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PM Comments
Friday, May 18, 2012 Grain Commentary
Corn—what a difference a week can make. The forecast has begun to discuss the possibility of a ridge developing over the next couple of weeks. Other dry pockets in the world in Russia and China are making the shorts nervous. i.e. Chicago wheat gaining $1.02 ½ cents for the week. The price of wheat gaining sharply is reversing attitudes of more wheat feeding to replace corn. Thusly, July corn futures gained 54 ½ cents for the week. December futures gained 32 cents for the week. Basis levels gained 4-5 cents across most of interior markets for the week. Farming selling appears to very limited or the stocks are shorter than the most recent projection by the USDA. The weather is the key market maker in the coming weeks, but an underestimation of actual stocks by the USDA will accelerate the July futures. –July settled up 10 ½ cents at $6.35 ½ per bushel. This week’s price action eclipsed all the moving average resistance and closed above. Bullish reversal of the downtrend. December futures closed up 8 ¾ cents at $5.37 per bushel.
Soybeans—despite the bullish weather forecast the price action succumbed to major reversing the short wheat long soybeans spread. Just today alone the spread moving over 50 cents a bushel against the long soybeans short wheat position. The weaker dollar should have helped support. World economic factors and poor performance of the equities this week caused liquidation of the long fund positions to protect equity. For the week July futures managed to only lose 1 cent while the November futures lost 33 ¼ cents. The debt crisis in Europe is causing major concern for holders of long commodity positions. The market feels the collapse of Greece has already become and will bring further equity crisis. A more prudent long position in commodities is warranted. But regardless of the debt crisis, the weather could force a more price risk posture in the November contract. A lower national yield will cause massive supply rationing through price acceleration. This is very early to get excited about lower bean yields though. But I certainly wouldn’t fade the soybean market at the moment. –July settled down 33 cents at $14.05 per bushel. November settled down 18 ½ cents at $12.88 per bushel.
