Look at those Grain Exports!
Jul 24, 2014
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For almost two weeks now we have been seeing export sales announcements coming through almost every morning. However, this grain export business has not done much to support markets so far but it could be a positive sign for things to come. The question now is - will this increase in export business continue or was this just a short term deal?
For the last two weeks it has seemed like every morning it was not a question of if but a question of when I would get an email from the USDA FAS announcing new export sales. Global buyer buyers have been buying corn and especially soybeans after the recent, sharp drop in prices. This came to a head on this weeks export sales report which confirmed very strong sales of corn and soybeans. Corn sales of almost 45 million bushels came in almost double the high end of trade guesses and soybean sales of over 90 million bushels were almost twice the market expectations as well. This strong export sales business is a bright spot in an otherwise dreary market climate lately.
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The question now is whether this strong up tick in export sales will continue or if this was just a flash in the pan. First of all, prices may need to stay low to continue to encourage sales. Secondly, there is the possibility that global buyers are looking at the recent break in prices as an opportunity to make purchases on a percentage of their needs before key August weather just in case there were a problem. Some of these purchases may be a weather hedge, if you will, for the remainder of the growing season. So, it will be very interesting to see what happens in the next few weeks.
At this point we are ahead of the export sales pace from last year at this time. If this pace keeps up the USDA could be too low on their current export forecast. And, if prices do continue to go lower exports could get even stronger. The bottom line is that it is positive to see global grain buyers step up to the plate at current prices rather then wait for the market to continue to come down.
For now weather will likely continue to be the key market mover. As many analysts are now throwing around super sized yield forecasts the markets focus is squarely on production and how big crops could be. In my experience things are rarely as good as they seem and almost never as bad as they seem.
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December Corn Daily chart:
November Soybeans Daily chart:
December Wheat Daily chart:
All this means that speculators should be looking for opportunities and producers need to look to lock up some prices. Give me a call for some ideas. In particular, producers looking to hedge all or a portion of their production may be rather interested in some of the options / options-futures strategies that I am currently using.
In my mind there has to be a balance. Neither technical nor fundamental analysis alone is enough to be consistent. Please give me a call for a trade recommendation, and we can put together a trade strategy tailored to your needs. Be safe!
Ted Seifried (312) 277-0113 or firstname.lastname@example.org
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