Grain Market Comments 6-7-2012

Markets closed firmer across the board today.

Old crop corn ended up 8 cents firmer, new crop corn was 17 cents higher, beans where 42 cents better on both old and new crop, KC wheat was 13-14 higher at closing time; but the last trade was trade was only 6-7 higher, MPLS wheat was up 19-23 cents, CBOT wheat was up 18, the US dollar was about unchanged leaving a near Doji on the charts with the cash index at 82.260, gold got hammered down $46 an ounce, and crude was also near unchanged at 84.82.

Overall a good day for the grains; but I didn’t care for the outside markets and how they closed.  The US dollar left a near Doji and equities where well off of their highs with the Nasdaq down nearly a ½ of a percent.  It made me ask the question if the price action on the outside markets the past couple of days was just a correction before they resume their “risk off” type of attitude.  I posted a couple US dollar charts at http://grainmarketingplans.blogspot.com/2012/06/us-dollar-cash-index-chart-6-7-2012.html

Basis remains on the firm side for most of the grains.  I would note that we are seeing product needing to move locally and that could cause some basis weakness before wheat harvest as producers and elevators look to make room for wheat harvest.

The outside market strength helped our markets today but so did the weather.  There is some moisture forecasted for early next week and if it happens we could see a little pull back; but right now everyone is talking about the hit and miss dry weather in many areas with some talking decreased production.

Next week we will have a USDA report that will have updated Supply and Demand numbers for both the old crop grain balance sheets as well as the new crop balance sheets.  Most of the estimates I am seeing are for a bullish report with decreased stocks.  This could open some risk if the USDA doesn’t agree with the estimates and prints bullish numbers.  After all crop conditions for corn and early emergence are not exactly that of a decreasing yield; but that of an increasing yield; yet I don’t see many estimates looking for corn, wheat, or bean carryout increases from last month.

The average trade estimates that I have seen for corn is down 30 million bushels on old crop stocks with new crop carryout estimated nearly 90 million less than the last USDA report.  Beans and wheat have small decreases estimated but nothing major.

Sunflower prices have firmed up the past couple of days with the firm bean market.  Feels like buyers are getting close to scrambling for coverage as producers become less willing sellers. 

It is now past 5:00 p.m. and the markets have opened back up; we presently have July KC wheat off about 7 cents, CBOT wheat off about 7 cents, MPLS off about a penny, beans down about a nickel, and corn off 2-3 cents while crude is off over a dollar a barrel.

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

Grain Market Comments Day ahead of USDA Report

Grain Markets closed mixed to weaker the day before the monthly USDA Supply and Demand report.

Old crop corn was off 6 cents, new crop was off a dime but traded another 3 cents lower at the 2:00 time, KC wheat was off 3 cents, MPLS wheat had nearby up 10 cents, Sept MPLS was up 2, CBOT wheat was unchanged, equities and outside markets reversed and closed down very hard from last night’s highs; the DOW was off 143 points, crude off 2.50 which is over 5.00 a barrel off of it’s highs, and the US dollar near unchanged at 82.60 on the cash index well off of the 81.72 lows it had.

Very disappointing is how I would describe today’s price action; starting with the outside markets as it looks like the market finally got a bail out that it didn’t like.  Doesn’t happen very often; but probably due in my opinion as bail outs with fake money might not be the answer.  Bottom line we saw the US dollar make a new low for the past couple of weeks; but turn around and close positive leaving a bullish key reversal on the charts.  July beans left a near doji; but also made a new high for the recent move and closed lower another technical key reversal on the charts.  Crude over 5.00 was good for the charts either; not a key reversal; but not anything good for the technical picture.

Now perhaps we get a bullish report in the a.m. and our outside markets recover behind the latest bail out overseas; but I think today’s price action should really remind US to practice good risk management when making our grain marketing decisions.  December corn didn’t trade positive at all today or last night and I seen yesterday afternoon where some called it 10-15 firmer for Sunday night’s session just because of the hot and dry weather that many are having.  Yet a little system that left a little coverage for parts of Iowa had new crop corn under pressure all day.

