Overnight Highlights from CHS Hedging's Tregg Cronin 10-30-12

Outside Markets: Dollar Index down 0.250 at 79.982; NYMEX-WTI up $0.39 at $85.93; Brent Crude up $0.16 at $109.60; Heating Oil down $0.0087 at $3.1065; Cattle are weaker, but hogs firmer; Gold up $5.80 at $1713.50; Copper is up $0.0345 at $3.5305; Most major currencies are firmer this AM; Softs are firmer aside from Coffee; S&P’s are down 1.75 at 1405.75, Dow futures are down 36.00 at 13,018.00 and Treasuries are lightly mixed.    

Financial markets are still inundated with Hurricane Sandy as most of New York and all US equity futures will be closed for a second day in a row.  Futures are still trading right now, but will most likely close at 8:15 CDT as they did yesterday.  A sharp selloff of 10+ points occurred in the S&P’s last night, but things have recovered this morning to trade around unchanged.  There were some noteworthy happenings around the globe, however.  First up, the Bank of Japan decided to expand its asset purchase program for the second time in two-months, a move seen as a surprise.  The Yen is 0.48% weaker.  Also, Italy sold 10-yr bonds with an average yield of 4.92%, the lowest since May 2011.  Switzerland also sold short term bills with a positive yield for the first time in over a year.  Both supportive.

The US radar summary below shows pretty well the now Tropical Storm Sandy moving inland.  On top of the rain and flooding, West Virginia is expected to see up to 3’ of snow in mountain areas.  I’ll leave the forecasting of that one to somebody else.  The next 5-days will see a dry growing area from TX-ND and WY-IL, but OH is expected to see decent rainfall this week with the eastern part of the state receiving as much as 3.0”.  This will continue to hamper harvest efforts.  NOAA’s extended maps are bringing above normal temps back into the picture for areas west of the Mississippi.  East of there will be normal/below.  Precip is seen above normal for areas north of I-94.  NE/KS/OK are expected to see below normal precip in the 6-15.  The second map below shows the 6-10 for South America and the red blob over northern Brazil which is probably the biggest reason for the selloff in the soy complex yesterday.  Rains there will help growing areas get into November in good shape.  Excessive moisture remains a problem in Argentina, slowing planting progress.

Ag markets are bouncing a bit today on a “Turnaround Tuesday,” but everything is well within recent ranges as the news flow continues to be slow enough to not warrant a change in trend.  There were a lot of revised crop estimates overnight which could be providing some support to our markets.  First up, a Chinese news agency reported the Chinese Ag Minister pegging the soybean crop at 9.8MMT which would compare with the USDA at 12.6MMT.  This could mean as much as 3MMT more in imports, pushing them well over 60MMT.  The National Australian Bank was out last night saying the country’s wheat crop is 20.6MMT vs. the USDA at 23.0MMT.  GrainCorp said Central Queensland is 85% complete.  UkrAgroConsult cut Ukraine’s corn crop to 18.8MMT vs. the USDA at 21.0MMT.

Other new overnight included South Korean poking around for corn.  KFA bought 62,000MT of South American corn from S.A. at $327.93/MT C&F for March 20 delivery.  KOCOPIA bought 55,000MT of optional origin corn at $334.30/MT C&F for Mar 20 delivery.  Would also appear to be South America, although March performance might be difficult for South America.  Also out last night, Russia sold 53,055MT of grain from state stockpiles.  Since Oct 23^rd, 117,690MT of milling wheat has been sold and 18,350MT of feed wheat.  Interfax also reported Russia’s grain exports have already exceeded the government’s target of 10MMT citing research group IKAR.  Other headlines of note included ADM beating analyst estimates on earnings with $0.28/share and net income of $182 million, down from $0.68/share a year earlier.  They cited improvements from its soybean-processing business which should have been robust this year.  Argentina also said Bunge was being excluded from the Cereals Register for failing to pay taxes.  This is a big deal come February.

Open interest changes yesterday included wheat down 3,040, corn down 1,420, soybeans down 13,540, meal down 2,040 and soy oil down 1,080.  Looks like heavy liquidation across all markets, especially the soybean market.  Comforting to know open interest wasn’t unchanged, or there might have been commercial participation, but spreads and basis hung in yesterday.  Chinese markets were weaker overnight with soybeans down 17c, meal down $1.70, soy oil down 25c, corn down 2.5c, palm down 65c and wheat down 3.5c.  Malaysian Palm Oil was down 39 ringgit at 2,501 (1.5%).  Palm Oil nventory information at the end of October will be very interesting.  Paris Milling Wheat is up 0.29%, Rapeseed is up 0.10%, Paris Corn up 0.20%, UK feedwheat up 0.48% and Canola is up 0.02%.  

One other quick note, in the corn options pit yesterday, ADM sold 6,000 December 740 calls and 2,000 December 750 calls, receiving around 12-17c a piece.  They did the exact same thing with November options a couple weeks back.  Options pit participants think ADM could be selling calls to hedge corn purchases as opposed to selling futures.  It proved to be a worthwhile strategy with the Nov as options remained range bound and they were able to clip a coupon and earn time value.  We’ll see if it works for the Dec.

Call things better as we bounce from the weakness yesterday, but volumes should remain subdued as long as the East Coast remains a mess.  Ranges feel like they will continue to hold, but firming basis levels and tightening spreads don’t feel like they are getting the farmer to move, and the reseller market might not be keeping the pipeline full enough.  More chop today with private crop estimates towards the end of the week,.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax

www.chshedging.com

CHS Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.151 at 80.229; NYMEX-WTI down $0.73 at $85.55; Brent Crude down $0.38 at $109.17; Gold down $1.90 at $1709.00; Copper is down $0.0480 at $3.5020; The Yen is firmer, but all other major currencies are firmer; Cotton and Cocoa are firmer, but the other softs are weaker; S&P’s are down 9.50 at 1398.00, Dow futures are down 91.00 at 12,963.00 and Treasuries are firmer.   

Hard to say there is any news more pressing than Hurricane Sandy and the standstill it is causing along the East Coast.  Floor trading at the NYSE and the NYMEX has been canceled today, although electronic trading will occur as normal.  Analysts are already forecasting as much as $15 billion in damages, although $8 billion was thought to be insured losses.  In other market news, Italy’s borrowing costs dropped as the country sold $10.3 billion in 6-month T-bills at an average yield of 1.347%, down from 1.503% in September and the lowest since March 28^th.  Economic data in the US today will include Personal Income (+0.4%), Personal Spending (+0.6%) and the PCE Deflator (+0.4%).  The USDA crop progress report is being delayed until tomorrow due to the Hurricane.

