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.
Mar 07, 2012
· Grains mixed overnight after a choppy session yesterday; Soybeans continue to show most strength among ag complex
· Dec corn breaking upper end of recent "triangle" chart formation on Monday before collapsing back towards the bottom end yesterday; No shortage of sellers on rallies in corn
· Outsides loosely positive for grains today; Equities markets holding steady this morning after yesterday’s sell-off; Crude holding the $105 area for the time being
· No deliveries for corn, soybeans or wheat
· Chinese gov’t officials claiming earlier this week that they will not have any major import needs for corn after last year’s record crop
· Analysts continue the debate over next year’s soybean carryout; Some looking for a sharp drop near intolerable levels if soybean acreage does not rise relative to current USDA projections
· Another dock workers strike in Argentina has halted grain exports for the time being; The now yearly event will likely not last very long; Up to 150 ships may be affected
· Livestock prices correcting lower the last 2-3 days; Most technicians had been looking for a setback while fundamentalist believe the market still exhibits a bullish landscape over the longer term
· Export Sales tomorrow morning; USDA Crop Production on Friday morning
Grain producers still have plenty of time to get a floor set on 2012 production ahead of the March 30th planting intentions report. Our main concern right now would be that the market sells off ahead of the report, leaving producers with no choice but to either buy put options or sell some cash at lower levels on at least a portion of production. The risks associated with this report are enormous, in our opinion. December 560 puts run about 52 per bushel this morning, which would allow a producer to set a floor at $5.08 with unlimited upside. Option buyers should note that volatility levels are currently fairly low. Please call the office for some different ideas on how to protect the ’12 crop during the next couple of weeks.
As always, call the office with questions or concerns.