Grain Market Comments - Close Open Commodities for 3-14-2011 firmer markets for the grains despite weakness in the overnight session? Trend Reversal on the charts or a correction?
Below are grain market comments as well as a forward from K State from their webinar on Friday.
Our markets really got beat up last week as fund liquidation was heavy across the board; in the overnight session we traded both sides but finished under some pressure as corn ended the overnight session down about 5-6 cents, beans off 14-17 cents, KC wheat was down 5, MPLS wheat was down 10, and CBOT wheat was off 7 cents. As of 9:20 outside markets have European wheat down 3 %, the equities continue their pressure with the DOW down 55 points, crude oil is off about 60 cents a barrel, and the US dollar is under pressure with the March down 305 at 76.465.
Outside influences along with an overall attitude and outlook change for the grains was the main story last week and appears to be the story this a.m. as money flow has done a turn around here recently. The fundamentals or facts that we lack supply and have good to decent demand for our grains has took a back seat; at least it did last week. Nothing much really changed other then money flow over the past couple of weeks.
Ideas are still out there that we could run out of some of the grains or at least have very tight ending stocks whereas any delays in harvest or pick up in demand could really get things explosive when the marketing year comes to an end. Corn, soybeans, and sunflowers are the main three grains in our area that have the potential to see some fireworks if see things really stay tight.
Our markets did open up under pressure this a.m. but turned back to the positive early in the morning; as of about 12:30 both corn and wheat have had about a 20 cent trading range since 9:30 with the markets very near the middle of that range with corn, CBOT wheat, KC wheat, and nearby beans all plus or minus 1-2 cents of unchanged. MPLS wheat is lagging as it is down 5 presently. The equity markets are still down with the DOW off about 120 points, 30 off of its lows. While crude is down 80 cents which is nearly 2.00 off of it’s low point.
So far a little mixed emotions as to what today’s market is trying to tell us; I do like the fact that so far we have held Friday’s lows in most of the markets and we have had some long tailed candles on the charts which is a sign of a little indecision; i.e. perhaps we are trying to form some sort of bottom?
The big thing that will continue to give us direction will be money flow and if it wants to flow out there is tremendous downside risk; especially if there ends up being any negative fundamental changes. The other big thing and in my opinion what will end up telling us if we have 4.00 ish corn or 8.00-10.00 ish corn will be and is weather. Stories are out there in regards to the KC crop and its outlook. Bottom line is we are a long way away from having grown any crops as we haven’t even planted them so in theory we should see more of that risk premium come back into our marketplace especially as our demand and underlying fundamentals stay strong.
The money flow and fundamentals probably continue to give us a great deal of volatility as we move forward and that will probably lead to many buying and selling opportunities as the funds seem to help our markets really over do market pricing moves; both directions; as to which direction could be next to get over done keep in an eye open to how they are sitting as when too many starting leaning one side or another it can mean a trend reversal or a correction is near.
Basis for spring wheat remains firm; but much of that is due to freight and protein spreads. Railroads are behind and product isn’t able to move as fast as it would like to be moved. Us an elevator seem to be stuck in the middle as farmers are not able to get as much hauled as they would like and buyers can’t get the product like they would like to either. It is normal to see freight and movement slow in the winter; but this is as bad as I have ever seen it and it does spill over a concern or yellow flag if you will when I think about what the March USDA balance sheet will show. Is it possible that the slow movement via our infrastructure for moving grains has slowed down so much that the March stocks number comes in higher then expected and leads to surprises in the balance sheet in the form of more grain inventory?
We did have grain export inspections out this a.m. wheat came in at 25.7 million bushels as it continues to lag the paced needed to hit current projections; presently that number is about 30 million.
Corn shipments also lagged as they came in at 35.2 million bushels which is about 6 million bushels shy of what is needed on a per week basis to meet current projections.
Beans did have strong shipments at 32.9 which is nearly 2 ½ - 3 times what is needed on a per week basis to meet current projections. Perhaps the strong shipments in beans help make sense of the slow shipments in the other grains as I know that our elevator can only handle so much threw it.
As reported by SAFRAS, Brazilian soybean harvest was reported 32% complete as of Mar 11, up 10% on week, but below 48% harvested during the same week last year and the 5-year average of 33%. Perhaps this helped out our soybean price action today and also helps explain some of the good soybean shipments/sales lately.
When the day was all said and done corn ended up firmer by a couple pennies, beans where up 6-8 cents, KC wheat was up 3, MPLS wheat was up 1, CBOT wheat was up 2, equities where weaker with the DOW down 51 points, crude turned back around and is presently at 101.71 on the April contract while the US dollar is off 433 on the cash index at 76.347.
All around the close wasn’t that bad as most of our grains closed well off of the lows and held Friday’s lows; so at least we stopped the bleeding for a day. Now weather we can build on today’s action and reverse the trend see over the last week or so remains to be seen. Personally with the fundamentals we have today; the fact that the funds have sold off some of their length, and that I see very few signs of demand slowing; I think I would have the attitude of buy the break not sell the rally. The only scary thing is that some of the trends and charts indicate we could see additional technical selling and the way our markets over due things it wouldn’t take much to add much more pressure to our markets.
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