Thursday, December 5, 2013

Closing Grain Market Comments 12-5-2013

Grain markets closed weaker today in choppy trade.

Corn was down 3 cents, KC wheat was 9 lower, MPLS wheat was 8 lower, CBOT wheat was a dime lower, Jan soybeans were down 2, the US Dollar off 400 ticks or so with the March futures at 80.440, crude is at 97.50, gold was off 22 bucks, and the DOW closed down 68 points.

Follow up selling for wheat today from the announcements the past few days that include bigger crops in Australia and Canada.  Plus no nearby issues for the wheat crop in the U.S.  It might not pencil out very good for producers trying to make a profit but the market doesn’t seem to care about that.

We did have export sales out this a.m. and considering it was a holiday week last week they were not super bad but overall they were on the disappointing side and didn’t help the bulls out at all today.

We did have corn and beans manage to get back to unchanged a couple times during the session but when the markets closed they both ended in the red. 

Technically you can find both some positives and negatives when looking at the charts.   You have some of the wheat charts back down towards some major support that hopefully holds.  But if it doesn’t it could really open up further technical downside.  You have soybean charts that have moved a little range bound the past few days and corn charts that had a very positive close early in the week.  But today’s price action for corn opens up the question as to was today a small breather/correction before moving higher or have the last few days been a breather before resuming the selling pressure????

Only time will tell for sure and it probably depends on what type of info the USDA puts out next week in their report.

Speaking of the report, CHS Hedging did release their pre-report ideas for next week’s USDA report.   Tim Emslie who is CHS Hedging Research Manager wrote up the comments for the pre-report ideas; he along with DTN Senior Analyst Darrin Newsom are our two speakers for the marketing meeting we are sponsoring this winter.  It is in Pierre at the Ramkota at 10 a.m. on January 20th

You will see that they are on the bandwagon of smaller carryout numbers do to strong demand.  But how much of that demand is because of the season (harvest)?  Also one needs to question what a couple things are doing to demand.  First off what is the producer holding pattern doing to demand?  Yes there is demand for products at present price levels; but if the American Farmer doesn’t sell do the buyers find a replacement of some sort? 

How about the horrible freight/slow moving trains?   As example I feel if mother nature would have cooperated a little more and if trains would have showed up a little faster that our elevators could have handled much more at harvest.  But things didn’t come together………….will the demand still be there later when the product wants to move is the question?

I have seen a few more orders pick up for the birdseed industry; but overall things are still slow.  We really need a little more demand.

Wheat basis, corn basis, and cash values in general seem to be all over the board.  I do like the idea of having some offers out there because of how volatile freight and basis is.  It helps us know what type of numbers we should be offering when we get someone looking to buy and that is worth a lot for end users.  To get coverage without having to call 100’s.

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


opening grain market comments 12-5-13

Grain markets are called weaker this morning behind a weaker overnight session.

When the overnight session ended corn was down 5 cents, KC wheat was down 6 cents, MPLS wheat was down 3, CBOT wheat was off 8, and soybeans are off 7 cents.  At 8:00 outside markets have the US Dollar about unchanged, crude up 25 cents a barrel, gold down 23 bucks an ounce, and the equity futures pointing towards a lower start of about 30 points on the DOW.

Rather low volume in the night session last night as most of the grains struggled.  Wheat is seeing some follow up weakness from yesterday’s Stat’s Canada report that had a much bigger than expected Canadian wheat crop.  The buying on corn the past couple of days has looked to mainly be short covering.  We put in new contract lows on Monday and then reversed to close higher and that lead to a little short covering; which it should.  Think of it this way; on your grain that you are marketing do you take a little off the table when we make new highs that we have had for several years?  Many do and the guys that are short should take a little profit when they make new lows. 

Technically can they take enough profit to help turn the charts?  Today’s weakness so far isn’t the best; but we are not that far away from where many of the recent shorts positions where took on; so yes if we can mustard a little more of a rally we could easily see more short covering and if that happens with some fundamental news we could see charts turn bullish.  But as of right now until we can mustard just a little more of a rally and turn those charts rewarding the rallies seems to be the play. 

Longer term I think the question many producers need to ask them self is what happens if the markets don’t turn around.  What is one’s game play should our markets continue to drift lower?  Eventually things turn and we get higher markets but from what point and how long does it take?  Does it take us months?  Years?

I think having a game plan on a worst case scenario for marketing ones grain is good business.  If the answer is instead of selling I will just build bins; how are you going to pay for the bins?  How many years worth of grain are you willing to sit on?  Will the bank go with a  plan like that?

