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Archived Market Commentaries:
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Date:
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1-06-09
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Headline:
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Closing Grain Comments
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Comments:
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New Year!!! New Money??? Trading funds were aggressive buyers of grain futures on Tuesday as a drier weather forecast for eastern Argentina & western Rio Grande do Sul, Brazil fueled a renewed appetite for risk. Owing to strong demand from China--USDA reports that nation has already bought 12.75 mb of US beans in 2009--soybeans have the strongest fundamental supply-demand "story" to underpin an upmove. But rising CBOT open interest suggests that both corn & wheat saw "new" money flow on Monday, & floor traders reported similar buying today. Chart-based buying of grains accelerated today when prices moved above last week's highs. Prices firmed into the close when an early rally by the US dollar faded. March corn futures surged 16.25c higher, March soybeans settled 29c higher, & March CBOT closed 26.75c higher.
For end-users who bitterly remember the uninterrupted grain rally seen in early 2008, there must be a developing sense of deja vu. Corn & wheat users whittled down inventory thru the fall--awaiting a low to form. Now that prices have rebounded $1.39 in corn, $2.44 in beans, & $1.90 in wheat since lows were set Dec 5th, they are probably getting a little nervous. Unlike last year, however, already bankrupt end-users like the #1 poultry producer Pilgrims Pride & the #2 ethanol producer VeraSun Energy don't have much financial wherewithal or positive operating margins to chase markets higher. End-users now hope--always a tenuous market strategy--that fund money soon runs out, that rain falls in Argentina, & that aggressive farmer selling sends prices into a tailspin.
Gulf corn & wheat basis declined 3c today as CBOT gains lowered export demand. Soybean basis firmed 2c as export demand remained solid due to China.
Be sure to check with your local Top Ag Agronomy Center for pre-season price opportunities. Need financing? Give Lloyd a call at 243-5293 or contact your local Top Ag Agronomy Center at Okawville, Trenton, or Pierron.
"Closing Comments" are written by David Marshall, Toay Commodities Futures Group LLC, Nashville, IL. To learn more about his services, contact him at dmarshall@tcfg-llc.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness. Commodity trading involves risks. You should fully understand those risks before trading.
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