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Archived Market Commentaries:
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Date:
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12-8-09
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Headline:
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Closing Grain Comments
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Comments:
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The US dollar rallied to a 2-week high--eclipsing 9-month downtrending chart resistance & triggering further unwinding of long gold, crude oil, soybean & wheat trades on Tuesday. Corn bucked the downtrend. With 12% of the US crop still in the field & a blizzard bearing down on unharvested corn from Nebraska thru the Great Lakes, traders bought corn against beans & wheat sales to add risk premium into corn prices. Since the Nov 20th expiration of options on CBOT December grain futures, speculators have been paring their positions in grains & squaring books ahead of the year-end. Grains often slide into mid-December in years were grain stocks are building, & this year is fitting into that pattern, too. March corn futures edged 1.25c higher today, Jan beans dropped to a low-range 9c loss, & March CBOT wheat ended at 4-week lows with a bottom-range 7.25c decline.
Grains have not been the only commodities experiencing a pull back recently. Gold has dropped $96/oz (-7.8%) since setting all-time highs last Thursday. Crude oil has tumbled $7.41/barrel (-9.3%) since Nov 23rd. The US dollar slowed its downward momentum during that time, & stayed well above the lows it set in early August, 2008. To go up, markets have to first stop going down. With the dollar appearing to set a short-term low, speculative ownership of commodities against their short dollar bets was also vulnerable.
Looking ahead to Wednesday, traders will be positioning for Thursday's USDA monthly Supply/Demand revisions. Although US crop production is not revisited in December, foreign output is. Corn & wheat exports have failed to live up to USDA projections, but soybean sales are at a historic pace. Traders thus expect USDA to lower corn & wheat exports & raise soybean exports & crush on Thursday. Average trade guess sees USDA boosting corn carryover by 21 mb to 1,646 mb, decreasing soybean ending stocks by 35 mb to 235 mb, & boosting wheat stocks by 1 mb to 886 mb. With nearly 1.5 billion bushels of corn still unharvested as of Dec 6th & at risk of forced "outdoor storage" into the winter, USDA may compensate by waiting until January for usage adjustments.
Gulf demand for export grain continued to waver on Tuesday, & grain basis sagged. Locally, corn basis lost 3c, beans dropped 2c & wheat declined 1c.
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.
"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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