As for more news this morning we did have export sales out and they were a little disappointing; but keep in mind last week was a Holiday week.

Wheat came in below expectations and below what we need on a per week basis at 8.4 million bushels.  Corn was off versus where it had been at; but in line with most of the estimates and still double what we need on a per week basis.  It came in at 23.4 million bushels.  Soybeans came in at 29.6 million bushels; in line with most estimates and nearly 10 times what we need on a per week basis; but also a big decline from the recent weeks.  Soybean oil was only about ¼ of what it needs to be on a per week basis.

Other headlines I am seeing; from CHS Hedging

  • The International Grains Council(IGC) reports an estimate of 2013 China corn production at 217.5mmt with imports of 4.5-5.0mmt. USDA is at 211mmt and imports at 7mmt.
  • China’s quarantine authority says it has rejected 5 “lots” of US corn. More rejections are possible.
  • Bangladesh intends to import 850,000 tonnes this year vs 350,000 last year.
  • South Korea and Australia reach agreement to eliminate 300% import tariffs on key ag products, wheat included.
  • Deliveries of 649 contracts in Chicago, 13 KC.
  • Some Brazil farmers expected to switch up to 3 million acres of second crop corn to soybeans.
  • Rumors of cancellations and new business, will we see confirmation of either in daily announcements?
We are now offering free delayed price on winter wheat until July of 2014. 

The one very challenging thing lately has been basis.  For all of the grains it is really about quality and timing.  As example the past few days I have had some spring wheat on the spot floor.  The opening bid on it and where it has traded at has been 40-60 cents different.  We have freight costs for shuttles moving all over the board.  Yesterday it looked like some freight cost as much as 80 cents a bushel on top of the normal tariff charges.  Bottom line having offers in place makes sense; but offers can be way too cheap or way too expensive in a hurry with all of the factors driving basis. 
The one thing we have to watch out for on all the markets in general is the double up effect that poor rail performance can have.  What I mean by that is an end user will buy say a spring wheat train on the spot floor.  Because what he has bought isn’t coming in; so he owns spring wheat from elevator A who isn’t getting cars; while elevator B gets cars and sells the wheat.  Then before you know it elevator A gets their cars and the mill has two times the wheat coming at them versus what they really need or want.  The slow freight and unknown of when elevators are getting cars as well as when the cars will get to destination adds greatly to price volatility.

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


Grain Merchandiser
Midwest Cooperatives
605-295-3100 (cell)
605-258-2166 (fax)

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Monday, November 25, 2013

Closing Grain Market Comments 11-25-13

Grain markets closed mixed to firmer today in choppy holiday mode trading.

Corn was up 2-3 cents, KC wheat was up 1-2 cents, Mpls wheat was unchanged to up 2, CBOT wheat was up 2-3, January soybeans up 10, November 2014 beans down 6 cents, the DOW up 8 points, crude down 75 cents, and the US dollar slightly firmer with the cash index at 80.849.

Not a big news day today; we did have export shipments out this morning and they were mixed.  Wheat in expected range at 12.6 million bushels which is below what we need on a per week basis……….corn slightly better than we need and slightly better than expected at 30.2 million bushels……….soybeans strong at 66.9 million bushels…..but that was below trade estimates; while above what we need on a per week basis.  The thing to keep in mind on exports is their seasonal pace.  Right now are elevators busy shipping wheat to the export markets? No the main focus has been the fall crops so for wheat to lag right now shouldn’t be a big surprise.  For beans to be strong and well above what we need on a per week basis also shouldn’t be a surprise.  The biggest thing to look for on exports is the trend and the comparison to the same time periods in previous years.

This afternoon we had a crop progress report which basically showed that harvest is close to being done in most areas.  Here is CHS Hedging recap. 

Technically we did have a strong close on soybeans today so perhaps that can lead to more follow up buying.  But we do need to keep in mind the fact that we already have the funds long plenty of soybeans; so now might also look like a spot for some profit taking.  January soybeans had their highest close since late September.  While wheat and corn are both within 10-15 cents of contract lows.  Really a tale of two stories on the charts.  Fundamentally you also have different stories.

You have a bean story that has super strong demand along with a balance sheet projection that is on the tight side of things.  While you have a corn balance sheet that has 1 ½ -3 times the carryout that it has had the past couple years.  The longer term thing that is a little scary is what happens if we raise a trend line or better corn crop in 2014?  Can we afford to let 3-8 million acres of corn swing over to soybeans?  I think the answer is yes if we can actually grow a big crop.  82 million acres at 170 bushel is a 13.940 billion bushel crop.  Our expected usage for this present marketing year is just under 13 billion bushels and with the ethanol blend wall one can paint a picture where any production next year over 13-13.5 billion bushels could add to our carryout.

