---- HAPPY NEW YEAR ----
We started the week's reports with our weekly export inspection report showing wheat inspections at 9.1 million bushels versus 10.9 the week prior; 13.1 a year ago; and our weak four-week average of 12.4. It speaks for itself that demand remains a non-positive driving force near-term. Corn saw 20.3 m.b. inspected for near-term export versus 31.2 the week prior; 23.8 a year ago; and four-week average of 24.7. I see it as neutral as importers are fresh off the holiday-closings most celebrated and await price direction for the start of the New Year. Soybeans saw 32.2 m.b. inspected for near-term export versus 58.9 the week prior; 29.4 a year ago; and four-week average of 48.2.
Typical of holiday closings but over a year ago is important. These holiday reports are difficult to factor in-- especially when closings are attached to weekends such as Christmas and New Year's fell on. Next week on out will more accurately address demand. Just a note, of the 32.2 m.b. bean number, China was in for 18.6 of the total and 14 m.b. to other countries showing ample demand world wide for protein.
Monday, January 4, 2010, started the New Year as expected with sharp early rallies in grains; corn opened up 9; wheat up 12; and beans 18 higher - all pushing to further highs in early trade before profit-taking set in. Today, Tuesday, January 5, 2010, started off lower as turn-around Tuesday theme set in. Wednesday, grains will follow the lead of crude oil - as the crude inventory report comes out - when the grains open, but as I noted on my weekly report last week, expect firmer pricing in grains ahead of the January 12 U.S.D.A. crop report as traders fear a downward adjustment in winter wheat acres and corn and bean 2009 production.
There is a severe cold-front coming in Wednesday. WXRISK.com sees the arctic cold blast hitting the upper plains Wednesday, the western corn-belt Thursday, moving into the eastern grain- belt Friday, even colder than the last cold blast. This looks to keep grain movement off the farm at a standstill as equipment is frozen and diesel fuel run trucks at high risk of failure. Farmers will sit tight and this will firm cash prices. We can expect growers mid-month or off the January 12 report rally to see some sell corn but not much as they sold all the poor yielding, poor quality, high moisture corn ahead of year's end to ethanol producers who are not concerned about quality. Farmers look to hold their remaining corn, especially the quality corn until late spring - early June period when seasonal highs off planted acreage concerns and weather premiums set in. March corn, Wednesday, finds support at 4.10 and resistance at 4.24. Buy support and add on a close over 4.24. If the crop report January 12 comes out as bullish as we hope, 4.40 will be hit.
Farmers are done selling beans and what is in on farm storage sits until late spring or until any near-term price surges are attractive enough to get some growers to challenge the cold. Export sales are 87% of the U.S.D.A. projection for the marketing year ending September 1. Though exports slow the first quarter of the year as South American crops compete for world export, I expect Asian demand to remain strong and over a year ago. In January, 2008, our average weekly sales were 489 T.M.T; and 929 in 2009. February, 2008, average was 647; and February, 2009, 756 T.M.T; yet late-year 2009 saw China and other countries accelerating their protein purchases setting us up for a stronger first-quarter totals than the two prior years. The 2008 and 2009 number all improved from the year prior even on record South American production in 2008. March beans find support Wednesday at 10.48 with resistance at 10.85. Buy support and add on a close over 10.85. Wheat is the tail of the dog but a few issues leave it room to aggressively follow corn and beans.
This severe cold snap entering this week could lend to some winter wheat crop damage. The weather site COMMODITYWX.com sees sub-zero temperatures in areas without a protective snow covering. 10% of the dormant-emerged wheat in Oklahoma, Northern Texas and western Kansas are at risk, as well as some of the soft red winter wheat acres in Illinois and Indiana. Talk of potential winter kill and lower winter wheat planting numbers on the January 12 crop report, should have our March support of 5.40 hold into the report. We have minor support at 5.50 with potential of 5.74 if the report comes out bullish and weather is harsh enough. Buy support and hold into the report.
Our next report will be Thursday or Friday when the pre-report trade estimates for the crop report come out. I want to see them so I can analyze them and the meaning to the report. The average production estimates tell us how they are positioned in the market.