Kleist Comments

MORNING GRAINS 8/14/14
MORNING GRAINS 8/14/14

Corn:
Exports:
Comments: Weekly export sales old crop 117,100t, of note Unknown cancels 322,500t….once more, lost sales into new crop sales of 787,800t. Big concerns over export demand one of the reasons why hedge positions remain intact.
IF the ‘key reversal’ is to hold, we need some more help fundamentally and yesterday’s overnight export sales not enough. Hence why near term buy breaks for trading turns is accompanied by a caveat: new lows and out. But I will defend hedge equity protection in the calls. Overall the longer term outlook remains negative due to 1) the yields were likely too low and 2) the crop then likely higher (might be more acreage as well); and export demand is poor.
But no confirmation of it until January. And, besides concerns over the Canadian rail backing up grain the U.S. NW included in that and I understand there’s concern in the Midwest as elevators MUST move old crop before new crop arrives and finding transport issues. Harvest crunch? Open interest fell 7400 led by Sept. off 27,000 amid good volume.
So: technically short term the reversal is limp and fundamentally the market remains long term bearishly bent. But it might take until closer to pre-harvest to see my old Dec. objective of $3.50-3.25.

SOYBEANS: ****AUG. CONTRACTS EXPIRE TODAY********
Exports: None Visible.
Comments: Weekly export sales old crop 61,400t dn. 35% and new crop 1.08mln.m/’s;
meal 31,700t and soyoil a minus (-)4,900t. New crop sales need to stay large if we are to move this incoming crop. Weather forecasts sees more rain; China reports more financing problems from their banks, their futures lower with vegoils sharply lower; I suspect the trade will look for higher yields and acreage for the January report; open interest rose 6900 led by X/F/N contracts amid still light-side volume. While I’ll bet a bit on buying corn on technical for a moment as mentioned, no such propensity for the beans yet. If Argentina’s backed up crop remains, they will need to move beans to get financing for the next crop at a time when the U.S. is into harvest. Possible train wreck?

Wheat:
Exports: None Visible.
Comments: Weekly export sales 338,700t off 43% not good Kemo Sabe if looking for a bottom to be in place. If you didn’t believe me, how about Commerzbank? They say Euro zone wheat exports to drop 3.0mln. m/t’s “will work to the advantage” of the Black Sea ports; open interest rose 5,000 amid strong volume; last rally I used my major m/a’s as bear defense and it remains in place. I wonder if instead of corn (if it rallies better) trying to drag wheat prices higher, wheat prices might drag corn prices lower.

Kleist Comments

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

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