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Grain Blog
Friday Morning, USDA S&D Report - 05/09/2008 12:00 AM - Luke Minich, lukem@co-alliance.com, 800-439-1390
Corn and Beans were higher last night following Crude. Crude is up over $12 this month despite the US$ being up .75% in the same time frame. Whether the government publishes the number or not we are in an inflationary cycle that does not appear to be slowing down with the US economy. Higher crude leads to higher gas to higher ethanol to higher corn, and then is spreads across all of agriculture as we try to balance acres. Higher raw food prices multiplied by higher processing and transportation costs due to high energy costs, they supply chain can't "eat" the costs for an extend period of time and they pass it on the consumer. The cycle ends when consumers, not just here in the US but globally, run out of money. Demand has two components, the desire to consume and the ability to consume. Consumable commodities will continue higher on a broad scale until we strip the global consumer of his ability to consume either by high prices or government intervention. That’s not to say we won’t have correction along the way or that every commodity will experience the same level of value growth.
This mornings USDA S&D was bullish for corn and beans. 2008/09 corn carryout is projected at an extremely tight 763 mil bu while beans are projected at a very tight 185 mil bu. Wheat stocks are larger than expected but with wheat almost $5 off their high they should be factored in.
Early Call, In line with overnight, +8 corn, +14 beans, be careful of profit taking late in the day.
Thursday Morning - 05/08/2008 12:00 AM - Luke Minich, lukem@co-alliance.com, 800-439-1390
The US$ is strengthening on ideas that the FED may be done cutting rates while the ECB is starting to signal a rate cut might be possible. Consumable commodites(energy, grains, base metals) continue to show strength, decoupling themselves from currencies, while store of value commodities (gold) are showing weakness, staying with the currencies. This is an important event as it highlights who will be doing the buying from here on out. The Index funds tend to buy commodities in aggregate as a store of value, hedge/spec fund buy individual commodities based on market direction. IF investors quite throwing money into Index funds we could destabilize the trend; bringing the commitment of the hedge/spec funds into question. Argentine farmers look to be going back on strike so look for bean basis to improve and bean futures to gain on corn.
Early Call, Corn +5 to 8, Beans -5 to start, buy a lower opening.
Wednesday Morning - 05/07/2008 12:00 AM - Luke Minich, lukem@hotmail.com, 800-439-1390
Corn was up 3 last night making it down 2 for the week despite having a 36 cent range, welcome to the weather market. New crop beans were up 1 cent last night making them unchanged for the week in a 52 cent range. The intra day pattern of higher in the morning and lower into the close is a bit concerning but with this much volatility you should still have an opportunity to get filled on higher offers.
Early Call, ?, but the radar looks bullish with rain from Chicago to Dallas.
Tuesday Morning - 05/06/2008 12:00 AM - Luke Minich, lukem@co-alliance.com, 800-439-1390
Corn planting progress was reported yesterday at 27% nationwide a 17% jump from last week and in my opinion about 5 points lower than the reality. After dropping 20 cents yesterday on thoughts that the USDA may give us bearish surprise on the planting progress corn was up 3 last night signaling that the 27% planted was about in line with the trade expectations. Beans were up 12 last night on yesterdays crude oil rally, bean planting was only 5% vs. the 5 year average of 14%, a cash market strength from Asian buying.
Early Call, Corn +5 to 10, Beans +10 to 20.
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