Then if we take it one step forward and add 5 million acres of soybeans at 40 bu an acre we are adding 200 million bushels.  Can we add that straight to demand?  If not we could see a soybean carryout that is near double what it presently is.

I am not trying to say that things in the grains will be dark for a long time or that this is how things with shake out.  But rather I am trying to point out the fact that if the dominos line up correctly we might not like things for some time to come.

Domino number one was this year’s corn crop.  Some of the domino’s lining up that we need to watch to see how they land are South America crop (right now projected as big), then how fast demand bounces back, and followed up by acres for next year’s grains.  How many acres can corn afford to lose if we have a 2 billion bushel carryout heading into the game?  What about if we hit big yields?

Hopefully some of the bearish talk like the above and what some advisors are pointing out means we are near a bottom.  Things always look the darkest at the bottom.  But one thing that almost is for certain is marketing grains going forward isn’t going to be easy.  Thick nerves will be needed as should good risk management.

Elsewhere in the markets birdseed business remains slow.  I don’t seem to have many end users looking for product right now.  But there is a system that could help bring some moisture to the east coast.  Hopefully it is cold enough that it is some snow that leads to birdseed demand.

Basis remains very choppy and volatile for the grains.  It is all about timing and quality.  If you get lucky to hit both at the right time you can see decent bids; otherwise it is liking giving the stuff away and this seems to be for nearly all the grains.  As example right now it makes more sense for me to cancel rail car orders in Pierre for corn and truck the corn to my Onida facility and put it on a shuttle.  Typically we don’t bid any different prices for the two locations on corn; but right now the spread is just huge between ethanol numbers and export numbers.  Also as I have mentioned we have big spreads in quality and timing of grains like winter wheat, spring wheat, milo, and sunflowers.  Timing is everything.

We are closed Thursday and Friday but there are grain markets on Friday.  If anyone is looking to do any marketing I will be on my cell which is 605-295-3100.

Also with the Holiday look for basis and the board to be rather choppy.  We really need some good new news to get the funds interested in owning corn and wheat; lately they just seem to want to sell the grains and buy the stock market.  We need something to cause a spark in the grain markets and help money flow into our markets on the long side.  Keep in mind that money flow is the trump card; we can have good prices when we have money flowing the right direction no matter what our supply/demand fundamental situation is like.  Money flow and the funds are the trump card that we need to have in the deck once in a while.

Mark your calendars!!
Winter grain marketing workshop on January 20th in Pierre at the Ramkota at 10:00 a.m 
Speaker - DTN Senior Analyst Darrin Newsom
Speaker - CHS Hedging Research Manager Tim Emslie

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

Wednesday, November 20, 2013

Grain Market Comments 11-20-2013

Grain Markets are called mixed this morning with a mixed overnight session.

In the overnight session corn was down 2, KC wheat was unchanged, MPLS wheat was down a penny, CBOT wheat was down a penny, and soybeans were unchanged.  At 8:00 outside markets have gold down 12 bucks an ounce, crude up 30 cents a barrel, the US dollar down slightly with the cash index at 80.623, and stock market futures pointing towards an open near unchanged to slightly better.

A few news items the last several days, first off the EPA announcement or confirmation of rumors that the ethanol mandate will be lowered.  Basically another headline that isn’t going to cause anyone or the funds in particular to buy corn.  It opens the door to question our demand going forward.  The good news is presently ethanol margins are good and ethanol demand is very strong.  Later this morning we will get ethanol numbers and hopefully the trend of strong/better production with stocks unchanged to historically low can continue.  This shows that short term an ethanol mandate really doesn’t matter; because if economically corn for ethanol works then plants will run and try to use as much as they can should it make them money.

The next news item that was really a headline the past few days was China rejecting a cargo of new crop corn from the US.  From what I have heard this was the first US new crop cargo.  But as you read deeper into it this appears to be just a one-time issue; as the strain that was rejected has been approved in other countries where we export a large amount of corn and it sounds like it should be approved in China shortly as well.  Bottom line is this was another headline that didn’t lead to the funds buying; but to the funds selling.

We also had crop conditions early this week; but no big surprises there as we are nearing the end of fall harvest.  Corn harvested came in at 91%, beans came in at 95%, milo 91%, and sunflowers at 65%.  Personally I thought the South Dakota harvest % for sunflowers was a little light; but that might just be back-yard-again’s.