So keep in mind that even if everyone you know or everything you read says that the market should or will go up; the market is the market and it doesn’t have and seldom does listen.  Some say it is the markets job to do as much damage to as many as possible.  Now this might not be true; but our grain market prices really do seem to move in an unpredictable pattern.

This afternoon we had crop conditions out and we seen a big decrease with G/E conditions falling to 66% down from last week’s 72%.  Perhaps a little bit more then expected; maybe it helps open the possibility that we see a decrease in yield on the USDA supply and demand report that is out in the a.m. 

Spring wheat conditions decreased by 3% in the G/E and soybean conditions decreased by 5%. 

Below are the estimate for tomorrow’s USDA report. 

The big numbers will be corn carryout; I think the others are still followers; but the USDA could also throw out a curve ball at any time.

Overall you can see that for present marketing year the trade is looking for stock decreases for wheat, corn, and beans.  When they are looking for a bullish report and we get a neutral report it could open the doors for negative price action.

The same can be said for next year’s ending stocks; once again the trade estimates are looking for decreases in carryout versus the May numbers; over 100 million bushels for corn.  Which could happen and based on some comments production and yield could be a lot lower then what is forecasted as many are very dry.  But before this afternoon’s crop conditions report one might have mentioned the fact that the USDA could have left corn yield unchanged or even took the yield number bigger on the same ideas they had in the May crop report.  That we have a crop in nice and early with good emergence and good crop conditions as reported weekly. 

2011/12 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	0.821	0.688 - 0.901	0.851
Soybeans	?	0.189	0.130 - 0.218	0.210
Wheat	?	0.753	0.727 - 0.775	0.768

2012/13 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	1.750	1.223 - 1.950	1.881
Soybeans	?	0.143	0.052 - 0.220	0.145
Wheat	?	0.714	0.647 - 0.772	0.735

2011/2012 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	127.630	126.000 - 128.800	127.560
Soybeans	?	52.090	51.000 - 53.000	53.240
Wheat	?	197.124	196.000 - 198.835	197.030

2012-2013 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	149.745	145.000 - 154.000	152.340
Soybeans	?	58.140	55.700 - 62.000	58.070
Wheat	?	184.791	180.800 - 190.674	188.830

I think that we can all find plenty of reasons for the numbers to be much more bullish the then average trade estimate; but we need to realize that there is also the chance that the numbers come in more bearish or simply come in not as bullish as the market is expecting; plus I don’t know how anyone can be super bullish the overall economic picture; 2008 has to be in the back of one’s mind.  One thing that should be at the top of the bearish list has to be old crop corn export shipments; they have been poor well below what is needed on a per week basis to meet present USDA projections.  Today’s corn shipments where 17 million bushels which is nearly 20 million below what is needed on a per week basis.

It might be a little late to protect one from the crop report in the a.m. but it isn’t too late to stay aggressive or pro-active and put yourself in a good comfortable spot for your grain marketing.  If you need help writing a grain marketing plan please give us a call.

Don’t forget that the markets will be open tomorrow when the report comes out; this could make things a little more volatile than in the past?

Thanks

Market Comments - 7-23-2012 - Key Reversals on the Charts? Top in for Grains?

The grain markets closed weaker today behind a very volatile trading session; lead weaker by beans, some wetter forecasts, and weak outside markets.

Corn closed down 10 cents, beans where off 64 cents after trading limit down at one point during the session, KC wheat was off about 27 cents, MPLS off 26, and CBOT wheat was down 31.  Outside markets had crude down over 3.50 a barrel, gold off 7.00 an ounce, the equity markets weaker with the DOW down 101 points, and the US dollar made new calendar year highs today.

So was today just a pause before going higher on the grains? Or was today it?

