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Standard Grain

RSS By: Joe Vaclavik

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.

 

USDA Conspiracy Theories and IMF Funding for EU...

Jan 19, 2012
  • Grains higher overnight lead by soy complex; Nearby corn and soy trading to resistance levels at 5.99 and 11.97 respectively; Outsides mostly positive, US$ down slightly, however this certainly looks like another Euro rally to be sold
  • IMF raises $600bil to help deal with EU debut situation, sparking some buying in the commodity markets and rally in the Euro…another band-aid to fix a severed limb
  • Many traders continue to debate USDA’s increase of 2011 corn production on last week’s report; Some believe that the numbers are just not possible given the variances in state by state data versus most normal years
  • Technicals still pointing lower; Most chartists looking for a move to Dec lows in corn in order flush out weak longs; We believe the end user will buy the break near those lows
  • Many producers exhibiting a “deer in the headlights” mentality as new crop corn and soybeans drop; The prospect of 94-97 million acres of corn should terrify producers more than drought and the IRS combined; Corn will be planted post to post given current price ratios
  • Cattle on Feed to be released on Friday; Estimates are 103.3% on feed, 94.2% for placements and 97.2% for marketings
  • Export sales delayed until tomorrow morning due to the MLK holiday on Monday
 
If you believe that there is a USDA conspiracy to keep corn prices low via last week’s ’11 production increase, you should call your broker today and buy the N/Z corn spread. At 58 over, it’s the lowest it’s been in weeks as a result of the report. If you think the ’11 crop is really much smaller than last week’s USDA number, you must also believe that there will be a major supply discrepancy from summer to the fall harvest, which has the potential to be massive. We don’t condone these type of theories, but would be happy to help you trade them if you do.
As one smart farmer told me yesterday,”The USDA is run by the same people who run the post office. Do you really think they’re that smart?” I can’t help but agree.
 
As always, call the office with questions or concerns.
 
Regards,
Joe Vaclavik
(312) 462-4438
 
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