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.
Corn Tests Yesterday's Lows Overnight...
Mar 21, 2012
· Grains mixed overnight after yesterday’s collapse; Corn, soy and wheat contracts falling hard yesterday after Monday’s technical reversal in May corn
· Corn trading near yesterday’s lows on the overnight session after trading above 6.50/May early in the session; Some blame lack of bullish news while others believe recent rains set up many farmers for an ideal planting season
· Rains across several plains states helping winter wheat; Although the crop is far ahead of schedule in many areas, yields should be good barring any significant frost event
· Talk of another China soybean purchase yesterday may have supported the soy complex overnight
· Cash markets across the US correcting along with break in futures prices
· Oil World releasing new, and not surprisingly lower South American production estimates; Brazil soybean production pegged at 66.5mmt, down from 68.0 previously; Argentina soybean production down 500,000mt to 46.5mmt
· Argentina truckers strike still going strong as corn and soybean harvest begins; Truckers to meet with gov’t officials tomorrow
· Many farm groups upset over new budget proposal for 2013 that would cut ag subsidies and make crop insurance more expensive for producers and less profitable for insurers
· Outside market mostly quiet overnight
The corn market in particular did a complete 180 degree turn since Friday’s bullish close. As far as charts are concerned, corn and wheat still look range-bound from our end. A correction to the downside in soybeans is good for the long term health of the market. Option prices for new crop corn are still cheap in our opinion. As of yesterday’s close, the 5.60 Dec PUT option was worth just under 53 cents. Buying this option allows a corn producer to set a floor at 5.07/Dec futures with unlimited potential for upside price improvement.
As always, call the office with questions or concerns.