I don’t know and as always all I can really preach is good risk management and doing things that make one comfortable whether our markets go up, go down, or chop around sideways. 

The market has left us some different clues as to what the future may hold; but we are not going to be able to outguess with all of the factors effecting prices on a consistent basis; nor do we recommend anyone trying to out guess the market; after all that is why it is called the market and is a price discovery system; a very volatile one at times; but nonetheless a price discovery system.

Some of the clues the market left today are both bullish and bearish.  The bullish side of things; is the fact that each day our crop has got smaller and for many areas it is too late for some of the crops.  Yield estimates for corn are falling each day by virtually everyone in nearly every area.  So just because supply is so unknown and we have previously built up such strong demand prices potentially have no limit as to where they could go.

So there is the most bullish thing we have; the unknown factor or fear of not enough supply factor.  We do have to have our prices get to the spot where end users are not using the same amount they would have if our prices where say 5.00 on Dec corn; as we simply don’t have enough product to meet the “normal” demand. 

Until we really can put a solid figure on supply it is hard to determine if we have curved enough demand and until that happens many in the industry feel the only place to go is up.  Goldman Stachs had a corn price target of 9.00 today and many have been talking about 10.00 or higher corn. 

These projections hitting the headlines are also one of the reasons to be a little cautious; and lead to some of the bearish clues we have seen.  Typically when Wall Street starts talking about prices going higher the top is soon; after all take 2008 and crude oil when it was near 150; I think nearly all the forecasts where for 200 crude; not 30ish like it happened to be just several months later.  Everyone get’s bullish at the top as that is when all of the bullish information is known; but what also happens is there comes a spot when you need to feed the bull so to speak or when everyone that has bought or sold a market already has.

A couple technical red flags if you will did happen today; Dec corn traded to a new high of 8.00 and closed lower leaving an outside bearish day along with key reversal as it touched the 8.00 level that capped the market last year as well as in 2008.  Some of the wheat markets and their charts also left key reversals and outside bearish days.  The key reversal is when we make new highs for the move and close lower and the outside bearish day is when we take out the previous sessions high’s and low’s while closing lower.  Both strong technical signals that we perhaps reversed. 

Another bearish warning sign has to be demand; most corn bids rolled to the Dec at no spread.  I still have ethanol plants trying to sell me back corn as they have slowed their grind.  The profit portion for corn end users isn’t exactly great as no one can make much if anything at these levels.   Does it mean we can’t go higher; no but I don’t see a picture in my mind that doesn’t involve ethanol plants going either belly up or at the very least shutting down for an extended period of time.  Which is scary because we could very easily curve demand more then we have cut supply.  I doubt it; but very possible and historically it wouldn’t be a first.

The US dollar making high’s for the year after gapping higher on Sunday night is also a little caution flag for the grains.

Bottom line is continue to get yourself in a comfortable situation whether or markets go up, go down, or chop around.

If you need some help with your risk management please feel free to give us a call.

Thanks

Closing Comments 11-19-12

Markets closed firmer today behind supportive outside markets.

Corn lead the way higher up 12 cents, beans were up 12, KC wheat was unchanged, MPLS wheat was up ½ cent, CBOT wheat was up 4, equities where firmer with the DOW up 208 points, crude up over 2.00 a barrel, and the US Dollar was weaker with the cash index at 80.852.

A nice little follow threw bounce for most of the grains following the mini bounce the grains had off of the lows from Friday.  Corn and beans started firm last night and stayed firm most of the session with corn leading the way.  Wheat didn’t seem to want follow despite the very bad conditions; this afternoon we had crop progress come out with a  2 % decline.

Wheat not following could be due to the technical weakness seen late last week as it broke support trading to new lows for the past several months.  Perhaps one positive could be the fact that wheat didn’t have huge follow through selling.

