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.
Slow News Day in Chicago, Grains Mixed
Nov 15, 2012
The grain markets are mixed this morning. Soybeans were unable to penetrate yesterday’s highs overnight and have sold off since. Major support in the January soybean contract will come in near Tuesday’s low at $13.91 ¼. Soybean spreads saw a significant rebound, but are also weak to start the day today. South American weather has been mostly benign; sources in Brazil and Argentina firmly believe that the potential for big crops remains intact despite some minor weather issues. The March corn contract will run into some significant resistance in the $7.35 – 7.38 area. Fundamental news has been slow overall. The weekly Export Sales report is delayed until tomorrow due to the Veteran’s Day holiday.
More talk regarding the Mississippi River and its low water levels has been circulating. Some are pushing for action from the government, which may include dredging and removal of rocks in an effort to clear the path for barge traffic. Most believe that the river will not close entirely, but that traffic will have to remain slow. A continuation of these issues on the river can affect everything from export activity to domestic basis levels.
The USDA will release its Cattle on Feed report tomorrow. Analysts look for an On-Feed number near 94.6%. Placements are expected near 87.3% while marketings are estimated at 102.6%.
China’s government will continue to buy domestic corn and soybeans from local farmers in order to build state reserves. China’s demand for US soybeans has been strong, however many now look for switches/cancellations of some sales in the near future.
Yesterday’s NOPA Crush came in at 153.5mil/bu vs. the average analyst guess of 147.7mil/bu. Crush in September was 119.73mil/bu. The USDA raised their estimate for soybean crushings on their most recent Crop Production report by 20mil/bu as part of a 100mil/bu overall demand increase for the 12/13 crop year.
The Ukraine will export 5mmt of corn to China, according to a Bloomberg article this morning. Ukraine wheat supplies have been tight; many believe a total ban of exports is imminent.
The soybean market acts poor to start to the day. The trend remains lower while fundamental news is slow. Most chart readers continue to maintain a bearish stance on the corn, soybean and wheat markets; some long-term chartists believe that the bean market will move as low as $12.00/bu over the long term. Many producers are beginning to grow concerned as new crop 2013 corn and soybean contracts move lower. Nov ’13 soybeans are now trading below $12.80 while Dec ’13 corn has been able to hold $6.00 for the time being. Producers around the world have huge economic incentive to grow enormous amounts of corn, soybeans and wheat during the next 12 months.
Standard Grain provides futures/options brokerage to farmers, feedlot operators, elevators, processors and private traders. Call us today at (312) 462-4438 or visit www.standardgrain.com