Closing Comments 2-11-2013
Grain markets closed under pressure today as spillover
pressure from Friday’s report and technical selling lead our grain prices
lower.
When things were said and done corn closed down 7 cents,
soybeans closed down 21 cents, KC wheat was down 11 cents a bushel, MPLS wheat
was off a dime, CBOT wheat was lower by 15 cents a bushel, crude oil was up
about a dollar a barrel, gold was off about 18 an ounce, the US dollar was up
slightly and equities closed down slightly with the DOW off 22 points.
We took out some important technical support on the charts
today that lead to some fund selling and possibly more fund selling in the days
to come.
Weather was mixed; with Argentina a little wetter then
expected; but much of the HRW area didn’t get as much rain as expected.
We did have 10 year USDA Ag Projections out today; and they
reminded us that we have some work to do for corn fundamentals not to be
considered bearish for new crop. The
numbers the USDA used are not new info and didn’t cause much extra pressure if
any; but the headlines are bearish should they shake out as projected. Yield of 163.5 bushels an acre; with a corn
carryout projected to be over 2 billion bushels.
The bean number had ending stocks at 185 million bushels;
which isn’t bearish; but gives us some cushion versus this year. The wheat carryout is projected at 733
million bushels; which like the bean number has be considered neutral overall.
A couple other highlights I took out of the report; the huge
increase year after year for Chinese soybeans.
They are projecting 63 million metric tons of imported beans for China
in the 2012-2013 marketing year; while in the 2022-2023 marketing year they are
projecting 102.9 million metric tons of beans to be imported. That long term is bullish; the other thing
that I didn’t notice was other countries showing the same type of demand
increase for soybeans. So what could
happen if that same type of demand hits some other nations???
The other negative that stood out to me on the 10 year projections
was the fact that ethanol usage is not expected to get back above 5 billion
bushels until 2019-2020; it was just last year that we used a little over 5
billion bushels. Bottom line is it
appears that the demand rationing has took place and that the USDA thinks that
demand will take a while to bounce. On
the other hand they have trend line yields basically showing a 2-3 bushel yield
increase.
Now you can’t put too much into the report as it is early
estimates and really doesn’t mean much as so many factors will change things as
we go by; but it is interesting to see the thoughts the USDA has and that could
help lead us to seeing why they might have various changes as we go forward.
Basis felt a little better on all of the grains today;
mainly because of the soft board.
The birdseed market remains on the slow side; but the next
few days could see a pick up from the latest snow on the east coast.
I guess the thing we really need right now is a bull story
or a headline to get the funds back involved without it we still have a strong
old crop balance sheet; but I don’t know that it is strong enough for us to
have a major rally.
Please give us a call if there is anything we can do for
you.
Thanks