Export shipments came out this a.m. and the same story continued; poor for corn and wheat while very strong for beans.   Corn came in at 14.4 million bushels nearly 10 million less than they need per week to meet current USDA projections.  Wheat about ½ of what it needs on a per week basis coming in at 11.1 million.  While beans came in at 62 million nearly 3 times what we need on a per week basis to meet current USDA projections.

Look for markets to be a little on the slow side as we head into the holidays.  But that doesn’t mean they will be as tame as perhaps they should; but do look for them to be a little thin.

Basis feels a little firmer for all of the grains as producer movement is rather slow.  Many producers are very bulled up on prices; perhaps they should be but the fiscal cliff situation and outside markets in general should remind us that we never know if or when we will have another 2008 type of market.  So don’t be afraid to pull a little risk off the table with all of the unknowns we have.

As mentioned above wheat conditions continue to decline; I believe the worst on record for this time of the year.  But that still hasn’t lead to any new export business coming to the US; nor did it help wheat prices bounce today.  The market feels that the wheat crop isn’t made or broken in the fall; and that itself is correct; but the lack of emergence is rather scary.  But if you ask many advisor’s or analysts what comment is really needed for a bull market you will probably get the answer strong demand.  So far we lack that demand; and until that changes I don’t want to get too bulled up just because I look in our trade area and see a horrible dry situation.  A lack of supply is a good start of a bounce for prices; but it doesn’t create demand; longer term we need to see demand.  In marketing I think one needs to keep in mind that we are still a little high priced and not getting the business needed; so on a global front we are still too high priced.

The birdseed business remains slow with buyers showing very little interest.  I did talk to a couple guys today that indicated orders seem to pick up a little; but they were not sure if that was just pre-holiday ordering versus demand pickup.

One announcement; this week’s MWC Marketing Hour Round Table meeting will be on Tuesday at 3:30 in Onida due to the Thanksgiving Holiday.  Also MWC will be closed on Friday; if anyone is looking to do any marketing I will be available on my cell phone at 605-295-3100 as grain markets are open for a couple hours Friday.

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

Closing comments - Grains 12-3-12

Markets closed mixed today despite the firmer start this a.m.

Corn was up 1-2 cents, KC wheat was off 7, MPLS wheat off 5, CBOT wheat off 3, soybeans up 15, the DOW was down 60 points, crude was unchanged, and the US dollar ended softer.

Rather disappointing day for wheat today; as we finally got some export business; yet we sold off with KC wheat closing 17 cents off of it’s highs.  Not a good day when you get good news yet can’t close firmer.  There is an old saying sometimes it’s what the market can’t do.  Bottom line I didn’t like the price action for wheat at all today.  Does that mean the bottom will fall out of it…….no.  But today has to be a rather negative red flag.  I think that great potential remains for wheat; but right now all I see is great potential.  We need to have much more demand and some of that demand has to be for milling wheat.

The other thing we have to watch out for is if more demand comes; will it trade like old news.  The market has been talking about the fact that the US is the only wheat game left in town for some time.  So will exports be a big enough headline news to have our markets rally? 

One thing that I don’t care for is the fact that soybeans recently traded down to their May highs; while wheat is still a good 1.25 to 1.50 above it’s early spring highs.  Maybe that means soybeans have got too cheap recently; but it also should tell us despite wheat’s horrible crop condition there remains plenty of price risk.  After all look at what happen to beans; great demand yet a huge sell off.  So even though I don’t think wheat will sell off and have the bottom fall out of it; we need to realize that these price levels do have downside risk.  After all today we got export news and sold off; perhaps the market is tired of this news.  Perhaps to really rally we need a new fresh piece of news for the bulls????

Bottom line make sure that you are comfortable in your marketing as today’s price action should remind us that the futures market as well as the funds have their own minds.

We did have export shipments out this a.m. and the same theme continued; great for beans over 50 million; horrible for corn under 10 million; and poor for wheat around 14 million.  Beans 2-3 times what we need on a per week basis while corn and wheat remain 1/3 to 2/3 of what we need on a per week basis to hit current USDA Projections.

