Short-term Grain Market thoughts..

[latidude]

Crop progress reports continue to paint a picture that crops are in mostly good to excellent condition. We currently have very large stocks of grain in storage and commercials are strongly short (they're usually net short because that's how elevators hedge their exposure). Finally, the dollar is once again catching a bid on renewed fears out of Europe. As long as the dollar remains bid, domestic grain prices will need to go lower because our grain is priced higher on a relative basis.

In the short term, there might be price spikes do to there being a record short position in grains, but this short position is very well warranted in light of the the points above. As long as weather conditions don't significantly deteriorate, the supply demand picture won't just change overnight.

There are of course small variations in each of the major markets. Wheat probably being the most bearish on a fundamental basis, followed by corn. The most bullish of the lot imo has to be soybeans and that is mostly attributed to continued demand from China, increase in crushings, and the always unpredictable Argentinian worker strikes and their potential impact, which should be limited as they enter the winter lull.

In the short term, I'd watch the $4.50 and $5.00 range in wheat - it seems the one most particularly levered to the USD and the one I have typically been most fond of trading.

 

[iqfeed]

Might be a longer term outlook than you were thinking, but Darin Newsom did a webinar last Thursday that discusses some details on Corn. You can watch the replay at:
http://www.dtn.com/promo/wcreb_trading_report

The corn discussion is at about 36:35 - 45:00 into the webinar (you can skip ahead in the broadcast).

 

[benwm]

Quote from latidude:

In the short term, I'd watch the $4.50 and $5.00 range in wheat - it seems the one most particularly levered to the USD and the one I have typically been most fond of trading.

Hello latidude...thanks for your comments on wheat - although I'm a seasoned trader in interest rate markets I've just started to look at grains so this is helpful for me...Would be interested to know which crop reports you look at and the key data you look at...eg. what are headline numbers in the reports? And any sources you look at assess the condition of the crops?

I'm a novice in wheats but a hunch of mine is that this Icelandic eruption and ash cloud is going to reach Canada / North America before long and will affect next years winter wheat harvest. At the very least you'd think it might affect supply in Russia/Ukraine/Afghanistan...

I did a little research and after the 1783-84 Laki eruption in Iceland you had the lowest ever winter average temperature in Eastern USA, average temperatures 4.8 degrees below the 225 year average...reports of "unusually harsh winter...spring flooding...Mississippi froze at New Orleans...barely crops 'brown and withered'...as did the leaves of the oats...rye had the appearance of being mildewed"

Same thing with 1815 eruption in Tambora, Sumatra - 1816 being the "year without a summer"...rapid temperature swings, June 1816 two snowstorms in Eastern Canada and New England, big effect on American North East, New England, Canadian Maritimes, Newfoundland, New England, frost killing off most of the crops that had been planted....oats rising in price from 12cents/bushel to 92 cents/bushel.