GrainTV – May 31st, 2012

At the time of this post we see old crop corn down 1/2 cent, soybeans down 24, and Chicago wheat down 6. Dry conditions across much of the Western Corn Belt is supporting the corn market this morning as early June will be a critical stage for this crop. This morning Cody and Logan take a look at some weather maps from Planalytics and soil moisture tables released this morning from Thomson Reuters.

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

Futures Commentary – May 31st, 2012

The commodity markets are experiencing fund liquidation as the equity markets
have growing concerns surrounding European debt and employment growth. The Dow
has experienced a volatile week of trade and is down 58.96 points to settle at 12,395.87
today. Oil has fallen substantially in the last couple weeks and is off another $4.23 a
barrel to trade at $86.61 as of this writing. Gold is down a bit losing $6.70 an ounce to
settle at $1,562.20 Thursday. The dollar index continues to rally and hit a high for the
year this week. Grains have slid partly due to fund liquidation.

Corn fell another 21 ¼ cents this week to settle at $5.57 ½ on the July contract
Thursday. Conditions reported on Tuesday showed a 12% decline for Illinois and 14%
decline for Indiana in the good-to-excellent ratings. This did little to support the market
and funds have begun to liquidate long positions at a quick pace. Expectations for
tomorrow’s export sales report are for 450,000-650,000 MT.

Soybeans have been the leader to the downside losing another 42 cents on the
July contract to finish trade at $13.41 ½ Thursday. Funds have been massive sellers of
long positions over the last several weeks and that pace has accelerated near the end of
this month. Adding to the bearish sentiment is the fact that China has begun to sell off
some of its state reserves. Expectations for tomorrow’s export sales report are for
450,000-700,000 MT.

Wheat is following corn and beans lower and is off 30 ½ cents on the CBOT July
contract to settle at $6.44 ½ today. Harvest is nearly two weeks ahead of schedule and
was reported as 9% complete as of Tuesday’s report. Conditions did deteriorate, but this
is becoming less of a factor as harvest moves northward. Spring wheat was rated at 79%
good-to-excellent. Export sales expectations are running at 350,000-500,000 MT for
tomorrow’s report.

Funds are rolling positions, position evening, and taking profits near the end of
this month and that has led the markets lower. Equities are experiencing anxiety over a
slowing employment pace and European debt issues leading to volatile trade activity.
Weather and crop progress and conditions will continue to drive the grain markets for the
coming weeks. Tomorrow, the export sales report will be released a day late due to the
Memorial Day holiday.

GrainTV – May 25th, 2012

This afternoon Cody and Logan discuss export sales, weather expectations for coming week, and strength out of the dollar index as the Euro Zone crumbles.

Take time to remember what Memorial Day is all about this weekend, we will see you back here on Tuesday.

Want to watch and trade these markets whenever they are open? Take a demo of our Firetip trading platform and get started!

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

Futures Commentary – May 25th, 2012

The equity and commodity markets moved in divergent ways so far this week. The Dow rebounded 160.37 points to finish trade at 12,529.75 Thursday. Oil slid a bit further losing another 31 cents a barrel to trade near $90.75 as of this writing. Gold lost favor as a safe haven and has been hurt by the sharp rally in the dollar index. After today’s trade, the precious metal is down $33.20 an ounce to settle at $1,558.80. The agricultural commodities have been hit hard by favorable growing conditions and decreased demand prospects.

Corn was the leader to the downside in the agricultural complex this week. The grain has lost 53 ½ cents as of Thursday and closed at $5.82 on the nearby July contract. A large new crop is weighing heavily on the market as the initial conditions ratings were the 2nd highest reported in the last 20 years. Forecast for the next 15 days have turned more favorable as temperatures and precipitation prospects are better than previously thought. Demand has fallen off recently as export sales disappointed again at 156,100 MT, which is down 54% from a week ago.

Soybeans showed relative strength in relation to corn and wheat, but did fall 23 ¾ cents to settle at $13.81 ¼ on the July contract today. Open interest and managed money longs continue to decline as this market has started to cool off from extreme overbought territory. Chin a has begun to auction off reserves from their state coffers and have recently cancelled some cargoes from delivery. These factors have slowed demand. Export sales, however, were reported as 800,100 MT, which is up 29.8% since last week.

After a sharp rally in wheat last week, the market was due for a pull back or period of consolidation. The grain sold off 30 ¼ cents on the July CBOT contract to end trade today at $6.65. Harvest has begun in the southern growing regions and was reported as 3% complete as of Monday. Export sales were minimal as we approach the end of this marketing year and were reported as 72,400 MT.

