Tuesday, March 5, 2013

Morning Thoughts 3-5-2013

Markets are having a small bounce as of 8:50 this a.m.

Corn is up 2, beans are leading the way up 15, KC wheat is up 2, MPLS wheat is up 1, and CBOT wheat is unchanged.  Outside markets are supportive with the DOW making new all time highs this morning up about 100 points at 14,227, crude is up 50 cents, and the US dollar is a little lower.

I did see an announcement that the CME grain market trading hours will change on April 7th.  The Open outcry or pit and the Globex or electronic will start trading weekdays at 8:30 a.m. central time and close at 1:15 p.m. central time.  The overnight Globex or electronic will open at 7:00 PM central time and remain open until 7:45 a.m. central time the next morning.  There is no pause for the USDA reports; but perhaps the CME is opening the doors for the USDA to move release times to 8:00 a.m.?????

We do have a USDA report out on Friday with estimates at 646 for a corn carryout.  Presently we are at 632.  Market is basically looking for a decrease in exports/ethanol; but really not a major change is expected.

For soybeans the market is thinking we could see an increase in crush and or exports as the average estimate is 122 million bushel carryout versus the present 125 million bushel carryout.  But really not a major change.

For wheat the trade is looking for a small increase via lack of exports as the estimate is pegged at 702 million bushels versus the present 691 million bushels.

Overall not much for changes expected in our carryout’s.  Just looking at the numbers I would say that we have a small bearish risk; but most likely the USDA waits until the March stocks report and thus the April S & D before we have any major changes if we do.

The bigger thing is likely to be South America production.  Market is looking for a Brazilian soybean crop to decrease slightly and for the Argentina bean crop to slightly decrease.  Same thing for corn crops.  Now here is another potential risk; will big crops get bigger?  The ranges are rather wide so unless we have a major surprise it might not be another major market mover and we have seen some strength happen lately in beans despite the fact that we have record crops coming.  I don’t know how long logistics can provide support as eventually the South America crop will provide supply.

We did have some state updates on crop conditions yesterday and we seen some improvements.  KS up 1% on the G/E, OK improved 16%, and TX was unchanged.

We did sell more beans to Unknown and to China this a.m.; 330k tones of old crop sold to unknown and 345 k tones of new crop sales.

Basis remains strong; but more from a lack of supply then super strong demand.  Some of the local ethanol plants are full through April.  The coverage needed is for later on; but with the inverses in the board; not many plants have a lot strong interest either.

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