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RSS By: Joe Vaclavik

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.

 

Follow-Thru Buying Overnight After Blockbuster Report...

Apr 02, 2012

 

·         Grains mixed overnight following Friday’s blockbuster report from the USDA; Gov’t posting corn acreage at 95.9 million while simultaneously dropping stocks to near pipeline levels; Market responded with a trade featuring limit-up old crop corn and strong old/new spreading
·         Soybean acreage pegged at 73.9 million on Friday, far below the average trade guess of 75.4; Beans were up 45-50 cents on Friday and saw follow-thru buying overnight; Most believe that beans need to buy back at least 1.0 – 1.5 million acres back from corn; New crop corn vs. soybean ratio now at 2.54 : 1
·         Old vs. New corn spreads making new highs overnight; N-Z trading an inverse near 106, K-Z trading inverse near 110
·         Wheat prices able to rally sharply on Friday after both stocks and acreage came in below pre-report guesses; No follow-thru seen overnight
·         Forecasters looking for colder temps to grip the Corn Belt beginning Saturday; Some looking for overnight lows in the 20s next week for many corn and HRW wheat areas
·         Soybeans look to target August/Sept highs near $14.00 in the Nov contract; Nearby May looks poised to test the $14.70 area
·         USDA should release first crop progress report this afternoon; Markets close on Friday for Good Friday
·         Outside markets mostly flat today; Most look for corn, soy and wheat to continue their path higher this week
 
            Using current USDA estimates, the market will use the next several days to digest the prospects of both a 14+ billion bushel corn crop in 2012 and near pipeline old crop supplies. Old vs. new corn spreads likely move higher, or hold steady until we know more about the ’12 crop. Soybeans now presented with the likelihood of a negative carryout IF significant acreage switching is not seen. 
As far as marketing is concerned, we believe that $13 cash is a great place to make a first new-crop cash sale for soybeans on a small amount of your production. The potential for a greater move higher is certainly there, however producers should stay away from speculation as much as possible. Corn producers may want to use the next few days to roll down any December PUT options at the 590 strike price and above. Given new info from the USDA, we believe downside may be limited for the next 1-2 months.   
 
As always, call the office with questions or concerns.
 
Regards,
Joe Vaclavik
(312) 462-4438
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