The Midwest was quiet over the weekend in terms of moisture, although there was a band stretching from E-TX to OH which dumped over an 1.0” in most of OH.  The next 5-days will see a dry, cool Midwest, although the 48-hour forecasted precip map below shows the coverage along the East Coast as Sandy makes landfall.  The below normal precip should continue in the 6-15 for the Midwest, but temps do look to warm up to above normal from the current normal/below.  The next 48-hours in South America should see decent rains in the central and southern growing areas.  Northern areas along the coast have decent chances of 0.25-0.50”.  But the 3-7 day outlook has below average rainfall forecasted.  The 6-10 and 11-15 day forecast maps are below for South America.

Mixed trade overnight as the soy complex falls and grains stabilize and move higher.  Malaysia’s Palm Oil resumed trading after a holiday Friday, and that combined with weak Chinese markets seem to be the onus behind the selling pressure.  Several analysts are also making note of the favorable conditions in South America.  Going home Friday, there were some interesting basis moves, especially when considered week over week.  St. Louis saw heavy weakness over the last week in both corn and soybeans with spot bids dropping from  -5Z to -22Z and beans from -1X to -12X.  The majority of the weakness was escalating barge freight between St. Louis and Cairo.  Peoria, IL was also down quite hard on bean basis, but Council Bluffs, NE was firmer.  Corn and Soy spreads firmer overnight.

Japan bought a little food wheat and barley in an SBS tender overnight.  Russian wheat prices continue to inch higher according to SovEcon.  Third grade milling wheat was up 0.8% w/w, and feed wheat is up 1.1%.  Russia’s grain intervention sales will be expanded to all regions of the country on November 6^th.  Interfax said the price of wheat bread in Russia is up 9.5% since the start of the year.  Russia has exported 9.322MMT of grain since July 1 vs. 11.247MMT last year.  Commentary overnight made note of palm oil exports from Indonesia, the largest producer, dropped 2.1% in September to the lowest level in 3-months.  This continues to stoke rising stockpile flames and fears.  Weighs on the world veg oil market.  There was a story on Bloomberg overnight about Australia’s Parliament working to abolish wheat export levies which amount to about 22c/tonne.  Funds were sizable buyers in the week ended Tuesday of CGO wheat, KC wheat and corn.  Funds also bought beans and meal, and sold more soy oil.  More detailed comments tonight.

Open interest changes during Friday’s session included wheat down 1,650, corn up 6,370, beans down 10,200, meal up 3,680 and soy oil down 1,510.  The big drop in open interest on beans was more than likely tied to November option expiration.  The decent jump in corn with the lower close looks a bit ominous.  As noted above, Chinese markets were soft with beans down 11.25c, meal down $5.90, soy oil down 70c, corn down 2.5c, palm down 60c and wheat down 1.75c.  Malaysian Palm Oil was down 63 ringgits at 2,540.  Paris Milling wheat is up 0.09%, Rapeseed is down 0.36%, corn up 0.50%, UK feed wheat down 0.19% and Canola is down 0.23%.

Call things mixed to start, but expect volume to be incredibly thin as most of New York gets the day off to prepare for the storm.  With little in the way of marketing moving news, a disengaged farmer at current prices and what appears to be patient end users of corn and wheat, this week could be a slow one.  We get private crop estimates from Stone and Informa this week ahead of the USDA’s next update November 9^th.  Basis levels are historically high and will continue to have to shoulder a lot of weight in the rationing process.

Trade as of 7:05

Corn up 2-5

Soy down 11-16

Wheat up 2-5

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights from Country Hedging's Tregg Cronin 10-25

Outside Markets: Dollar Index down 0.073 at 79.841; NYMEX-WTI up $0.76 at $86.49; Brent Crude up $1.17 at $109.02; Heating Oil up $0.0241 at $3.0635; Livestock markets are firmer this AM; Gold up $15.50 at $1716.00; Copper is up $0.0010 at $3.5690; The Yen is down 0.44%, but other major currencies are firmer; Softs are rallying at the moment, led by Coffee and Sugar which are both up 1.0%+; S&P’s are up 8.25 at 1413.25, Dow futures are up 61.00 at 13,082.00 and Treasuries are off 0.4-0.7%.    

Financials are mostly positive this morning with equities up and borrowing costs down.  A few data points overnight worth noting: The U.K.’s gross domestic product rose 1% in the third quarter, the fastest growth in five years and helping the UK to exit their double dip recession.  Olympic ticket sales and a surge in services helped the rebound.  Analysts think the UK growth could go back to flat to close out the year.  Also supportive overnight was a Nikkei newspaper saying the Bank of Japan will add to its stimulus policies.  Economic data in the US today will include weekly jobless claims (370,000; -18,000), the Chicago Fed Index (-0.2); Durable Goods Orders (+7.5% m/m) and US Capital Goods Orders (+0.8%).

Since midnight, rains have fallen in the upper-Midwest, dropping 0.25-1.00” amounts across E-NE/E-SD/NW-IA/S-MN/NW-WI.  This system continues to impact the upper-Midwest this morning with 0.75” having fallen in the Twin Cities in the last six hours.  The next 1-2 days will see more rain affect the central corn belt and Great Lakes areas with totals heaviest in WI to the tune of 0.25-0.90”.  This will continue to plague harvest efforts there.  Aside from that, the far eastern corn belt will be impacted by hurricane Sandy early next week.  OH/PA will see the most effect, two of the states lagging the national average in harvest.  No change to NOAA maps with normal/below normal precip for the southern plains and Midwest while below normal temps will be seen east of the Mississippi.  Late in the period, more normal/above temps will creep in over the Rockies and western corn belt.  South America is expected to see above normal precip in the central/southern growing areas while northern Brazil is expected dry the next 3-7 days.

Quiet trade in fairly narrow ranges overnight.  Grains seem unwilling to extend yesterday’s gains as most expect a disappointing corn export sales report, and unless wheat sales are near/above 500TMT, most will view as disappointing.  As of yet, it doesn’t appear corn can maintain strength on just domestic basis levels.  The market needs to see the export market claw back some business to give a sub-700mbu carryout some merit.  Soybeans and products should see another sizable week with soybean sales expected between 600-800TMT.  This will get soybeans back close to 80% of the marketing year forecast already on the books.  Encouragingly, crush basis and meal offers firmed again last night, in-keeping with robust meal export sales and a lack of rationing in domestic livestock operations.

