Grains closed sharply lower on Wednesday with old crop wheat leading the way. The stronger US dollar and a better US forecast continue to weigh on wheat futures. There was also talk that Ukraine may lift their wheat ban soon which would be another bearish factor for US prices.
Although the old crop corn market is still tight it is trading at a premium to Chicago wheat which puts it in direct competition for feeding. This may continue to tie corn to the price of wheat for the near future.
Soybeans held the most support today even though they settled off the highs. The strong export sales and concerns over logistical problems in Brazil are still the main sources of strength. We are getting to a very tight point in our balance sheets and further sales could be exponentially supportive. Interior basis levels are very strong for US Soybeans with on farm storage estimates running low. This is a direct result of the strong inverse-carry incentive the markets have been giving producers to sell beans throughout the year. South American production is coming online and our soy exports sales should drop off shortly.
The decline in new crop pricing has been highly influenced by weather and time. A more favorable forecast in the US is reducing the uncertainty. As time goes on we will have the large South American production to compete with which has also caused some liquidation by the "long-only" money. We still favor selling new crop corn and soybeans on rallies.
The CME Group announced that they would reduce grain trading hours pending CFTC's approval. The new hours will be:
Sunday to Friday, electronic trading from 7:00 p.m. to 7:45 a.m. CT
Monday to Friday, break in electronic trading from 7:45 a.m. to 8:30 a.m. CT
Monday to Friday, floor and CME Globex trading from 8:30 a.m. to 1:15 p.m.
For now we remain with our current outlook which is range-bound for old crop corn and soybeans and a bearish long term trend for new crop. Please contact us with any questions or to review your current marketing plan through farm marketing management software - AgYield.
EHedger | 866.433.4371
Premier full service commodity brokerage offering risk management services for the agricultural sector as well as professional traders.