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Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

A Closer Look at Informa's Numbers

Mar 02, 2012

   Informa "world" numbers were released this morning, below are a few highlights: 

Total South American Soybean production down 3.4 million metric tons from last          month.  
Brazil seen at 68.0 million metric tons, down 2.0 million from last month.  
Argentina forecast at 47.5 million metric tons, which is actually up 1 million.  
Paraguay down 2.4 million metric tons to 4.0 million.  
Argentina corn seen at 22.5 million metric tons, which is unchanged from last month.  
Brazil is seen at 61.5 million metric tons, unchanged from last month as well.
 
In my opinion "new" crop corn has to be looking fairly attractive to Chinese importers, especially if they sense a poor growing season may be upon their doorstep. Obviously the fundamentals are favoring the "July vs. Dec" bull spreads, but just keep it in the back of your head that last year many in the trade were also wildly bullish this spread, and it ended up putting in it's high during the first week of March. My point is be careful getting overly optimistic with the "old crop vs new crop" corn spreads.  If you are playing this game I advise drinking only very small doses. Better yet you might want to take a look at trading this one from the opposite side of the  fence for a short-term pop.    
 
The funds continue to view soybeans as the "darling" of the trade. The USDA announced 5 cargoes of beans to "unknown" this morning, 2 old crop and 3 new crop.  This was NOT anything the market hadn't been anticipating, so no real excitement from the news. Similar to the corn market, I think the bull spread in soybeans may have ran it's course (at least for the interim), therefore I am not opposed to "Selling the July beans and Buying the Nov "new" crop beans."  
 
There is some talk circulating about what seems to be an annual dock workers strike in Argentina.  It seems like every year right after harvest kicks in the dock workers go on strike.  I guess if they keep getting raises and better benefits out of the maneuver...why not?  I would suspect this problem goes away just as quickly as it started, if not it could be another notch against South American exports. 
 
As far as "weather" is concerned, I have a feeling the market is viewing it as more "bearish" than "bullish," especially as the trade starts to make the shift from focusing on South American weather to US weather. I still think South America could see a few additional hiccups, but I believe this market has somewhat tired of the news. Starting in mid-March it will be all about US planting conditions and or issues in China and Canada. 
 
In my opinion, the "outside" market winds are starting to shift. The US dollar is stronger, crude oil is under pressure, while gold, silver and copper are all trading lower. Pay attention to these trends, if they continue I would have to imagine pressure will eventually start to spill over into the Ag markets. It may not be immediate, but I could see it start to gradually affect bullish momentum.  
 
There is more than likely some new money flowing into the commodity markets with this being the start of a new month, that is why downward pressure was limited "TODAY." Be careful though as we move into mid-month.
 
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