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.
Friday AM Grain Market Update...
Jun 15, 2012
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Soybeans are trading independently higher this morning while corn and wheat have struggled to remain unchanged to slightly higher. Yesterday’s export sales report was negative for corn and positive for wheat and soybeans. Weather forecasters are having trouble wrapping their heads around current forecasts, as the GFS model is conflicting with the EU model. Currently, the radar is showing a significant rain system across much of KS, OK, and parts of NE and IA. Forecasters are uncertain as to the direction this system will move and whether or not it will move into key corn growing areas in IA, IL and further east.
Outside markets are mostly positive for our ag markets this morning. Crude oil is trading higher, hovering in the $84-85 range this morning. The US$ is lower with equities and metals higher. The bond market has backed off since its “blow-off top” on June 1st. Most economists, as well as government officials, believe that interest rates will remain extremely low for the next 2 years at a minimum.
Informa will release their acreage estimates this morning, ahead of the USDA’s June 29th report. In their prior report, the private group estimated corn acreage at 96.1mil, soybean acreage at 75.8mil and total wheat acreage at 57.6mil. We believe that soybean acreage could rise significantly from March planting to June 29th due to a significant flat price rally.
USDA announced a 110,000mt SRW wheat purchase for the 12/13 crop year. This will be the biggest China purchase of our wheat since 2004. China is also said to have purchased several cargoes of old crop US corn this week.
Argentina soybean harvest is 96.8% complete according to exchange data. Recent rains there have slowed the harvest process. Corn harvest reported at 67% complete.
Looking forward to Sunday night, there are two major factors that could have an impact on the ag markets. Obviously, the first is weather; any major forecast change could result in major volatility. Feel free to email info@standardgrain on Sunday afternoon for the latest forecasts. Secondly, the much hyped Greek parliamentary election will take place over the weekend. To simplify, the “pro-bailout” party is currently holding a narrow lead in the polls over the “anti-bailout” party. Financial markets are on-edge, as the future of the EU could hang in the balance. A scenario in which Greece would leave the EU, abandon the Euro and return to the Drachma currency, would be very negative for the Euro currency and has the potential to have a major impact on our ag market over the short term.