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.
China GDP Data Negative for Commodities
Apr 13, 2012
· Grains mixed overnight; Wide range trade in beans started the session higher and is now trading towards slightly lower on the day
· Nearby soybean contracts posting new high closes yesterday; Tuesday’s reversal negated by chart action; Nov soybeans trading 25+ cents off recent highs as old vs. new spreads have been strong
· China GDP announcement last night caused setback to many financial markets; China GDP rose 8.1% vs. estimates of 8.3%
· Rains currently moving east through MN, IA and further south; Precip is welcomed by producers who have seen very little rainfall/snow during the last several weeks
· Forecasts calling for warmer weather to hit the Midwest this weekend, however colder temps may return by middle of next week
· Weekly export sales were strong yesterday, coming in well above trade expectations; Soybean exports below expectations, wheat within expecations
· Grain traders should note the drastic rally in cattle and feeder cattle prices during the last 2 sessions; Both commodities posted new lows early in the day on Thursday and have rallied significantly since on short covering
· Outside markets mostly negative for grains this morning; US$ up, equities/crude lower
New crop corn prices continue to be the biggest concern for producers across the country. Current futures price levels paired make significant profitability difficult to attain on operations with high cash rents and increasing input costs. Weather will be the driver of market action from here on out. The USDA has made it clear that they’re not ready to lower carryout significantly, as they believe that new crop corn will come in early in southern growing areas. Ideas that lower than expected yields are possible via a weather event is December corn’s best chance of seeing $6 again. We still advise that producers take steps to protect the gap between current price levels and crop insurance despite the unattractive board price.
As always, call the office with questions or concerns.