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Archived Market Commentaries:
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Date:
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2/05/09
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Headline:
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Closing Grain Comments
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Comments:
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Finally! A Rebound! Dry Argentina forecasts, lowered S American corn & soybean estimates, Chinese drought talk, & good export demand gained traction in Thursday's trading, triggering good speculative buying in grains. March corn futures closed up 13c, March soybeans settled 30.5c higher, & March CBOT wheat closed 19.5c higher.
Soybeans led today's charge upward after weather models reduced next week's rain chances in Argentina & forecasters said parts of Brazil also need rain. Brazil lowered its official corn (50.3 mmt, -2) & soybean (57.2 mmt, -.6 mmt) output estimates this morning to reflect early season dry weather damage. The US ag attaché also slashed his Argentina soybean estimate by 7 mmt to 42.5 mmt. USDA weekly export sales data was solid. Corn sales hit a marketing-year high for corn (47.875 mb vs 21.7-39.4 mb expected). Although soybean sales were slightly below trade guesses (12.452 mb vs 14.7-25.7 mb expected), sales of wheat (12.118 mb vs 7.3-16.5), soymeal (184,100 mt vs 75-220,000 tonnes) & soyoil (10,000 vs 0-20,000 tonnes) were solidly within expectations. Wheat drew support from Chinese reports of drought worries & need for rain in the US southern Plains. Given the past 4 weeks of losses, the smaller supply & better demand gave recent sellers reason to scurry for cover. Despite today's rebound, March beans are just equal to last Friday's close. To avoid yet another weekly loss, March corn must rebound 8c & March wheat must gain 6.5c on Friday.
USDA will release its monthly US & World Supply/Demand revisions next Tuesday morning. Traders expect reductions in S American production, but also look for USDA to lower US domestic demand for corn. South Africa looks to have a bumper corn crop this season, & that may help offset some Brazil & Argentina cuts.
February delivery basis levels were fractionally changed today. Gulf bids were steady/weak, but a decline in barge freight mostly offset that change. Barge freight now equals the lows they set in early January. The last time that happened, river freight soon thereafter jumped 30c per bushel! Historic basis levels rarely last long, so call us if you are interested in taking advantage of current levels with a basis contract.
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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