Grain Market Reports 14Jan2011

Tanner Sheahan
CPS Tangent

Here are the Grain Market reports from Dan Steiner of PGG for the last couple days.  SWW prices in Portland for Jan-May run from $7.65-$7.80 with N/C for 2011 hitting $7.70.  Chicago 2011/12 futures prices for SRW are about $0.40-0.50 higher than current prices for May delivery.  Maybe looking at strong commodity prices for a while yet?

As a reminder, and for new readers, the prices I summarize are coming from Dan's original report that can always be found on the Pendleton Grain Growers website.  There is bound to be some discrepancies depending on who and when you call.  I have heard, however, if you show up in person with a bag of fun-sized Snickers you can get a better price...not really.

Side note: Pat's previous post on world population is echoed loudly in these market reports on a daily basis.  There is, at this time anyway, widespread uneasiness in regards to a world food supply that will only get tighter as time goes by.


Futures prices continue to climb, with lots of ‘friendly’ information out there. Traders are still pondering what the 754 myn bu carryout actually means…what it boils down to is 5.5% Stocks to Use which is the tightest since 95-96. Corn consumption for the US this year is at a rate of 1 byn bu MORE than 2010 production. First ¼ usage was 451 myn bu MORE than 1st ¼ last year. Besides which, there is still concern about the ‘300 million’ missing bu from the Sept report. Many believe that those or at least many of those bushels were actually NEW CROP bushels shipped before the September report. If true it would further tighten the supply. Ethanol has not gotten bad press…. YET… it will come. Food inflation, export bans etc it is only a matter of time. The one thing hanging over new crop prices is the tax credits/ subsidies expire 12/31/11. No one knows what the political climate will be like, or what corn production will be, but today it is hard to imagine that serious cuts to those subsidies won’t happen, drastically altering the direction of the 2011 crop…so be careful with new crop. As for old crop, still no evidence of rationing…it simply HAS TO HAPPEN. Sales reports this morning showed mediocre wheat sales of only 5.4 myn bu (but a large sale last night (5.7 myn bu) already has next week looking sharply better. Corn sales continue to churn in mid range of traders guesses of 20 myn bu. Chinese gov’t still says they don’t expect to import large quantities of corn. The market simply does not believe it at this time, the pressure to contain prices is too high. Wheat appears to be along for the ride, but quality is king right now, and the world’s best supply of high quality wheat is right here in the US.
           Aussie floods are far from over. Ports are closed, not only halting coal but also wheat shipments. Indonesia is knocking on our door, looking to fill gaps while the floods rage on. ½ of Indonesian wheat comes from Aussie. Gavilon received accreditation to export wheat from Aussie, that makes the total 26 exporters, where a short time ago it was 1. The 1 (AWB) is in negotiations to sell out to Cargill (who by the way posted profits up 16% last ¼). Consolidation at this stage is inevitable. The farmers like the options and are pressing to stop the sale. Argie gov’t wants to curb exports to help suppress domestic prices. Farmers obviously aren’t in favor and have offered to strike for a week in protest. Paki gov’t sold 18 myn bu of wheat to Paki and Myanmar.

***Didja Know: The only thing that can destroy a diamond is extreme, intense heat. The natural phenomenon that produces ‘aurora borealis and australis borealis’ produces sound waves that only wolves and dingoes can hear.   

Futures giving up ground this morning as traders will to take some profit, consolidate the market and head into a 3 day weekend (MLK holiday Monday). Sorry no markets Monday. Its been a positive week and we know a bit more about the world S&D’s than we did a week ago. Crude oil was up a $1 in early trading, and even though corn traded sharply lower, bounced back and now is only down by a marginal amount. Wheat is getting beat up, but .20 moves are becoming common place. Chinese Gov’t increased bank requirements again (4th time in last 2 months). You can almost hear inflation in some parts of the world. Things will get very dicey if the US suffers some sort of weather calamity this summer.
           SAM weather appears to be more ‘normal’ heading into the weekend with the major production areas in Brazil not only getting good precip, but temps are expected to be in the mid 80’s. Heavy flooding is causing huge problems, but so far as Ag, has not been a problem. Argie will get more rain and cooler temps. It now looks like the worse may be behind them on the corn and bean crop. So whatever damage was done was done a week or 2 ago. We won’t fully know that till the crop gets closer to harvest.
           Interesting article this morning talked about the patents expiring on some 2 dozen varieties of GMO products. One of the big issues to be dealt with is, there is a big difference between holding the patent and holding the ‘foreign approval of that patent’. Will those varieties be accepted as ‘generic’ or will each ‘holder’ of the material need to seek approval before export. With world stocks as tight as they are, things OUGHT to move through the political channels easier.

Didja Know: What’s it mean to give more than 100%? IF you gave each letter of the alphabet a number corresponding to its place in the alphabet…where A = 1, B=2 etc….KNOWLEDGE scores a 96, Hardwork gets a score of 98. So even though hard work and knowledge will almost get you there just not quite…Attitude gets you a score of 100. There is one thing that will put you over the top….