February 27, 2009 - Don't forget the other half

There was a lot of stuff going on the last couple of days, most of it was negative to the corn market. The USDA released their first real ballpark estimate for corn and soybean acres yesterday with corn estimated at 86 million acres and beans at 77 million. Both were higher than expectations and compare to 86 and 75.7 last year. Today the USDA released preliminary Supply and Demand forecasts which put corn carryout at 1.72 billion and soybeans at 380 million bushels for the 09/10 crop year. These figures are more than adequate and led traders to feel there may be more of a cushion in carryout stocks than they had been expecting for both commodities. The outlook forecasts put out should be treated with a great deal of caution as the USDA was off by 4 million acres on both commodities a year ago...

Corn futures were $.115 lower today but December futures did manage to squeak out a gain of $.0125 for the week, normally that wouldn't be cause for excitement but this is the first weekly gain in seven weeks!

I wanted to mention a phenomenon that has generated significant interest this year for our customers and the Corn Belt in general, the basis contract. We have more bushels on producer basis contracts this year than ever, by a wide margin. This is a sign that producers have noticed the relatively strong basis we have seen, particularly in the case of soybeans, and have chosen to take advantage of the strong cash markets. We think it is a good thing to watch when the market signals indicate it is time to move grain. Lets not forget to market these bushels! In many cases this year producers who are doing the basis contracts have never done them before, lets remember that the grain marketing decision isn't over when you put the grain on a basis contract, the final price still needs to be set by pricing the futures portion of the contract. It seems that sometimes it is all too easy to put bushels out of mind once they are on a basis contract. It is easy to see why, the bushels are moved, you have received an advance on them, etc. Lets remember that final price still needs to be established on these bushels, meaning they are still subject to days like today.

Have a good weekend, Phil Farrell

February 26, 2009

Corn and soybeans futures closed modestly lower on Thursday, amid speculation of higher-than-expected U.S. corn acres plantings this spring and following a weak export sales report for both corn and soybeans issued Thursday morning. Export sales for the previous week showed corn at 17.7 million bushels down 66% from the previous week, soybeans came in at 12.5 million bushels, down 69% from last week. Analysts had been expecting corn export sales to come in between 30 to 37 million bushels and soybeans at 20-31 million bushels. The USDA outlook conference started today, which announced harvested acres at 86 million acres for corn and 77 million acres for soybeans, based on their planting projections. The department also forecast farm exports during 2009 to fall to $95.5 billion, down $20 billion from the prior year.

The USDA chief economist said today that 15% of U.S. ethanol capacity has been idled due to the slowing economy and falling crude prices, with current corn usage projected at 4.1 billion bushels for 2009/2010 marketing year, which is a little over a 3% increase from the current year.

The White House released their first budget plan today which moves aggressively to tackle climate change and shift the nation from reliance on foreign oil to green energy. The budget calls for significant increases in cutting-edge research into renewable energy, including solar, wind and geothermal sources and ways to produce non-corn ethanol, and eventually a gasoline-like fuel, from plants.

Crude oil closed the day up 6% as OPEC signals that it will cut production output again next month to push prices higher. Gold closed almost $24/troy oz. lower today as investors left "safe havens" for riskier commodities such as crude oil.

Chris Spurlock

February 25, 2009

An end to February Break? Planting Rally?
Today corn closed 9 higher and soybeans 3 lower.
In the corn market traders are moving to attempt to insure new crop corn acres away from soybeans. Most traders are looking for up to 2 million acre drop in corn and a 4 million acre addition to soybeans. Corn over the past week displaying some buoyancy shaking off lower movement. It does appear at this point in time that we are poised to potentially rally the corn market. Today we challenged the downtrend line drawn off summer highs along with the 20 day moving average along with establishing a fresh one week high on May Corn at 3.77 3/4. A close this week above 3.80 basis May futures would build confidence that the break is behind us.
In the soybean complex, especially tied to the crude oil market where some support is showing up around the $40/barrel area potentially suggesting that we are near a low in crude. This supporting especially soybean oil futures where the funds have been quietly buying over the past week.
An item of note, President Obama stating that he would like to cut farm subsidies. Hinting that potentially drawing an end to Direct Payments by 2011.
Up Coming News:
7:30am Thursday Export Sales estimates as follows:
Corn 750-950 mt
Soybeans 550-850 mt
Jeff Neisler

February 24th, 2009

Higher equity markets (Dow Jones up 236 points), and higher crude oil (April futures up $1.44) provided support for a modest gain in the grain markets today. Corn and soybean basis both remain firm on limited producer selling. The investment and hedge funds have a neutral position in corn, long 31,000 contracts of soybean futures and short 18,000 contracts of Chicago wheat contracts. Corn and Soybean insurance prices are being calculated in February with Dec 09 futures avg currently at $4.05 and Nov 09 soybean futures avg at $8.91.

February 23, 2009

With the dawning of a new week has come higher prices in the row crops primarily corn and beans,while leaving wheat to fight its own battles. Corn closed up 1 1/2 to 2 cents on the day and soybeans closed up 10 to 13 cents while wheat closed down 8 to 9 cents.Less than expected rainfall in the southern hemiphere and a higher close in Asian markets overnight helped revive the markets today.The weekly inspection report was right at traders guesses. Without a boost from ethanol use or biodiesel it is going to be hard for us to get corn and bean inventories down to a level that will encourage additional buying by the funds or the speculators. Thus the level for reduced corn inventories need to see more export demand more feed demand and more ethanol usuage. There will be time for weather markets later this year but the real question is where will all this demand come from

Chuck Peterson