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October 2012 Archive for 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.

 

Tuesday a.m. Grain Market Update

Oct 30, 2012

         Soybeans have rebounded this morning after a poor performance yesterday.  Monday’s break was pinned on better weather in South American and the perception that the USDA may raise the soybean yield number here in the US between now and January.  The Brazilian soybean crop is 28% planted, which is slightly below average for this point in the growing season.  Some areas of Argentina are seeing too much rain this week, causing planting delays. The December corn contract traded below the 100-day moving average for the first time since June during yesterday’s session and sits just a few cents above it this morning.  Many fund traders keep an eye on major moving averages, which can sometimes signal a trend change.  The USDA delayed their Crop Progress report yesterday due to Hurricane Sandy.  The report is scheduled to be released this afternoon.

     

      Funds will begin to roll commodity positions out of the December contracts and into 2013 beginning tomorrow.  The Rogers Index (RICI) will start on Wednesday, Deutsche Bank of Friday; Goldman Sachs will begin one week from Wednesday.  During these rolls, an opportunity for producers to roll futures or HTAs into March/May could present itself as large traders bear spread the market.

      CME Chairman Duffy was quoted as saying that CME Group will not take action to reduce grain trading hours.  "We need to remain competitive and will keep our markets open as long as others are open at the same time" said Duffy.  

      Outside markets are choppy this morning.  Equity futures are mostly unchanged after trading sharply lower early last night.  Crude oil is marginally higher; Euro currency is also higher.  The New York Stock Exchange is closed again today due the hurricane.  Many firms in New York and surrounding areas are absent due to the weather and power outages.    

      Technical indicators in corn, soybeans and wheat still look negative in our opinion.  The corn market has been unable to hold a trade above $7.60/Dec while the rebound in the soybean market looks to be over the time being.  The wheat chart continues to trade in a slowly down-trending channel and has been unable to hold a rally despite news of a Ukraine export ban.  The market may not see a major move in either direction until the November 9th Crop Production report from the USDA.

 

Standard Grain

One Financial Place Suite 3990

Chicago, IL 60605

www.standardgrain.com |info@standardgrain.com | (312) 462-4438

 

    

Resistance Levels for November Soybeans

Oct 24, 2012

Nearby soybean contracts saw a major correction that spanned about a month and a half.  The November contract corrected more than $3.00 per bushel before beginning a rebound last week.  A simple Fibonacci Retracement along with a few key moving averages provides us with a few possible upside objectives.
 
1)     $15.63: (100 Day Moving Average)
2)      $16.01: (38% retracement from September high to recent low)
3)      $16.35: (50 Day Moving Average)
4)      $16.37: (50% retracement from September high to recent low)
5)      $16.74: (62% retracement from September high to recent low)
 

ZSX12 ~ Daily 10232012 024411pm

 

Monday Morning Grain Market Update

Oct 22, 2012

 The grain markets are higher this morning, led by soybeans.  The bean market continues its short-covering bounce this morning after a brief pause on Friday.  The November bean chart is just coming off of severely oversold levels while traders contemplate the balance between rampant Chinese demand and larger US production.  Many analysts are penciling in high number for Brazilian bean production as weather there has been mostly cooperative during planting season. Still, we know through our own experience in 2012 that a crop is not "made" until it’s in the bin.  The corn market is near the upper end of what has been a wide trading range.  The December contract would need to see a close above the 50 day moving average at $7.73 ½ before any new technical buying would occur.  Both corn exports and the ethanol grind have been soft while demand for feed remains in question.  Many traders believe that "the price is right" in the corn market for the time being.  Wheat futures gave back most of the gain seen early on Friday later that afternoon; Ukraine’s announcement that it would ban exports beginning on November 15th was enough to push the sharply higher for only a brief period of time.  The market is trading marginally higher this morning. 

