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.
Up Overnight on China GDP, South American Weather
Jan 17, 2012
· Grains rebounding overnight after last week’s USDA-induced collapse; Gov’t raising corn production slightly while leaving demand mostly unchanged, a shock to bulls who were looking for lower carryout numbers
· Soybean carryout growing by 45mil/bu from the Dec report; Production up with demand slightly lower; World carryout numbers bearish across the board
· China’s GDP at 8.9% vs. estimates of 8.6%; Outsides higher with US$ sharply lower as a result
· No major changes to S. American weather outlook over the weekend; Best chances for new rains early next week; Reports conflicted on extent of crop damage
· Corn harvest has begun in the northern areas of Brazilian states Parana and RGDS, outlook negative due to drought issues
· Today’s NOPA Crush seen at 140.7mil/bu compared to 141.3 in No; Report released at 7:30am CST
Last week’s market action had to have flushed out the bulls in the grain market. Last week’s report was not necessarily bullish; We would describe it as being neutral, but bearish relative to market expectations. The government simply didn’t make enough changes to convince us which way our S&Ds are headed. We look for a choppy trade this week, which may be heavily dependent action in the currency markets. Next topic up for discussion: 2012 Acreage Allocation.
Producers: If you’re not worried about the prospects for 2012 grain prices, you should be. There is tremendous downside risk in the corn market especially IF producers were to planted 94-95 million acres or more. Call the office for specifics.
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As always, call the office with questions or concerns.