Grain Market Comments for a very strong session - May 17th grains closed higher

Markets are called mixed this a.m. behind a mixed overnight session and weaker outside markets.

IN the overnight session CBOT wheat was up 1 cent, MPLS wheat was up a penny, KC wheat was off a penny, new crop corn was up 5 cents, new crop beans where up 7, old crop corn was up 7, and old crop beans where up 4 cents.  At 9:25 outside markets are weaker/mixed European wheat is up about 1 percent, equities are softer with the DOW off 40 points, and crude is off about 60 cents a barrel.

Outside markets with fund liquidation/risk coming off the table versus friendly fundamentals appears to be the story this a.m.  A battle that has been going on for weeks and continues to lead the headlines; weather is supportive to our markets as it simply remains either too dry or too wet in many places.

Winter Wheat conditions dropped yesterday which was a little bit of a surprise, while spring wheat came in at only 36% planted which is near record slow, corn planting was 63%, and beans at 22%. 

It is about 10:40 now and markets are open with the grains holding in there tremendously well despite the rather weak outside markets.  Presently we have the equities under pressure with the DOW down 165 points, the US Dollar is firmer with the cash index up 350 at 75.82, crude is off 2.00 a barrel, while the grains have CBOT wheat up 9 cents, KC wheat up 2, MPLS wheat up 5, beans off a dime, corn up 2 cents on the old crop, and new crop corn up about a nickel.

So far I consider the grain price action great; wheat in particular having gained on the overnight session despite the outsides.  One caution would be that wheat is being lead by CBOT wheat which could be due to the quality concerns starting to hit the SRW wheat area (scab and disease with all of the rain) but it CBOT wheat leading the way for wheat’s strength today could be more risk coming off the table as the funds on Friday where short CBOT wheat and long the other wheat’s.

When everything was said and done the grains all ended up showing some strength and closed very firm across the board; wheat lead the way with CBOT wheat up 28, KC wheat was up 19, and MPLS wheat was up 26, Corn was up 23 on old crop, while NC corn was up 18, beans where up 14, crude bounced back towards unchanged and at 5:30 is up about a dollar in the night session, the US dollar is down 101 points at 75.369 on the cash index, and the equity markets bounce well off of their lows with the DOW closing down 69 points.

Overall a great day; especially considering where the outside markets where for most of the grain market session; many thought we could see the grains close in the red; but we did manage good solid strength as most of our grains close near the highs when all was said and done.

Basis strong, spreads supportive, weather supportive (dry in Europe, dry in the south, Wet in Ohio, ND, Indiana, SRW Areas), and outside markets bouncing all helped the grains today in very impressive action.  Technically it appears we are still in sideway’s markets; but a decent bounce could turn some signals into buy’s in the near future.

Birdseed buyers seem to have more interest the past couple of days as it appears that business has picked up; I would note that business on the books via increased shipments is the main attraction but I have also had some buyers inquire about purchasing product that really seems to be in tight hands.

Watch for more volatile price action as we move forward; there has been rumors lately that Russia and the Black Sea region will be back in the export game rather soon.  That in itself wouldn’t be the most friendly thing for our grain markets.

Also don’t forget tomorrow we will have another session of our MWC Marketing Hour Round Table; in Onida Wednesday at 3:30.  We will be updating charts, going threw strategies and then do some more mock trades.  We hope to see you then.

Thanks

Grain Markets Opening Comments 5-16-11 stronger markets ...China buying corn again or another commodity sell off waiting to happen?

Markets are called mixed to higher this a.m. from a firmer overnight session and mixed outside markets.

In the overnight session CBOT wheat was up 10, MPLS wheat was up 12, KC wheat was up 8, beans where up 3-4 cents, old crop corn was up 11, and new crop corn was up 6.  At 9:15 outside markets have crude down 80 cents a barrel, European wheat up 1-1 ½ percent, the US dollar is weaker down 333 at 75.424 on the US Dollar cash index, and equities are softer with the DOW down 25 points.  Crude, the US dollar, and equities are more supportive to the grains now then they where when the grain paused their session at 7:15.

China’s rumors of buying old and new crop corn, weather, and a technical bounce in oversold markets are the main reasons being talked about this a.m. for last night’s bounce and a possible continuation of a bounce this a.m.  On the weather front quality concerns for the SRW crop has popped it’s head and cold weather hasn’t allowed for the corn crop to progress much.  This afternoon we will have a planting progress and crop conditions report out.  Estimates are all over the board for corn planting progress as I have seen the from 55% to 70% planted.

We will have export shipments out this a.m. at 10:00 and those may be watched a little more then normal due to the fact that last week the USDA cut exports for corn and beans.  If we can see shipments pick up over the next several weeks then there is a chance that the bulls are correct in regards to last week’s reasoning behind the cut in exports.  That it was simply logistics due to flooding and that the sales/shipments should pick back up once logistics allow.  Lower prices seem to have helped the demand picture in general and it has been heavily noted that corn basis is firmer.

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

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

Is it time to panic sell? Are you Comfortable?

With the recent sell off in beans; one has to ask themselves what could we see happen in some of the other grains.  How much downside is left in these commodity and grain markets?

First off there are so many factors that will determine where these markets go from here that one really should NOT try to out guess it.  When marketing grain or doing a grain marketing plan you want to search for Comfort.

One thing you can do is try to evaluate the markets with a plan based on what happens in our markets and on the outlook.  For the outlook I like listing possible outcomes both good and bad; both macro items and specific items.

