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.
Down Overnight Despite a Strong Weekly Close...
Mar 19, 2012
· Grains sharply lower overnight after a strong close Friday and initial follow-thru buying early last night; Old crop soybeans trading leading the way down, as both corn and soybeans bear spread vs. new crop contracts
· 860 contracts traded at 5.75/Dec corn last night, part of a massive sell order that could not penetrated early in the session
· No major reason for the break overnight, most blaming “profit taking” or “technical setback”
· China gov’t will offer farmers more subsidies for grain production if oil prices continue to rise
· Outside markets are quiet with currencies/crude/equities/metals all near unchanged
· Brazil soybean harvest 55% complete vs. 47% last week and 43% on avg
· Corn basis leveled weakened last week after several weeks of strength; CIF and Decatur both down 8-9 cents
· Traders continue to discuss the prospects for increased Chinese demand for corn and soybeans; China gov’t sources estimate current corn stockpiles at 10% of last year’s
· Heavy rainfall this week across much of the country should assist HRW wheat growers and hamper early corn plantings temporarily in many areas; Winter wheat should develop at an accelerated pace through next several weeks
Grains look to start the week lower; however we remain a short-term upside bias based on last week’s strong closes. Weekly charts are looking a little better. A weekly continuation chart for corn shows higher lows in each of the last 4 weeks. Bulls are excited at the idea of a friendly stocks report while bears continue to tout massive acreage. A season rally would not be out of line during the next few weeks.
We continue to advise PUT option strategies for new crop corn and soybeans ahead of the March 30th acreage/stocks report. Call the office for specifics.
As always, call the office with questions or concerns.