As for news last night I didn’t see much for headlines and news this time of the year should really focus on a couple things.  Biggest thing should be demand and South America weather.  There are still questions as to the size of the US crop; but most still feel it will get bigger as we get more USDA reports (January). 

Even though our prices are very depressed from the levels they have been at many advisors and others in the industry still seem to be very bearish.  I read one comment today that mentioned if things line up right we could still have a dollar or more down side left to the corn market.  Most seem to feel that old crop (the crop just harvested) might be limited to 30-40 cents down side; but many feel that new crop for next year might have a dollar or more downside.  Mainly because of the fact that it is going to be hard for our balance sheet to be much less then 2 billion bushels of carryout; plus last year and last spring we went into fall planting with many areas dry or still in a drought.  That doesn’t look to be the case this year.  So some are wondering if we actually grow a big crop for the US how big can the yields be? 

My view is that when everyone is bearish eventually we make a bottom; but it needs some spark for it to happen.  And until we get a spark we need to realize that there is probably much more downside price risk than anyone would like to consider possible.  Don’t get me wrong there a plenty of bullish scenarios that can happen or shake out over the next several months; but we simply don’t have any that are showing enough life to get the funds or pro’s interested in owning grain.

When we get into these markets and when margins get tight marketing will be key.  Finding the little extra here and there will go along way.  The easiest way to find the little extra is to watch the signs out there and attempt to pick up a little extra via things like the carry in the board as well as perhaps some basis appreciation.  Some producer will look to sell call options at levels they hope we get to. (even though I prefer to look at selling calls when implied volatility is a little stronger) There are hundreds of strategies even in “poor” markets; the bottom line is producers need to get them self comfortable and find a plan of action that works for them and there operation that fits there goals.  If you need help please feel free to give us a call.

 The other big thing I continue to see is basis for the different grains.  It is so hit and miss it is unreal.  Typically ending destinations are not the buyers like they used to be.  The spreads on quality for corn, wheat, milo, and sunflowers is huge.  Big spreads on corn that is going to ethanol plants versus corn going to the export houses.  Also bigger spreads at the export houses for tw on corn.  Wheat huge spreads depending on quality and timing.  Milo huge spreads depending on if it is a birdseed buyer or export play going to China.  Bottom line is basis and cash values on a lot of grain will depend on timing and logistics.  Producing timing, elevator timing, and when rail cars show up.  Look for things to be very choppy. 

What volatile cash markets and basis does is it presents opportunities to have offers out should an elevator such as our self able to get things lined up to hit one of the hotter markets.  Please let us know if you want to have an offer out there.

Thank you

Thursday, November 14, 2013

Grain Market Comments 11-14-2013

Grain markets are called mixed this morning after a mixed overnight session.

In the overnight session we had corn unchanged, KC wheat up 6, MPLS wheat up 4, CBOT wheat up 7, and soybeans down 5.  At 8:10 outside markets have the US dollar near unchanged, crude down 70 cents, gold up 15 bucks an ounce, and the DOW futures near unchanged.

Markets have been very quiet as of late; other then last week’s USDA report.  Most of the news this week is a day late with the Veterans day holiday.  This morning we will get ethanol data but we won’t see export sales until Friday.

Talk continues to be floating around that the EPA may lower the ethanol mandate; but keep in mind that right now ethanol margins are strong and our low stocks with high production point to the fact that economically ethanol works right now and that is just as important as a mandate; maybe even more.

NOPA crush will be out on Friday. 

From CHS Hedging .  “Japan has bought 60,346 tons of U.S. wheat. This is the first regular tender in four weeks that Japan has bought milling wheat. They also bought 45,594 tons of Canadian wheat and 23,505 tons of Australian wheat.”

One of the biggest things I am seeing develop for many of the grains is basis and logistic issues causing big basis swings.   First off rail freight costs have been extremely volatile as of late.  As harvest finishes up the demand for rail cars and trucks softens and thus the costs becomes less.  But bigger then that seems to be quality issues and local issues that have spill over effects.  This is happening for more than one grain.

One example is corn over the last month plenty of corn from Central South Dakota has went over to Iowa ethanol plants on rail and some of the typical ethanol plants that pull corn out of are area are absent and show little interest.  Corn going to the corn capital during harvest?  A couple reasons first off some areas have pockets where they just didn’t get all the acres in so there draw area will expand.  Plus you have the issue with moisture; as many ethanol plants only take 17 or less moisture corn.  So corn has to get dried down.