Overnight, Taiwan Sugar Corp bought 23,000MT of US corn and 12,000MT of US soybeans from CJ International.  The grain was bought at $374.68/MT C&F for corn and $652.27/MT C&F on beans.  South American FOB offers remain at least 90c below US offers, or $38.58/MT.  Of particular interest overnight, China only 9.8% of the 398,025MT of soybeans auctioned overnight with an average price of $19.71/bu.  About ¼ of the beans were offered in Inner Mongolia which failed to attract buyers.  This is in-keeping with the recent uptick in soybean exports to China as the government tries to encourage demand of foreign beans at these prices.  Should signal value to US traders…  Japan said last evening they are poised to boost rapeseed imports to a record 2.4MMT this year, up from 2.3MMT in 2010.  Soybean imports may drop 4.6% to 2.7MMT, the lowest in 43 years.  Looks like diversification as opposed to a slowdown in outright demand.  Mexico’s stock exchange will now offer corn futures contracts denominated in pesos that will trade on MexDer, the Mexican derivatives market.  The contract size will be 25MT of yellow corn.  EU grain inspections from the French port of Rouen were up 78% last week to the highest total since March on large barley exports to Saudi Arabia and wheat shipments to Algeria.

Open interest changes yesterday included wheat up 9,890, corn up 5,000, beans up 690, meal up 3,020 and soy oil up 2,850.  Looked like some fresh speculative buying yesterday with the markets firm as they were.  Chinese markets were mixed overnight with soybeans up 6.50c, meal down $1.70/ton, soy oil down 4c, corn up 7.25c, palm up 1c and wheat up 7.75c.  The Chinese Yuan continues to strengthen, firming to 6.24 from 6.25 yesterday.  Malaysian Palm Oil was up 25 ringgit overnight to 2,603, the highest in almost a month on speculation stockpiles in Malaysia will decline now that exports have picked up.  Paris Milling wheat is down 0.75%, Rapeseed up 0.31%, Corn down 0.20%, UK feed wheat up 0.61% and Canola is up 0.42%.

Export sales, or lack thereof, is likely to drive early morning direction.  Demand remains real for the soy complex, but modest to poor on grains.  With barge freight jumping to 750-800% of tariff this week, corn is being stopped by the ethanol plant or feedlot before it even gets to water.  The jump in barge freight is said to be barges moving up the Miss with good quality corn to blend with afla corn.  Continue to pay attention to energy markets as they get sold.  Crude/Corn and RBOB/Corn spreads are at some very weak levels.

Trade as of 7:10

Corn down 1

Soy down 1-2

Wheat down 1-3 

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Market Comments 10-25-12

Markets are trading choppy Thursday morning.

At about 8:45 we have corn off a penny, beans off 4 cents, KC wheat up 3, MPLS wheat up 2, and CBOT wheat up 2.  Outside markets have the equities bouncing with the DOW up 60 points, crude up 50 cents a barrel, and the US Dollar unchanged.

Another news lacking day today; other then export sales.  Which came in at 21 million bushels for wheat, 5.6 million bushels for corn, and 19.2 million bushels for soybeans. 

Wheat numbers where above expectations as well as what we need on a per week basis to meet present USDA estimate.  The best wheat export sales in 11 weeks.

Beans were also solid over 2 times what we need on a per week basis with us now up to 919 million bushels of commitments only 2 months into the marketing year with the US projecting exports at 1.265 billion bushels; or nearly 73%.  Perhaps continuing to open the doors for the demand number to be moved up.  I would note that on the negative side is the fact that the market was actually looking for a little bit better sales then we got.

Corn sales were once again horrible and below the low expectations.  So far we are 48% off of last years commitments at this time.

The USDA did report a sale of 120k tones of soybean to unknown this a.m.

Wheat basis is a little defensive on the spot floor the past couple of sessions; both winter wheat and spring wheat with more producer movement as well as elevator movement with fall harvest winding down.  If we want to see basis and flat price firm up we really will need to good export sales continue as we move forward.  We need to get to the point where we actually see some domestic – export competition.  So far I haven’t seen much if any of our wheat flow to the export market.

The birdseed market remains very slow; not much interest from buyers.  But producers are not exactly running to the door to sell either.  I think for that market to stabilize or bounce we need to see a couple things happen. 

First we need to see beans stabilize; which some believe they have made their seasonal low.  If beans can take off and continue to stair step up that adds support to the crush market which in turn makes the birdseed market have to pay more.  The birdseed market can’t afford to let too many sunflowers go to the crush from area’s that are suppose to supply the birdseed or they may have to really pay up later.

Bigger then beans stabilizing will be the actual birdseed demand.  Prices have been a little high the past couple of years and that has lead to more price increases on the shelves.  So we have higher prices which don’t help demand especially if the economy is struggling and we need to have solid demand which probably needs to come from a wet snowy winter on the east coast.

If we can see some demand and have beans stabilize move higher there is plenty of potential for the birdseed sunflower market; but limiting the upside should be the huge amount unsold sitting in producers bins.  I think there could be more then ever sitting un-priced just looking for a rally.  With all that product overhead a rally to some of the levels seen the past couple years just might not happen.  I do think should demand be strong that the birdseed market lacks coverage; but they also have no reason to get any coverage until demand picks up.  Bottom line is demand and bean complex will determine next price move; longer term it will be a stand off between the buyers and producers………..which have to sell or buy first.

Please give us a call if there is anything we can do for you.

Thanks

Morning Comments 10-17-12

Another small little bounce is happening Wednesday morning; as of about 9:20 markets have corn up 4, beans up 7, KC wheat up a nickel, MPLS up 8, and CBOT wheat is up 5.  Outside markets have the US dollar once again weaker with the cash index at 79.01, gold up $4 an ounce, crude up 50 cents a barrel, and equities are quiet with the DOW off 10 points.

Another lack luster news day.  One thing out was the press release of the CME group purchasing the KC Board of trade.  Not sure what effect it has other then making spreads a little easier to trade.

Weather has some moisture in the eastern parts of the corn belt; but it remains very dry in the western and many areas such as ours are not seeing much for wheat emergence.  Ending Australia wheat stocks are seen at 7.1 MMT and production numbers continue to come down; most very close to 20 MMT versus the USDA at 23; some chatter is it could slip down to as low as 18 mmt.  But still for this to be super bullish our price we need it to translate into demand.

That is the big story for all of our markets now; demand. Supply is virtual known; perhaps not 100% but it is much more defined than it was before harvest.  Demand should now take the lead to where prices go.  Solid demand with good profitability for guys like ethanol plants and we open the upside.  A lack of demand and profitability struggles don’t add up to higher prices.

