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