Mixed Overnight, Corn Drags while Beans Hold Their Ground

Published on: 07:18AM Feb 14, 2012


·         Grains mixed overnight with soybeans showing continued strength; Beans clearly in the process of "buying acres" from corn over the past several sessions
·         Corn market relatively weak as traders expect massive planting this spring; Weather and price action will have a lot to do with the ultimate allocation
·         Dry Brazil weather has been the scapegoat for strength in soybeans, however a combination of soy vs. corn spreading and possibly some Chinese buying could have something to do with the rally
·         US$ up slightly; Crude trading above $101 after yesterday’s globex debacle (electronic trading of crude was halted for an extended period of time yesterday afternoon)
·         USDA released its 10 year baseline projections yesterday; ’12 corn acreage seen at 94mil, soybean acreage seen at 74mil; Most traders don’t take much stock in these early numbers which are used for long-term planning purposes; USDA sees corn stocks doubling to 1.6bil/bu by next summer according to baseline projections
·         USDA sees China corn demand at 16mmt by 2020-2021 compared with just 3mmt this year
·         Some traders discussing increasing dryness in some areas of the corn belt, which may lead to early planting of corn and possibly more acreage
Soybeans are clearly the leader of the grain complex the last few days. Corn seems reluctant to move higher, but it’s tough to keep a market down when its main competition rallies 25 cents in a day. We would love to see a rally in new crop corn/soy contracts especially as we head towards planting, however the Dec ’12 corn has a lot working against it. A bearish acreage surprise on March 30th could spell trouble for corn producers across N. America. We don’t like either side of the market today, but would like to wait for a break in soybeans to the $12.38-12.40 area in the March contract before taking a shot at the long side.     
As always, call the office with questions or concerns.
Joe Vaclavik
(312) 462-4438