Thursday, June 7, 2012

mid day 6-7-2012 - Comments from Country Hedging's Chris Steinhoff

Below is the mid day update from Country Hedging's Chris Steinhoff

Choppy, choppy, choppy…Crude up $1.80 then only 70 cents, then $1.50 higher, then 60 cents firmer…Gold and the US$ are weaker…DJIA is 86 points better…FED bernanke’s words were a little disappointing to the $.

Corn----sharply higher early in modest volume but has backed off as the outside markets have backed off. Weather, tight cash market and World economic(china rate cut) are the main drivers, so too is the fact the GSCI roll begins today, and some may be playing ahead of that.  Export sales were slow on corn as the month of May corn sales were pathetic. Japan and Mexico were biggest buyers, unknown cancelled 50tmt. The USDAs 1.7bb export total is at risk. Weather across parts of US corn growing areas has been dry, and by reading crop comments on AgWeb there doesn’t seem to be a good cornfield anywhere in the US. Meanwhile the crop gets closer to tasseling across Southern and eastern growing areas and they could use some rain. Weather forecasts are turning drier next week with coverage and amts seemingly no better than 40% of 1/10 to ¼ inch. Spreads vs CN are a nickel weaker and delivery values along the ILL are cheaper than the strong cash market. US farmer sells very little old crop or new crop, instead waiting for the rally, even though CN was $6.30 in May, $6.70 in March and $7.80 last August! But weather and $ rule, and until rain falls or forecasts make a complete change things may be very well supported, at least until the Wall Street casino sells. Black Sea region has received rain and they may be exporters, Brazil crop looks large they may export more. China may OK Brazil origin

Beans---25-30 higher. Funds are long a lot of beans and meal. Farmer movement is quiet as 500 bushels generates some decent cash. Weather is not as critical at this stage for beans, but rain wouldn’t hurt. News is pretty light. Export sales were decent but the slowest of May. USDA may need to raise the export guess.  Brazil farmer has sold and trucked a lot of beans supposedly as some traders feel Brazil WILL run out of exportable supplies at some point. Market still depends on China for the demand in the world and US crusher keeps crushing but is having a harder time buying. Spreads are a little weaker vs SN. Sx/SF is a slight carry with the uncertain crop and acres. If moisture allows, double crop acres should be big.

Wheat---HRW harvest finds a better crop than farmers thought. As combines are now stretching across a big section of KS, or will be by next week. ND gets scattered rain and in many places the crop looks better today than it did yesterday. Parts of the Black Sea have received good rains which help what is there of the winter wheat and most definitely helps the spring crops. Keep hearing of a small area in ND/MN where the spring wheat is short, heading out and the heads are small-but this area is small and too bad if you are in that area, as other areas look fabulous. Farmer selling some spring wheat. Export sales were poor, and we saw cancellation or rolling forward into the new crop year. May 31 stocks estimates could be interesting after seeing 20% of HRW harvest in the past marketing year. Overall demand remains poor and mills have their pick of HRW or DNS for protein.

Christopher Steinhoff
Market Analyst
651-355-3723 fax

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