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Archived Market Commentaries:
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Date:
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2-03-09
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Headline:
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Closing Grain Comments
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Comments:
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Expectedly heavy overnight rainfall in Argentina & expectations for three more rain events within the next 12 days sent grain futures reeling on Tuesday. The wetter forecasts prompted traders to ignore reports of corn sales to Egypt, lowered estimates of Brazilian & Argentine soybean crops, & supportive outside markets. This week's losses are factoring in expectations that rains have halted crop losses in South America. Forecasts for rain in the southern Plains within 10 days also weighed on wheat. Monday afternoon, Texas crop scouts rated the winter wheat crop only 12% good-excellent & 74% poor or very poor. Neighboring Oklahoma--which has also sustained 90 days of below normal rainfall--ranked its wheat crop just 24% good-excellent & 36% poor/very poor. Having seen better rains in the eastern 2/3 of its state, Kansas rated its wheat crop at 59% G-E & only 10% P-VP. A sharp decline in the US dollar, a modest rebound in crude oil & gasoline futures, & stronger New York stocks helped grains limit their losses late in the session. March corn futures closed 8.75c lower & at its lowest level since Dec 11. March soybeans settled 13.5c lower--11.5c above the intra-day low but its worst close since Dec 29th. March CBOT wheat closed down 11.25c--at a 2-week low.
In reporting its quarterly results this morning, ADM estimated that 21% of total US ethanol distilling capacity--about 2.7 billion gallons worth--is now idled due to poor margins. That reminded traders that the world recession has cut into demand for energy & grains alike. Rising unemployment is not just a US problem. China reports that sluggish exports to the US, Europe, & others have forced factory owners there to lay off 20 million workers. News that Pakistan had purchased 6.32 mb of optional-origin wheat & that Japan, Pakistan, Iraq, & Bangladesh are seeking wheat imports were offset by ideas that current world wheat supplies still remain high. Russia & the Ukraine have both exported as much grain in the first 7 months of the 2008-09 marketing year as they did in their entire 2007-08 marketing seasons.
Higher bids at the Gulf, weaker barge freight, & tight farmer holding again pushed grain basis higher in our region on Tuesday. Locally, corn basis jumped 9c, bean basis firmed 2c, & wheat basis improved 4c today. With recent declines, barge freight is within about 7c/bushel of its post-harvest lows.
Your Top Ag Agronomy Center has the supplies & services you need as you get ready for wheat top-dressing & spring planting. Be sure to check with us for pre-season discount 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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