January — A Month in Review

The first trading month of 2012 is nearly over with mixed results, so let’s take a little time to review the trade from this month.  For most of the month, three items were the main drivers of price direction and they were: South American weather, the dollar index, and the USDA reports of the 12th.

Persistently dry and hot weather in January has plagued the growing areas of Northern Argentina and Southern Brazil.  The governments and private forecasters of these countries have reduced anticipated production several times over the course of this month.  These reductions have given way to tentative plans to add an export levy on corn and wheat for Argentina.  These factors have been the key bullish fundamental force driving our grain markets higher domestically.  Another factor lending some support is a slightly weaker dollar index.

Debt crisis concerns have once again come to the forefront in the Euro zone.  The dollar index has been fairly volatile in a relative tight range.  Early in the month, the dollar index hit multi-month highs sending the grain markets lower.  The Euro currency comprises the largest portion of the dollar index and when the Euro was weakening it caused the dollar index to rally.  To counteract a strengthening dollar, which causes our exports to be more expensive on the world market, the trade had to send prices lower.  Towards the end of January, we are seeing the inverse situation occur.  The last piece of the trade puzzle for the month was the surprising USDA reports of January 12th.

On the day of the USDA reports, we saw double-digit losses across corn, soybeans, and wheat, with corn being the leader to the downside hitting the daily limit of 40 cents.  If we could take this day out of the month corn would have been positive to start the year.  We cannot, however, erase that day from the books.  We can learn and prepare ourselves for the next big report which comes on March 30th, the Prospective Plantings report.

By the numbers, corn was down 19 ½ cents for the month.  Soybeans were down 28 ½ cents and Chicago wheat actually ended the month higher by 9 cents.  As far as volatility is concerned, corn was less volatile (as measured by standard deviation from the mean) than the average of the previous 3 years as was Chicago wheat.  Soybean prices were more volatile in nature than the previous 3 years average.  What can we learn from this month’s trade activity?  Be prepared for the unexpected moves to the downside.  Those moves will cost producers and traders the most on their bottom lines.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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Grain Markets Continue to Climb

The equity and commodity markets continued to climb higher this week as a “risk on” sentiment has taken hold.  The Dow is up 23.15 as of the close Thursday to finish at 12,734.63.  Oil continues to hover around $100 at $99.79 a barrel at the end of trade today, which is up $1.59 on the week.  Gold reached 6-week highs en route to a settlement of $1,720.70 an ounce up $53.80 for the week.  The dollar index has fallen off sharply lending some underlying support to the grain markets.

Corn has moved higher to the tune of 23 cents on the March contract to finish trade Thursday at $6.34 ½.  Concerns surrounding dry and hot weather in Argentina continue to keep support under this market.  Adding to the bullishness has been a brisk consumption pace by ethanol plants and export sales that remain ahead of the USDA projections for the year.  Export sales beat expectation once again and were reported as 958,100 MT, which is up 26% from last week.

Soybeans have had an impressive rally of their own this week, adding 35 ¾ cents to the March contract that settled at $12.22 ¾ today.  The oilseed has benefited from reductions to the production outlook for Brazil and Argentina.  Harvest delays in South America are bolstering the bullishness too.  Crush margins are thought to be improving for Chinese importers and a weaker dollar index is making our exports more attractive on the world market.  Export sales missed expectations at 466,300 MT, which is down 53% from last week.

Wheat has been the leader to the upside for the grains this week and is up 43 cents on the March CBOT contract to settle at $6.53 ½ Thursday.  Early in the week, Russia announced that exports from that country were nearing the proposed target of 25 MMT at which point they will curb or eliminate exports all together.  This lit a fire under the wheat market sending it sharply higher.  Speaking of export sales that came in at the high end of expectations at 604,700 MT, which is up 3% from last week.

Slow and steady the equity and commodity markets have climbed higher over the last couple of weeks.  Solid economic data domestically, a weaker dollar index, and a little more stability out of the Euro zone has aided in the rally.  Adding fuel to the bull’s run is a possible export ban from Russia and production reductions due to stressed crops in South America.  These issues will have to be monitored as we move towards the Planting Intentions report on March 30th.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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GrainTV – January 26th, 2012

Grains are trading higher this morning once again, at the time of this post we see corn up 8, soybeans up 13, and Chicago wheat up 13 1/2. On this morning’s broadcast Logan and Brock look at Corn/Soybean ratios, chart landscape for Chicago wheat, and South American weather projections.

Bulls in the Driver’s Seat for Now

The equity and commodity markets have rallied this week as corporate earnings, unemployment figures, and a weaker dollar have provided positive fuel for the run up.  The Dow is up 203.13 to finish trade Thursday at 12,625.19.  Oil has rallied due to increased demand prospects and is up $1.29 a barrel settling at $100.49 today.  Gold has benefited from a sharply weaker dollar index to end trade at $1,658.20 an ounce, up $19.40 this week.  The agricultural commodities have moved higher as well.