As example one might list Macro items as

The US Dollar
World Economy direction
China
Europe issues
Politics and Policy
ETC



Crop specific items might include

carryout
supply
demand
weather - drought- relative to supply
price - econ 101........
supply trend, demand trend, and price trend

The reason I like to list some of the above is to help get an idea of some of the possibilities that I feel could happen; especially when looking at extremes

One big extreme could be corn yield this year; if we hit 170 or higher we likely are swimming in corn and have corn starting with a 4.00, more then likely a 3.00 and possibly a 2.00

On the other extreme if we have yields like last year or less; we could easily see new highs for corn.  Perhaps close to the 10.00 or so that corn is presently worth in China

So after i have looked at these possibilities i need to ask my self some hard questions as for outlook and what ifs.  Such as if we see a huge drop have I put my self in a comfortable situation?  Will my crop insurance give me all the coverage i need?  Do i need to have more sold?  Do i want to own put option protection as another form of coverage?

What about to the upside; am i comfortable if we go up from here?  Do i have too much sold?   Do i need to own some cheap out of the money call options?

I could go on and on; asking and answer hundreds if not thousands of questions.   But at the end of the day I want to have one thing
.



Comfort.  I want to be comfortable so that I never have to Panic sell or Fear sell.   I want to be comfortable enough that I don't lose a wink of sleep at night if the markets go up, if the grain markets go down, or if they just don't do much of nothing.

How you get to your Comfort Zone is something that each of you will have to determine.  You might be there and if your not your gut is probably telling you so.  Listen to it.

There is a saying buy fear and sell greed.  Don't be so uncomfortable that you put yourself in that situation.  Put your self in a comfortable situation where you are making sales and using tools that allow you to be comfortable without thinking that you are getting greedy or that you are fear selling.

Be pro-active as it is the first step in getting comfortable.

Grain Market Comments 5-22-2012 corn gets hit hard

The grain markets took a step back today behind some rumors that China was cancelling some old crop purchases of corn and soybeans.  Nothing really confirmed but plenty of China rumors.  Perhaps just another trick to buy at cheaper prices or maybe this is for real.  Some of the rumors where that they cancelled, others that they replaced with South American business, and others that they rolled into new crop.

The wheat market was the only market that held in there and only via closing above yesterday’s lows; wheat was still like the other grain markets priced lower and rather sharply lower.

Not sure if it is fear time; but we need to realize that there is plenty of downside risk to the grain prices.  So practice good risk management and have a solid grain marketing plan in place for you and your operation.

At the end of the day old crop corn lead the pressure down with the July off 32 cents, Sept was 20 lower, and the Dec corn contract was off 16 cents.  These are the last trades; not the settlements as corn’s last trades where a couple cents better then the settlement or actual close, beans a penny weaker, and wheat’s last trade price was very close to its settlement or closing price.

Beans were off 32 cents on old crop, new crop beans were down 25 cents, KC wheat was off by about 14 cents, MPLS off by about 15 cents, and CBOT wheat was off 18 cents.  Outside markets had a very strong US dollar which didn’t help our markets out at all, crude down over a dollar a barrel, and equities ended the day about unchanged.

The latest weather updates appear to have a little relief in some areas and most felt this added to the pressure; but really it seemed to be the corn market leading us down and we have seen basis feel a little weaker in some spots for corn.  I actually thought wheat held in there and consolidated like it is suppose to do following a nice run up; no red flags technically to me that it is over.  While I seen an article on beans today that had the headlines of Sayonara Soybeans!  The label of the technical article itself is rather scary; bottom line is beans have done plenty of technical damage to the charts. 

Basis for wheat is a little weaker on the run up but not really considering the huge rally the board did have.  I remember the 2010 rally and it seemed like basis was weaker penny for penny on what the board did; the recent rally has helped producers catch up on sales without damaging basis much.  Anytime basis holds in there when the board rallies it is a good sign.

The birdseed market is a little defensive on sunflowers but the millet market is now on fire. 

We recently sold a big chunk of Milo the ethanol market as well; so that commodity feels a little better or at least it’s supply and demand dynamics has changed.   

I think the wheat price action the next couple of days will be very important as well the weather and what it helps the charts do or not do.  If wheat can hold these levels with maybe some digestion on the charts or consolidating it should give us a chance to have another leg up.  The funds still remain short and if our crops have got smaller in the US and the World since the last Supply and Demand report that should only help out our prices.  Keep in mind that even though it seems like we have plenty of wheat our US and World carryout numbers are down to the lowest level since 2008.  That to me is friendly and the funds love weather stories so if we don’t get the moisture that is being called for in Russia and it remains dry down south I think wheat has the potential for a nice little bounce. 

From a pure risk management perspective keep in mind that every time wheat has bounced in the last year or so it has failed and ended up lower then where it started it’s rally at; so there is nothing wrong with pricing some grain on this rally because that is still a possible outcome and if you look at the US dollar chart you would be very nervous owning the grains right now as it’s chart looks rather friendly.

We have talked about wheat being too cheap versus other commodities for a long time now and that is another possibility that the market could do; get spreads back in line. 

As for corn outlook new crop really comes down to weather as I can paint pictures or possible price outcomes where on good yields along with poor outside markets that corn gets really cheap perhaps starting with a 3 and on the other hand bad weather or say 1988 type weather could propel corn to new all time highs.  Bottom line is that our markets have more risk and volatility then ever so the only logical thing to do is risk diversify and make sales that make sense when given the opportunity.  Today we still have the chance to make sales or get protection on to lock in profitable levels.  No guarantee that will be the same a few days from now more less a few months from now.  If you need help with your marketing or want to put in some open orders/offers please give us a call.

One thing I didn’t like today was the fact that I haven’t heard or seen one comment for corn that basis is better with the softer board.  The board going down and basis weaker isn’t a great thing to see.  Technically corn to me appears to be in a sideways market. 

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

Thanks