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.
New Highs in Beans Overnight, December Corn Struggles
Feb 28, 2012
· Grains mostly higher overnight, same story continues: Ag complex led by old crop beans, Dec corn is the weak link
· Traders clearly convinced that corn acreage will be heavy at the expense of soybeans; Recent Chinese demand also supporting the now hugely overbought soybean market; March, May and July contracts all trading $13+ overnight
· Outside markets supportive for grains this morning; US$ lower, equities/metals higher; Crude mostly flat, still trading in the $108-109 range
· US Farmers collected a record $10 billion in crop insurance indemnities for their 2011 crops; 5% of claims on 2011 crops are outstanding, meaning that the amount is likely to climb even higher; Previous record was $8.67 billion in 2008
· Major snow event to help dry areas in eastern Dakotas and southern Minnesota; Light rains to aid areas of far northern Iowa
· Opening calls higher across the board
The fate of corn may rest in the hands of soybeans this week. As soy continues to grind higher, corn has been able to hold onto small gains. The December corn contract continues to be the weak link; however it has been able to hold the $5.50 area for a few days.
I’ve travelled through every major corn/soy state during the past 30 days and have struggled to find more than a few producers who will be planting any significant amount of soybeans. One trader friend of mine recalled the 2007 acreage experience: Most believed 90 million acres of corn was unachievable, as a comparably large number hadn’t been seen since the 1940’s. USDA released a planted acreage number of 90.5 million at the end of March, which was revised upwards in June to 92.9 million.
As always, call the office with questions or concerns.