This Week's Market Perspectives: March 23, 2012
- Published on Monday, 26 March 2012 13:09
By Kevin Roepke, USGC Manager of International Operations
Traders are trying to "position" themselves before the Prospective Plantings report. Bulls are leaning on low stocks to support a rally. Bears are leaning on the acres themselves to move the market in their favor. A late soybean rally could and should buy back some acres at the 11th hour, but the question remains if it was too little, too late.
Spreads have to be viewed as a key indicator for market activity. Take a look at July corn futures versus December corn futures. Farmers are scrambling to plant early in order to capitalize on this dollar inverse. What they are intending on doing is selling new crop corn at old crop prices. Insurance and high seed costs are inhibiting those that aren't up for a challenge.
In the news this week:
1. News of China buying sparked demand and supported prices.
2. Sources indicate a purchase of more than 300,000 tons of Australia feed wheat into China.
3. A(n annual) truckers strike in Argentina seems to be losing momentum.
4. Russia announced no intentions to restrict grain exports.
5. The cost of production reportedly raised $44 dollars per acre this year. Seven dollars on seed, four dollars on fertilizer. At these levels, breakeven price is $5.08.
6. Glencore apparently is in the driver's seat to purchase Canadian grain giant Viterra.
7. Informa ending corn stocks = 1.8 billion bushels.
Stay tuned for next week's report!