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Archived Market Commentaries:
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Date:
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01-27-09
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Headline:
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Closing Grain Comments
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Comments:
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Stronger hints of a weather pattern change by next week in Argentina & diving crude oil prices sent grain futures plunging lower on Tuesday. Weather models suggest high pressure will set up in Brazil starting this weekend & into the middle of next week that forces humid, tropical air into Argentina. While rain totals still don't look drought breaking--.25"-.75" with 75-80% coverage according to one model--traders are wary of a shift away from the dry weather pattern that has been locked over Argentina for nearly 6 months. Rain now won't reverse earlier damage to the Argentine corn crop, but it would come just ahead of the onset of pod-fill in soybeans. Traders who bought beans on drought worries were quick to bail out this morning when prices gapped below overnight trading ranges & fell thru uptrending moving averages & trendline support dating to Dec 5th. Lows were set in beans & wheat in the first ten minutes, but corn worked to new lows as the day progressed. March corn futures settled 16.25c lower, March soybeans closed 33c lower, & March CBOT wheat settled 7.75c weaker. Most old-crop grain contracts closed near the bottom of their trading range.
Today's losses in beans came even as private South American soybean yield estimates continued to be scaled back. German oilseed analyst Oil World lowered its Argentine soybean estimate by 4.8 mmt to 44 mmt, decreased its Brazilian bean estimate by 1.5 mmt to 57.5 mmt, & opined that total South American soybean output would reach just 108 mmt this year--7.86 mmt below 2008. Commodities in general were hurt by a report of a record decline in 2008 US home prices & expectations for rising inventories of crude oil despite sharply lower prices. Consumers have seen their wealth assets--homes & 401K pension plans--under big pressure the past year. With their income now under threat from rising unemployment, concerns about "demand" for farm products is helping keep grain rallies stalled below pre-Jan 12th USDA report levels.
Winter weather disrupted truck traffic, reduced farm grain deliveries, & lowered the demand for barge freight today--boosting grain basis. January-delivery corn & soybean basis surged 6c & wheat basis improved 2c this afternoon. As weather warms & winter's grip starts to wane, St Louis will begin to lose its premium to mid-Mississippi & Illinois River grain bids.
As you put together your spring planting plans, 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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