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Archived Market Commentaries:
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Date:
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2/10/09
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Headline:
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Closing Grain Comments
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Comments:
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USDA offered neutral/friendly data in today's monthly supply/demand revisions, but negativity from outside markets quickly overwhelmed that news. Grains were higher for less than one-minute, hit their intra-day lows by 10 am, & then ground out a trading range for the balance of the session. With New York equities diving more than 4%, crude oil crumbling below $38, & the US dollar & US Treasury bills soaring, traders were seeking safe haven investments & bailing out of everything else. Both Fed Reserve chairman Bernanke & Treasury Dept chief Geithner testified to Congressional committees today about why aggressive actions are needed to pull the US out of a nose-diving economy. The more they talked, the worse markets sold off. In making their case for credit aid & fiscal stimulus packages, Bernanke & Geithner's discussion about dire circumstances sent outside markets into a tailspin. March corn futures recovered from early losses to close just 3/4c lower. March beans settled with a mid-range 8c loss, & March CBOT wheat closed with a mid-range 9c loss.
Summarizing this morning's USDA monthly Supply/Demand report, the agency left US corn & wheat usage & carryover stocks unchanged from January, but increased soybean exports by 50 mb, lowered crush by 35 mb, & decreased end-August soybean stocks by 15 mb to 210 mb. In its World S/D reports USDA sharply cut S American corn & soybean production, but also reduced its estimate of world usage of grain. Citing drought, USDA lowered its soybean production forecasts for Brazil (57 mmt, -2), Argentina (43.8 mmt, -5.7) & Paraguay (4 mmt, -1.6). Those nations' production dropped 342 mil.bu. in the last month & are now seen 338 mb below last year. World-wide economic woes prompted USDA to trim projected world soy usage by 4.49 mmt. Projected world soybean carryover fell to 49.87 mmt--a 4-year low. With US farmers expected to grow a big 2009 bean crop, traders shrugged off those S American cuts & "sold the fact" that the recent rally built into prices. Ongoing dry weather also compelled USDA to cut its Brazilian corn forecast by 2 mmt to 49.5 mmt & its Argentine corn estimate by 3 mmt to 13.5 mmt. Those cuts were offset by a projected 5.75 mmt decrease in world corn demand. World wheat output was reduced marginally, but USDA also reduced feed wheat usage & increased world wheat ending stocks 1.60 mmt today. After being a huge "bull" about grain demand in July, USDA is now a big "bear." Markets reached that point on the December 5th selling climax!
Barge freight costs eased slightly lower, & farmer sales came to a halt after the positive report & negative price action today. Basis levels pushed back higher with local corn basis rebounding 3c, soybean basis recovering 4c, & wheat basis rallying 5c this afternoon.
Tonight's stormy weather forecast suggests you tie down your rain gauge! Our flotation equipment can help minimize compaction on soggy wheat fields that need nitrogen top-dressing. And be sure to check with your local Top Ag Agronomy Center for pre-season price opportunities as you make your final preparations for spring planting. 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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