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Archived Market Commentaries:
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Date:
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2-09-09
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Headline:
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Closing Grain Comments
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Comments:
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Grains opened higher today on the heels of a warmer/drier 10-day forecast for Argentina, strength in crude oil, & weakness in the dollar. Beans quickly triggered buy-stops when 4-week chart resistance was exceeded & ran 18c higher in the opening minutes. Bean strength spilled over as wheat jumped to 20c gains & corn jumped 6c higher on short covering. With USDA's monthly revisions due at 7:30 am Tuesday, buyers used the early run-up to take profits ahead of reports that many expect to be slightly bearish. As crude oil gains faded, grain prices then retreated further. March corn closed .25c higher, March beans settled a penny higher, & March CBOT wheat finished the day up 8c.
Weekly export inspections were huge for soybeans (46.6 mb vs 30-35 mb expected) & modest for corn (28.8 mb vs 28-31 mb guessed) & wheat (19.0 vs 13-15 mb expected). Sales & shipments of US soybeans remain at a record-high pace due to aggressive Chinese buying, but sales of corn & wheat have lagged badly this season. Cumulative inspections of corn are just 677.8 mb--446.9 mb below 2008. Year-to-date wheat inspections are 745.2 mb--162.2 mb behind last year.
In tomorrow's reports, average analyst guess sees USDA raising projected corn carryover stocks by 48 mb to 1,838 mb. Some analysts expect USDA to trim both corn exports & ethanol crush. Others believe recent strong sales to Asian markets may encourage USDA to hold off on export cuts in February. Average guess sees USDA lowering by 22 mb to 203 mb the projected end-August soybean ending stocks. Exports to China are seen prompting most of the extra usage, but a reduction in S American bean production could also curtail their soy product exports & shift soymeal & soyoil exports business to the US. That would boost late-season US soy crush. End-May wheat carryover is seen edging 6 mb lower to 649 mb. Traders looking for a slightly friendly report say reduced imports, improved mill use, or a small boost in exports are possible. In its world supply/demand forecasts, USDA is expected to lower S American corn & bean output, & reduce world ending stocks accordingly. An increase in S African corn production may counter some yield losses in Brazil & Argentina.
Basis continued to work lower today as Gulf values sagged on recent increased farmer & elevator grain movement. With barge freight now equal to marketing season lows, further basis gains would depend on improved export demand. Locally, corn basis declined 2c, bean basis lost 4c, & wheat basis was unchanged. The tendency for St Louis to post a seasonal winter basis peak in late January to early February has been repeated in 2009.
Be sure to check with your local Top Ag Agronomy Center for professional application of your wheat nitrogen. 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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