Morning Grains 11/28/12

WHEAT
General Comments: Futures closed higher on ideas of increasing demand and worsening crop conditions. Traders have been looking for signs of new demand, and also remained concerned about the crop conditions for Winter Wheat crops in the US. Signs of new demand for U*S Wheat have been hard to find, but are expected to appear soon, perhaps just after the first of the year. USDA showed another drop in condition ratings again this week and is now showing the Winter Wheat crop in the Great Plains is off to its worst start since USDA began to keep records. Dry weather in the Great Plains is hurting crop establishment in the region. Overall conditions seem good in the Midwest. The lack of good conditions in the Great Plains does not mean that crop production will not be good next year, but it does mean that a good Winter and especially a good Spring will be needed for any kind of good production prospects. SRW prices remain at or below those in Europe. The production problems in Russia and eastern Europe and increasingly in Australia and Argentina imply that world stocks will get cut and demand for US Wheat could increase by the end of the year. Australian conditions are reported to be mostly OK in the east but too dry in the west. Yields and quality have been down in Australia so far this harvest. Russian prices are moving higher and now not competitive in world markets, and EU is now offering the cheapest Wheat into North Africa. Prices in the EU are moving higher. Demand will eventually come here and force US prices higher as well.
Overnight News: The southern Great Plains should get dry conditions. Temperatures should average above normal. Northern areas could see dry weather. Temperatures should average above normal. The Canadian Prairies should see mostly dry conditions, but light snow is possible late this week. Temperatures will average below normal.
Chart Analysis: Trends in Chicago are mixed to up0 with objectives of 882, 910, and 987 December. Support is at 854, 845, and 830 December, with resistance at 877, 895, and 907 December. Trends in Kansas City are mixed to up with objectives of 917, 944, and 975 December. Support is at 900, 895, and 885 December, with resistance at 921, 925, and 930 December. Trends in Minneapolis are mixed to up with objectives of 946, 971, and 994 December. Support is at 930, 921, and 918 December, and resistance is at 938, 951, and 963 December.

RICE
General Comments: Prices closed higher on what appeared to be some speculative buying and perhaps some commercial buying. At the end of trading, prices for the last two days had basically the same range. Prices in futures remain cheap to cash, and cash markets have actually been stronger over the last couple of weeks, the opposite of what futures have shown. Demand, or at least export demand, has been great for Long Grain, but poor for Medium Grain. There is not a lot of cash Rice available right now. The harvest is over in the Delta, but the buying has not been strong enough yet to turn the trends up to stay. Demand has been for Long Grain in recent reports as Latin America buys here again due to higher Brazil prices. Medium Grain and Short Grain demand is expected to improve over the next few weeks.
Overnight News: Mostly dry through this weekend, although showers are possible about Friday. Temperatures will average near to above normal, and above normal late in the week. Temperatures could be much above normal this weekend.
Chart Analysis: Trends are mixed to up with objectives of 1535 and 1591 January. Support is at 1492, 1480, and 1460 January, with resistance at 1510, 1520, and 1531 January.

DJ USDA World Market Rice Prices – Nov 28
USDA today announced the prevailing world market prices
of milled and rough rice, adjusted for U.S. milling yields
and location, and the resulting marketing loan gain (MLG)
and loan deficiency payment LDP) rates. Source: USDA
—–World Price—– MLG/LDP Rate
Milled Value Rough Rough
($/cwt) ($/cwt) ($/cwt)
Long Grain 19.75 12.92 0.00
Medium/Short Grain 19.47 13.17 0.00
Brokens 13.98 —- —-