Bottom line is huge market potential remains should we end up getting bullish cards like less harvested acres, smaller supplies, or increased demand from the price break.  While at the same time huge risk remains if weather goes perfect in SA, our crops are actually bigger than expected, or the funds just continue to lack a headline reason to get involved.

Basis is firming on spring wheat and spring wheat is leading the markets today; the front month in particular as spreads firm in MPLS.  Also there has been talk of some Chinese buying of Canadian spring wheat.

The sunflower birdseed market remains very quiet; not much for demand there.  Plenty of buying needs to be done; but until prices stabilize or the buyers sense demand picking up look for the buyers to lay in the weeds trying to buy as cheap as possible.  Keep in mind that one of the worst things an end user can do is to be long and wrong or have higher priced product then the next guy on the shelf.  So don’t look for sunflower prices to stabilize until we give end users a reason for them to.  Perhaps that reason could be beans bouncing or stabilizing or orders/demand picking up, or realization that harvest is about over and there coverage is behind the eight ball.

Millet remains firm; but also very thin.

Please give us a call if there is anything we can do for you.

Don’t forget this afternoon at 3:30 we will have our weekly MWC Marketing Hour Round Table meeting.  Join us for charts, strategies, and generic grain market talk.

Thanks

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

Overnight Highlights from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.374 at 79.035; NYMEX-WTI up $0.16 at $92.27; Brent Crude down $0.31 at $113.70; Heating Oil down $0.0094 at $3.1891; Cattle markets are firmer, while hogs are weaker; Gold up $5.20 at $1749.90; Copper up $0.0095 at $3.7175; All major currencies are firmer this morning; Softs are firmer except for coffee and cotton; S&P’s are up 2.00 at 1451.25, Dow futures are unchanged at 13,435.00 and Treasuries are weaker.    

Financial markets are bouncing quite well around the world overnight, led by the NIKKEI which was up 1.21% and the IBEX 35 (Spain) which is up 1.39%.  Much of the bounce in Europe is coming after Moody’s held the Spanish credit rating at investment grade as opposed to dropping it to junk.  EU officials also said Spain would be eligible for bailout funds if and when they asked for them.  Bond markets are reacting well as Spanish 10-yr yields dropped to 5.4785% this morning, down 28.4bp and the lowest since April 3^rd.  Italy’s 10-yr yields also dropped to 4.8028%, the lowest since March 8^th.  Economic data in the US today will include US Housing Starts (770,000), US Housing permits (+2.7% m/m) and US building permits (810,000 & +1.1% m/m).

Some very light precip impacted part of the Dakotas and a section of MT north of the interstate.  The big focus today in the Midwest will be the wind.  Below is the midday wind forecast, and west river-Dakotas are expected to be the worst.  A system is working across east-river ND/SD this morning.  The next 2-days are expected to bring solid precip to almost all of MN/WI/IN/IL/MI/KY and hit edges of IA/MO.  MN could see as much as 0.50-1.35” by Friday.  By Saturday, and through Monday, the Midwest should dry out, although the PNW should see rains chances this weekend.  NOAA maps are keeping things split down the mid-section wth normal/below temps for the upper-Midwest, while that same areas sees above normal precip.  South of I-80 should see below normal precip and above normal temps.  Weather continues beneficial in Brazil with even the dry areas in the North receiving chances, but rain delays to planting and too wet are being discussed in Argentina.

Slight bounce overnight in the Ags, although today has the look and feel of a quiet session inside Monday’s range which should produce flagging action.  Volumes in the grains yesterday were the lightest in several days, and based on the overnight news flow, there doesn’t appear to be much to right the ship and get traders engaged.  We are rapidly moving to a demand focused market with harvest on its final 10-15%.  Farmer marketing is slowing, and concerns about sourcing grains in 30-45 days are being heard.  Elevators have been active in the reseller market, but most think basis and spreads are going to do a larger share of the heavy lifting to close out the calendar year.  Spring wheat continues to pace the wheat market on Chinese buying ideas and soy oil led complex gains o/n, up 0.88%.

Overnight news included Japan issuing a tender for 320,000MT of feed wheat and barley for shipment by Jan 31 in an SBS-sale.  South Korea’s MFG also issued a tender for as much as 210,000MT of corn for delivery in March and April.  With some importers booking JFMAM needs already, it underscores the need for US corn to get competitive.  It should be pointed out, however, Brazil’s lineup to load corn is 3.023MMT vs. 3.105MMT last week and 1.191MMT last year.  This is thought to be 60-75 days long, and will have to taper off soon or risk impeding soybean exports when the world needs S.A. beans.  News from Australia said wheat reserves fell 14% from a year earlier to 7.1MMT at the end of the marketing year on Sept 30 thanks in large part to record shipments.  Private production forecasts for Australia seem to be gravitating towards 20-21MMT vs. the USDA at 23MMT.  Analysts said the combination of 7.1MMT ending stocks with a production of 20-21MMT will provide a domestic market which isn’t well supplied during 12/13.

Open interest changes yesterday included corn up 6,930, beans up 2,030, meal up 2,070 and soy oil up 4,820.  Wheat was down 850 contracts.  Interesting to see the entire complex and corn receive decent jumps in O/I while markets rallied yesterday.  Keep an eye on soy oil as world veg oil markets have a bottoming feel to them.  Chinese markets failed to go with us last night as soybeans fell 8.25c, meal was down $2.60 corn up 4c and wheat down 0.25c.  Their soy oil market was up 26c, however, and Malaysian Palm Oil was up 5 ringgits to 2,471 (although down 115c on the week).  Chinese crush margins are improving as soy oil and soybeans diverge.  Paris Milling wheat is up 0.10%, Rapeseed up 0.11%, Corn down 0.63%, UK feed wheat up 0.38% and Canola is up 0.56%.

Call things a tad better to start, but it wouldn’t surprise anyone to see the volume at 9:30am take it in a different direction.  We’ve had little for fresh fundamental input this week aside from firm cash markets and firm spreads in the interior.  It should be noted, soybean calendar spreads are especially weak overnight.  Wheat markets are clinging to the idea of better demand for hard wheat, although as the spot floor showed yesterday, the current demand is for lower proteins.  Should be some good basis opportunities coming.

Trade as of 7:10 

Corn up 2-4

Soy up 0.50c front end/5-7c back end

Wheat up 4-7

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Morning Comments 10-16-12

Markets are seeing a small bounce on Tuesday a.m.

