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Archived Market Commentaries:
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Date:
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11-20-09
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Headline:
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Closing Grain Comments
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Comments:
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We will again be operating with extended harvest hours this weekend. Here's our schedule.
At Addieville, Okawville, St Libory: Sat 8 am-6 pm; Sunday Noon-5 pm.
At Pierron: Sat 8 am-5 pm; Sunday Noon-5 pm.
At Trenton: Sat 8 am-5 pm; Sunday 10 am-5 pm.
Closing Comments: 11/20/09
Recovering from minor overnight & early session losses, soybeans again worked higher on Friday as limited hedge pressure & this week's solid demand outlook continued to attract speculative buying & commercial ownership. Corn & wheat futures spent most of the trading session on the downside. With today being last trading day for options on Dec CBOT futures, Dec corn was supported on sell-offs at the $3.90 strike price & rallies were halted near the $4.00 strike price. Reports that the worst drought in 68 years will cause Mexico to import more corn helped explain this week's announced 37.163 mb of US corn sales to that country. Wheat struggled with demand news, but was underpinned by increasing evidence that soft red winter wheat acreage has been sharply reduced in some Midwestern & Delta states. Private estimates that predicted a smaller Australian wheat crop were partially countered by news of bigger Ukraine grain output. Dec corn futures closed with a low-range 4c loss today, Jan beans fought to a top-range 7c gain, & Dec CBOT wheat ended with a mid-range 2.75c decline. For the week, Dec corn gained 1/2c, Jan beans soared 59c higher, & Dec wheat rallied 20.75c.
This afternoon's CFTC Commitments of Traders reports suggest that a lot of ownership has been transferred from farmers to speculators during the past several weeks. Investment banker Barclays Capital reports that $55 billion of money has flowed into commodities like energy, metals, grains & livestock futures so far in 2009 as investors used the sharp break in prices from summer 2008 highs to diversify their assets. Last week, index funds significantly increased their long exposure in corn, soybeans, soymeal, soyoil & CBOT & Kansas City wheat, but generally reduced their longs in livestock. Renewed interest in gold, copper, crude oil & grains have rallied them well above early year lows despite more than adequate--some would say burdensome--supplies. The downtrend in the US dollar has accelerated that trend. Charts hint the greenback has spent the last 7 weeks trying to find a seasonal low. Next week the weekly US dollar index has key downtrending chart resistance near 76.50--the weekly high set on Friday. A break above that level could have far-ranging influence on many markets.
Following the mid-week news that soybean crush is being supported by strong export demand & improving poultry output, this afternoon's Cattle on Feed report also suggested feedlots will maintain feed demand in coming months.
USDA indicated that end-October feedlot inventories & Oct cattle placements were both 1.5% above last year & beef cattle marketings during the month were 3.3% below 2008. Those extra cattle are eating grain. Compared to last October, 85,000 fewer lightweight cattle were placed, but 121,000 more 600#+ cattle went into lots. Separately, USDA's monthly Cold Storage report hinted that red meat & poultry demand is improving. Exports probably jumped last month. Total red meat supplies in coolers declined to their lowest level since July 2008 & total frozen poultry supplies were at an 8-month low. Total frozen red meat & poultry supplies were 276,198 mil.lbs. smaller than Oct 31, 2008.
Looking ahead to next week, prices could be choppy as the Thanksgiving holiday reduces trade volume. Markets will be closed next Thursday & end early on Friday for the holiday. A frontal system due on Monday-Tuesday should keep harvest slower than normal. We look for USDA to report corn harvest at 68-72% completed & bean harvest about 95% done in Monday's Crop Progress data.
Nearby basis levels were mixed on Friday afternoon as barge freight ticked higher. Corn basis declined 2c, bean basis dropped a penny, but wheat basis edged a penny higher today. For the week, cash corn jumped 14c, nearby soybeans surged 72c higher, & spot wheat gained 42c.
Fall fertilizer applications can save valuable time next spring, & may save you money, too. Contact your local Top Ag Agronomy Center at Okawville, Trenton or Pierron for all your fertilizer & winter annual weed control needs.
"Closing Comments" are written by David Marshall, Toay Commodities Futures Group LLC, Nashville, IL. To learn more about his farm marketing advisory or commodity brokerage 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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