December 6, 2013
Limited news and with cold weather and a USDA report on the horizon have the grain markets trading sideways into the weekend. We are always on the lookout for a surprise or two in these reports, but December at the USDA is seldom a season of giving surprises to the market. Small adjustments downward in both corn and soybean carryout may be as much as the market can expect in the Christmas stocking this year.
U.S. stocks finally broke the five day slide to record nice gains today. More positive economic news came in to overwhelm the negative sentiment that chances of a December Fed taper has brought to the markets. Today's big news was a better than expected employment report for November that showed the country added 203,000 new jobs for the month and unemployment dropped to 7.0%, down from 7.3% in October. The personal income and outlays report from this morning was a mixed bag with incomes going down 0.1% in October, but personal consumption expenditures increasing by 0.3% in the same month. Major stock indexes traded from 0.8% to 1.2% higher at the commodity close.
The dollar index traded just higher today as the positive move in the markets was not felt by the dollar. Crude oil was steady heading into the weekend after adding nearly $5 per barrel for the week.
Corn traded steady to a little higher today as the market readies for the weekend and Tuesday's USDA reports. The market has moved mostly sideways this week as news seemed to be mostly positive for demand but not strong enough to build a rally ahead of the reports. We are looking for a reduction in carryout with better export and ethanol numbers to support this market. Feed use numbers are likely to remain steady until the grains stocks report in January gives a better tally of feed use.
March 2014 corn futures were up 0.75 to close at $4.3425. December 2014 corn was up 1.25 on the day to close at $4.6375.
Bottom line: Pricing the largest corn crop in history is getting more difficult as corn prices challenge the $4 level with harvest nearly complete. There is still a chance that season low prices could come after the first of the year when it looks like corn will move into the market.
Soybeans traded mixed today with nearby contracts off a little and November prices up slightly. USDA announced another big export sale this morning with 6.95 million bushels of 2013 and 7.165 million bushels of 2014 soybeans headed for unknown destinations. This helped pull prices back from double digit losses, but wasn't enough to pull the nearby contracts back above zero for the day. Our expectations is for USDA to drop carryout by 20 million bushels to 150 million as the export sales continue to keep this market looking tighter heading into spring. This will place the market right on the threshold of rationing the crop if exports or crush don't slow up soon.
January 2014 soybeans closed down 2.50 today at $13.255. The November 2014 soybean contract was up 1.25 to close at $11.6425.
Bottom line: Soybean prices have moved back above $13 as export demand keeps pulling both beans and meal through the market and holding prices. Basis remains strong as buyers are looking to fill commitments and farmers are reluctant to make sales. Look for opportunities to market beans ahead of the South American harvest.
Wheat markets traded mixed and mostly steady today as weather concerns have finally begun to overshadow disappointing demand news from the export market. Very cold temperatures in the Plains and ice storms in the Delta and Southern Midwest have wheat growers nervous about winterkill on a portion of the crop. The difficult thing about winterkill issues in December is the 3+ month waiting period before the crop shows the effects of today's weather. By then, the market will have forgotten this event completely and will be trading a whole new set of information.
March 2014 wheat on the Chicago board was down 1 to close at $6.51. The July 2014 contract closed the day unchanged to finish at $6.54.
March 2014 KC wheat was up 0.25 to close at $6.955. The July 2014 winter wheat contract was up 0.50 to finish at $6.885.
March 2014 Minneapolis wheat was down 3.25 today to close at $6.81. The September 2014 contract was down 1 to close at $7.055.
Bottom line: Wheat exports have slowed as southern hemisphere harvests are coming into the market and prices were above most shippers. Lower prices could pick up some export business for remaining 2013 sales.
Cold and ice are the key words for wheat growers this week. Very cold temperatures have settled into the Plains with below zero readings as far south as Kansas and lows in the single digits in southern Colorado and the Oklahoma Panhandle. Nearly 10% of the winter wheat crop may have seen some winterkill damage from this Arctic front. Soft red winter wheat growers were unable to escape the winterkill threat as ice storms have moved across the northern Delta and southern Midwest impacting up to 15% of the soft red crop this morning. Below normal temperatures are going to hang on into next week before warmer weather finally arrives.
Want to receive market commentary by e-mail twice each day? This service includes added information, charts and graphs to explain market trends, and more. Sign up for the FREE service today - just click HERE.
This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Mr. Burgener does not currently maintain interest in the commodities mentioned within this report.
THERE IS RISK ASSOCIATED WITH TRADING FUTURES AND OPTIONS. ANYONE ACTING ON OUR INFORMATION IS DOING SO AT HIS/HER OWN RISK. CONSULT YOUR FUTURES AND OPTIONS RISK DISCLOSURE STATEMENTS BEFORE TRADING.