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.
Rebound Overnight, USDA Report Friday A.M.
Mar 08, 2012
· Grains rebounding overnight after yesterday’s break; US$ lower with equities rebounding after a big one-day break on Tuesday
· USDA to release March crop production report tomorrow morning at 7:30am CST; Pre-report estimates on following pages
· Export Sales this morning at 7:30am CST, estimates:
o Wheat 300k-600k mt
o Corn 500k-750k mt
o Soybeans 600k-900k mt
· Brazil corn exports seen at 8mmt vs. 9.5mmt last year; Brazil gov’t raises corn production estimate to 61.7mmt from 60.8mmt in February
· Brazil soybean export volume seen at 31.8mmt vs. 32.4 last year, soy crop pegged at 68.75mmt vs. Feb estimate of 69.23mmt
· Traders looking for modest drops in old crop stocks on tomorrow’s report; Most producer and traders are looking past tomorrow to the planting intentions report on the 30th
Most aren’t expecting anything too exciting on tomorrow’s report. The grain market seems convinced that the corn acreage number will be substantial at the end of the month. Many corn growers will now lean on heavy crop revenue insurance as Dec corn moves lower. Options are still cheap, relatively speaking. During the last few several, many instances occurred in which an at-the-money option would cost over $1 per bushel for corn. The average yearly trading range for the December corn contract the last 5 years is over $2 per bushel. At-the-money options for December corn currently run just over 50 cents per bushel. Do the math and decide if setting a floor on non-guaranteed bushels makes sense for you.
As always, call the office with questions or concerns.