Another example is winter wheat and quality.  South Dakota didn’t have much of winter wheat crop this year and some of the areas that did have winter wheat don’t have milling quality.   So many mills have replaced winter wheat in the grind if they can.  The biggest thing that we see is the difference in bids between quality that is milling quality and stuff that has to go to the export market or go to a big house to get blended.

Last example is the sunflower market.  You have birdseed business that is slower then slow and buyers that don’t have interest.  While you have confection buyers or buyers that buy sunflowers for human consumption super hungry for big seeds.  The spread between the two bids is just huge and it all comes down to logistics.  Sunflowers going to the birdseed that have to move today are cheap.  But sunflowers going to the birdseed for say later in the year are reasonably priced.  Why because buyers that can arbitrage know that the spread between crush sunflowers – dehull sunflowers – birdseed sunflowers has to be reasonable.    So how this shakes out later is anyone’s guess but one of a couple things needs to happen.  Birdseed sunflowers need to come up (which probably is how things shake out just not until things get put away) or the other markets(dehull – crush)come down in value.

Bottom line if one is looking to move sunflowers and you can put in the bin nearby you can see some decent offers getting hit.

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

Friday, October 4, 2013

Opening Grain Market Comments 10-4-13

The grain markets are called mixed this a.m. behind a mixed overnight session.

In the overnight session corn closed up a penny, KC wheat was down 2 cents, MPLS wheat was up  penny, CBOT wheat was unchanged, and soybeans closed off a nickel.  At 8:00 outside markets have crude up 80 cents a barrel, gold down 8 bucks an ounce, the US dollar up a couple hundred ticks at 79.99 on the cash US Dollar Index, and the DOW futures are pointing towards a positive start of about 30 points.

Rather choppy markets in the overnight session and very narrow range for corn the past few sessions.  As for stories there seem to be a few different ones out there for mentioning.

First off is the government shutdown and some of its effects on the grain markets.  First off it has had a negative effect on the DOW as the DOW has lost over 700 points the past couple weeks.  It’s a little early to say if any of that money leaving the stock market will manage to make its ways to the grain markets; but technically if the DOW were to lose another 300-400 points it could really open up more downside pressure in a hurry.  If the DOW loses money in a hurry that seems to hurt all investments; and grains would probably be included in that.

Probably more important for the grain markets is the lack of information that the market is getting.  Presently we are not seeing export sale announcements or weekly export information.  We are not expecting to see harvest progress or crop conditions.  Many are wondering if we will see a monthly USDA report; and if we do how delayed will it be.  Some of my sources indicate that even if we had a resolution by today that we still would have the USDA report delayed.  One other thing I have noticed is no USDA spot floor close for MPLS spring wheat.  I know there are hundreds of more things that are getting effected; but the point I am trying to make is that the USDA being closed and government shutdown seems to be adding more unknowns. 

Unknowns can do one of two things; they can add premium or they can scare the players away.  Who wants to play a game when you don’t know the rules? 

The other couple generic stories as of late have been better than expected yields for the row crops.  Most seem to be in the camps that the yields are getting better.  I guess only time will tell; but if yields are getting better fundamentally we will need to see some increase in demand.  That might not be easy to happen in corn if the producer is a unwilling seller at the lower prices.  They say that cheap prices promote demand; but that is only true if the end users can actually buy the product cheaper.  I guess I am a little worried that the low price of corn won’t attract as much export demand as we might need to help our balance sheet situation simply because producers might not be big willing sellers. 

If that is the case it could have some side effects on basis; meaning early in the game you could see basis strength……….but that lack of selling later on could cause us to have missed the business.  That could open the door to the producer then trying to sell after we have already missed the business.   Spring wheat basis did just this a few years ago; producers held on too tight at harvest and by the time they looked to sell the export card had already sailed.  Bottom line is I am not super bullish basis if we have a huge carryout and see producers fail to sell it when the end users look for it.   Keep in mind the type of percentage that the is feed in the first quarter of the year.

So if producers are not willing sellers during the present time period when we feed most of the corn and they fail to sell so we end up getting some export business things could get dicey if we actually have the big crop that some (most) believe. 

So for marketing I am not opposed to consider min price contracts.  Because the cost of a min price contract is going to be cheaper than paying the min storage fee.  Plus you don’t have to worry about paying storage and getting less for the grain.

Don’t get me wrong the min price option isn’t best for everyone; but it might be a better option than paying storage at the elevator.

We will have some private reports for estimates out today; with INFORMA out at 10:30.  Most are looking for an increase in corn and bean production.

