Grain Market 7March2011

Corey Burns

Good Morning All!

Hopefully you got some fertilizing done yesterday. It looks like we should be getting about 1 3/4" of water between now and Friday morning...hopefully we get a few more decent days before too long.

It looks like the wheat market has stayed fairly level in the last week. Today's price is $7.80 and the peak price is $8.05 for June Sales. Futures for 2012 are down slightly at $7.46.

     Markets started with a small uptick, but again took a left hand turn and we are SHARPLY lower this morning with wheaties down 28-30 and corn off 13-15. $$ is down, crude is up sharply and Gold is up $15. We are seeing more profit taking a bit of ‘flight to safety’ in this mornings trade. Unrest continues in Libya, is growing in Bahrain and is also spreading to Saudi and Kuwait. China is also concerned and has stepped up security. Media is not allowed to film or interview protesters. Protesters are just showing up and milling around in HUGE numbers, tying up traffic and slowing everything down. The Gov’t there has also blocked underground internet/ phone. Inflation rate in China is very high. Obama is talking about opening strategic reserves. We have an new USDA S&D out Thursday…Those are pretty much the headlines.
             Weather man says that HRW should get a drink this week before turning back to dry. Last system skipped over the driest areas and hit further east. Corn planting has started in Texas, but will struggle north as the weather gets very wet, very fast heading east/ southeast. COT report was highlighted by overall spec liquidation in Chicago SRW and a build in corn. Corn is still friendly. Weather system give the east more precip (they don’t need anymore) and at least 1 major weather service is forecasting big time flooding in the mid west this spring. Informa rated the Brazil crop =3 myn mt to 71.4 myn mt, and also took Argie up 3 myn mt to 52 myn mt.

             Chinese gov’t is talking about totally banning corn exports, has ordered 4 major feed companies to ‘not buy corn from the market’ (which drives up prices). If you can believe the Chinese stocks numbers, they say they have 100 myn mt of wheat on hand. I haven’t seen anything on corn numbers, but the market chatter is LOUD that China will need to make major corn purchases from someone before summer. Weather in the Chinese wheat belt that was ‘severely dry’ then got much needed precip is supposed to return to dry…we’ll need to watch this closely. The Chinese population has become somewhat accustomed to a higher standard of living, and won’t want to give it up easily. Chinese farmers are known to be hoarding everything…cotton, corn, wheat, rice. Prices are escalating so fast it is their only hedge that they will be able to buy what is necessary to farm another year. Consequently the market has NO confidence in the Chinese Gov’t numbers, and for that matter, those out of India, Pakistan etc.

             Iraq booked 14.5 myn bu of wheat (11 of it US). GASC (Egypt) says that they are good for 5 months…with today’s board action, it will be interesting to see if there are ‘buyers of the breaks’ around. Morocco booked 10.3 myn bu (EU)? Mexico bot 5.9 myn bu of US corn. Argie strike ended opening up roughly 20% of Argie export capacity.

             So you can see the market has plenty of stuff to sort through today. Be prepared for LOTS more days like these…by the way…the Budget proposal sent from the House had NO funding for E15 pumps.

***Didja Know: According to the USDA, 44 myn people in the US (15% of the population) is receiving food stamps?
***All bids are subject to change, please call for CONFIRMATION of prices. All information in this letter is from sources deemed reliable, and is for informational purposes