January 15, 2010

Good afternoon bloggers! The good news for today is that the Chicago Blackhawks are on track for winning Lord Stanley’s Cup and it was on this day in 1777 the state of Vermont declared its independence from Great Britain.

Today we witnessed an already bearish market take another hit following Tuesday’s USDA report. March corn futures were down 9.5 cents and finished the day at $3.71. Beans finished 10 cents under at $9.74. Farmers in both N. America and S. America are now facing a market down over 50 cents from Monday. The lack of selling and movement within the pipeline has caused for end user demand to increase. Elburn Coop Morris Terminal has seen a corn basis increase of 25 cents which shows us a growing demand. Not only has the local basis strengthened significantly over the past 15 days, but New Orleans has corn basis is at 43 cents over while beans have remained unchanged. Estimates show no expansion of US soybean acreage for next year, but show increased S. American stock which may be burdensome for next year US stock.

Logistics will be crucial for farmers and elevators in the near future. We have been hearing through the grapevine about corn quality. Reports from certain regions of the country are having issues with open ground piles that have been exposed to snow and precipitation. The US Southeast will be receiving rain from the Delta region as well as rain hitting the Tennessee Valley. The Midwest will be fairly dry except for Kentucky receiving a little rain on Sunday. Illinois is forecasted to be relatively mild over the weekend with possibilities of receiving some precipitation late next week. Just as a friendly reminder, markets will be closed Sunday and Monday, opening again Monday night in observance of Martin Luther King Day.

Thursday January 14th, 2010

Is it just me, or has the weather made you feel oddly tired of late. Anyway, I bring news of Energy this evening. (Pardon the pun, man is that corny.) The market has finally seen a week of losses with most coming yesterday after a bearish Department of Energy report. It was builds across the board, 3.7 million bpd on crude, 3.8 million bpd on gasoline, and 1.4 million bpd on heating oil/diesel. If I was a betting man I would of thought larger losses were in store, but so far in two days the market has given back about .03 cents on heating oil and .03 cents on gas.

Today's losses or lack of gains were due to weaker than expected retail sales and the unpredicted new jobless claims rise by about 11,000 to 444,000: Seems there is once again more folks looking for work. Also today came talks from the CFTC in the way of a proposal which would enforce position limits on traders in an effort to rein in excessive speculation in energy and commodity trading, mainly oil. As expected thus far the CFTC position is one of a light handed initial approach to limits, really only effecting the big players; of course those players insist regulations or limits make markets more volatile by, "distorting price functions and pushing traders to unregulated offshore markets". Time will tell how enforcement will work but in the short term it isn't news the bulls need. The short term outlook is bearish with some more downside most likely in store. Might be a good weekend to fill the tank, but hold off on locking in all of your spring gallons just yet.
Thanks for reading,
Zach Winter

Wednesday, January 13, 2010

The corn market further explored the downside today. The market did begin to stabilize after the open however and finished 15 cents off the lows for the day. The new crop months actually managed to close higher with December up $.01 while old crop March corn was 8.5 cents lower at $3.84. For much of the session, the USDA report continued to exert a negative influence. This was especially true as there was a lack of any other fresh fundamental news. However, as corn started to stem the slide, end users stepped up to buy the break with livestock feeders and ethanol plants likely taking the opportunity to lock in some nearby needs as the producer continues to sit on the sideline and ponder how to handle the 40 cent break. Also helping to rally the corn market back was the perception that the index funds would buy the close in big numbers and indeed corn did rally 5 cents in the last 15 minutes.

The soybeans were the best performer throughout today’s session. Once they weathered the storm of 20+ cent losses in the corn and $2.00+ losses in the crude oil, they were able to post gains for the day with 14 cents better at $9.92. Nearly half of yesterday’s losses were recovered. The USDA report did help to influence the market today with the best support coming from the increased U.S. export forecast which now stands at a record 1.375 billion bushels. From a production standpoint traders will focus on South America where the weather forecast seems to be ideal with recent rains to be followed by 5 days of dry weather.

Phil

Tuesday January 12th, 2010

If you are on the side of producing grain, it was a bad report card issued by the USDA today in it's supply & demand findings. The USDA increase corn yield from 162.9 in Dec to a whopping 165.2 bu/ac. Harvested acres were also somehow increased from 79.3 to 79.6 million acres which increased production a total of 230 mbu. Traders were expecting a reduction of near 100 mbu leading into the report. Demand was also surprisingly increased 140 million bu with feed use up 150 mbu from Dec. In the end, carryout was increased 89 mbu to 1.764 billion. Corn closed down the limit of 30 cents with an outrageous number (over 100,000) of contracts offered to sell limit down in the March futures month. Bids tonight have 15 cents of corn protection to reflect the offers to sell when the market closed.

The USDA soybean report showed production up .7 bu/ac to 44.0 with acres slightly down from 76.6 to 76.4 with an end result of 42 mbu more of production. Demand was increased as expected 52 mbu with exports up 35 mbu for a net rusult to carryout of 10 mbu less. The SA crop estimate was increased for Brazil from 63.0 million metric ton to 65.0 and Argentina was left unchanged at 53.0. Last year Argentina had 32.0 mmt and Brazil had 57.0 mmt.

Time will tell if any of these numbers are accurate, but the USDA did leave the door open to a lot of revisions as they already announced they would be resurveying farmers in many key states and would revise production numbers in their Mar report.

Scott Meyer

Monday January 11th, 2010

Corn futures closed the day lower amid cautious trade ahead of Tuesday's January Crop Production report. Prices spent the majority of the day in the red, but within a very tight trading range. The U.S.D.A. will release crop production and stocks reports Tuesday at 8:30 a.m. EST. Most traders are expecting a reduction in crop size and 2009-10 ending stocks, although they say that weak demand will likely keep the carryout projection from dropping too significantly. Index fund rebalancing, which has been a supportive factor in the market in recent days, is expected to continue through Thursday, according to traders. Fundamentally, the market remains weak, some analysts say. They add that it could take significant outside market support to propel prices past resistance around $4.25.

Soybean futures fell for the fourth consecutive trading day Monday, as speculative selling continued to erode prices amid bearish technical and fundamental outlooks. The market has taken on a bearish persona, looking past a potential reduction in government carryout forecasts on trader expectations that exports will soon drop off as demand shifts to South American origins. As with soybeans, traders are remaining cautious ahead the USDA report that due out tomorrow morning.

~Chris Spurlock