March 20, 2009

It's the first day of spring and the marketplace appears to be on a break. With corn finishing the day unchanged and soybeans posting modest gains of 11 cents on old crop and fractionally higher on new crop. Other than the inflationary argument, we have not necessarily made any fundamental change in our supply and demand items. One could argue that higher prices from here are likely to add to our corn acreage and further hurt demand. Production would be a longer-term bearish item.

Large speculators exited short positions in Chicago Board of Trade corn, soybean and wheat futures this week, shifting to net long in corn for the first time in months, according to Commodity Futures Trading Commission data released on today.

Soybean futures closed higher Friday, with the nearby May contract leading the upside on worries about tight old-crop supplies and disputes in Argentina. The markets felt support from ideas that a dispute between Argentine farmers and the government could shift more demand to the U.S. from South America. Farmer unrest revolves around unhappiness with Argentina's grain export tax.

~Have a good weekend - Chris Spurlock

Thursday March 19,2009

Wednesday's action by the Federal Reserve that infused an extra $30 billion dollars into the stimulus package has really weakened the dollar and strengthened the commodities by bringing renewed noncommercial buying to the grain market. The other sectors of the commodities markets also had a good day with gold up $70.00 an oz and crude oil up over $3.00 dollars a barrel. The market opened stronger than overnight with corn up 15, beans up 35 and wheat up 30 on the open. Shortly after the open cash selling of grain came into the market and drove prices down to the low of the day. The rest of day was lackluster with soybeans finishing up 25 corn up 8 and wheat up 25. Even though the weekly export sales were considered bearish the market shook the news off and trended higher. Seasonally this is usually a prime time for a pre-planting rally couple that up with some noncommercial demand and this market could have some potential. Having said that remember there is a lot of old crop corn and beans sitting in farmer bins waiting for a home. Basis levels were softer today by 2 to 3 cents which can be expected by the rally.

Don't forget our breakfast meeting on Wednesday March 25th at Maria's restaurant in Morris. Anyone wishing to come please call one of our locations and we will get you registered.

Chuck Peterson

March 18, 2009

Today the grains in Chicago closed mixed. May Soybeans closed up 2 and May Corn down 2 1/4. With the exception being May Wheat which closed down 22 1/2 cents as US wheat prices are higher than international competition.

The grain market is taking note of a few things today:
1) Additional premium needed to old crop beans to satisfy Chinese appetite as the Argentina farmer is about ready to strike against the soybean export tax.
2) US Dollar Index traded to a fresh 1 month low today.
3) A surprise jump in Crude Oil and gasoline inventories
4) Rumors of Valero Energy Corp bid on 7 Verasun ethanol plants at 25% replacement cost or 61 cents/gal awaiting bankruptcy court approval.

Overall, the grain markets are trying to consolidate prior to USDA March 31st Planting Intention Report. With the likely hood of old crop soybeans continuing to build premium vs. all other markets in the short run.

Up and Coming News:
Thursday 7:30am CST USDA Export Sales estimates as follows:
300-500 MT Soybeans
600-800 MT Corn
150-300 MT Wheat

Jeff Neisler

March 17th, 2009

Argentina is also facing huge economic issues and the government in a concession to get things moving is in constructive negotiations with farmers to end the strike of grain movement. The latest news release is a 2-tier system that changes the current 35% export tariff across the board. In the new agreement, small producers would get an 8% break to make the new tariff 27% and large producers would still have to pay the 35% but would get a 5% rebate back that can be used for fertilizer, seed, and other farm related items. If the new tariff scale is agreed upon, that would release a lot of pent up soybeans into the world export market.

Interesting to note that Aventine Renewable Energy out of Pekin IL issued a press release looking for immediate capital to stave off filing for bankruptcy. If Aventine does not make it, that would be the end to all 3 big publicly traded ethanol companies. VeraSun and Pacific Ethanol have already filed and gone through the process of bankruptcy, obviously not a great sign for expansion of ethanol plants on the public sector.

Scott Meyer

March 16, 2009

The soybean complex was the leader today with some impressive rallies as money flowed back into commodities. There seemed to be some discussion today about fresh Chinese demand as well as a labor situation developing in Argentina the fact however is that today’s rally was all about money flowing into commodities as funds were reported to be in for 5,000 contracts on the day. There was a pickup in hedge selling from U.S. producers but this didn't seem to lend too much pressure to the market, surprising since we were up $.40 at one point and producer selling should pick up at some point both in U.S. and South America. For the record export inspections came in at a rather disappointing 22.4mil.bu. Let's see if the influx of fund money continues over the next few days...

Phil Farrell