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 19th
and Dec 20th for our marketing meetings in Philip and Pierre where we will have Tregg
Cronin and Kevin Van Trump speaking.
Grain
Merchandiser
Midwest
Cooperatives
800-658-5535
800-658-3670
605-295-3100
(cell)
605-258-2166
(fax)
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