Monday, June 18, 2012

Mid Day Report from Country Hedging's Chris Steinhoff 6-18-2012

Crude oil is $1.00 lower…Gold  is $2.00 lower…Greece and now other EU countries have their hand out too…DJIA is  down 4 points…US$ is 0.300 firmer

Corn----modestly higher early, then the pit opened at 930am, volumes increased and buy paper pushed things higher, now pressing 18 cents higher. Parts of the ECB are critically dry, not having seen any substantial rain for 5+/- weeks and some of this crop gets ready to tassel. IN missed most of the rains and rain chances the next few days is hit or miss. Parts of ILL, WI and MN are sitting in very good shape…so the 166bpa USDA yield estimate is getting harder to achieve by the day and it was a lofty # to begin with as that seemed unattainable from the beginning as these monster yields the seed corn companies keep promising never seem to show up. But this year the US farmer had the $ to spend, and spend he did as fertilizer and micro nutrient salespeople should be getting some good commission checks. This spending may surprise everyone on yields, but we will have to wait and see on that. Farmer selling is relatively slow as they want $7.00 or seem willing to sit on the old crop, fully aware of the inverse. At least for now!!! USDA acres report in a few weeks and 96 mil or 97 mil or 95 mil may get trumped by weather! New tin piggy banks provide a lot of storage capacity. Spreads are mixed as N/U is steady/firm at a 70 inverse. The N/Z is a 72 ¾ inverse as the U/Z narrows toward even $ on the early harvest/crop potential. . Z/H is a 12 ¼ carry and the Z/N is a 26 ½ c arry. Hearing some ethanol plants are slowing or shutting down ans margins are poor and origination is tough. Export inspections of 24.7mb is behind the 33mb weekly pace needed.

Soybeans---Double digits higher but well off today’s highs. Acting to follow corn and bean weather is the same as corn weather. Plus many believe Brazil is nearly out of beans, so I guess they didn’t have muddy dirt roads to truck these beans over this year in record time. China has been quiet as they want to sell more soybeans from reserves. US acres report on June 29 may be a surprise, did the US farmer switch acres or just find a way to plant more of everything this year? Many bean fields are still in their ugly phase but rain and heat can do wonderful things to a growing soybeans crop. It appears there is plenty of heat coming but rain is the large ?...Farmer sells a few and elevators sell some basis length to the processor. Shuttle qtys are getting hard to come by in the WCB. Sounds like ECB may still have a few beans left and with the crop dry, selling may be slow too. Spreads are slightly weaker. N/Q is a 16 inverse. N/X is a 56 inverse and the X/F is even to 1/2 carry…Export inspections of 7.9mb is slightly behind the new export pace needed to reach 1.335bb

Wheat---HRW harvest is in full swing in Kansas. Hearing reports the mills do not like the milling/baking quality of this crop even though quality is very good and proteins are decent. But not hearing this from everyone so I do not know what or if there is an issue or is someone talking position?????? DNS crop looks fabulous in most of ND, what will USDA say on acres. Hearing a lot of barley acres got planted because growing contract were quite high priced. MGEx is inverted while KC and CME are carries. Bids roll early and people panic. A lot of new tim piggy banks in wheat country too, so what is actually still on farm? More than people think I would guess.  World demand remains steady with Russia/Black Sea having been a concern since last fall’s seeding. Aussie dryness a concern to some too as they finish seeding. EU winter wheat appears OK for now as they get ready to harvest. Argentina seeds wheat too.

…current radar moves a system thru Michigan and scattered across MN and WI…ILL and IN may not get much rain the next 24 hrs…see DTN map below…next 5 day map from NOAA also included

Christopher Steinhoff
Market Analyst
651-355-3723 fax

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