We did get our Onida elevator opened up for some corn; presently we are taking up to 17 moisture; with normal discounts to apply.

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

Wednesday, September 18, 2013

Opening Grain Market Comments 9-18-13

Markets are called mixed this a.m.

In the overnight session we had corn unchanged, KC wheat up a penny, MPLS wheat up a penny, CBOT wheat up a penny, and soybeans off 6 cents a bushel.  At 8:10 outside markets have crude up about 50 cents a barrel, gold down 8 bucks, and the DOW futures pointing towards about an unchanged start.

Markets started rather firm yesterday off of the FSA data; but didn’t manage to hold the gains as we simply lack a bullish headline that interests the funds for corn and wheat.  While we have failed to continue to feed the bull for soybeans; fundamentally many think that soybeans still have a bullish story; but the latest headlines have been slightly better than expected early yields, moisture in areas that still have green beans, and simple technical selling.  We also need to consider the world soybean story; which has a big carryout and even close to a record stocks to usage; those headlines are a little early because we are no place close to having a South America bean crop and should have plenty of weather scares as we move forward.

Sounds like both China and unknown reported more US soybean purchases this a.m.  I read something that indicated the sale of the beans to China was the 5th largest ever.  Will it be enough to help push our markets back up?

We will have the grain stocks report on September 30th.  That is the next “big” USDA report.  Personally I feel we have a little risk that soybeans come in higher then estimates just because of the fact that as tight as things are suppose to be and with a late harvest it hasn’t felt like we have had cash basis on fire.  With a late harvest and no early beans to speak of and one of the tightest carryout numbers of all time one would think that basis would be very firm; but that hasn’t been the case; so I do feel we could have a bearish surprise on the soybean stocks.

We will have ethanol numbers out later today and exports out in the a.m.  Watch both of those for more fundamental price direction.

Overall the big thing that the grain markets need is a bull story.  Everyone loves a bull story; the funds in particular.  I just don’t know when or if that bull story will show up but until it does it feels like the funds simple don’t care to own our grains.  Hopefully they don’t decide to get even shorter.

Locally we have started to see a little corn getting harvested.  Not much and most of it is wet; but we are getting very close.  As for marketing it still feels like there is a little better nearby basis then for a month and a half from now.  The trick for us is going to be if we can get rail cars in to capture that premium; while making the various specs.  As example some ethanol plants and other end users will take corn up to 17-18 moisture; others need to be 14.5-15.0. 

Bottom line if you think you will have some corn in the next week or two make sure to check with us as we might be able to do something to get some sort of premium and potentially even waive some or part of the drying costs.


Tuesday, September 17, 2013

Opening Grain Market Comments 9-17-13

Markets are called better this a.m. after a firmer overnight session that seemed to gain most of its strength when FSA acre numbers came out this a.m.

When the overnight session ended corn was up a dime, KC wheat was up 5, MPLS wheat was up 3, CBOT wheat was up 7, and soybeans were up 17 cents.  Outside markets at 8:10 have the US dollar weaker by about a 100 ticks, crude down nearly a buck at 105.75 on the Oct contract, gold down 3 bucks, and the DOW future pointing towards a start of about unchanged.

Looks like the markets bounced a little off of some chart support plus this a.m. we got FSA data that comes off as bullish.  I say “comes off” as bullish because you can read in many different places how the FSA data has never lined up perfectly to what the USDA uses.  So the headline off more prevent planted acres comes off as very bullish. 

Corn had prevented plantings reported at 3.57 million acres and 91.43 million acres enrolled in subsidy programs.    For soybeans we had FSA prevented plantings reported at 1.69 million acres this morning and 74.66 million acres planted enrolled in subsidy programs.  Now the big headline tells the funds that harvest acres need to go down.  But as mentioned I am not positive that’s how it will shake out because there is a history of the FSA numbers and USDA numbers be different.

Yesterday we did have crop conditions out; not much for surprises other then the fact that we did have corn harvested reported.

Here is the CHS Hedging recap of the weekly condition report.

As for cash markets; look for the nearby to continue to show pressure for local markets.  Why and why so generic?  Because we simply can’t get enough trucks or rail cars to move the product that is trying to move ahead of fall harvest.  Plus we have a little new crop corn coming in to a few locations.  I expect to see basis get extremely wide for some of the grains in the short term.  Longer term I do think we could see a bounce; but over the next month or so it just feels like we are going to get ran over with product.

