Tuesday, May 14, 2013

Market Comments - Slow corn planting Continues

Markets are called choppy/mixed this a.m. behind a mixed overnight session.

July corn was off 3 cents, December corn was unchanged, KC wheat was off 2 cents, MPLS wheat was up 2 cents, CBOT wheat was up 2, old crop beans off a penny, and new crop beans up 2 cents.  Outside markets have the US Dollar about unchanged, crude off 30 cents a barrel, gold off 11 bucks, and equity futures pointing towards an unchanged start on the DOW.

The May contracts expire at noon today; hopefully those levels can act as some price targets for the July contracts.  The May corn is about 70 cents higher then July, May soybeans are a 1.10 higher than July, and MPLS May wheat is 43 cents higher than the July MPLS Wheat contract.  Yesterday May corn and May soybeans had incredible strength and were the main headline for the rest of the strength in the grain complex.  This a.m. both of those markets are up 4-7 cents; but very thinly traded.

Yesterday afternoon we had a crop progress update that showed corn only 28% planted.  Yet last night we didn’t mustard much strength in the corn market.  Why?  The funds just don’t seem to care and the end users are not ready to panic and push this thing higher; at least not yet.  We want to be patient in waiting for better prices; yet we also should try to be pro-active.  Not easy to do both at the same time.

Last year when did the drought start?  But when did the market finally start to trade it?  The drought was going on the whole time that planting was well ahead of schedule but the market didn’t trade it until June 18th; that Sunday night the market opened up strong and by the close on Monday we had a positive 28 cents on December corn. 

When did the USDA acknowledge the dry situation?  Not until the July crop report.  Last June they didn’t decrease the yield despite the early dryness that was seen.  Their May number was actual an increase from their outlook numbers that came out in February. 

So when will the USDA or the funds acknowledge or trade the present slow planting situation?  Well first off the USDA did drop yield from the outlook form; so in a sense they have acknowledged it.  But to what extent should be the question and maybe that won’t be known until we actually have a better idea of when the crop get’s planted.

Perhaps the market is trading this current situation and not the fear of how bad it could get?  Bottom line is we have plenty of question marks and still don’t know the answers, and we don’t exactly have a history telling us we will trade worst case right away.  The funds might be late to the game or then the outcome of the game might just not be known.  I think that is the case; we really don’t know how production will shake out and we probably don’t have a reason to run things up today.  IF things change and we end up with a big production number the market will need to do its job of finding demand.  If we stay on the present path the market might just be slow to re-acting.  Bottom line with all of this is to realize what is bearish out there and what is bullish out there.  Thus in your grain marketing plan realize that the market doesn’t have to trade what you or I think it bullish it and the funds will have a mind of their own; so be pro-active or find a way to get yourself comfortable.

As for other news out there; we really don’t have much other then weather and crop progress/conditions.  Crops are extremely behind average and the wheat crop remains very poor.

I did see some updates from CNGOIC on the Chinese crops; they pegged corn at 214 MMT versus the USDA at 212 on Friday.  They pegged the soybean crop at 4% less than a year ago at 12.3 MMT.  Wheat at 121.9 MMT versus 121 that the USDA had on Friday.  These are all for the 2013/14 crop size.

Forecasts still see dry weather the next couple of days but a system later this week.  I know I am praying for us to get some of the moisture and I seen a couple forecasts that have us with up to a 60% chance on Saturday.

South Korea did buy some optional origin feed wheat as well as optional origin corn.

I did see a comment that as much as 30% of the corn could get planted this week; so some of the estimates for next week are 50-60% planted.  What number would be bullish enough for our markets to have a leg up?  What number would be bearish enough for the funds to try and sell this thing down?

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