Weekly Grain Update 4.22.16

Even the best amusement park ride couldn’t duplicate the roller coaster that commodities experienced this week.  Unfortunately, even the most experienced, well-versed traders in the industry are struggling to fully explain this week’s market action.  Let’s start with what we do know, first South America.  Argentina is too wet, preventing producers there from harvesting the soybean crop fueling concerns of lost production.  This is viewed as an old crop soymeal issue because Argentina is a bigger crusher than exporter of beans.  Brazil is having an opposite weather struggle, too hot and dry over key areas, potentially decreasing the corn crop.  In light of the corn production concerns Brazil has adjusted the import tax structure, which could benefit the US corn demand.  However it is too early to gauge the full impact.  Brazil is also host to a political quagmire as they start the process of impeaching the president on allegations of corruption.  Keep in mind too, that Brazil is preparing to play host to the world this summer as the Olympics come to Rio.

Here in the US, fundamentally, very little has changed.  Planting progress should come in around 25%  on Monday compared to 16% on average.  The rapid rally in corn should have put a halt to any acreage changes from corn to soybeans.

Money flow buying into commodities, covering short corn positions, and waiting for US weather clarification was seen as a major force behind this week’s rally.  As the board rallied producers were quick to reward the market on the way up. Rising futures coupled with heavy cash movement throughout the country led to the biggest basis drop seen in long time.  Some places down double digits in a matter of days.

Given the variability of price movement, now is the time to have pricing orders in place with the grain department to avoid missing an opportunity while we all start to focus on better weather and spring planting season.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

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CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS Rochester and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS Rochester bases its recommendations solely on the judgment of CHS Rochester personnel.

 

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