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 Rebound Overnight
Apr 19, 2012
· Grains sharply higher overnight after sharply lower closes yesterday; May corn trading below $6 during yesterday’s session, now trading near 6.15; Not any major news this morning regarding the grains
· Many cash traders eyeing stronger basis levels on yesterday’s break; Old vs. new crop corn and soybean spreads up only slightly this morning despite flat price rally
· Dec corn trading down to major support near 5.23-5.25 yesterday; Holding support there should be seen as a positive sign for the bulls
· EU grain merchandisers reporting that Japan all but halted their interest in EU origin corn due to quality concerns, suggesting they may only resume purchases after harvest
· Export Sales this morning at 7:30am CST, pre-report trade estimates:
o Wheat 400k-650k mt
o Corn 650k-900k mt
o Soybeans 750k-1.1 mmt
· Outside markets mostly mixed to start the day; US$ higher, equities mixed, crude flat
· Corn planting to move forward this weekend after some rains occur on Friday/Saturday; Major progress should be seen across the country early next week
Grain markets are slated to open the day session sharply higher today. We’ll look for a strong close to end the week before we’re totally convinced that a near-term low has been seen. For the corn market, there is still a major fundamental disparity between old crop and new crop contracts. Cash traders continue to tell us that corn stocks are tight while we know that the corn being planted is off to best start in years. Corn has rebounded versus soybeans in new crop contracts during the past couple of sessions. We believe that there will be a 1.0-1.5 million acre increase in soybeans from prospective to final due to the sharp increase in price. Some traders recall the 2009 scenario in which both corn and soybeans gained 1+ million acres from March intentions to final.
As always, call the office with questions or concerns.