Monday, April 8, 2013
Closing Comments - a few days before big April USDA Supply and Demand Report
Grain markets had a nice little bounce today lead by a weather scare (frost threat and last week’s frost damage) for wheat.
KC wheat lead the strength up 19 cents, MPLS wheat was up 12, CBOT wheat was up 14 cents, nearby corn was up 5, July corn up 2, new crop Dec corn was down 3 cents, soybeans were up 16 cents a bushel on the old crop, crush sunflowers were up 20 cents a cwt, the dollar is up with the cash index at 82.779, the stock market managed a bounce after being down earlier in the session the DOW ended up closing up 48 points, and crude is up about 90 cents a barrel.
We did have crop conditions/progress this afternoon. No update on corn planting; but the end of the report did say it expected to report nationwide corn and spring wheat planting progress next week. We did get an update on the winter wheat conditions and we saw a 2% increase in the G/E slot; mainly coming from the eastern corn belt states or areas that plant SRW.
This a.m. we had export shipments and they came in mixed. Rather poor for corn, while good to decent for both wheat and soybeans.
Technically some of the wheat charts did clear some resistance today; and a bullish report on Wed could take us back to the level we had before the March stocks report took us down at the end March. CBOT May wheat managed a close above the 61.8 retracement as well as the 20 day moving average. The next couple days could easily look like a break of resistance or a simple head fake should we get a negative USDA report on Wed.
More important than whether Wednesday’s USDA report is bullish or bearish on actual hard numbers is how bullish or how bearish versus what the market is expecting. Could the numbers be bearish enough to give us another leg down in the grains? Sure that is possible but it really depends on what the market or “crowd” is actually trading.
Below is DJ Survey for this week’s USDA Report.
04/08 08:42a CST DJ SURVEY: April World Grain, Soybean Carryout
CHICAGO--The following are analysts' estimates in millions of metric tons
for 2012-13 worldwide grain and soybean ending stocks, as compiled by Dow Jones
The U.S. Department of Agriculture is scheduled to release updated supply
and demand tables at noon EDT (1600 GMT) Wednesday. Parentheses denote the
number of estimates in that average and range.
04/08 06:35a CST DJ SURVEY: April U.S. Grain, Soybean Carryout
Average Range USDA USDA
Corn (21) 0.824 0.625-0.925 0.632 0.989
Soybeans (21) 0.137 0.107-0.160 0.125 0.169
Wheat (21) 0.731 0.700-0.776 0.716 0.743
Corn Soybeans Wheat
ABN Amro 0.875 0.160 0.746
ADM Investor Services 0.824 0.150 0.732
AgriSource 0.850 0.135 0.750
AgriVisor 0.825 0.155 0.716
Allendale 0.882 0.139 0.722
Alpari 0.925 0.150 0.740
Citigroup 0.813 0.135 0.722
Doane Advisory Srvcs 0.882 0.130 0.776
Farm Futures 0.756 0.148 0.755
Futures International 0.708 0.131 0.717
Global Comm Analytics 0.625 0.107 0.706
Jefferies Bache 0.857 0.125 0.716
Kropf and Love 0.882 0.140 0.741
Newedge USA 0.800 0.135 0.723
Olympus Futures 0.845 0.115 0.700
Prime Ag Consultants 0.882 0.150 0.746
Rice Dairy 0.857 0.125 0.741
Risk Management Commodities 0.787 0.135 0.710
RJ O'Brien 0.865 0.130 0.732
US Commodities 0.832 0.140 0.720
Water Street Solutions 0.739 0.150 0.749
Average Range USDA USDA
Corn (11) 120.2 116.0-125.0 117.48 131.16
Soybeans (12) 60.1 58.21-62.0 60.21 55.25
Wheat (12) 178.6 176.9-180.0 178.23 196.47
Corn Soybeans Wheat
ABN Amro 122.0 61.0 180.0
ADM Investor Services 121.0 61.0 179.0
AgriVisor 121.0 61.0 178.5
Allendale 121.12 60.18 178.34
Alpari 117.9 61.0 179.5
Doane Advisory Srvcs n/a 59.0 179.6
Farm Futures 118.3 59.1 176.9
Futures International 116.0 58.7 177.5
Jefferies Bache 121.5 58.21 178.0
Olympus Futures 122.0 60.0 178.0
Prime Ag Consultants 125.0 62.0 180.0
Water Street Solutions 116.5 59.8 178.11
Other news today includes the fact that corn spreads did firm up a little bit today as the May gained on both the July and Dec corn contracts. Basis locally feels heavy for nearby corn; but some of the excess corn has been sold off to the local feed lots so if a big end user came in and wanted to buy a couple shuttles worth corn wouldn’t be cheap. Ethanol plants seem to be covered for April and May but June forward is a different story.
Wheat basis feels softer on the spot floor; but the storm that is coming might slow down rail movement too and that along with producers going to the field isn’t going to help supply so perhaps we can see a little basis bounce?
I think heading into the report this week we need to realize that stages are likely set for another big movement. One of our brokers today mentioned a 800 million bushel corn carryout could be limit up and 900 could be limit down. What happens if the number is 650 million or a billion? Could we have another dollar move in a couple days? Who knows for sure; but I would guess that either of those extremes could give us big movement. For those that made sales ahead of the last USDA report maybe now is a place to look to buy a cheap call option to re-own bushels should we have a bullish surprise? And for those with too much unsold inventory there really is never anything wrong with spending a little bit of money to buy puts and establish floors. They would have worked really good ahead of the last report.
For new crop grain marketing I think we are entering the weather stage. Plenty of upside potential should we add some weather premium back in; but also plenty of risk should mother nature decide this is the year we grow trend line or better yields with no hiccups along the way. Should the later happen the bulls will struggle as we will be in a situation that we have to find a tremendous amount of demand (more than we ever have year over year) or be faced with the biggest corn carryout in years. Bottom line is if or when we get some bounces for new crop prices risk is probably suppose to be took off. We can look back and say we should have done it months ago; which perhaps that is the case. But also every day that goes by without weather premium added back into the market; every day we get closer to downside risk and what one doesn’t want to do is somehow get in the situation where you end up making big percentage sales at what ends up being a blow off bottom.
Don’t forget we are still offering free delayed price on most of the grains. Most of the programs are free until new crop; call for more details.
Please give us a call if there is anything we can do for you.