Grain Market Reports 12Jan2011

Tanner Sheahan
CPS Tangent

 Here are the grain market reports from Dan Steiner for the last couple days.  USDA came out with their January report but as you probably realize I've had some trouble hosting documents lately.  So, I'll try posting it up here.  There are four pages to that report, click the tabs at the bottom of the page. If the link doesn't work just shoot me an email and I'll send you a copy.  Thanks to Dan for sending that out to us.

Wheat prices in Dan's report for today ranged from $7.60-$7.80 for January-May with N/C for 2011 hitting $7.50.

11Jan2011:

Wow what a busy day! Actually there is no ‘NEW’ news…more of churning of the same old stuff, but we do have the USDA report tomorrow, and lots and lots of market chatter about the potential implications. Average trade guess has corn carryouts estimated at 778 myn bu, with wheat carryouts at 842. Markets are building premiums for tomorrow’s report, and historically the Jan report has been a market mover! Japan is tendering for wheat tonight. US ethanol tariffs are coming under fire and some in Congress believe that they are illegal. Brazil, who has already won a WTO case vs. the US on cotton is considering taking the US to WTO on ethanol tariffs.
               We mentioned the other day about the BDI (Baltic Dry Index) and the low levels that they have been trading at. There are number of reasons for this: Floods in Aussie shutting down up to 1/2 of the worlds coal mining, slower world economies, but one other thing I wasn’t aware of till this morning. There are about 400 new ships under entering the marketplace between 2010/11. This is roughly a 40% increase in the last 2 years. The floods continue in Aussie. Coal and rail movements are of course shut down, with ‘force majeure’ being declared weeks ago. An estimated $1 byn in Aussie Ag crops have been lost.
             Other int’l news: French Ag Minister is calling for stricter regs on commodity specs. The fact that inflation will continue and perhaps become rampant is a major concern. Not only are food companies and grain companies hedging, but the market is also open to speculators who can wind the commodity markets to levels not imagined a short time ago. Spec limits are not new, but this is coming from a new direction. Spec activity in the market place can fuel precisely the same type of action that hoarding does. Gov’t of Kazakhstan says they expect food inflation to stabilize in the next few months…not sure why they think so…there is no significant harvest going to happen in the next few months. SAM is looking cooler/ wetter through the weekend. There are at least 2 more systems that will work through Argie/ Brazil. SK (South Korea) will try to set up a private firm to directly procure grain. They have become concerned about the level of ‘concentration’ of international grain companies, and are concerned about their level of control in the marketplace.
 12Jan2011:

USDA report provided the fuel for this mornings rally. The January reports have a long history of being
"big market movers". This one was no exception.
Lets start with Corn: USDA took average corn yields DOWN another 1.5 bpa taking another 97 myn bu off the production. Corn used for ethanol was ramped up another 100 myn bu, exports left unchd and feed usage down 100 myn bu. Corn clearly has not rallied enough to curb demand, and ending carryouts were tightened down another 97 myn bu to 754 myn bu. RESULT corn up the limit early but now only up 24!
Wheat: Wheat report was mostly neutral with just minor tweaks. Food usage was down 10 myn bu, with exports increased a total of 50 myn bu: HRW got bumped 15 myn bu, DNS 15 myn bu, SWW 10 myn bu, SRW up 25 myn bu and durum lost 10 myn bu. One of the biggest/ more interesting things from the report in regards to wheat was the acreage. USDA has winter wheat acres up 10% to 41 myn acres. If you have been keeping score, you know about the crop condition of the HRW. SRW acres were up 47% to 7.8 myn acres.eventually this ought to put at least a little pressure on the Chicago futures. SWW acres are rated up 4% to 3.7 myn acres. SEE ATTACHED S&D report.
SK now estimates losses due to FMD (Foot and Mouth Disease) at over $1 byn.
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