Around 9:20 we have corn up 6 cents, beans are up 11, KC wheat is up 7, MPLS wheat is up 6, and CBOT wheat is up 7.  Outside markets have a softer US dollar with the cash index at 79.428, crude is floating near unchanged, and equities are firmer with the DOW up 99 points.

First off crush sunflowers went down twice yesterday; first when they did normal bids; but then again at 5 the crush markets took bids down another 50 cents.  This a.m. with the small bounce in bean oil they are only down another 35-40 cents.  Bottom line is the sunflower market in general is seeing a little pressure; I don’t think it is from our area in general; but further North.   One good thing I see on the sunflower market is that many areas are getting close to being done so even though there is some pressure today it feels like we are getting near a support area.  I do think that producer ownership might keep a lid on things unless demand really picks up as it seems like everyone has way more sunflowers in the bins then they normally do.  So for sunflowers to run after harvest producers will have to be very tight fisted.

Not tons of new news out this a.m. it seem more like a dead cat bounce or Turn around Tuesday; our markets have been just a little over done the past couple of sessions.

We did fail to completely close the “gap” left on beans; so that has lead to a little more technical buying.  We also sold 110k tones of beans to unknown; once again most likely China.

Corn harvest was 79% complete; hopefully that means we are getting close to a seasonal bottom or have already made that bottom.  It does feel like basis wants to move higher; but buyers are very hit and miss with many starting to go more to a hand to mouth versus deferred ownership.  Many of our ethanol buyers just can’t lock in good margin on deferred slots so it doesn’t make sense to have tons of ownership at a loss.  Some buyers also think that many of the elevator piles this year might have to get picked up earlier because of condition.  That I would agree with.

Weather remains very dry in Australia; while most of South America is on the good to wet side.  So ideas remain that the Australia wheat crop is getting smaller; while prospects are for a huge South America Bean crop.  Now is it early for that?  Yes as they are just planting; but it is a headline and headlines are what we need to have the funds involved.

If we are going to turn this thing around we really want to see headlines switch to strong demand and I don’t think that has much of a chance of happening for anything other than beans any time soon.  So if we rally look for beans to lead the way.  Now after the first of the year perhaps that changes and demand for wheat or corn could lead us up then; but right now neither corn or wheat seem to be great candidates for leading our markets higher.  As they both lack demand; having said that they seem to have be near support areas too given the tightening balance sheets; so I don’t look for either of them to lead us much lower.  I think the next real big movement will be beans; up if we find solid demand or have any weather issues in South America or down should the crop be much bigger, demand slip, or we just fail to give the funds a reason to be long.

With the greatly volatile markets and unknown factors out there please give us a call if you want help doing a marketing plan or if you would like to have some offers out there.  And make sure that you are comfortable given the sever possibilities that are out there.

Please give us a call if there is anything we can do for you.

Thanks

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

Overnight Highlights from County Hedging's Tregg Cronin 10-16-12

Outside Markets: Dollar Index down 0.371 at 79.369; NYMEX-WTI up $0.33 at $92.19; Brent Crude up $0.28 at $115.50; Heating Oil up $0.0039 at $3.2130; Livestock are quietly mixed; Gold up $7.60 at $1743.60; Copper up $0.0130 at $3.7245; The Yen and Loonie are getting sold this morning; The softs are bouncing rather sharply this morning with Cotton, Cocoa, Sugar and Coffee all up 1.1-2.8%; S&P’s are up 6.75 at 1442.25, Dow futures are up 59.00 at 13,419.00 and Treasuries are weaker.      

Equity markets are bouncing around the globe this morning, most likely catching up to the strong finish in the US yesterday afternoon.  Most economic data received yesterday was positive, and there seems to a bit better optimism from consumers, at least that’s what the underlying theme of the data seems to suggest.  Today’s data points in the US will include the Consumer Price Index, Industrial Production and the Housing Market Index.  The CPI is expected to show a 0.50% gain m/m, and up 0.2% less food and energy.  This measure, at least, continues to agree with the Federal Reserve’s recent policy initiatives.  Tonight will see the second Presidential debate in New York which will be a town hall format covering both domestic and foreign policy.

Not much for measureable precip in the last 24 hours.  There are some scattered showers over N-MN/N-WI.  The next 48-hours will see more moisture fall from LA to MI with totals expected in the 0.25-1.21” range.  Most The precip will be mostly east of the MS river.  N-MN and up into the Canadian Prairies should also see some solid amounts.  5-day totals should be generous, and the PNW also looks to finally see rain.  Areas along the Pacific in WA/OR could see between 2.0-5.0”.  ID will also see some showers.  Pretty split through the belly of the country on NOAA’s extended maps.  Below normal precip in the southern plains, above in the Great Lakes and far-northern plains for the 6-10.  Similar set up in the 8-14.  No discernible changes to either South America or Australia.

Moderate relief bounce overnight in all of the Ags with soybeans clawing back about half of what the lost and keeping their nostrils above the $15.00 mark.  Nothing in the overnight wires to point to directly, so we’ll attribute the bounce to being “oversold.”  There was talk of China snooping around for 3-5 cargoes of soybeans yesterday, but this is commonplace.  Remember, China imports 60MMT, which is just over 1MMT every week.  Assuming they spread it out evenly, that’s almost 2.5 Panamax vessels every single day of the week, including Sunday.  China shopping for soybeans is no reason to get excited.  Of the three major commodity markets, wheat holding the bottom end of its 12-week range (HRW & HRS) seems to be the most constructive thing about yesterday.

The China National Grains and Oils Information Center released update production forecasts overnight with corn at 201MMT, up from 197MMT last and up 4.26% y/y.  Wheat was seen at 118MMT, unchanged from the last guess and up 0.51% y/y.  Soybean production was estimated at 12.8MMT, down 0.2MMT from last month and -11.63% y/y.  FWIW, very few private estimates have China’s wheat crop anywhere near 118MMT, but are closer to 110MMT.  This on top of the rumored purchase of 300,000MT of Canadian spring wheat yesterday.  Also of note, Japan issued a tender for 128,144MMT from the US and Canada.  All but 28,068MT will come from the US.  A wire story also said Japan bought 250,000MT of corn from Ukraine at $1.10 over the December CBOT board.  The cargoes were said to be for Nov-Dec shipment.  Also from Ukraine, grain stocks as of Oct 1 were 19.4MMT, down 11% y/y.  Ukraine grain exports are up 73% y/y July 1-Oct 15 to 6.64MMT.  The ministry said exports will slow appreciably through the end of the year.