Corn has rallied 6 ½ cents to finish trade on Thursday at $6.06 on the March contract.  The market has stabilized after the limit-down move last Thursday and has traded in a relatively narrow range around the $6.00 level.  The grain has benefited from a sharply weaker dollar and continued heat and dryness in key growing areas of South America.  Export sales should see a rebound in this week’s report due out tomorrow a day late due to the holiday Monday.

Soybeans have been the leader to the upside for the agricultural markets and have gained 38 ¾ cents on the March contract to settle at $11.97 Thursday.  Production uncertainties from South America are bolstering ideas that export demand will shift back to  U.S.soybeans in the near future.  Adding to those ideas is the fact that China bought 414,000 MT after the USDA reports.  A weaker dollar and possible Chinese monetary easing have added support.

Wheat has gained support from corn and soybeans leading to gains of 3 ½ cents to close at $6.05 ¾ on the March CBOT contract.  The grain has little support of its own due to ample world supplies, lackluster export demand, and a good start to this year’s winter crop.  These factors will continue to pressure the market going forward.  Export sales are expected to be routine once again in tomorrow’s report.

Strong economic data, a weaker dollar index, and lower unemployment claims have led the equity and commodity markets higher this week.  Dry and hot weather in South America is opening the door for increased demand prospects for U.S. grain.  Early indications are for better than expected export sales in tomorrow’s report which comes a day late due to the Martin Luther King holiday Monday.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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GrainTV – January 19th, 2012

Export sales of US corn to Mexico, South Korea, China, and Egypt have supported grains this morning. At the time of this post we are seeing corn up 7, soybeans up 9, and Chicago wheat up 6 at the time of this post. On this morning’s GrainTV, Brock and Cody discuss these recent export sales, South American weather, and the cash market along major river systems.

GrainTV – January 17th, 2012

Continued dryness in South America combined with positive news out of China has helped grain rally this morning, with corn up 6 and soybeans up 21 at the time of this post. News out of South America and China are the focus of this morning’s GrainTV, tune in for the full report!

USDA Reports Once Again Shock the Market

The final revisions to the USDA Supply/Demand and Crop Production reports sent the commodity markets sharply lower Thursday.  The Dow continues its rally to start the year and is up 111.10 to close at 12,471.02 today.  Oil has fallen off by $2.99 a barrel to end trade Thursday at $98.94.  The dollar index has sold off sharply this week while gold has rallied $33.60 an ounce finishing at $1,651 today.  Agricultural commodities took it on the chin due to unfavorable revisions in production.

Corn was the leader to the downside today and was down the maximum daily limit of 40 cents for most of the session.  Tomorrow will have expanded limits of 60 cents.  Traders and producers were looking for revisions lower for production.  What they received, however, was a surprise increase in yield, harvested acres, production and higher than expected quarterly stocks.  This led to the sharp sell off Thursday and for the week corn is down 32 cents to settle at $6.11 ½ today.  Export sales were decent at 321,500 MT, which is up over 7% from last week.

Soybeans sold off sharply today as well, down 20 ½ cents on the day and 14 cents for the week settling at $11.82 ½.  As with corn, soybean production, yields, ending stocks, and quarterly stocks were bumped higher resulting in the sell off.  At one point in the session, the oilseed was down over 50 cents, but rebounded throughout the day.  South American production was lowered lending a little support.  Export sales were better this week at 433,900 MT, which is up 54% from last week.

Wheat followed the other grains lower and were pressured by larger than expected winter plantings.  World ending stocks were revised higher to the 2nd largest amount ever, confirming the ample supplies that have pressured the market since this season’s harvest.  Export sales were higher at 365,200 MT, which is up 164% over last week.

The USDA shocked traders and producers Thursday by revising corn, soybean and wheat productions and carry outs higher.  This sent the agriculture markets sharply lower, especially corn, which was down the exchange imposed daily limit of 40 cents.  Little fundamental news will be reported until the March Planting Intentions report, so focus will turn back to South American weather.

THERE IS A RISK OF LOSS IN TRADING FUTURES AND OPTIONS. FUTURES TRADING IS NOT APPROPRIATE FOR ALL INVESTORS. PLEASE READ OUR RISK DISCLOSURE.

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GrainTV – January 12th, 2012

GrainTV went live for the market open this morning with grains trading sharply lower after the USDA WASDE report showed ending stocks well above trade expectations. Brock and Logan break down the report on this morning’s broadcast and share their reactions as the market opens limit-down on corn contracts through the July contract.