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

Wednesday, September 11, 2013

Opening Comments 9-11-2013 - USDA Report Preview

Markets are called mixed this morning as it appears the trade is a hurry up and wait for the USDA report which is out Thursday at 11 a.m. central time.

In the overnight session corn as unchanged, KC wheat was unchanged, MPLS wheat was up a penny, CBOT wheat was unchanged, and soybeans were up 3 ½ cents.  At 8:00 outside markets have the US Dollar unchanged, crude about unchanged, gold down 2 bucks an ounce, and the DOW futures pointing towards a start of about unchanged.

Very quiet trade last night as well as the past few days.  Basically feels like the market is waiting for some questions to get answered.  How big or big are our fall crops and what is the USDA going to say about crop size as well as demand.  As it sits right now we do have harvest activity happening in different areas of the US and overall I would say the theme seems to be “better than expected” for corn yields.  But it is very early and most seem to be in the camp that corn yields could go either way; with a slight downward bias.  The problem for corn is that unless demand can really pick up a couple bushel an acre drop in yield is still going to leave us plenty of corn.

Bottom line is a headline of 1.5-2.0 billion bushel carryout for corn isn’t attracting money flow’s attention and that is what we are really in need of.  A headline that gets the funds buying some more of our grains; a corn and wheat headline in particular. 

Most thing that the big headline out of the report on Thursday will be the beans and most look for corn and wheat to follow the soybean price action.  Now how much corn and wheat follows will be questioned.

As for the beans most are looking for a big drop in yield; some are in the camp that our crop is smaller than a year ago.  When everything is said and done I think that is a possibility just based on weather; but I also think we have some risk that the USDA looks at the crop conditions being 20% better than a year ago and prints a much bigger production number then most in the market believe.  Plus there are a few analysts out there that actually thing soybean yield isn’t going down as much as what most of the crowd thinks.

Below are the estimates for the report; they come from the Van Trump Report.  The one thing that really stands out to me is the huge estimate range for production.  The soybean range for production is bigger than the last carryout numbers we had a month ago.  When looking for risks heading into reports sometimes we want to look at what everyone is thinking won’t happen.   You will notice below that the every estimate for soybean production is less than last month.  I would be more then shocked if the USDA left bean production unchanged; but we are dealing with the USDA.

Here is link to CHS Hedging Pre-Report write up.  Very good info and good explanation as to the numbers they feel the USDA will print.

USDA September Crop Report - US Production Cheat Sheet

Average Trade Guess
Trade Range
August Est.
2012 Final #
Corn Production
13.330 - 14.013
150.200 - 157.200
Harvested Acres
87.000 - 89.140
Soybean Production
2.980 - 3.239
39.000 - 42.400
Harvested Acres
75.100 - 77.000
Global Ending Stocks

Average Trade Guess
Trade Range
August Est.

115.860 - 125.000
59.700 - 62.220

169.350 - 175.720
125.920 - 152.000
67.100 - 75.000
US Ending Stocks

Average Trade Guess
Trade Range
August Est.

0.579 - 0.769
0.107 - 0.145

0.477 - 0.600
1.147 - 2.296
0.114 - 0.230

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

Tuesday, September 3, 2013

Opening Grain Market Comments 9-3-13

Markets are called better this a.m. behind a very firm overnight session that was lead by soybeans.

When the overnight session ended we had soybeans up 46 cents, KC wheat up 5, MPLS wheat up 4, CBOT wheat up 6, and corn up 6.  Outside markets at 8:00 have the US dollar up 200 points with the cash index at 82.318, crude about unchanged at 107.50, gold up 2 bucks, and the DOW futures pointing towards a positive start of about 100 points.

A very choppy volatile trading session last night.  In the soybean market in particular.  We gapped higher by opening up around 37 cents higher, then moved up to nearly 50 higher, only to break some 26 cents, before moving higher getting to up 50 cents with just a few minutes before the end of the session

Why so strong in the soybean market?  First off we did have some longs exit late last week before the long weekend.  So perhaps some of them wanted to get back in?  Overall it looked like most called the moisture that we got over the corn/bean belt over the weekend as expected to less than expected.  Plus the forecast doesn’t show much moisture any time soon.  Many are saying that it will be too little too late when/if the moisture hits.

Fundamentally many are talking about even lower bean yields with some thinking perhaps we will be less than year ago.  So many are jumping on the bandwagon that we need to ration off demand.  One thing to keep in mind is that the USDA had big increased year over year in demand; so don’t be surprised if the USDA report we get Thursday the 12th shows some demand coming off the table to offset production decreases.