CORN AND OATS
General Comments: Corn and Oats were higher on ideas of increasing demand potential for Corn. Reports indicate that US Corn is now competitive in world markets and is available unlike European origins and increasingly origins from South America, where the weather has been a problem for farmers this year. Supplies of Corn remain tight. Basis levels have been very strong as farmer are not offering much if anything at all. That could become an issue as there is talk that the Mississippi could close early this year due to low water levels. This could increase shipping costs to the Gulf and depress basis levels in the Midwest. A shippers group is asking the government to open reservoirs and lakes to increase the flow and allow for better shipping on the river. The weather is still improving in South America. Current weather forecasts feature better rains in northern sections of Brazil, with the best amounts and coverage in the north and northeast. Southern Brazil should be dry. Argentine planting could be stalled again after some recent rains. More rain is forecast for today and tomorrow, but the rest of the week should be dry. Argentina sources say it will be hard for the country to produce over 25 million tons of Corn this year due to the excessive rains in recent weeks, but the loss estimates will hold at current levels with the improved weather. Planting of Corn is expected to be very strong next month in Argentina. There are some expectations for less production in Brazil from weather problems as well. Farmers in the US are now more willing to store crops as futures prices have moved lower. Basis levels are mostly steady, but strong. Gulf basis levels are strong. Corn prices should stay very strong into next year as end users remain short on inventory, and users should be extending coverage into the first quarter of next year if not longer.
Overnight News:
Chart Analysis: Trends in Corn are mixed to up with objectives of 766, 774, and 815 December. Support is at 747, 742, and 730 December, and resistance is at 763, 769, and 776 December. Trends in Oats are mixed to up with objectives of 378 and 391 December. Support is at 361, 358, and 354 December, and resistance is at 378, 381, and 384 December.

SOYBEANS AND PRODUCTS
General Comments: Soybeans and products closed higher on ideas of weather problems in South America and more export business. Soybean Oil has been the big demand item, with some big export sales reported last week and then more reported yesterday. Reports of improving planting conditions in southern Brazil and Argentina continue. Too much rain has hurt planting progress in those areas. Forecasts for the week call for better rains in northern sections of Brazil. Southern Brazil should be mostly dry. Argentine planting could be better this week as drier weather is forecast to return. However, rains are possible in Argentina over the middle of this week. Soybeans planting should be active in Brazil this week, and planted area could expand in some areas where it is getting late to plant Corn. Farmers in southern Brazil will want rain once the planting is done, but this region has turned very dry in the last few weeks. The Soybeans demand continues and there is still the threat that the US will sell all it has before too much longer, so the down side for prices could be limited. Basis levels remain strong due to the strong demand and also due to tight farmer holding patterns. Export basis levels are said by many to be historically strong this year. There is talk that farmers will soon become more willing sellers of Soybeans if weather continues to improve in South America and if production prospects get better.
Overnight News: China bought 290,000 tons of US Soybeans yesterday.
Chart Analysis: Trends in Soybeans are mixed to up with objectives of 1481 and 1535 January. Support is at 1428, 1403, and 1381 January, and resistance is at 1474, 1484, and 1490 January. Trends in Soybean Meal are mixed to up with objectives of 453.00, 473.00, and 508.00 December. Support is at 433.00, 427.00, and 420.00 December, and resistance is at 440.00, 447.00, and 458.00 December. Trends in Soybean Oil are up with objectives of 5130 December. Support is at 4985, 4940, and 4920 December, with resistance at 5055, 5090, and 5135 December.

CANOLA AND PALM OIL
General Comments: Canola was higher on commercial buying and Chicago price action. Chart patterns are mixed in the short term. The cash market was called quiet there as farmers remain out of the market due to the recent price weakness. Futures traders talked about good comercial buying for export and domestic needs, but no new business has been confirmed yet. However, ideas are that new demand has been found for Canola in the export market. Palm Oil was a little lower in choppy trading. Ideas are that speculators were selling and selling uin many copmmodities. Demand has been stronger than expected over the last month or so, but traders are worried about demand from Europe longer term. China and India have been active buyers so far this month, and ideas are that they will continue to buy. Strong exports might continue through the end of the year as the duty free export quota expires at that time. Traders expect demand to hold strong as Palm Oil has favorable pricing for biodiesel producers, but still expect stocks to increase on strong production. However, Palm Oil production could continue to trend lower soon for seasonal reasons.
Overnight News:
Chart Analysis: Trends in Canola are up with objectives of 601.00 and 619.00 January. Support is at 589.00, 586.00, and 581.00 January, with resistance at 597.00, 602.00, and 613.00 January. Trends in Palm Oil are mixed. Support is at 2370, 2260, and 2230 February, with resistance at 2460, 2485, and 2500 February.

