February 13, 2009

Corn futures closed slightly lower ahead of a long weekend. December corn lost $.16 for the week, the seventh consecutive week with lower Friday closes. The market appears to be less concerned with South American weather and is more focused on finding a price to generate demand. The export market has certainly perked up due to the lower prices of corn and transportation. This week marks the fourth week in a row of 40+ million bushel sold with this weeks 60.8 million a marketing year high. Sales year to date are still well behind a year ago but at 1.040 billion bushel sold we are catching up somewhat and is giving us hope that we can achieve the USDA 1.75 billion bushel estimate for the year. The strong export sales and deteriorating futures prices continue to support basis with delivered river values very near the +0 level.

Soybean futures settled lower with improved Argentina weather and the continued weak economic climate the main influences. The export market continues strong with 937 million bushels sold for the marketing year to date, 82% of the 1.050 billion yearly forecast by USDA. The bean export sales totals are impressive with Chinese demand the reason, they bought another 116,000 ton today and 200,000 more was announced as sold to unknown destinations, likely China as well. The cash bean situation is much like corn, STRONG basis continues at all locations, river, processor and container markets. This looks to be a good time, depending on road conditions, to move cash beans either through Basis or even Delay Price alternatives. We have seen a large amount of this type of grain moving both corn and soybeans. Another way to take advantage of the strong basis is to sell the cash grain and replace with a minimum price contract. The added benefit of this contract is it also locks in a floor price on the grain.

Have a great weekend, Phil Farrell

February 12, 2009

Thursday brought the market several numbers to ponder over. First off the bat was the USDA's weekly export sales. Both corn and soybeans showed strong sales, with corn coming in at 60.8 million bushels and soybeans at 39.3 million bushels. The USDA released their projects for the 2009/2010 crop at 88.0 million acres up 2.0 million acres from 2008/2009 at 86.0 million acres. The USDA corn production for 2009/2010 is estimated at 12.685 billion bushels. On soybeans the USDA projects the 2009/2010 crop at 74.0 million acres down from 75.7 million acres on the 2008/2009 crop, with production forecasted at 3.110 billion bushels. The USDA Ag Outlook is scheduled for Feb 26-27. Producer cash sales continue to remain light.

On the weather front, private weather forecasters have added some rain in longer range outlooks for Argentina, but traders remain cautious of long range predictions. The trade continues to eye outside markets for guidance as well, with crude oil being weaker on the day and the dollar continuing to firm up.

Chris Spurlock

February 11, 2009

Grain Markets today closed lower on follow thru selling from yesterday's panic in financial markets. Corn closed down 8 and soybeans closed down 16. Yesterday the USDA released their monthly update on Supply and Demand with really little changes of note. Leaving domestic supply and demand tables nearly unchanged. This leaving room to go with a few assumptions or speculations:
Corn
1) Corn world ending stocks building and demand needing to be sourced.
2) Corn export demand is pent up trying to await lower prices with the USDA stating corn exports are unchanged as we are severly lagging their current goals.
3) They are expecting feed demand to stabalize and/or start to pick up all while we have the lowest cattle on feed since 1959.
4) Ethanol- the wild card, apparently the USDA is expecting the destruction of margins there to stabalize and sort itself out soon?
5) Or, the USDA was sleeping until Sunday night and needed to release something so why not copy the January Report????? Personally, I think they are still taking to many things for granted in the demand side of the equation and corn carryout and/or stocks to use will likely continue to grow, leaving less emphasis needed on "the acre war".
Soy Complex
1) Domestic Crush is slipping along with soybean meal demand.
2) Exports are stellar yet many variables in our equation are in the Chinese hand's.
3) World soybean stocks are dwindling leaving a higher responsibility on the new crop soybean market to secure acres both domestically and abroad.

From a technical perspective March corn still remains trapped in a trading range from 3.50 - 4.00 and march soybeans remain trapped in a ratcheting down trading range from 9.60-10.00 with solid technical support at the 40 day moving average today at 9.65. A violation closing basis of these ranges will likely move us aggressively in the direction of the breakout. The question remains, are commodities a safe investment? Are commodities at or below fair value? Interesting to note that yesterday the Dow Jones lost 5% in one day while the grains losses amounted to less than a mere 1% on the day. Although I continue to believe that the highs for the marketing year are likely to be much earlier this year rather than later assuming a normal spring and summer weather pattern with stabilization of the economy coming now from deflationary action.

On a positive note basis levels especially on corn are firming and do need rewarded.
Up and coming news:
USDA export sales Thursday 7:30am CST estimates as follows:
30-37 mbu of corn
17-24 mbu of soybeans

Jeff Neisler

February 10th, 2009

USDA Report out this morning with minimal differences to what was expected. The one bright spot for corn would be that carryout was unchanged from last months 1.79 billion bu. Many traders thought and still think that number will approach 2.0 billion before Sept 1, 2009 rolls around. United States soybean carryout was down slightly to 210 million from last month's 225 with increased exports trumping decreased crush numbers. South America reports came in as expected with Argentina corn and soybean production hit much worse than Brazil. In the end, world corn stocks were virtually unchanged and soybeans were only down slightly as the decrease in demand has absorbed the lower South American production estimates. River basis a touch better today as warmer temps and lower board has created more empty barges and better navigation times. Crude up $2.00 in the a.m. to $41.80 only to fade and end down $1.50 for the day at 38.00. Dow Jones down 388 points to 7882 to add fuel to the already disappointing commodity markets today. On a bright spot, the temperatures today remind us that Spring is just around the corner and a new growing season awaits.

Scott Meyer

February 9, 2009

The start of the new week brought prices up early in the session only to have them falter later in the day. Corn traded up 5 1/2 cents on its highs of the day, beans traded as high as up 17 cents and wheat traded up as high as 20 cents. The day had the feel of a market trying to find a direction to go with no road maps to follow. Exports inspections were relatively good for beans 45.6 million bushels and wheat 19.1 million bushels, corn was mildly disappointing with only 28.8 million bushels. Commercials were light sellers on the day. The close on the day was corn up 1/2 cent beans up 1 cent and wheat up 8 cent. It wasn't a truly convincing day either way for the grains. Tomorrow brings us the monthly supply and demand report with some unknowns soon to be known. It will be interesting to see if the carryouts on corn and beans remain the same or if they will be adjusted. If and when there is an adjustment just how big of an adjustment there will be. Tomorrow is just a few hours away so stay tuned in.

Chuck Peterson