Open interest changes yesterday included corn down 6,124 contracts, wheat down 607, soybeans up 1,213, meal up 1,104, and soy oil up 4,421.  Corn is still seeing long liquidation, somewhat of silver lining, while the soy complex appears to be adding fresh shorts almost daily.  Open interest continues to steadily increase in soy oil which is likely to be noncommercials.  Chinese markets were a bit firmer last night with soybeans up 8.75c, meal down $1.00, soy oil up 75c, corn up 4c, Malaysian palm oil up 2 ringgit at 2,435 (Dec), Paris Milling Wheat is up 0.19%, Rapeseed is up 0.47%, Corn up 0.31%, UK feed wheat up 0.05% and Canola is up 2.20%.  Canola’s demand prospects still look incredibly strong, and after slightly smaller supplies, fits with it putting a growing premium over soybeans..

Not much really stood out about the crop progress report with corn harvest heading down the homestretch at 79% complete.  Notable progress remains in OH at 31%, MI at 36%, PA at 41% and WI at 54%.  On soybeans the stand outs are OH at 38%, KS at 40%, TN at 33%, SC at 7% and KY at 42%.  Much of these are double crop beans, however, and national progress remains 13% ahead of average.  Winter wheat emergence in the northern plains remains a big concern.  SD is at 11%, MT at 25%, ID at 33% and OR at 24%.  Too dry.

Not a surprise to see a decent bounce today consider the Fri/Mon break.  Most fundamentalists continue to scratch their head at the current sell off given the lack of movement from the farm, firm cash markets and firm spreads.  This seems to point toward value at current flat price levels, so would caution against getting overly bearish “down here.”  On the other hand, liquidation events usually last longer than anybody thinks they can, so no need to a hero…

Trade as of 7:10

Corn up 5-7

Soy up 11-13

Wheat up 7-10  

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights from County Hedging's Tregg Cronin 10-12-12

Outside Markets: Dollar Index down 0.179 at 79.596; NYMEX-WTI up $0.27 at $92.34; Brent Crude down $0.54 at $115.17; Heating Oil down $0.0181 at $3.2393; Livestock markets are firmer on the front-end; Gold down $0.50 at $1768.30; Copper down $0.0190 at $3.7400; The Yen and Aussie Dollar are weaker but the other majors are firmer; Most soft commodities are firmer; S&P’s are up 4.25 at 1432.75, Dow futures are up 33.00 at 13,298.00 and Treasuries are softer.  

Things are mostly quiet across the pond this morning, but the EU should have cause for celebration after they were awarded the Nobel Peace Prize for the solidarity and cooperation during the current EU fiscal crisis.  Whatever it takes I guess.  Also making headlines was JP Morgan beating analyst estimates with $1.40/share during the third quarter vs. $1.02 last year and the $1.24 estimated by analysts.  They cited a surge in the mortgage business and improved capital markets.  Also interesting overnight was Wal-Mart reporting its lay-away program has already brought in $400 million to date, over half of the entire 2011 total.  Better living through lower prices.  Eco data today in the US includes the PPI (+0.8%), PPI-ex energy & food (+0.2%), PPI y/y +1.8% and U of Mich consumer sentiment (78.0).

Not much for rain around overnight with some scattered precip in the Great Lakes, while another system impacted MO/AR/KY with scattered amounts, but localized up to 1.0”.  The next 1-2 days should see rain in the southern plains with the highest concentration in OK at 2.93”.  The precip chain extends all the way to WI, but the precip has shifted East and MN looks to be largely missed now.  E-IA/S-WI could see totals as high as 2.0+”.  The 5-day forecasted precip map is below.  NOAA’s extended look has moderated a bit with more normal temps in the 6-10 to below normal in the 8-14 for the upper-Plains.  Precip should be normal/above, but nobody is holding their breath.  No significant changes to S.A. with below normal precip in the 1-5, but more normal/above in the extended.  

Export sales will be released today at 7:30 CDT due to the Columbus Day Holiday Monday.

Grains are giving back a bit of yesterday’s gains this morning, possibly a sign that corn’s inability to hit limit up, or lock there, meant a straight shot over $8.00 wasn’t needed or likely.  Overnight wires are quick to say soybeans losses overnight are tied to the fact supplies are rising in the US while demand has yet to be fully realized.  I continue to view soybeans with a great deal of fundamental value at current price levels, and apparently the crush plants and exporters of the US tend to agree as evidenced by recent basis moves.  Farmer marketing has slowed appreciably below $16.00 and that is likely to continue.  As noted in yesterday’s recap, lows were likely made in late-Sept/early Oct for the foreseeable future, but that doesn’t mean steady and even range bound trade can’t develop.

Overnight headlines included South Korea’s NOFI canceling a tender to buy 210,000MT of corn and 70,000MT of wheat, citing high prices in an email.  Japan issued a tender for 66,000MT of feed wheat and barley due by October 26^th in an SBS tender.  Saudi Arabia said cereal imports in 12/13 are forecast at 12.8MMT, with wheat imports consisting of 2.3MMT to maintain demand levels for milling and conserve water needs domestically.  Saudi Arabia is expected to produce around 1MMT of wheat this year, and wants to stop growing wheat entirely by 2016.  Argentina’s wheat crop is forecast at 10.12MMT this year, down 28% from last year according to the BA Grains Exchange.  Farmers choosing to plant soybeans and corn as well as a struggle to drain flooded fields contributed.  As noted yesterday, Bloomberg made mention overnight soy crushers in China may increase imports after the government finished selling the cheap reserves and increased auction prices.  One investment bank is calling for a “twin peak” in commodity prices during Q1 of 2013.

Open interest changes yesterday included wheat up 14,030, corn up 50,120, beans up 3,250, meal up 1,370 and soy oil up 1,010 contracts.  The jump in wheat, and especially corn, were quite large.  Certainly fits with the moves we saw yesterday, but large nonetheless.  Interesting to note a lack of O/I jump in beans and meal, considering their moves yesterday, signaling the buying could have been short-covering.  Soy oil calendar spreads hit new lows for the move again last night.  Chinese markets didn’t react much to our news yesterday with their beans up just 1.75c, meal down $3.30, soy oil down 42c, corn up 0.25c and wheat unchanged.  Paris Milling wheat is down 0.76%, Rapeseed down 0.10%, corn down 0.31%, UK feed wheat down 0.50% and Canola is down 1.00%.

