Tuesday, July 10, 2012

mid day update from Country Hedging's Chris Steinhoff 7-10-2012 day ahead of USDA report

Crude oil is down $1.00…US$ is 0.200 firmer…DJIA is  up 4 points…grains-can’t be up everyday

Corn---can’t be up everyday as traders think to tomorrow’s USDA and square up and take profits. Tomorrow report may be irrelevant as traders may not agree with USDA anyway….. Rain seems to stay 7 days out, and we now needed it last week.  Get to July 30 and rain will not make much of a difference and we will transition to a demand market. Markets are at the highs when news is at its worst…can news get much worse??? The US corn crop is smaller today than it was yesterday. Period…but we need to remember we have already rallied $2.00+…. So something is factored in. Hearing ethanol plants being told by management to cut grind 30% immediately. Talk of selling contracts back to elevators and no new DDG sales! Also hearing farmers on the fringes of the “new” corn belt realizing they can not grow dryland corn as weather doesn’t allow it…there was a reason the old timers grew wheat. Because the rain was Nov to May, Not may to July!!!!!!!!!!!!!!! Spreads are slightly weaker. We are beginning to see major signs of a demand slowdown. Farmgate offers now well above the market as many open orders have been achieved. Much speculation on the mandate and whether uncle sam ever considered what happens when the US sees a drought.

Soyabeans---world demand remains strong. Mainly China. US crusher watches beans go by door to the export market. Dryness hurts the beans to as beans are losing yield potential daily as well in many areas, but there remains time to still have a good crop. Where moisture allows there are still double crop beans being seeded, but those areas are scattered. Total planted/harvested acres may not be as high as predicted as summer dryness hurts the double crop option. New crop export book is large but then again there seems to be plenty of old crop book too yet to execute. SX:CZ is 2.14:1, so there is room for beans to run on the spread.

Wheat---SRW and HRW harvest moves fast as the crop is now 75+% in the bin. Spring wheat is coming on fast as warm and dry weather brings it early and harvest will be sooner than we think. Still has great potential but could use a few cooler temps and a shot of rain. MT has a few issues. MGEx is flat, KC and CME are carries…World still experiences a few production issues but Canada looks mostly OK and the US skated by without any major, major issues. Black Sea region has a weather issue as their production is still in question, which in turn brings into question their ability to export. USDA report tomorrow may not really mean much

***new crop train values are slashed as all the grain seems to be in the WCB and the RRs want this new grain to move to the PNW and the export market. Farmer selling is quiet and they are now bullish again…World has experienced drought in Russia, Ukraine, Argentina, S Brazil and other areas the past 12 months!!! Will the highs be seen in July????? Call if you need anything

Christopher Steinhoff
Market Analyst
651-355-3723 fax

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