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.
South American Weather Issues Persist...
Dec 29, 2011
· Grain markets mixed overnight with soybeans and wheat lower, corn steady; Funds actually impressive buyers of ag complex this week despite the holidays
· South American weather issues and newly found technical strength helping the ag markets; Most “chart bears” now likely out of the short side in the grains
· Limited rainfall and hot temps across major growing areas of Rio Grande do Sul and Parana will continue to increase crop stress according to forecasters; Rains across the Mato Grosso state will be helpful for producers
· Analysts in Argentina and US are moving estimates for Argentina corn production lower, ranging from 24 to 30mmt vs. last year’s 23mmt and USDA’s current 29mmt; Many believe damage to corn crop may be done while the bean crop has a much better chance to do well
· Outside markets mostly mixed with a higher US$, higher crude, flat equities and collapsing metals market
Producers who sold cash grain at lower futures prices and re-owned with call options should be looking good. Basis levels widening out in most areas as markets rally. Market action tells us that the weather issue in South American is real; however one forecast change could certainly cause a major setback across the board. Nearby corn trading 60+ cents off recent lows, nearby beans about $1 removed from recent lows. Traders looking forward to Jan crop production report and new weather forecasts after the new year. We have not issued any recommendations on the ’12 crop. We’ll likely not recommend any sales until the Feb-April timeframe, which history tells us is generally the best time of the year to price grain on rallies.
Producers: No new recs
Specs: No new recs until next week.
As always, call the office with questions or concerns.