Call things weaker to get going today as markets seem to be saying the lows are in, but the highs aren’t in jeopardy just yet.  The focus has shifted back to demand now that the supply concerns are behind us, so a great deal of attention will need to be paid towards the SX/SF, CZ/CH, MWZ/MWH, KWZ/KWH and the WZ/WH spreads as well as interior and export basis levels.  Farmer movement is likely tapers off as harvest wraps up the next 10-14 days.  Then we have to determine where he sells grain again?  Still a lot of piles, however.

Trade as of 7:10

Corn down 3-5

Soy down 15-16

Wheat down 4-7

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

market comments 10-12-12

Day after the report markets are consolidating and trading a little weaker around 9:00.

Presently corn is off a nickel, KC wheat is down 7, MPLS wheat is off 5, CBOT wheat is off 8, and beans are down a dime.  Outside markets have a weak US Dollar, equities are up with the DOW up 65 points, and crude is up 50 cents.

The story yesterday was the friendly USDA report.  The story today is a little consolidation and demand talk.  Corn demand really is soft and some of the commentary I listen to think that any rally won’t be lead by corn despite yesterdays friendly report.  They think that if we have a rally it will have to be lead by bean demand in the short term; perhaps a South America weather story; or if we can eventually see some demand from the smaller wheat crops around the world it could be lead by wheat.  I tend to agree; I don’ think corn can go super cheap any time soon just based on the tight balance sheet; but I think the market is comfortable too and if corn is going to rally it could be several months and that only happens if we see nice solid profitability from those that buy corn or see some sort of solid demand. 

Bottom line is I think for our markets to take another leg up some demand will be needed or a headline story like weather that the funds can jump on board.  I am not saying I want to get bearish here by any means; but I think we need to realize that if demand doesn’t stay solid and we don’t give funds a reason to buy in but give them a reason or headline to sell that there is some (plenty) of downside risk.

One of the reason for the demand comments this a.m. is because of the once again horrible corn exports.  Under 1 million bushels of corn; which is just horrible.  Beans continue to be good; but not nearly as good as they have been coming in at 18.4 million bushels; well above what we need on a per week basis but less then ½ of what we did a week ago.  Wheat came in at 10.3 also much less than needed and a decline from last week.

Recap from yesterday is corn carryout at 619 million bushels………very bullish; but we still need to see solid demand.  World corn carryout at 117.27 mmt; also very bullish and tight well below trade estimates and probably biggest positive from yesterday.

Bean carryout at 130 million bushels; bullish but an increase from last month and bottom line here is production increased big time; that was met with demand.  The bigger supply says we don’t need to ration off as much demand; so some think the bean number isn’t super bullish but yet bearish just from the 200 million bushel production increase.  World numbers at 57.56 well above last month and above trade estimates. 

Wheat at 654 million bushel carryout; above estimates but below last months.  Says we do have plenty of wheat in US but tighter then past years.  World wheat in line with trade estimates at 173 mmt; but a decrease from last months 176.

Overall a good report; a little disappointing on the wheat and bean price action and even more disappointing today as now around 10 our markets have took another big let down.  The report gives us plenty of upside POTENTIAL but we need solid demand and a reason to get money flow or the funds involved; without demand or money flow most grains are more than fair priced.  Bottom line don’t be afraid to make some sales here and there on bounces as with all the above mentioned unknowns and other black swans practicing good risk management is all one can really do.  Keep in mind there is nothing wrong with making sales that make sense.

Please give us a call if there is anything we can do for you.

Jeremey Frost

Grain Merchandiser

Overnight highlight's from Country Hedging's Tregg Cronin 10-9-12

Outside Markets: Dollar Index up 0.112 at 79.652; NYMEX-WTI up $0.74 at $90.05; Brent Crude up $0.99 at $112.80; Heating Oil up $0.0241 at $3.1684; Cattle firmer, hogs a bit weaker; Gold up $1.70 at $1776.20; Copper up $0.0135 at $3.7405; The Loonie and Aussie Dollar are firmer while the other major currencies are weaker; The softs are all trading better; S&P’s are up 1.25 at 1451.00, Dow futures are up 10.00 at 13,511.00 and Treasuries are mixed/weaker.

Protesting in Athens upon the arrival of German officials, including PM Angela Merkel, seem to be grabbing the most headlines this morning.  Updated forecasts by the IMF also have some unnerved as they said the world economy will grow 3.3% this year, the slowest pace since the 2009 recession, and down from 3.5% in July.  Their 2013 forecast calls for growth of 3.6%, down from 3.9% previously.  The third quarter earning’s season begins today with Alcoa, and today is also the fifth anniversary of the S&P’s 1565.15 record close.  Economic data in Europe overnight included Finland’s economy expanding at 0.3% in July y/y.  In the US we are again light on the economic data front.  The NFIB Small Business Optimism Index came in at 92.8 vs. expectations for 93.5.

Light, scattered precip in the upper-Midwest overnight, but nothing measureable outside of MT.  There are some scattered systems moving across C-ND/S-SD/S-MN this morning.  2-day totals are expected to be rather light with the most accumulation in WI/MI/N-MN to the tune of 0.40”.  The 5-day forecasted precip map shows better chances towards the weekend for IA/MN/WI and then a separate system in OK/N-TX/MO.  Much of these areas look to see 0.50-1.00” amounts.  SD/ND should be mainly dry.  No change to NOAA’s latest 6-15 with above normal temps for the central plains and below normal precip.  The ECB has the potential for some above normal precip, which should keep harvest efforts labored after a wet week last week.  Maps for South America keep Argentina in good shape and the majority of Brazil.  Only trouble spot is far northern-Brazil, but it is early.  See the Vegetative Health Index vs. last year below.  Western Australia should be dry the next 10-days.  In the East rains of 0.20-0.60” should fall later tomorrow and into Thursday.

Grains are showing a slight bounce overnight, clawing back some of what we lost to begin the week as the choppy trade continues.  Encouragingly, November soybeans did take out Friday’s high at 15.69 ½, turning the short-term trend up.  Bulls would like to see trade above $16.13 ¾ from September 28^th before getting too overly excited, however.  There wasn’t a great deal of overnight news, so expect more of the same until Thursday.  Last night’s FOB  comparative still has South American corn well under US corn as vessels unload in Wilmington full of Brazilian maize.  FOB offers for Brazilian and Argy maize were reported at $264.56-268.49/MT vs. the US Gulf at $318.88 and PNW at $329.12.  The freight spread to get it from Brazil to the feedlot in NC is roughly $35-40/MT for reference sake.

