Grain Market Report 22Feb2011

Tanner Sheahan
CPS Tangent

Wheat has fallen off some more.  Prices are pretty flat for the rest of the year ranging from $7.75 and peaking at $7.90 for May.  Post harvest is still $7.75-7.80 and new crop for next year is hanging in there at $7.53.  It's amazing how disappointed we get when prices drop and I know that's a direct hit on the bottom line but we're still bumping up against $8.  That's pretty good money.

The weather is going to be...less than desirable for a while here.  That's good for the growers on the stripe rust front.  But be ready when the weather breaks; stripe rust is out there and getting worse with every good day.

Dan sent out his acronym/abbreviation cheat sheet again the other day and I thought it would be a good idea to post it up for those of you who may have missed it the first time around.  It can get confusing if you don't what all those letters mean.

Grain Marketing Abbreviations and Useful Information:

The grain business is like most anything else, there is a certain amount of “lingo” or jargon that is used and is primarily unique to the grain business. Below are some of the more common things you might run into, and hopefully the following information will be of help. Please give me a call or e-mail with any questions (541-481-6614 or graingrowers@centurytel.net)

The grain industry uses a unique lettering system to designate: the exchange where the grain is traded, the option month we are talking about and then the type of grain, for example CUW.
The exchanges we work with are: Chicago; for Soft Red Wheat (SRW), Corn, and Beans. Chicago gets the letter C.  Kansas City for Hard Red Winter (HRW).  Kansas City gets the letter K.  Minneapolis (Mpls) for Dark Northern Spring Wheat (DNS).  Mpls gets the letter M.
Most any of the grains we will deal with in this part of the country are traded in the option months of March, May, July, September, and December, and are designated by one letter.  March = H, May = K, July = N, September = U, and December = Z. The last letter is to designate the type of grain: Wheat is W, Corn is C, Beans are B.
Sooooo, CUW is Chicago September Wheat. CZC would be Chicago December Corn. Etc. CBOT is the Chicago Board of Trade, KCBT, Kansas City Board of Trade. MGE would be Mpls Grain Exchange.
M= 1,000  myn= 1,000,000    mt = metric ton (2,204 pounds)  a short ton has 2,000 pounds so: in a short ton (st) there are 33.33 bu of wheat, 35.7142 bu of corn, 41.66 bu of Barley. All export sales are made in mt so there are 36.7 bu/ mt of wheat, 39.4 bu/ mt of corn, and 45.9 bu/ mt of barley. So a 200m mt sale of wheat is about 7.3 myn (million) bu. Or 7.87 myn bu of corn.
COT: Commitment Of Traders report. This report shows who owns what in the grain industry. It is broken down into 3 main categories: The specs (speculators) or funds. The commercials or elevator operators, and the non reportables (positions held by small firms, individuals etc.) For each category and grain they list the long and short position. Positions are either by futures contracts or combination of futures/ options. The combo report comes out every 2 weeks, the futures portion is updated weekly. Extremely useful tool to help establish the market direction. There is now a “supplemental” report available that breaksout the position of “index funds”.

Abbreviations for locations: Argie: Argentina,    Aussie or OZ: Australia,    SA South Australia,    NSW New South Wales,    WA Western Australia.    SAM is South America.    EU: European Union.    FSU: Former Soviet Union.    Kaz or Kazi: Kazakhstan.    UK: United Kingdom.    USDA; United States Department of Ag.    ABARE: Australian Bureau of AG Resource Economics (similar to the USDA),    GASC: General Authority of Supply and Commodity (purchasing agency for Egypt),    JFA: Japanese Food Agency (Purchasing agency for Japan).    FAS: Foreign Ag Services (reports on world grain stocks).    FAO: Food and Ag Organization.    AWB: Australian Wheat Board.    MAFF: Japan’s Ministry of Ag Fisheries and Forestry,    CNGOIC: China Nat’l Grain Oilseeds and Info Center,    ABB: Australian Barley Board.   ABH: Australian Bulk Handlers.    CWB: Canadian Wheat Board.    CFSA: Often just called the FSA (Consolidated Farm Service Agency). Used to be called the ASCS.     

BU: bushel.    Min: Minimum.    Px: Price.    Cak: Contract.    S&D: Supply and Demand. This is a report put out by the USDA monthly. It has the estimated production numbers, estimated usage numbers (by industry…like seed, feed etc.) and estimated carryouts or how much they think we will have left at the end of the year.    Prem: Premium (can be used for Protein premium, spreads or basis depends on how its used).    Mo is used for month.    LH is Last Half,    FH is First Half (as in portion of a mo)    GMO: Genetically Modified Organism. Mostly refers to grain varieties that have been modified in the lab vs. the field (quicker, more precise, more efficient etc.) to exhibit certain characteristics like disease resistance, milling quality etc.

Sometimes we will abbreviate Major grain dealers: UH is United Harvest (after United Grain and Harvest States merged). Cgl (Cargill). LDC (Louis Dreyfuss Corporation). Kalex (Kalama Export). EGT Export Grain Terminal.
22Feb2011

More profit taking is on tap this morning, as traders seek ‘safe haven’. There has been lots of talk of spec limitations and enforcing those limitations. When you look at the size and scope of their positions the potential to the markets are obvious. Wheats are called down 15-20 and corn is called down 7-10.
           China’s worst drought affected areas are set to receive ‘significant and prolonged’ precip. This weather event should significantly ease the drought concerns.