DAIRY
General Comments: Dairy markets were lower on follow through selling by speculators The CME auction showed some demand for Milk, but the other products were quiet. Chart patterns remain generally weak for the short term. There are ideas that the longer term rally could resume after the first of the year due to strong Asian demand. US and EU prices continue to show premiums to other origins. Demand still seems to be good, especially for Cheese, and this demand has held the market at current higher levels. US and EU prices remain above those in Australia and New Zealand to the point where Asian buyers can get cheaper products locally. However, most of te production in New Zealand and Australia is made into powder products and not Cheese, so the US and Europe can keep a competitive edge even with the higher prices. The powders are also popular in that part of the world as well, so it looks like the market can keep this division going into the coming year. It is turning cool in the US Midwest and that could hurt production here a little bit. However, weather is said to be good in New Zealand and Australia.
Overnight News:
Chart Analysis: Trends in Milk are down with objectives of 1845 and 1785 December. Support is at 1880, 1860, and 1845 December, and resistance is at 1920, 1950, and 1960 December. Trends in Cheese are down with objectives of 182.00 December. Support is at 182.00, 181.50, and 180.00 December, with resistance at 187.00, 189.00, and 191.00 December. Trends in Butter are down with objectives of 165.00 December. Support is at 166.50, 165.00, and 163.00 December, and resistance is at 170.00, 172.00, and 175.00 December. Trends in Whey are mixed. Support is at 6000, 5800, and 5600 December, with resistance at 6400, 6520 and 6700 December.

Daily Cash Nonfat Dry Milk Trading on Tuesday, November 27, 2012
(Carload Unit = 42,000-45,000 lbs)
——————————————————————
NONFAT DRY MILK : CLOSE : CHANGE
——————————————————————
EXTRA GRADE : $1.5600 : N.C.
GRADE A : $1.5575 : N.C.
——————————————————————
SALES: 2 CARS GRADE A @ $1.5575
LAST BID UNFILLED: 1 CAR GRADE A @ $1.5550
LAST OFFER UNCOVERED: 1 CAR GRADE A @ $1.5600
Close represents US $ per pound. Change is price change from previous close.
Information disseminated by USDA, Dairy Market News – Madison, WI
1114C (608) 278-4200

Daily Cash Cheese Trading on Tuesday, November 27, 2012
(Carload Unit = 40,000-44,000 lbs.)
——————————————————————
CHEESE : CLOSE : CHANGE
——————————————————————
BARRELS : $1.7750 : N.C.
40# BLOCKS : $1.8250 : N.C.
——————————————————————
SALES: NONE
LAST BID UNFILLED: NONE
LAST OFFER UNCOVERED: NONE
Close represents US $ per pound. Change is price change from previous close.
Information disseminated by USDA, Dairy Market News – Madison, WI
1058C (608) 278-4200

Daily Cash Butter Trading on Tuesday, November 27, 2012
(Carload Unit = 40,000-42,000 lbs)
——————————————————————
BUTTER : CLOSE : CHANGE
——————————————————————
GRADE AA : $1.6725 : -.0075
——————————————————————
SALES: NONE
LAST BID UNFILLED: NONE
LAST OFFER UNCOVERED: 2 CARS GRADE AA @ $1.6725
Close represents US $ per pound. Change is price change from previous close.
Information disseminated by USDA, Dairy Market News – Madison, WI
1122C (608) 278-4200

Midwest Weather Forecast: Mostly dry this week, but some showers are possible about Friday. Temperatures should average near to below normal today, but near to above normal by Friday and could be above to much above normal this weekend.

FOB Gulf of Mexico of Mexico Basis Levels:
FOB Gulf Basis Levels-Cents per Bushel
Corn HRW SRW Soybeans Soybean Meal Soybean Oil
November 84 December 114 December 90 December 100 January 55 December 150 January
December 84 December 116 December 85 December 95 January
January 84 March 72 March 94 January
All basis levels are positive unless noted as negative

Questions? Ask Jack Scoville today at 312-264-4322

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