Markets are called
better this a.m. on firmer overnight markets lead by weather forecasts and the
delayed planting progress.
In the overnight session new crop corn lead the strength up
14, while nearby corn was up 12 cents, soybeans ended the overnight session unchanged
to off a couple pennies, KC wheat ended the overnight session up a nickel which
is about a dime off of its overnight session highs, CBOT wheat was up 7, and
MPLS wheat was up 5-7. Outside markets
look to be supportive this a.m. with Gold up 15 bucks an ounce, crude up 70
cents a barrel, the US dollar off about 190 ticks with the cash index at 82.190,
and equity futures are pointing towards an up 50 or so start for the DOW.
Same news that producers were talking about and scratching
their heads on why on our markets were going down at times last week has helped
our markets bounce some in the overnight session. Adding some fuel to the fire has to be the
most recent 6-10 day 11-14 day forecasts that call for much of the corn belt to
be cool and wet. Going home late last week some of the forecasts had provided a
window of getting some field work done.
We already know that we will be very far behind in this afternoon’s crop
progress/condition update but some forecasts indicate that many areas (primarily
the corn belt) could fall further behind.
Sitting here today it might not be a major concern; but in a couple
weeks talk will be of losing acres as well as the yield drop that typically goes
with late planting.
For marketing the question we really have to ask our self is
what does this do to the big picture.
First off losing acres means we need to have higher yields; the less
acres we have the more important yield becomes.
But secondly we have to ask our self how much will the big picture
change? If we lose acres because of too
much moisture will the other acres more than help offset via having better
moisture profiles? I guess this is
really debatable; but keep in mind that if some places are not planting because
of too much moisture other areas might be getting ideal moisture. The idea of losing corn acres also leads to
the thought of increased soybean acres and that should make it no surprise that
beans are struggling while corn is up double digits. Third is our possible production cut in corn
material? Or is it needed to prevent the
balance sheet from getting too burdensome?
Meaning have we dropped below a 13 billion bushel production yet? If we haven’t doesn’t that mean we still need
to find nearly 2 billion bushels of demand to keep our balance sheet unchanged
from this year? Have we ever found 2
billion bushels of demand year over year?
No.
Bottom line is if this rally can get some legs to it; don’t
be afraid to take some risk off. Yes you
want to ride it and given were the funds are the upside could have plenty of
room; but at some point typically fear rallies need to be sold. Not right when they start but typically at
the point when guys all get bulled up. I
can stand here today and mention the bearish points; so everyone isn’t bulled
up. But if this bounce can get us back
up to 5.00-5.50 or so cash new crop corn; taking some risk off the table will
just be good risk management. It doesn’t
mean one has to make big sales or many sales; but with rallies one wants to get
them back to a comfortable spot be it making sales or the use of futures or options.
Other news out includes the wheat tour which starts today
and with twitter and other internet sources we should see lots of info and
plenty of pictures. I believe the actual
production estimate will be out on Thursday.
We will have export shipments out at 10 this a.m. and crop
progress/conditions out at 3 this afternoon.
The Chinese markets are closed though Wednesday.
First notice day is tomorrow; so it will be interesting to
see what shakes out with the May contracts and see how strong the cash markets actually
are. Many will say that the July
contract should drift up towards the level that the May go off at.
Please give us a call if there is anything we can do for
you.
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