As for USDA reports; we will have one next week Tuesday; but most don’t expect major changes until we get to the Jan report; which will include final production as well as quarterly stocks.

Weather in parts of Argentina remains too wet to allow them to prevent planting soybeans.  But that also means some areas have very good moisture profiles.

Basis felt a little defensive today for all of the grains.  Lots of applications happening with the start of the month.  Railroads (at least locally) are not having much for issues as some cars are actually coming early.  Plus no winter to speak of hasn’t exactly slowed down the rail like it typically does this time of the year.

Weather also hasn’t helped out any birdseed demand.  Business remains on the slow side; I have seen a few orders for cars before Christmas but no real uptick in demand.  Producer selling is soft and bean oil complex is adding some support but the birdseed sunflower market is no run away.  I would say the market isn’t super deep; I don’t think a lot of pounds can be bought cheap; yet I don’t think bids would stand in there even at current levels for tons of pounds either.

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wednesday’s at 3:30.  Also make sure to mark your calendars for Dec 19^thand Dec 20^th for our marketing meetings in Philip and Pierre where we will have Tregg Cronin and Kevin Van Trump speaking.

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

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Closing Comments 12-4-12

Markets closed mixed today in a rather choppy quiet session.

Corn closed down 3- to up 2 with the deferred months gaining on the nearby, beans closed up 2 nearly 20 cents off of the lows, KC wheat was off 4, MPLS wheat was off 3, CBOT wheat was off 4, DOW was off 13, crude was down 80 cents, Gold was off over 20.00 an ounce, and the dollar was weaker.

Not bad price action at all for beans and even wheat and corn bounced a little bit off of the lows; but still disappointing compared to where the markets where at one time.  Not much to really blame the weakness on today; but it was negative to see spreads work wider; mainly in corn.  As spreads work wider it isn’t exactly strong demand sign.

A little weakness came from Taiwan buying Brazilian corn; from what I heard 60 cents a bushel cheaper then US corn.  Basis is defensive a little bit today as it just seems like there is a hair too much corn north of us that is flowing down to our typical buyers cheaper then what local guys are willing to sell for.  Ethanol profitability probably doesn’t help this at all.  Tomorrow we should have the weekly ethanol numbers out; we really need to stay above what we need on a per week basis to meet current USDA forecast because seasonally we usually see a nice slow down in the summer as plants due maintenance and there just isn’t enough corn to source cheap enough.  That in itself is bullish but it also can turn bearish in a hurry when you end up curbing demand.

Not a lot of new news for direction this time of year.  We should focus on weather in South America, demand, and the funds.

 Presently weather isn’t perfect in South America but I don’t think it is a bull story either.  Only potential thing I have heard about is too much water leading to weak stand’s that could cause yield drop should we get hot and dry.  Weather is supportive prices in the US as it remains dry everywhere but that is and has been old news for some time.

Demand side of things is mixed; corn demand isn’t anything special as end user profitability struggles and we just are not in the export market.  Wheat you could say demand has picked up; but not really for milling quality wheat as we simply are not getting any HRW export business to speak of.  Soybeans have had strong demand; but enough to push us back to the previous highs?  It doesn’t seem like it right now.

The funds don’t seem to be playing our game right now; more are worried about possible tax implications and the fiscal cliff then anything so it seems like money is an outflow from investments and grains in particular.  I have said many times if we are going to rally we need the funds involved and for them to get involve we need good headline story. 

The headline story isn’t here today; could it be in the next few weeks or months?  Sure; but today it isn’t here.  I think we all can think of plenty of possibilities that could be that headline such as a bullish Jan USDA report, strong demand, continued wheat production problems, or continued dry weather.  Plus a hundred other things.  But there is also another hundred negative things that could happen.

