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Archived Market Commentaries:
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Date:
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Jan. 7, 2010
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Headline:
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Closing Grain Comments
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Comments:
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Profit-taking emerged in commodities on Thursday after China's central bank raised a key short-term interest rate & signaled it wants to slow the pace of lending & fight inflation in that rapidly developing nation. Since China is the dominant world soybean importer, traders bailed out of soybean ownership--a move that accelerated after Brazil boosted its corn & soybean production forecasts. With soybeans under pressure, the US dollar rebounding, & crude oil trending lower for the first time in 11 trading session, corn & wheat headed lower, too. Positioning ahead of next Tuesday's USDA reports also prompted traders to book profits after the recent run-up in grains. March corn futures settled 4.25c lower, March soybean collapsed 33c lower, & March CBOT wheat declined 9.5c on Thursday.
Export sales during the Christmas-New Years holiday week rarely are very good, but this morning's USDA Weekly Export Sales data was especially disappointing for everything except soybeans. USDA reported solid sales for soybeans (26.677 mb vs 14.7-36.7 mb expected) as China booked 16.63 mb (62.3%) of last week's soybeans. Traders shrugged off the new China purchases on assumptions that some cancellations of US purchases are inevitable by March-April. By contrast, sales were very slow for corn (14.358 mb vs 15.7-29.5 mb foreseen), wheat (3.432 mb vs 7.3-20.2 mb), soymeal (61,800 mt vs 100,000-300,000 mt) & soyoil (3,500 mt vs 0-25,000 mt). Only .544 mb of soft red winter wheat was sold last week, mostly to Latin America. While sales of soybeans & soy products are far higher than ever before by Dec 31st, sales of wheat are at a 3+ decade low & corn sales trail the pace needed to reach USDA's 2,050 mb export forecast.
Looking ahead to Tuesday's reports, average trade analyst guess expects USDA to lower corn production by 102 mb from their November estimate to 12,819 mb. Soybean output is seen rising 22 mb to a record-high 3,319 mb. As producers harvested beans instead of corn in November, corn harvest losses mounted. Analysts foresee 2009-10 corn carryover declining 62 mb to 1,613 mb as lower production is partially offset by reduced exports & feed use. Bean carryover is expected to decline 18 mb to 237 mb as higher export & crush use chew thru extra output. Wheat stocks are expected to rise 5 mb to 905 mb--a 10-year high. Winter wheat acreage is seen at 40.916 mil.ac.--2.395 million below last year's sowings. More than half of that reduction is in soft red winter wheat acres as the late bean harvest prevented SRW wheat planting.
Local corn basis firmed another 2c this afternoon & soybean & wheat basis was steady. Bitterly cold weather will continue to limit grain movement tomorrow.
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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