The equity and commodity markets have taken divergent paths this week. Favorable weather and waning export demand has led the markets lower. However, it will be necessary to watch the volatility as we are in the midst of a very pivotal growing season and weather will be a driving force going forward. Next month, the markets will receive some very important reports that will be a driving force throughout the summer.

Cash Commentary – May 25th, 2012

Spot corn basis continues to inch higher, gaining an additional two cents this week. Most of the strength came from the western part of the Corn Belt where states like South Dakota, Minnesota, and Nebraska increased basis three to four cents over the last seven days. Barge rates along the Mississippi River currently sit around four cents below the five year average for immediate delivery. Despite lower barge rates, the Gulf dropped five cents this week while river terminals were down a penny. Barge rates for new crop delivery have been on the rise and the majority of the river systems have already set their rates around five cents above the five year average.

As old crop basis continues to strengthen we are also seeing basis for corn delivered in July steadily increase. This week July basis was up three cents making it a gain of 15 cents so far this month. While spot basis is recorded at 13 cents above the July contract, basis for corn delivered in July currently sits at almost 16 cents above the July contract. A year ago at this time July basis was 37 cents less at 21 cents under the July contract. Keep an eye on these July basis levels as they may present a good marketing opportunity for stored old crop corn.

GrainTV – May 15th, 2012

This morning Brock and Logan look at yesterday’s crop progress report and the technical landscape on the July Soybean contract. Tune in for the full report!

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

Futures Commentary – May 4th, 2012

Positive action in the grain market early in the week was struck down by a broad commodity sell-off Wednesday, spurred lower by projections for a larger than expected winter wheat crop. Field scouts from the winter wheat crop tour pegged Kansas yields at 53.6 bushels per acre on day one of the tour, up from 40 bushels per acre on day one of last year’s tour.

Following wheat lower on Wednesday was the soybean market which posted July contract highs at 1512 ½ before closing the day down 16 cents at 1485. This was viewed as a key reversal by technical analysts, as new contract highs were followed by sharp selling and a settlement price lower than the previous day’s low. With managed money holding a record net long position in soybeans, any major profit taking by the funds will add substantial selling pressure to this soybean market.

Dominating market chatter this week wasn’t price action, but the CME Group’s decision to expand trading hours for the grain complex. These markets will now trade electronically 22 hours a day, with a 2 hour break between 4:00 and 6:00 PM CST, Monday through Friday. Open outcry hours will remain the same, and there will still be a settlement made around 1:15 PM CST on contracts. This move was in response to the ICE exchange’s decision to introduce grain contracts that are pegged off of existing CBOT (CME) contracts, and would trade 22 hours a day. This was a business move made by the CME group to remain competitive, and there are good arguments on both sides of the fence whether this is a good or a bad move for the markets and ultimately, price discovery in the grains.

Supporters argue that weather conditions and demand factors do not stop when the markets close, so to effectively manage price risk market participants need nearly round the clock access to the futures market. Detractors will say that this is just a move to capture market volume, and further removes grain futures from open outcry transactions. The bottom line for producers is that this move has large implications for managing price risk, especially on USDA report days when these reports will be released during market hours. Instead of having hours to digest the figures in the WASDE or Crop Progress reports, now the fastest finger will be able to capture any market moves following the report.

The ability to access these markets around the clock is more important than ever as we enter a new era of electronic grain trading. Grain Hedge clients have direct market access and can place their own orders any time the markets trade, all for $7 commissions per side. If you would like to take a look at what Grain Hedge can offer your operation, give us a call at 877-472-4607.

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

Cash Commentary – May 4th, 2012

As April came to a close many elevators rolled to the July contract for spot delivery for both Chicago wheat and corn. We reflect this week on the spread between these two commodities over the last two months. Since the beginning of March, the average spread between May corn and SRW wheat contracts was .16 cents in favor of corn. This is the only time in five years that this spread in the futures market has favored corn during March and April. The difference last year was 44 cents with wheat trading higher. Last year’s 44 cent difference was even 75 cents less than the spread seen in 2010. Over the last five years this spread has decreased as corn stocks have gotten tighter and global wheat stocks have been relatively abundant.

The difference in spot corn and Chicago wheat basis at the end of April was six cents with corn basis being the stronger of the two. Last year the premium of corn basis over SRW was an average of 37 cents. Spot Chicago wheat basis gained two cents throughout April with the majority of the strength seen in Indiana, Illinois and Ohio with gains of six cents in Indiana and three cents in Illinois and Ohio. With cash SRW and corn prices drifting closer together the decision of what to buy for feed becomes less clear.

GrainTV – May 4th, 2012

This afternoon Cody and Abbey discuss the day’s action in the futures market and recent changes in the cash market for corn and soybeans. Tune in for the full report!

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