One thing that has stuck out to me the past couple of weeks is volatility in options in our market place.  Volatility is extremely low; meaning options are fairly cheap.  So perhaps now isn’t the worst time to consider getting some protection.  Volatility for some of the grains has dropped as much as 20%; which means options are cheap.  So perhaps now isn’t the worst time to consider protection some of bad possibilities that are out there while yet looking for higher prices.

If we seen volatility jump 10% most options would increase in value dramatically.  As example an at the money put option would cost nearly 14 cents more for March Corn, 15 cents more for March wheat, and 26 cents more for March soybeans.  While puts 50 cents below the money would be double the cost for both corn and wheat while a March 14 bean put would increase by 25 cents.  Bottom line is I think the market is providing an opportunity to make a good business decision and that is getting some rather cheap protection.  Most ag options are seeing volatility as low as they have for nearly 10 years. 

If you need help looking at what protection might fit best for you and your operation give us a call; keep in mind we do offer CHS Hedging services.  Keep in mind that the above option talk might not be the right move for everyone; buying a put option would be a good move for someone that is nervous of the fiscal cliff, nervous on corn prices because of the lack of ethanol profitability, or nervous for prices in general; yet they really don’t want to sell.  In the case where one doesn’t want to sell yet wants protection buying a put option can be a way to help lock in a good min price level; another option is the simple min price contract.  To see which tool might make most sense for you check out presentation from 2012 Ag Horizon’s at http://grainmarketingplans.blogspot.com/2012/11/tools-and-considerations-in-grain.html

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wednesday’s at 3:30.  Also make sure to mark your calendars for Dec 19^th and Dec 20^th for our marketing meetings in Philip and Pierre where we will have Tregg Cronin and Kevin Van Trump speaking.

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

closing grain market comments 12-17-2012 - grains close weaker - beans leave doji on charts - Van Trump & Cronin Speaking at 2012 Grain Marketing Seminar

Markets closed mixed to weaker today after being slightly firmer this a.m.

Corn closed down 6-7 cents, beans closed unchanged, KC wheat was off 8 cents, MPLS wheat was down 7, CBOT wheat was off 6, the US dollar is near unchanged with the cash index at 79.560, crude is up about 60 cents, and the equity markets closed firmer with the DOW up 100 points.

Rather poor performance for the grains today; before the 9:30 bell most of the grains where slightly positive; but once the pit opened wheat came under pressure and then corn followed to the extent that beans closed about 13 cents off of their highs leaving a doji on the charts.  The doji has to be considered a warning sign when you consider beans are now over 1.25 off of their lows from about a month ago.

Today was really a lack luster news day for the grains; which we should expect more of as we move into the end of the year.  The things that will drive us should be demand news, weather (mainly in South America but here in parts of the US as well), macro events and money flow by the funds(fiscal cliff).  The next major report and probable fundamental market changer will be the USDA report on Jan 11^th.  I don’t know that I would look for the grains to be quiet; but I would look for our markets to be thin as we go into the holidays.  Many producers, buyers, and other participates will be in holiday mode for the next couple of weeks. 

Wheat is very over done on the downside; yet we still are not seeing any HRW export business come our way; we really need to find some export demand for our milling quality wheat and until we do the horrible conditions that we presently have with our wheat crop will likely take a back seat.  I have said many times I think wheat has ton’s of potential and I have noticed plenty talking about the 2008 wheat market.  But until we have some demand there is really no comparison.  I remember in 2008 when no one had any wheat left and when we where shipping train after train to the export market.  We have yet to ship a train this year to the export market.  In 2007-2008 we shipped train after train down to the Gulf and later in 2008 the mill market really had to pay up. 

As mentioned news was rather light and likely will be; but we did have export inspections out this a.m.

Corn came in at 15.01; which was slightly above trade estimates but still about 10 million short of what we need on a per week basis to meet current USDA projections.

