February 20, 2009

The weeks need to stop ending like this! Despite another good week of export sales and shipments, corn and beans were lower today. The bean market has a feeling that the stellar export sales to date will suddenly fall of a cliff — and even if we keep selling, then it doesn't matter, because they will be replaced. So far, soybean export shipments are up 18% over last year and sales are up 6%, all while USDA is still forecasting a 5% drop in year over year exports. There really seems to be concern that even if soybean exports continue strong that we are somehow encouraging too many acres to be planted.

The corn market seems to be suffering from an overall lack of interest. Exports sales and shipments were strong this week but year to date sales are still 44% below last year's total, with USDA forecasting a 28% drop for the year. We need the catch up activity to continue.

Speaking of uncertainty, many comments and discussions we have had in the past couple of months seem to focus on acres. I have heard several times that we should see commodities rally when we have to fight for acres. Unfortunately that hasn't occurred to date, but who knows what could happen. Seems like recently the bean market in particular is trying to go to a price that discourages acres. The recent rains in South America have stabilized their crop and attitudes from the western Corn belt seem to indicate a willingness to plant beans over corn. Our answer to that question has been that local farmers will again favor corn. Is that true?


Thank you to the first commenter on our Blog. This week someone asked what our 30 day outlook was for old crop prices. This is hard to answer as we sit at thirty day lows, but we believe that producer movement at some point will pressure the cash grain basis. Will it also pressure futures prices more? It seems as though there are many outside factors hitting corn and soybean markets right now that are too hard to pin down.

Have a good weekend, Phil Farrell

February 19th, 2009

All grain markets started the day higher as crude oil traded higher and ended up $4 a barrel. Corn closed up 4 cents, wheat up 8 cents and soybeans down 3 cents today. The nearby cash market basis for corn and beans was weaker today as the stronger basis earlier in the week and harder roads have allowed more deliveries. South America weather reports will now give way to South America yield reports as the combines will start rolling shortly in some areas. Export sales will be out tomorrow morning with estimates on corn at 31-47 million bu and soybeans 22-33 mbu. It will be interesting to see if crude oil can continue to rebound and if so will it be because of supply or possibly an increase in DEMAND.

February 18, 2009

Grains broke out to the downside this week followed by aggressive selling. With March Corn taking out 3.50 support and March Soybeans penetrating 9.60. Today grains continued that path with March Soybeans closing down 15 1/2 cents and March Corn the only exception closing somewhat victoriously at unchanged. The grain market is tired of talking about South American weather and is attempting to move its focus on to demand and the up and coming North American growing season. There appears to be a general consensus that acres will meet demand. An item of note is 5yr average price on corn basis front futures is 3.27, while soybean basis front end futures 5yr average at 8.16. Although oversold conditions are starting to surface. It appears that corn futures would like to test the 3.30 area and soybeans the 8.30 area basis front end futures. Hopefully that will be enough to stimulate demand. Export sales data needs high attention at this point in time, for that is where it will be easiest to source any demand changes. The US Dollar Index rallying of late trying to tell us that cash is king and those holding it will likely be rewarded. Although, this raising the export prices of U.S. grains on the world market. Little activity in the outside market arena with the Dow teetering at 7500 support and oil continuing on its slide to apparently the mid to upper $20 area.
Again, if you have any ability to execute basis levels, nearby bids are very attractive.

Jeff Neisler

February 17, 2009

The first trading day of the week, due to the Presidential Day holiday yesterday, brought volatile action to commodities with corn closing down 14 cents and soybeans losing 52.5 cents on the day. Commodities were driven primarily by the broad markets, with crude oil and the stock indexes falling along with a stronger U.S. dollar. Weekend rains in Argentina were less then expected but crops were benefiting from good rains over the last couple of weeks. Current forecasts show good showers moving in on Friday/Saturday. NOPA reported crush this morning of 139.1 million bushels of soybeans in January, analysts had projected only 138.2 million bushels. CFTC reported that large speculators reduced their net short positions in corn and have increased their net long position in soybeans in the week ending Feb 10th. Japan announced today that its GDP has suffered the sharpest quarterly decline since 1974, due to poor export demand.

Chris Spurlock