Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.
Big Soybean Sales Expected Again...
Nov 08, 2012
The grain markets are marginally higher this morning after a mixed post-election trade yesterday. Outside markets have been weak since the Obama victory. The stock market plunged yesterday along with crude oil prices while bonds shot higher. We do not believe that the election result will have any major impact on our ag markets over the near term. The longer term implications of the result may include more quantitative easing, which would ultimately lead to a lower US dollar and strong commodity prices. Still, we believe that currency action and macro events pale in comparison to the lasting effects of this year’s drought, which will be felt for months to come. Corn, soybeans and wheat continue trade within their respective ranges. Wheat futures have been the strongest as of late. The market is threatening to breakout above major trendline resistance. The winter wheat crop is off the poorest start on record according to Monday’s Crop Progress report, while exportable supplies in the Black Sea region remain tight.
The USDA will release their Export Sales report this morning at 7:30am CST, Pre-report estimates:
· Corn 100,000 – 300,000mt
· Soybeans 400,000 – 700,000mt
· Wheat 200,000 – 400,000mt
As soybean export sales continue to run rampant, many question what type of action the USDA may take on Friday’s report. Most traders look for a slight increase in the soybean yield estimate, but also look for increase demand on the other side of the balance sheet. Many look for a reduction in the projections for corn exports while looking for a slight decrease in overall corn production. Harvested acreage will likely not be changed until January according to the USDA. Analysts look for wheat carryout to grow by about 12mil/bu on tomorrow’s report; however some now believe that a bullish surprise could be in order due to increased feed usage and a possible increase in exports.
We look for a choppy trade into tomorrow’s report. Spec traders may want to take a shot at owning soybeans against the October lows in the $14.80 - $14.90 area on a post-report break, using tight stop orders. We’re ultimately of the opinion that the markets may be range-bound for the next several weeks, barring any production disaster in Brazil and Argentina. The status and perception of grain production in South America will be the biggest driver of these markets for the next several months. The world desperately needs a "good" soybean crop from these areas.
Need help with your marketing or trading? Call Standard Grain today at (312) 462-4438!