Markets are called mixed to weaker this a.m.; looks like a global risk off type of day with the Chinese stock market down 5.3%. Also seeing the rain makes grain comment this a.m.
In the overnight session most of the grains gapped lower and other then July soybeans didn’t manage to even get back to unchanged; when the overnight session ended July corn was down 8 cents, December corn was down 13 cents, KC wheat was down 7 cents, MPLS wheat was down a penny, CBOT wheat was down 9 cents, July soybeans down a nickel, August soybeans down a dime, and November soybeans were down 14 cents. At 8:20 it doesn’t look like the outside markets are going to help us any with the US dollar stronger at 82.718 on the cash index, crude is down 45 cents a barrel at $93.25, gold is off 5 bucks an ounce, and the stock market futures are pointing towards a lower start of about 120 points on the DOW.
Rain makes grain? Or the risk off that lead to our gap lower opening last night? Maybe both. Weather looks ideal in some areas; but many agronomists are not as bullish on the crop as some of the traders seem to be. Many areas lack heat while some areas actually need a drink.
Bottom line is weather is a mixed big; but the headline looks to rain makes grain. And with the outside markets struggling the demand question pops up fairly easily.
This afternoon we will have crop conditions and planting. Most are looking for the crop ratings to improve across the board for corn, spring wheat, and soybeans. That trend over the next few weeks will be important; if our crop looks to be getting bigger in the eyes of the traders.
Big news will be later this week in the form of the USDA report. I haven’t seen many estimates for this yet.
I seen this comment from a wire this a.m. “ A Tokyo based company expects CBOT corn futures to fall below $5.00 this week, and a large South Korean feed miller stated it has no plans for a corn tender this week because they expect the market to move lower.”
In my opinion producers are very undersold for new crop corn; but equally end users are very uncovered. When end users say no thanks I think the thing is going lower its like producers saying no thanks I think the thing is going higher. Both are typically wrong moves; end users should buy at good value and producers should sell on high prices. It doesn’t mean they should buy all their needs or a producers should sell all of their grain. But both should practice good risk management; when they don’t it helps add to the volatile marketplace.
Overall we need to watch some of the info this week as some of the unknowns get answered. But we also really have to watch the outside markets. The DOW down a little here and there is ok for the grains; but a massive economic meltdown is not. A very fine line.
Please give us a call if there is anything we can do for you.
Jeremey Frost
Grain Merchandiser
Midwest Cooperatives
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