Tuesday, July 24, 2012

Mid Day update from Country Hedging's Chris Steinhoff

Crude oil is 25 cents firmer…gold is down $1.00 and silver is  down 15 cents, so your bling bling at pawn America is holding steady…DJIA is 104 points lower…Risk off as the wall Street geniuses with the ivy league education have

Corn----profit taking and radar!!! And we go limit down on CU. Will rain really help the corn crop in the ECB? Well I guess it won’t do any harm but I really have my doubts whether the corn crop is getting bigger today. We rallied 3 bucks with only nominal sell off profit taking, but we are seeing it now, plus flushing the weak longs out. Scattered rains are falling this morning across N and some E growing regions. Certainly goes along way in MN to making a crop, but other areas that have been dry for weeks and months need a wee bit more rain to do much good. Many guesses from the “experts” now are in the 130bpa range and production near 11bb and harvested acres may need to be adjusted lower. But at some point acres lowered may actually stabilize yield estimates. Reports from country all depend on what road is driven and who’s looking, but not all looks terrible and not all looks good. Will not really know until combines roll, and that is beginning in parts of MO already. Cash markets are soft in many areas and some try to transition to new crop values. U/Z is 9 weaker at a 20 inverse. Ethanol plants keep getting by and we haven’t heard of massive  shutdowns anywhere, just a scattered plant here and there. Pollination will be the key and the field surveys for the Aug USDA report may be the timing of the worst news we have factor in and it will be a Friday!

Beans---limit lower with synthetics on SX  down around $15.40+/- as I write this. China is eerily, eerily quiet and the market can ill afford to let demand get a shoulder off the mat. Rain helps beans but can it salvage an average crop out of a crop that has been pot and dry for weeks? Plus SA doesn’t have any beans to sell. Hearing some marketing advisors are saying buy calls as beans are headed to $20-25. Hold on for that ride. SX:CZ is 2.05:1 so there is HUGE potential for a bean rally if corn is steady and someone wants to push that toward 2.5:1

Wheat---sharply lower as a follower of corn as the heat fundamentals have not changed dramatically overnight, could be maybe wheat rallied with corn too far. Cash prices for HRW and DNS across the N Plains are $8.00 to $9.00 and farmer is a seller but maybe should be a bit more aggressive at selling off the combine. Sweep the bin and play the rest of the summer. Not much else really going on. MGEx is finally not inverted, at least thru MWK.

Call if you need anything

Christopher Steinhoff
Market Analyst
651-355-3723 fax

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