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.
Quiet Overnight, Range Trades Continue in Grains
Feb 23, 2012
· Grains mixed overnight; Corn and wheat trading tight ranges while beans were able to rally back from last night’s lows
· Argentina/Brazil crops stabilized for time being thanks to recent storms; More rain expected through next few days
· USDA Outlook Meetings today and tomorrow in Washington; Most anticipate bearish tone from the gov’t; Focus on large plantings and growing grain stocks is likely
· Crude oil trading over $106 this morning as tensions between Iran and the West offset concerns over a global demand slowdown; Brent Crude trading nearly $20/barrel over WTI (Nymex)
· Euro currency showing strength again today, trading the highest levels since December; This week’s 2nd Greek "bailout" adding to strength
· Export Sales delayed until tomorrow morning due to President’s Day holiday; March options expire tomorrow at the close
· July-Dec corn spread trading over 80+ again this morning after trading lower end of recent range; Yesterday’s rally limited to old crop contracts as Dec struggles due to perception of a high acreage number from USDA next month
There is no real reason to believe the corn market breaks out of its recent range this week. A wedge formation (pictured on next page) is forming on the charts, indicating that some sort of breakout may occur in the coming weeks. New crop soybeans are drastically overbought (pictured next page). Soybean growers should initiate some sort of option strategy to set a floor on 25% of their crop this week. Beans may have a bullish fundamental outlook when considering the possibility of a low acreage number; however it’s tough to very bullish beans if you’re very bearish corn for the same reason (acreage). Call the office for specifics.
As always, call the office with questions or concerns.