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 Struggle to Trade Lower Overnight
Jan 24, 2012
· Grains lower but stable overnight after a strong performance the last several; Corn in particular acting very resilient given recent "bearish" UDSA report; Strong cash grain markets continue to offer support
· Outside markets modestly negative this morning with US$ slightly higher, crude/equities barely lower
· Old vs. New crop corn spreads continue to rally as traders give last week’s USDA report the cold shoulder; Trade clearly believes that we may run into some type of corn shortage this summer
· S. American production numbers continue to fall; Cordonnier lowering Argentina corn number to 20mmt from his previous 21mmt; Lowering Arg soybean production to 49mmt from 50mmt; Dr. Cordonnier lowered Brazil soybean production to 70mmt from 71mmt and left Brazil corn unch at 58mmt
· Ethanol futures increased for the third straight day yesterday on SAM crop issues and high crude oil prices, which have been supported by EU agreement to ban Iran oil imports
· Opening calls modestly lower across the board
Bears will look to jump on the lower open today, however we really wouldn’t be surprised to see corn, soy and wheat come back to trade in the green. Bull markets open lower and close higher; Today will be good to test to find out just what kind of market we’re trading. Corn spread action leaves us no choice but to be friendly old crop corn in particular, which will hopefully provide enough strength to drag the ’12 contracts back to level that producers find attractive. Beans seem as if there is something else going on…perhaps China buying the board or something similar? We’ll find out after the fact. Regardless: Bears beware.
As always, call the office with questions or concerns.