Kleist Comments

MORNING GRAINS 12/27/13
MORNING GRAINS 12/27/13

Corn:

Exports: None Visible.

Comments: Once again I have to concentrate on China, it IS a big deal: confirmed 2,000t cancelled of DDG with that MIR612 insect strain; government says to examine “every single shipment” of feed; Shanghai analyst in conjunction with report says 665,000t of U.S. corn already canceled (report yesterday I put out said 500,000t this year so far), says total DDG imports for 2013-2014 will be 4.0mln.m/t’s vs. prev. est. of 6.0mln. (I wonder if even that is at risk?) and said “…(not) a short term matter anymore” until MIR612 strain is OK’d. And report said feeders will substitute rapemeal if DDG’s further reduced. Gentlemen, 1) now wonder my +$4.40 March bear defense area never hit on recent rallies and 2) the implications for MUCH lower prices are very real longer term. This is not a knee-jerk reaction and something needing much monitoring.

Can much or all of China’s ‘rejections’ be made up? Weekly export sales rose 79% to 1.478mln.m/t’s with 622,000t to Jap./So. Korea, Mexico 247,000t and even Egypt at 118,700t; shipments up 94% to 1.348mln.m/t’s. However, time will tell. While March could not breech our bear defense area, there’s still that potential ‘bottoming’ off the $4.20 area. An old phrase that I have used many times is apropos here: I’d rather buy it higher with confidence than bottom pick it. Open interest rose 5,300 led by H & N amid very light volume.

 

SOYBEANS:

Exports: None Visible.

Comments: China report says it is going to end State cotton and soybean stockpiling DOMESTICALLY and use farm subsidies instead; but will still use imports along with domestic production for the reserves. Weekly export sales up 74% to 720,200t led by China at 577,700t; shipments off 8% but a still robust 1.445mln.m/.t’s; meal sales 83,300t with Unknown cancelling 190,000t; soyoil sales 83,900t led by Panama at 42,000t of it. Open interest fell 19,600 led by Jan. off 17,000 amid fairly light volume (that type of spot month liquidation in thin conditions all that’s needed for sharp moves). 23-day range and the formation still tilts to a distribution-type high forming; maintaining a move under $13.09 as the likely bull defense if buying breaks in this trading affair for now. End of year at hand, make sure all cash sales and hedges are current.

Wheat:

Exports: None Visible.

Comments: Weekly export sales fell 9% to a routine 596,900t’s, of note Brazil bought another 140,000t. Otherwise, no major weather problems around the world yet and competition thwarts sustainable rallies here for now. Open interest rose 2,800 led by March up 1,000 and rest nominally higher amid light volume. Held $6.00 yesterday largely because it’s a sentimental favorite. For now.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

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