Tuesday, June 12, 2012

Mid Day Comments from Country Hedging's Chris Steinhoff for 6-12-2012 USDA Supply and Demand Report Day!

Below are Mid Day Comments from Country Hedging's Chris Steinhoff for 6-12-2012

Crude oil is 30 cents firmer…DJIA is up 105 points…gold is $22.00 firmer….Spain, Greece blah blah…ND

Corn---Fund and spec selling in moderate volume. We got to experience a USDA report during mkt hours and we saw volatility as CN moved up 6 to down 15 in a minute or two. USDA basically left the US balance sheets unchanged. 2011/12 lowered exports and raised ethanol for unchanged carryout of 851mb. They also left the 2012/13 carryout at 1.881bb, leaving prod and acres alone as the next 30 days we will get qrterly stocks and acres and another USDA balance sheet where they may begin to adjust yields. World corn balance was left at 152mmt 2012/13 carryout vs 129 in 2011/12 and 124mmt in 10/11. Much of that depends on US crop being quite large.  Funds just do not appear to like to play in the corn market much anywhere, why?  I do not know. Rain totals were decent in parts of ILL, MO and OH, but IN appears to have gotten missed and forecasts do not look too good. WCB appears to be getting decent coverage in the next 5 days…ECb just seems to keep missing it. Farmers are selling some old crop corn where they’ve received rain and the crop looks OK, but it is light movement. New crop selling is non existent as they missed it and know it!!!!. Funds roll positions from CN. Spreads are firm vs the CN. CN/CZ is a 62 inverse. Z/H is an 11 ¾ carry. June 29 (june 1) stocks report could be interesting as to how they fill out the surveys currently in their mailboxes!!!!!! Corn is coming out of its ugly phase and growing fast in the WCB as many people believe we’ll see head high corn by July. Curly takes golf lessons

Beans---USDA drew a line in the sand and says 140mb carryout is the smallest it is getting! USDA also tightened the 2011/12 carryout to 175mb  by raising crush and exports. China is basically the world market and their economy is being questioned…maybe they just need to inject $ into Chinese banks and see what that does for the ghost cities. Farmer selling is light and difficult to figure out where the crusher and exporter is actually getting enough beans to do what needs to be done!!!!! I keep hearing scattered stories of soybean stands being poor as beans are in their ugly phase. World supplies getting larger depends on the big US crop. But we are stillprojected nearly 17mmt less than a few short 2 years ago…So we need Brazil and Arg to step up and produce beans for China next year. What will uncle sam find on acres??? With s ILL and MO getting rain and winter wheat harvest is well along in those states on June 10, plus SE US getting rain, what does the chance of double crop look like????? Spreads are firm vs SN and SX/SF is a penny inverse.

Wheat---HRW harvest, SRW harvest go fast and overall DNS crop looks promising. When will farmer sell to make space???? US and World have plenty of wheat even though some “experts” think the situation is tighter than expected. Why did the USDA not address winter wheat harvest in the 2011/12 balance sheet??? What did the farmer put on the June 1 stocks survey??? Are all those new tin piggy banks as empty as they say????? I personally do not think so, has anyone knocked on the side of these bins lately? What noise do they make? MGEx is inverted as many run scared of bids rolling soon, like maybe today???? Some are playing games as commercial isn’t about to let the farmer get paid to carry that wheat  that he says he doesn’t have. DNS farmer awaits the new crop protein premiums/discounts thinking he may hit a home run. US HRW yields are very good as KS is in gut slot harvest. Moe is in Canada fishing.

Christopher Steinhoff
Market Analyst
651-355-3723 fax

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