Corn and wheat seem to just be following the bean market.  Not exactly super willing followers either; at least not yet.  Now if the bean market is for real and it looks to be that right now.  One has to thing that it gives some support to corn and wheat; if for nothing else for acre purposes in the coming year.

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


Monday, September 2, 2013

charts 9-2-13

posted some charts for soybeans, corn, and KC wheat

next few sessions should be very important to direction

Friday, August 23, 2013

opening grain market comments 8-23-13

Grain Markets are called better behind a firmer overnight session.

In the overnight session corn was up 5-7 cents, KC wheat was up 2-4 cents, MPLS wheat was up a penny, CBOT wheat was up 4, and soybeans were up 16-18 cents.  At 8:00 outside markets have the US dollar about unchanged with the cash index at 81.57, crude about unchanged, gold up a buck, and the DOW futures are pointing towards a start of the equity markets of about unchanged.

Weather market right now; yesterday the market looked at the system that moved threw some key corn and soybean growing areas.  Today the market seemed to be looking at the very hot and dry forecasts that we have out there.  The heat should help the behind crop continue to catch up; but lack of moisture doesn’t help for yields.

Wheat basis feels very soft; but the good news is I do think we will slowly start seeing some pro scales for spring wheat.  I am not sure on winter wheat as we simply seem to be over protein for what the mills are looking for.  Plus there is plenty of 12.5-13.0 pro spring wheat out there; maybe the mills will simply use that instead of HRW?  One thing that could happen for protein scales is we could end up seeing a better basis in the areas that have better protein and less scales; but really might be a little early to know how that thing is going to shake out.  The bottom line is overall basis for spring wheat felt soft yesterday; but higher proteins actually felt a little better; winter wheat basis felt extremely ugly.

Old crop corn basis remains volatile; with some buyers searching for some corn.  The September contract has really gained on the December corn contract in the past few days.  Many are starting to wonder if this could be the year that the September contract finally goes off the board above December for corn. 

The one thing I would say about old crop corn is be cautious; we all know how the game ends; we just don’t know when it ends.  Also keep in mind that everyone every spot isn’t able to take part in a squeeze.  As example rumor right now is that some are short some shuttles of corn; but in our area I am not sure that shuttle quantities are out there and if they are out there we couldn’t take part because of the fact that we have too many bins full of wheat from spring wheat harvest.  So a short term squeeze might help those in corn country but we might not be able to participate.  The other thing one has to watch is local end users; if our local end users are covered until new crop then it won’t matter what their competitors is willing to pay; if they don’t need it they are going to buy it just to buy it.  Bottom line is caution should be used with old crop corn.  We have moved into a very high stakes poker game.

From CHS Hedging in regards to Pro Farmer
“Pro Farmer tour estimates corn yields in Iowa at 171.94 b/a.,  above the 3-year average of 157.09 b/a…….Minnesota corn yield is estimated at 181.09 b/a., compared to 172.53 b/a for the 3-year average…….. pod counts in Iowa at 927.30 pods versus 999.80 last year……3 year average is 1,189.74 pods in a 3’ by 3’ square.  The pod count in Minnesota totaled 869.42, below the 3-year average of 1,099.44 pods…….how accurate are pod counts at this stage in regards to final yield?”

Results should be this afternoon at 1:30 for the Pro Farmer Tour.

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


Thursday, August 22, 2013

pro farmer crop tour tweets

  1. more pro farmer crop tour tweets

more pro farmer crop tour tweets

here are more pro farmer crop tour tweets

  1. As we work our way to the center of the state moisture starts lacking. Nitrogen deficiency. Yields showing it. 140s-160s BPA
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  2. Our scout reports Minnesota corn yld at 175.6 bpa on 9 samples; 829 soy pods vs 906 pods last yr
  3. Nitrogen deficiency again but seeing consistent yield numbers so far. Around 170 avg after 4 stops.
  4. Western counties of Minnesota looked to of had adequate moisture... yields in the 180-200s BPA.
  5. Faribault Co, MN 2nd stop. Very immature corn. Needs time. Beans must be replant. Moisture not an issue.Corn-98.5 Pod count-175
  6. Little drops of rain whisper of the pain...159 on last field of corn 1062 bean pod count
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  7. Be nice if you could tell us corn stage when posting yield estimates, makes a big deal on the potential at this point in MN
  8. My driver '. "I'm sorry; I'm figuring out this wiper situation here." This all new to us.
  9. @hedgit_jhof: Average of 3 field to the Northeast of Cedar Rapids, IA for corn this morning is 192 bpa.