Overnight headlines included China setting import quotas for 2013 which were unchanged for major grain’s and cotton and have been unchanged since 2004.  Wheat imports are limited to 9.636MMT, corn at 7.2MMT, rice at 5.32MMT and cotton at 894,000MT.  State-owned companies are entitled to 90% of the wheat quota and 50% of the corn quota.  In other words, the majority of the grain is destined for state-reserves.  Russia’s cereal stocks at the end of the marketing year on June 30 are forecast at 6.9MMT vs. 12.4MMT this past year, but officials claim the country has enough supply to meet demand.  Price usually takes care of that for you.  Overnight, South Korea’s Feed Leaders Committee bought 70,000MT of S.A. corn at $314.30/MT C&F for April arrival from CJ International.  Japan will be tendering for 152,647MT of milling wheat this week from the US, Canada and Australia.  Conab also released 12/13 production forecasts this AM, pegging the Brazilian soybean crop at 80.1-82.8MMT, up 21-25% y/y, and the corn at 71.9-73.2MMT, up around 7%.

Open interest changes yesterday included corn down 3,160, wheat up 2,490, beans down 800, meal down 820 and soy oil up 2,100.  Soy oil is up 18,823 contracts, or 6.4%, since September 28^th while prices have declined 0.88c/lb.  The lack of open interest change yesterday despite decent moves on the board suggest more ownership changing hands from the specs to the commercials as evidenced on the recent COT report.  Chinese markets were mostly lower again with beans down 13.75c, meal down $0.70, soyoil up 45c, corn down 5.75c and wheat up 5.25c.  Malaysian Palm Oil was up 70 at 2,438 ringgit, Paris Milling Wheat is up 0.58%, Rapeseed up 0.62%, Corn up 0.95%, UK feed wheat up 0.42% and Canola is up 0.72% today and 6.2% since the lows last Wednesday.

Call things a bit better today as we bounce from yesterday’s sell off, but the trade is still concerned about a shocking supply increase on soybeans and corn Thursday.  The trade seems convinced world wheat production is going to be cut, just to what extent.  Keep in mind corn is still being rationed on the export front, and ethanol production has yet to come back online in a big way.  Soybean demand remains robust and should be reflected as so Thursday regardless of how large the national soybean yield is.

Trade as of 7:15

Corn up 2-3

Soy up 16-17

Wheat up 6-7

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

morning comments 10-9-12

Markets are trading firmer on Tuesday Oct 9^th.

Around 8:15 we have KC wheat up 7-8 cents, MPLS wheat up 7, CBOT wheat up 9, beans are up 14, and corn is up 4-5 cents.  Outside markets have a firmer US dollar, equity futures up slightly, and crude is up 90 cents a barrel.

Not lots of new news lately; more position squaring ahead of the USDA Supply and Demand report which is out Thursday morning.  Yesterday’s holiday delayed export shipments and the crop condition progress reports until today.

The other news out there seems to be more of the same; firming wheat basis, bigger than expected yields (mixed by some but bigger than expected is leading when it comes to headlines along with more and bigger grain piles then expected), fund still holding rather big positions in corn and beans, concerns over world wheat situation as crops get smaller in Australia.

As for the report estimates for corn yield are 122.8 which is basically unchanged from USDA.  I have seen production number all over the board with some thinking less harvested acres and others thinking bigger yields.  But overall not much expected change for corn production; the last overall estimate I seen was 10.6 billion bushels versus the 10.727 that the USDA has in Sept. 

Probably as big if not bigger than production will be where ending stocks are projected and what the USDA does with demand; exports have been lacking yet the stocks report at the end of Sept showed a smaller starting spot than what was expected; average estimate for ending stocks is 656 million bushels for the 2012-2013 marketing year versus 733 in Sept.  Keep in mind that the USDA was already projecting over a billion bushel of demand cut from last year. 

As for beans production ideas are 2.76 billion bushels versus the USDA at 2.634; with yields at 36.9 versus 35.3 last month.  Lots of debate of yield here but some estimates are closer to 40 bushels per acre.  Once again as big as production will be were the USDA pegs carryout at and what they do with demand.  We are well ahead of the needed export pace so there is potential that we see any increases in production are offset by demand increases.  Carryout estimates are at 135 versus 115 last month; I should mention that the September stocks report showed more than expected as well; which should lead to a bigger starting spot.

Wheat is pegged at 627 million bushels versus last month’s 698 million bushel carryout.  We had a bullish stocks report that indicates good feed demand; while production didn’t have major changes.  Lots of eye’s will be on the world numbers here and spillover to our exports.  We are currently running behind the needed exports yet we have our competitors getting less available to export.  Year over year world wheat numbers are getting friendly; but enough for another leg up?  In my opinion not until we actually see some of that demand hit our markets.

Going into the report we have to realize that even though there is plenty of upside potential should things go good there is also plenty of risk.  Who know what type of curve ball or change up the USDA has up their sleeve this time? 

Bottom line with the extreme volatility we have seen the past several months and all of the unknown in our markets as well as the world economies make sure you are comfortable no matter what the USDA says come Thursday.  For those that where pro-active making sales early it might mean catching up a little bit and working on getting your average a little higher; for others it might be doing nothing as everyone situation is different; bottom line is heading into a report that could move us tremendously either direction one needs to be a little pro-active when it comes to risk management.  One can be bullish and have tons of great reasons to be bullish but the market is the market and it tends to follow what the USDA says right or wrong.  If you need help with a marketing plan or want to look at some strategies to help protect one heading into the report please give us a call.

The birdseed market is still showing little interest in sunflowers; but the good news is the crush market should put a min price we see as right now those two markets are near par.  With beans firming and looking like they have maybe made a seasonal low perhaps sunflowers are close to one also.  The birdseed market really needs to have a good wet snowy winter along with a good economies if we want to see a huge rally later.  The thing that is a little scary is way too many are putting all there sunflowers in the bins thinking that 30-40 cent sunflowers is a given; we can’t get things too out of balance or we will simply have some many sellers on a small bounce that a big bounce just might not be in the cards.  One positive I see is the flowers flowing to the crush and the birdseed end users not buying at what could be the seasonal low; their lack of coverage gives huge potential; but the huge amount of unsold product with bigger yields is also going to be a risk.  At the end of the day it could really end up being a weather market; good wet weather that leads to good demand we go higher; otherwise perhaps we see long tail effect?

Bottom line for sunflowers is risk management is recommended; many didn’t sell many the past 2-3 months because of the unknown in yield; I don’t really want to make tons of sales at what could be the bottom yet if one isn’t any were sold near the percentage they should be there is still nothing wrong with making a profitable sale.

Please give us a call if there is anything we can do for you.

Thanks