      The USDA will release their crop progress report this afternoon at 3:00pm CST.  Corn harvest is expected near 90-95% complete.  Soybean harvest is expected at 80-85% complete.  The CFTC released their Commitment of Traders report on Friday afternoon.  Managed money sold 4k corn and are now long 256k.  The same group of traders sold 10k soybeans and 3k wheat; the now sit long 167k and 45k, respectively.  Fund liquidation has been a fairly consistent trend since early September.

      The USDA released the Cattle on Feed report on Friday.  Cattle on Feed was seen at 97% vs. the average trade estimate of 97.8%.  Placements were seen at 81% vs. trade estimates of 85%. Marketings were seen at 88% vs. the average trade guess of 90%. The report was considered mostly bullish for the cattle market and as a possible negative for the corn market.

      Outside markets are mostly positive for the grain markets this morning.  Equities and crude oil are both marginally higher.  The Euro is higher while bonds are lower.  More third quarter earnings results are expected this week.

      We believe that the soybean rally could extend further this week given technical momentum and short-covering.  A close above major resistance in the $15.75 area in the November contract could see the move extend to the $16.00 area very quickly.  The corn and wheat markets will have a tougher time rallying, as they remain mostly range bound.        

Visit our website today at www.standardgrain.com or call us at (312) 462-4438!

Grain Up Overnight, Ukraine to Ban Exports

Oct 19, 2012

       The grain markets are sharply higher again this morning, as soybeans continue the rebound that began on Wednesday.  Short-covering rallies of this sort can be quick and violent, as seen in years past.  It is not unreasonable for nearby soybean contract to make a run at $16.00 area sometime during the next several sessions.  The 50% retracement of the break that occurred from the early September highs to the recent lows would be near $16.37.  The corn market has firmed up as well despite signs of weakening demand. Export sales yesterday were poor once again for corn, while weekly ethanol production softens.  The feed sector is questionable at best.  Still, basis levels in the Eastern Corn Belt in particular have been excellent throughout harvest, a signal that local elevators and processors are willing to pay-up for grain.  There has also been talk of Brazil corn premiums increasing.  Nearby Chicago wheat contracts are up again some major trendline resistance on the charts this morning.  A close above $9.00 in the December contract could cause short covering and a run at the year’s highs, which were set in early July.

      Ukraine Ag Minister announced overnight that wheat export will be banned starting on November 15th.  Only 5mmt of wheat exports will be allowed.  This is likely the main cause for the significant pop in wheat prices this morning.   

      Informa will release estimates for 2013 acreage this morning around 10:30am CST.  Informa’s estimates on just about everything recently have been bearish relative to the rest of the trade. 

      The USDA ag attaché in Brazil estimated 12/13 corn production at 74mmt, which would be up from the 70mmt on the October Crop Production report.  Exports are estimated at 17mmt vs 16mmt on October report.  Argentina estimated their 12/13 wheat wheat crop at 11.5mmt, down from 13.2mmt last year.  Corn planting is 31.8% complete vs. 24.9% last year.

      Outside markets are mixed this morning.  Crude oil is up marginally along with bonds.  Equities, metals and the Euro currency are marginally lower.  The stock market has been strong the last couple of days on better-than-expected earnings from some major companies.  Existing home sales data will be released at 9:00am CST. 

      Moving forward, we see no reason to step in front of this rebound rally in the grain markets for the time being.  These moves generally last a little bit longer than most expect, as money moves and fund managers adjust positions.  There is certainly still a valid bullish argument in regards to Chinese demand for soybeans.  Although some believe that a portion of the demand will be shifted to either South American or the 13/14 crop year at some point down the road, we’re now saddled with some very large export numbers.  We’re skeptical of the rally in the wheat and would embrace and opportunity to sell the December Chicago contract above $9.00/bu.

 

Standard Grain

One Financial Place Suite 3990

Chicago, IL 60605

info@standardgrain.com | www.standardgrain.com | (312) 462-4438
 

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