives the funds a reason to buy look for grains to have plenty of willing sellers on the bounces; as the mentality has really changed to that of sell the rally.  The outside markets haven’t helped us at all for a while either and memories from 2008 are still fresh and the reality is that with perfect weather and weak outside markets a similar fate could be in store.

Please give us a call if you need any help with your marketing plan.

Thanks

open grain market comments and market thoughts for April 14th; can the grain markets continue bounce that they see middle of the session?

Markets are called weaker this a.m. behind a weaker overnight session as well as mixed outside markets and decent export sales.

In the overnight session CBOT wheat was down 15, MPLS wheat was 12-13 lower, KC wheat was down 11, corn was 6-9 cents lower, and beans where off 12.  At 9:25 outside markets have the US dollar softer, equities are softer with the DOW down 43 points, and crude is up 60 cents a barrel.

Money in and money out was the comment I received from my main contact at Country Hedging.  As overall grain fundamentals still appear to be friendly; weather simply hasn’t allowed great growing in the south for wheat nor has it allowed much planting in the North.  Weather for SRW wheat might be a different story but our main crop in the US is HRW so overall weather has to be considered friendly for wheat prices because it should be creating some fear that our fundamentals could be changing. 

Along those same lines weather isn’t exactly getting more corn planted in a timely manner while we have yet to see much if any signs of old crop demand falling.  Demand has been steady to good and it is almost like corn buyers have yet to blink.

The only thing that fundamentally I have liked to see has been the old crop new crop spread price action for corn and beans; whereas in the past several sessions we have seen old crop start to gain on new crop and that would be saying a lack of concern for nearby demand. 

I did fail to get these comments out before the open and now around midsession we have grains back in line with where the overnight left off at.  We did manage to see most of our grains open weaker but quickly bounce towards positive or unchanged; then we went under another round of pressure and hopefully made our lows.  Now at 11:30 we have spring wheat down 8, CBOT wheat off 9, KC wheat is down 16, New Crop corn is up 5, old crop corn is down 3-4, and beans are down 7-9 cents.  Equities are back to near unchanged with the DOW only off 3 points, the US dollar is still under pressure, and crude oil is up 1.30 a barrel.

It would be great for the charts if our grains can manage to turn things around even more and build on the momentum they have been building the past ½ hour or so; as example CBOT wheat is 10-11 cents off of it’s lows and an unchanged type of day would leave charts looking a little like perhaps the recent downtrend is at least losing it’s steam.

I should mentioned that incoming calls have slowed down with producers being very busy in the fields and that along with decent demand has help basis firm up; generically speaking I would say basis is firmer for nearly all of the grains.

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

For those of you following Neutral Nick on the grainmarketingsplans.blogspot.com he did update his position yesterday here is the link http://grainmarketingplans.blogspot.com/2011/04/neutral-nick-update-in-his-quest-to-get.html or http://grainmarketingplans.blogspot.com/

Thanks