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.
Follow-Thru Buying Overnight...
Apr 20, 2012
· Corn and soybean contracts seeing some light follow-through buying early this morning after yesterday’s rally; May corn now trading 25 cents off Wednesday’s lows
· Corn vs soy spreads correcting in favor of corn yesterday after several weeks of a relatively stronger soybean market; Many traders now believe that there will be some acreage switching from corn into beans given recent price move
· China corn purchase rumor fueling yesterday’s rally, along with the more broad old-crop supply issue; Still no confirmation on a China purchase, however rumors are that the purchase was for new crop corn; Dow Jones reporting that the purchase was likely small
· Rains expected for some areas of IL , IN and OH today and tomorrow; A significant planting window which includes warmer temps opens in the Corn Belt next week
· Outside markets quiet today; US$ slightly lower with crude and equities higher, metals mixed
The current pop in grain prices is a gift to producers who generally have to rely on a weather issue this time of year for pricing opportunities. Best case scenario here may be a confirmation of Chinese corn purchases and follow-through action from fund buyers. Chinese demand would have to be very significant to sustain higher prices long-term assuming US production is ample. The old-crop supply story is still very significant in our opinion. However, of even more significance is the fact that the USDA all but told us that they’ll be using early harvested corn to fill the make their balance sheets work. Without a weather issue, a move back to recent highs in 5.70 in Dec corn would be a fantastic pricing opportunity. There is a still a long growing season ahead, however the corn crop is off to the best start in years.
Producers should note the recent drop off in deferred corn spreads, which have increased carry from December to March/May/July of 2013. This is an opportunity to roll of a portion of December HTA’s to spring for grain that will be stored.
As always, call the office with questions or concerns.