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.
Lower Overnight after Disappointing Report Day Action
Feb 10, 2012
· Grains lower overnight after yesterday’s back and forth trade; March corn cleaning out buy stops above 6.50 early yesterday before collapsing to close lower
· March soybeans showing a similar action yesterday, cleaning out stops above 12.44 ¾ before breaking to close lower; We would describe yesterday’s USDA report as being neutral to slightly bearish, as a neutral report is generally viewed as negative
· Volatility in March corn and soybeans dropping as much as 4% on yesterday’s report
· Old vs. new crop corn spreads backing off yesterday and again overnight after rallying early in yesterday’s session; Spread action can be a good indicator of market sentiment in general
· Freezing weather posing problems for grain producers in parts of E. Europe; Winter grain in Ukraine areas could see major setbacks
Yesterday’s USDA report did little to convince us of market direction, one way or the other. Our best guess that the corn and soy markets stay range-bound until more is known about spring weather and acreage allocation. We wouldn’t be surprise to see South American production numbers drop even further (big crops get bigger, small crops get smaller). March is a big month for USDA reports. Crop production on the 9th, Grain Stocks/Prospective Plantings on the 30th. Hedgers should take a serious look at new crop corn and soybean contracts. Despite all the market chatter, prices this year will be most heavily influenced by weather, barring any huge surprise in the acreage numbers. Most studies have confirmed that per acre, planting corn is a "lay up" for Midwest producers. Risk for corn producers is a high acreage number combined with good weather this spring/summer. Everyone have a great weekend!
As always, call the office with questions or concerns.