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Archived Market Commentaries:
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Date:
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12-9-09
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Headline:
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Closing Grain Comments
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Comments:
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Wednesday was a battle between the "demand bears" versus the "supply bulls." The bears won. Speculative liquidation continued to pressure outside markets & the grain pits today. Worries about recession-impaired usage ultimately outweighed ideas that a fierce Corn Belt storm would reduce corn yields. Although blizzard conditions were bad enough to close interstate traffic from SE Nebraska thru Iowa, traders viewed the worst of the storm as having missed the Dakotas, northern Illinois & Wisconsin that have lots of unharvested corn. Grains initially traded on both sides of unchanged as traders positioned for Thursday morning's USDA supply & demand revisions, but eventually followed sagging crude oil & gold contracts to close lower. March corn futures declined 1.5c today, Jan beans dropped 15.5c, & March CBOT wheat lost 4.5c.
USDA's December reports typically are not major market movers because no revisions are made to US grain production. We don't look for tomorrow's data to break that pattern. Markets are well aware that corn & wheat export trends have been sluggish, & that soybean export sales have been historically strong. What's not known is how many bushels were lost this fall to flood damage in the Delta & frost in the Midwest. Perhaps the biggest unknown after Jan 1st is, "Will the speculative funds come back?" Fundamental-based traders still remember how in 2007-08 they were rolled over by spec money. Excellent crops will again be required in 2010 to maintain an adequate supply of grain. That's a story speculators may be willing to buy.
Previewing tomorrow's data, traders expect USDA to lower corn exports & boost Aug 31st ending stocks by 26 mb to 1,646 mb. Analysts foresee soybean exports & crush rates being raised & end-August bean carryover decreased by 35 mb to 230 mb. Average trade guess sees USDA increasing May 31st wheat carryover stocks by 1 mb. Most feel USDA has overstated wheat export demand, but believe the agency will wait until January to make changes. USDA will also release its Weekly Export Sales data on Thursday morning. Sales of corn are seen at 17.7-35.4 mb, beans at 22.0-33.1 mb & wheat at 11.0-18.4 mb.
Barge freight costs edged a bit lower today & Gulf basis levels were mixed. Locally, corn basis was 1/2c lower, bean basis rebounded 1.5c & wheat basis recovered 5.5c. Many local producers are within 1-3 days of completing corn harvest. This year's crop took 3 months to plant & 3 months to gather it!
Do you have non-GMO corn or soybeans or other specialty varieties that may be eligible for direct-ship segregated grain 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. As you make end-year financial planning decisions, be sure to contact your local Top Ag Agronomy Center at Okawville, Trenton or Pierron for all your pre-season fertilizer, seed & crop protectant purchases.
"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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