Beans had shipments of 37 million bushels; which were the smallest since September and below estimates but still well above what we need on a per week basis.  So far we have 40% more shipped this year than a year ago.

Wheat shipments came in a t16.4 million bushel which was the best number we had seen in several weeks; but still short of the nearly 22 million bushels we need per week to meet current projection.

Basis is steady for most of the grains; but I also don’t see many end users looking very aggressively other then bean buyers.  I do get some calls from brokers for corn and wheat from time to time but not much interest from the ethanol plants nor the mills.  Birdseed buyers also look to be very quiet; but orders have picked up.

Railroads are not slowing down supply either which doesn’t help out basis. 

To get basis running we probably need to see some export demand to keep our domestic buyers honest.  On the flip side with producer selling limited to a few bushels to keep the tax man happy I don’t think end users could buy anything without a big jump in the board or a big basis push.  Bottom line is it is a waiting came; longer term unless we get demand I don’t want to get too bullish basis on many of the grains just because producers have strong hands.  I much rather be bullish from demand.

It was about a year ago this last weekend that the first bean bull story started as soybeans gapped up one Sunday night.  So far I am not seeing any bull story done there other then planting delays; which isn’t much of one.

As for marketing I have noticed over the past couple of weeks that many advisor’s services have made plenty of sales recently.  I noticed one that is 70% sold in 2013 new crop corn, which to me is a little aggressive.  I also have noticed another has some 2014 wheat sold.  I am not going to make no generic recommendation to have X sold or X not sold as I think that every situation is different with different goals, needs, and risk/reward objectives; but I do think that we should take note that the reason some advisors are making some deferred sales is because levels are historically attractive with good profit returns and there are huge unknowns.  Some of the unknown’s could be extremely bearish should things shake out; such as what happens to corn price should we plant a record amount and have trend line or better yields along with curbing demand?  Some are on record having predicted sub $4.50 corn on the board next year.  I do know that some of the unknowns could also be bullish; so I am not going to preach that the sky is falling and one needs to be aggressive making sales; but I am going to say that sometimes that first little bit of marketing really helps out the average and helps many get comfortable.  Part of risk management can be risk diversification; so don’t be afraid to spread out a little risk here and there at levels that are both profitable and historically good.

If you would like help writing a marketing plan or going over some grain marketing options please give us a call.

Also I want to remind everyone that we have our marketing meetings this week.  Both Kevin and Tregg can give some good information about the markets as well as some opinions on where this thing might be heading.

Grain Marketing Seminar 2012

We would like to invite you to our

free grain marketing seminars:

Dec. 19^th, 2012 – 1:00 pm MST at the

Ambulance Building in Philip, Tregg Cronin Speaker

Dec. 20, 2012 – 10:00 am CST at the Ramkota in

Pierre, Kevin Van Trump and Tregg Cronin will be speaking on the grain markets.  Lunch will be served

Please RSVP for either location by calling

800-658-3670 or 605-258-2686

Closing Grain Market Comments - Day Ahead of USDA Supply and Demand Report

Grain markets closed mixed to weaker ahead of the USDA report that will be out in the a.m.

Corn was off 7 cents, beans closed up 2-3, KC wheat was down 7, MPLS wheat was off 7, CBOT wheat was down 12, equities seen the DOW close up 15 points, the dollar is near unchanged, and crude is down about a quarter.

Not a big news day today; more of just a risk off day with all of the unknowns such as the USDA report that is out in the a.m., the fiscal cliff, ideal weather, and other tax concerns as we go into the new year. 

One positive that we had today was the reversal that soybeans did; after trading down nearly 20 cents they managed to turn around and close up a couple; which I viewed as a good technical sign.

We did get a little wheat business today doing a little more SRW and white wheat with Egypt; but there was also some Saudi Arabia business done that have very little US wheat; more EU and Australia wheat.

