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Archived Market Commentaries:
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Date:
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12-1-09
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Headline:
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Closing Grain Comments
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Comments:
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As on Monday, a weak US dollar prompted early session speculative buying in grains on Tuesday. Unlike yesterday, markets could not hold their gains. Corn & wheat mounted a weak challenge of charts highs set in November & failed to exceed those levels, prompting profit-taking after recent gains. Although Jan bean futures jumped to their highest level since June 15th, the move looked vulnerable as market momentum reached levels that accompanied trading cycle highs set in early August & mid-October. Grains faded thru the noon hour & grains closed near their day session lows. March corn futures settled 3c lower--6.75c off its highs. Jan soybeans declined a penny--19c below its peak. March CBOT wheat closed 5c lower--down 13.75c from its early high.
Today's market news had limited impact on trading. USDA announced the sale of 4.567 mb of 2010-11 crop US corn to unknown destinations this morning, but S Korea rejected all offers as too high priced on 2.163 mb of US corn they had sought overnight. Japan will seek 3.858 mb of US wheat & .735 mb from each of Canada & Australia on Thursday. The US EPA announced this morning it was delaying a final decision on allowing a 15% ethanol blend in gasoline. That decision was originally due on Dec 1st. Noting that the EPA has found no ill effects from E-15 ethanol use in any 2001 model year or younger car they tested, analysts viewed the announcement as preliminary approval of the product. Oil companies, food manufacturers & some livestock groups oppose the plan, worried that corn prices will rise. Crude oil refineries have been operating at 78-80% of capacity as gasoline demand remains cut by the recession. Ethanol proponents want a higher blend rate to insure that the new ethanol plants scheduled to come on line in 2010 will have a market for their output. The ethanol blend mandate is due to increase in 2010, but not enough to counter prospective new production.
Looking ahead to Wednesday, markets will again keep a watchful eye on outside markets for price direction. Speculators have given life to the November rally, & recent trends argue that grain end-users are balking at the higher prices. Early in Tuesday night's e-trade session, the dollar had rebounded & grains & crude oil were modestly lower.
Gulf bids weakened on Tuesday as buyers continued to back away in the wake of Monday's CBOT rally. Locally, corn basis dropped 2c & bean basis slid 9c this afternoon, but wheat basis edged a penny higher. Improved harvest weather in November has refilled the pipeline & weighed on basis levels at a time they would normally be strengthening. Worries about whether freeze-damaged corn in the northern Corn Belt would store properly has many farmers there considering selling earlier than normal. Those extra supplies will tend to weigh on river values until the Mississippi above St Louis closes for the winter mid-month.
Do you have non-GMO corn or soybeans or other specialty grain varieties that may be eligible for direct ship programs? Give Mike a call at the Okawville elevator at 243-5293 & let him know what varieties & quantities you have available. He'll keep you informed of what marketing programs develop. Fall fertilizer & winter annual weed control 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 & 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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