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.
Steady Overnight after Yesterday's Collapse
Jan 13, 2012
· Grains mixed overnight after yesterday’s USDA induced collapse; USDA numbers themselves were not overly bearish, they were simply far different from what traders had expected (traders clearly had bullish numbers priced-in ahead of the report)
· Yesterday’s report could implications on this year’s acreage allocation of corn vs. soybean ratios were to make a significant move as a result of the report; 2CZ-SX losing big yesterday
· Soybeans able to close 30+ cents removed from yesterday’s daily lows
· Our lead forecaster noting no major changes in SAM weather patterns this morning; Scatted T-Storms affect Southern Brazil and Paraguay over the next 24 hours
· Outside markets mostly negative for grains today with crude/equities/metals slightly lower, US$ slightly higher
There was nothing groundbreaking on yesterday’s USDA report. The carryout number for corn, for example, changed very little. Some of the world numbers were slightly bearish; A problem that may need to be solved via lower prices. Spot margins for ethanol and livestock producers are negative for some areas, which is something that could turn into a problem for domestic demand. Is it possible that the government could wound our golden goose (ethanol) and lower corn usage sometime this year?
Market expectations ahead of this report are what really caused the problem. Knowing market expectations headed into a report is a must for any trader, farmer or end-user. Call our office today to learn how you can better prepare yourself for upcoming reports.
Producers: Follow our lead for new crop sales. Not recommending anything now. We’ll wait for market peaks in the Feb-June timeframe to make our sales. We may advise option positions on a portion of the ’12 crop in the coming weeks.
As always, call the office with questions or concerns.