This morning we had export shipments out and they continued the trend as of late.  Good bean shipments of 46.6 million bushels which is well above the 18.3 we need on a per week basis to meet current USDA estimates.  Wheat came in at 13.9 million bushels nearly 10 million bushels light of what we need on a per week basis to meet current USDA projections.  While corn came in a 7.9 million bushels shipped versus the nearly 25 million bushels we need per week to meet current USDA projections.

We haven’t come close hitting what we need on a per week basis for either corn or wheat since sometime in September.  While beans have been super strong since that same time.  I guess the point isn’t bean demand is super strong or wheat and corn demand is super weak.  We do need to keep that in mind; but the point is that keep in mind there is only so much elevations in our infrastructure.  As example I know our local elevator’s can’t handle ton’s of corn at the same time they handle ton’s of wheat; as there are only so many rail cars along with so many bin’s.  I think more important then shipments has to be sales as this point because we are in the time period when many exporters are still focusing on handling the beans due to the inverse in the market.  In  few months hopefully that opens the door for more wheat/corn shipments.

Below is information for the USDA report.

US 2012/13 Ending Stock Estimates
	USDA Dec '12	Avg. Trade Guess	Avg. Trade Range	USDA 2011	USDA Nov '12
Corn	?	0.663	0.493 - 0.752	0.988	0.647
Soybeans	?	0.130	0.063 - 0.145	0.169	0.140
Wheat	?	0.712	0.612 - 0.754	0.743	0.704

Global Ending Stock Estimates
	USDA Dec '12	Avg. Trade Guess	Avg. Trade Range	USDA Nov '12
Corn	?	118.006	115.700 - 125.100	117.990
Soybeans	?	59.409	56.700 - 60.700	60.020
Wheat	?	173.435	170.000 - 175.680	174.180

As you can see the market is expecting a bearish report for both corn and wheat; while a bullish report for soybeans.  Ideas are they cut the US corn export numbers, cut the US wheat export numbers, and increase the soybean export numbers. 

Typically the December report isn’t a huge market mover.  The big report is Jan 11^th; which if memory serves me right has had one grain or another trade limit up or limit down every year since 2008.

One somewhat silver lining is that if the reports do come in a little bearish for both wheat and corn perhaps that adds back a little needed demand.  Longer term I think the January report and what it does for final production and quarterly stocks to be very important.  The January report will give us final production whereas the report in the a.m. won’t have any adjustments to production.  The January report will also have winter wheat acres planted.

Possible unknown cards that the USDA could throw out tomorrow include demand estimates and world production estimates.  The above shows the markets expectation but the above doesn’t say exactly what the market is already trading.  Sometimes for markets to really move on report days you need to really miss the trade estimate while other times just coming in inline with trade estimates causes sparks.  To me the recent sell off the past couple days on corn…..nearly  35 cents from the highs on Thursday to the lows today has priced in a bearish report.  So to me that says if we don’t get a bearish report the market has a good chance of bouncing and if the report is bearish will it already be priced in???

Basis was mixed to weaker the past couple of days.  But with the weakness in the board thus lack of producer selling basis seems to have stabilized.  Also I would note that for the first time in a long time the railroad didn’t set cars in when expected; but rather a couple days late.  If this is wide spread it could quickly cause some pop in basis values.  But nearing the holiday’s probably doesn’t help because many industries have plenty of down time.

A couple of announcements don’t forget we will have our weekly MWC Marketing Hour Round Table meeting in Onida on Wednesday’s at 3:30. 

 Grain Marketing Seminar 2012

We would like to invite you to our

free grain marketing seminars:

Dec. 19^th, 2012 – 1:00 pm MST at the

Ambulance Building in Philip, Tregg Cronin Speaker

Dec. 20, 2012 – 10:00 am CST at the Ramkota in

Pierre, Kevin Van Trump and Tregg Cronin will be speaking on the grain markets.  Lunch will be served

Please RSVP for either location by calling

800-658-3670 or 605-258-2686