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.
Grains Hold Recent Lows...For now
Dec 15, 2011
· Grains slightly higher overnight; Corn and soybeans both tested recent multi-month lows yesterday while crude and other outside commodities collapsed
· Outsides are mostly supportive today to begin, however we wouldn’t rule out more downside in the markets that took the biggest hits yesterday (gold, silver, crude)
· Export Sales this morning at 7:30am CST; Pre-Report Estimates:
o Wheat 300k-400k mt
o Corn 400k-600k mt
o Soybeans 400k-600k mt
· China-based commodity analysts doesn’t see the government there adding to corn stockpiles through imports until LH of 2012
· Russian grain analyst SovEcon raised estimate for Russian grain output to 92mmt from 90mmt previously
· EIA weekly ethanol production at 938k bpd last week, down 16k from the previous week; Ethanol stocks at 17.1mil/barrels down 800k
· Canadian Wheat Board will ask courts to block a bill that would end its 68-year-old grain monopoly
· Rains in the RGDS state of Brazil, will continue to be dry for a couple of weeks as planting wraps up; Rio Grande do Sul is the 3rd largest growing state in Brazil
The trend in the grain markets remain lower, bottom-pickers beware. Most technicians are looking for a break below 5.80 in March Corn sometime during the next couple of sessions. We remain friendly both the corn and soy markets long term, however short-term downside appears imminent given the circumstances. With the collapses in gold, silver and crude yesterday, heavy margin-call selling seems to be a reasonable assumption today and tomorrow. Gold is trading below the 200 DMA for the first time since Jan ’09, possibly signaling a trend change in what has been the strongest of all commodities during the past several years.