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Thursday's Market Recap 2/16/12
Feb 16, 2012
The price of corn gained on the price of beans after a large run in the month of February. In fact, March beans are up 59 ¼ cents so far this month while March corn is down 2 ¾ cents even after today’s trade. March corn finished 9 ¼ cents higher at $6.36 ¼, March beans 2 ¾ cents lower at $12.58 ¼, and March wheat 2 ¾ cents higher at $6.28 ¾.
USDA weekly export sales data showed corn sales at the high end of estimates while beans and wheat were at the low end. We did however see another wheat export sale to Egypt, this time for 180,000 MTs. Rumors of Chinese corn purchases were thrown around today, we just have to keep in mind how many times we heard these last year that ended up baseless, never coming to fruition. We will discuss the reality of corn exports to China again when we see actual USDA sale announcements, not without confirmation though.
I have talked a lot about the corn-to-soybean ratio over the past couple of days. This is the first day since January 31st that the new crop ratio fell (meaning corn gained on soybeans). The market has done its job trying to predict an increase in corn acres before we actually see planting intentions. We are at great levels for hedging new crop soybeans again as we don’t see the need for beans to really "bid" for acres given current world supply. The market continues to put a large premium estimating South American production to be lower than current USDA estimates. If these fears are in fact overstated and production ends up not as bad as "some" say, then we may find this latest rally a good place to have sales on the books. Based on what we have seen so far for weather we still agree with the USDA expectations for S. American production. For a free trial of the EHedger research, please click on the link below.
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