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Archived Market Commentaries:
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Date:
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1-04-10
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Headline:
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Closing Grain Comments
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Comments:
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Grains were strong in the opening & closing minutes of Monday's trading, but faltered during the rest of the session. Foreign stock markets, crude oil, metals & grains had rallied solidly Sunday night on reports that Chinese manufacturing had posted its fastest growth rate in 20 months. Traders have been itching to buy an "economic recovery" story, & the Chinese news gave them an excuse. Corn had pushed 9c higher & beans & wheat surged to double-digit gains overnight in reaction to the news as new money flowed into asset markets. Grains extended their gains in the first ten minutes of the day session before profit-taking took over. A sluggish 10 am weekly export inspections report helped keep a lid on corn & beans thereafter. Corn briefly turned lower by the noon hour & beans nearly reversed its gains, but speculative short-covering helped wheat maintain double-digit gains all session. This afternoon's Commitments of Traders report showed that non-index speculative traders had bulked up on net short positions last week, making wheat vulnerable to such short-covering. Grains found renewed speculative buying in the last 15 minutes that lifted prices into the close. March corn futures settled 4c higher, March beans gained 9.5c & March CBOT wheat moved 16.25c higher today.
Weekend demand news was limited. Private buyers in Egypt announced they will seek US corn on Jan 10th & feed buyers in Israel said they would seek European feed wheat & barley & optional-origin feed corn on Jan 6th. Morocco reported it would seek from the EU 5.511 mb of soft wheat, 4.595 mb of barley & .165 mb of durum on Jan 12th. Morocco will also tender for 7.348 mb of US soft wheat & 5.511 mb of US hard durum on Jan 14th. Both tenders are the result of trade agreements that give the US & EU limited access to their markets.
This morning's Weekly Export Inspections data suggests we can use all the export business we can get. Corn export inspections reached just 20.349 mb in the week ended Dec 31--well below trade expectations that ranged 25-35 mb. Bean inspections of 32.237 mb also fell short of the trade's 42-55 mb guess. China was again the major soybean destination last week, taking 18.561 mb (57.6%) of the total. The Netherlands (2.787 mb), Indonesia (2.749 mb), Japan (2.726 mb) & Thailand (2.516 mb) accounted for most of the balance. Wheat inspections were again dismal at just 9.126 mb--well below the trade's 13-20 mb expectations. Although cumulative marketing year soybean inspections have reached 735.8 mb--210 mb above last year's record-high pace--corn inspections trail the subdued 2008 pace by 6.5 mb & wheat certificates are 181.8 mb lower.
Index funds are due to start their annual rebalancing of commodity portfolios on Friday. That normally takes about 2 weeks. Open interest has expanded recently as speculators who know the "index funds are coming" have bought futures in hopes of selling that ownership to the index funds at a profit.
With the mid-Mississippi River now closed for the winter & ice rapidly forming on the Illinois River due to the extremely cold weather, basis levels shot higher this afternoon as the elevator system maintained the premiums previously bid into January delivery. Locally, corn & wheat basis each surged 11c higher & bean basis rebounded 9.5c today. Temps that approach zero may ultimately even cause problems in St Louis by mid-January.
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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