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Archived Market Commentaries:
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Date:
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12-17-09
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Headline:
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Closing Grain Comments
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Comments:
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Year-end reversal of short dollar/long commodity trades accelerated on Thursday as the Euro plunged on questions about Greece's debt worthiness & traders viewed Wednesday's Fed policy statement as supportive to the greenback. A weak dollar has been the pillar that supported speculative interest in commodities since corn & wheat set lows in September & beans bottomed in October. As the dollar has rallied 5.5% to a 3-month high after setting 15-month lows Thanksgiving week, gold, crude oil, copper, cattle, & grains have faltered as that weak-dollar support crumbled. Part of the current dollar rally is seasonal. US multi-national corporations buy dollars to repatriate profits ahead of the end of the year. But the short-dollar trade has also been very popular &--until 3 weeks ago--very profitable for speculators. When a market finds itself leaning too hard in one direction & starts to reverse, the last one out of the trade takes the worst licking. Today, March corn futures crashed 13.25c lower to a one-week low. Jan beans collapsed 37.5c to a 4-week low & a test of ten-week-old uptrending support. March CBOT wheat broke thru recent congestion to sag 18.75c to a 6-week low.
Markets generally ignored neutral/friendly export news today. Overnight, US wheat was sold to Japan (3.16 mb) & S Korea (.845 mb) & Taiwan bought 2.131 mb of US soybeans. This morning, USDA reported weekly corn export sales at 48.308 mb--a marketing year high that was well above the trade's 19.7-35.4 mb expectations. USDA pegged total crop soybean sales at 34.711 mb--at the top end of 23.9-36.7 mb guesses--with China taking 71.5% of the old-crop net sales. Mostly due to China, bean sales are 367.5 mb above the previous all-time high for marketing week #15. Sales of soymeal (191,400 mt vs 125,000-250,000 mt guessed) & soyoil (20,600 mt vs 5,000-25,000 mt expected) were within expectations, but still quite strong. As with soybeans, sales of soy products remain record-high for early December. Wheat sales were reported at 12.676 mb--within modest expectations that ranged 7.3-16.5 mb. For the third straight week, cumulative 2009-10 wheat sales are the worst in at least three decades. Soft red winter wheat sales improved to a still-dismal 1.679 mb.
Looking ahead, pre-weekend & pre-Holiday evening up could dominate price action in both grains & outside markets on Friday. They way markets have stalled at previous resistance in Nov-Dec, a winter grain rally probably depends on some weather worry developing in South America.
Fueled by a drop in cash bids at the Gulf this afternoon, local corn basis declined 6c & bean basis crashed 10.5c lower this afternoon. Wheat basis was stable. Trade talk that China may release state-owned vegoil stocks to quell hoarding by consumers made world cash vegoil markets nervous today.
Would you like CBOT futures prices reported to your phone? Top Ag can send you nearby & harvest futures prices for corn, soybeans & wheat at 9:45 am, 11:15 am & 1:45 pm each day. We provide the service for free, but you may have to pay for text messages--depending upon your phone plan. Give Scott, Mike or Seth a call at the Okawville elevator at 243-5293 & we'll get you set up!
"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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