Tucker Talk: March 11, 2016

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Rolling Wheat

We have finally seen a rally in the wheat prices over the last week with a slight rally in corn.  Much of the rally in wheat is attributed to short covering by the managed money after the report on Friday afternoon showed them record short in both corn and wheat contracts.  Trade is also debating the implications of the early emergence of wheat.  There is still significant freeze risk in wheat producing areas and emerging wheat will need moisture in order to keep the condition high.  Weather projections show scarce rain over the next week in the southern mid-west wheat producing areas.

The European Central Bank (ECB) extended its quantitative easing on Thursday in order to try to stimulate the economy but when it came time for a press conference, the ECB Chair contradicted the ECB’s actions in his statement and caused turmoil in the currency markets.  This was corrected in the overnight trade and the European stock market is up this morning and the Euro is down relative to the U.S. dollar.  The current exchange rate is $1.00 to 0.9 Euro when only a year and a half ago it was $1.00 to $1.6 Euro.

On March 31 the USDA will release the stocks report for the first quarter of the year which is expected to be a mover and shaker in the market.  Some traders think that due to the exports being much slower this year that stocks could be higher than currently estimated, maybe even another record level.  Feed usage is expected to be higher than last year but it is uncertain how much and if that will be enough to offset the decrease in exports.  Warm weather this winter should have improved feed efficiencies. Weather risk is finally entering the corn market as heavy rains in the delta states prevent planting progress.

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Tucker Talk: March 4, 2016

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White 4-Pod at FCE

The 2016 revenue protection spring price for corn is $3.86. This is the average December futures price over the month of February.  The harvest price will be the average December futures price over the month of October.

Corn exports did better than expected last week and even though total exports are behind last years, the exports last week were higher than the same week last year.  Gulf corn offers to Asia have finally drifted low enough to be within $0.05 of offers from Argentina which will leave the US open for corn bookings.

Crude oil prices rallied today to 2-month highs but traders consider it short-covering rather than a bullish change in fundamentals.

Increased weather risk has caused a $0.20 rally in wheat over the last 3 days.  Warm temperatures have caused wheat to break dormancy 4 weeks ahead of schedule in important growing areas.  Most wheat producing areas are still under statistically high probability of a hard freeze until March 31st.  Areas such as Kansas and Oklahoma will need more moisture in order to keep the wheat going but rains are having a hard time developing.  Large rallies will be limited by increased farmer selling and moving of on-farm grain stocks.