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April 7 PM Grains Commentary: Joe Vaclavik

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[Joe Vaclavik] Grain markets here in Chicago were mixed on Monday. We had the corn market mostly lower, the soybean market mixed, and the wheat market mostly higher. We start off with some weather issues. We've got some cold weather, some wet weather across the United States, in the Corn Belt in particular, kind of a slow start to spring so far. There is some concern among farmers that planting may be delayed marginally, but most forecasters actually looking for a little bit of improvement here during the 2- to 3-week period. I really don't think it's going to be anything to write home about. We're certainly not going to plant a whole lot of corn early here in the United States, but I think that delays will be minimal when you look at the forecasts that are out here this week. Moving forward, we do have a USDA report on Wednesday. The trade again looks for corn carryout estimates and soybean carryout estimates to tighten just a little bit after a string of friendly reports beginning in January. The trade looks for the '13-'14 corn carryout to drop to about 1.4 billion bushels. That would be down 50 or 60 million from the previous report. We're looking for the soybean carryout number to drop actually under 140 million bushels. That would be down from 145 million in March. So we're looking for some friendly numbers here overall. The thing that concerns me is that we've had this string of friendly reports from the USDA in the corn market especially. I don't know necessarily that that can continue forever. I really do feel that without some kind of weather issue, real or imagined, here in the corn market it might be tough to see some higher price levels over the near term. Wheat futures strong on Monday. Forecasters removing some of the rains that they had in the forecast for this coming weekend. While a significant rain event is still advertised, it looks as if the amount and the coverage is going to be a little bit lesser than normal. Also on Monday afternoon there will be some crop progress and crop conditions ratings. Crop ratings are expected to be on par, maybe even a little bit better than they were at this point last year. Still the drought out in the western part of the United States, your big wheat-growing states— Kansas, Oklahoma, Texas, Nebraska—very, very dry, some windy conditions hurting the crop. We really need to see some rainfall there before we can break this wheat market in a real meaningful way. So again, the big thing this week will be that USDA report which is out Wednesday morning at 11:00. That could be a market mover, but I really think that weather and production prospects are going to be the name of the game here moving forward. This is Joe Vaclavik from Standard Grain from the floor of CME Group.

Video Details

Duration: 2 minutes and 28 seconds
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Language: English
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Views: 49
Posted by: cmegroup on Apr 7, 2014

Joe Vaclavik, Standard Grain Inc.

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