Thursday, May 2, 2013

Opening Comments 5-2-2013

Markets are called better this a.m. behind an overnight session that saw a small bounce.

Corn was up 4-7 cents in the overnight session, KC wheat was up 4, MPLS wheat was up 5, CBOT wheat was up 3 cents a bushel, and Soybeans were up 3-6 cents a bushel.  Outside markets have a very strong US Dollar with the Cash index back above 82.05, crude is up about 40 cents a barrel, Gold is up about 20 bucks an ounce, and stock market futures are pointing to an up 40-50 point start for the DOW.

First thing that sticks out and has for a while is the price action of the grains and the price action of the US dollar.  Yesterday the US dollar was down which means that our commodities would be cheaper for other countries thus in theory our grains should have seen some support.  This a.m. the dollar is up strong which means our product should be more expensive when looking to export it and thus that should spill over a little weakness to our grains.  But that correlation hasn’t been very good for some time.  It is something however that we need to keep in mind should a risk off global event happen the US dollar is still likely the best of the worst and a stronger US dollar won’t help out our demand.

The other thing that stood out this a.m. is the numerous pictures of snow in parts of Iowa/MN; seen a couple pictures of what looked like a good foot of snow.  Overall moisture might be a hair less than the high side of some of the predictions but it does look like things in many areas east of us will or have come to a standstill.  The forecasts as we go forward will continue to be very important.  Optimal planting date for many that got hit with the recent moisture is the middle part of May. 

This a.m. we did have export sales out and they were overall good but that was due to new crop sales.  Soybeans actually had another net old crop cancellations or negative number again this week (-4 million bushels)…..but the new crop sales were huge at 49.3 million bushels. 

Corn came in at 13 million just slightly above what we need to meet the old crop USDA balance sheet projections.  New crop was very strong at 25.8 million bushels.

Keep in mind that even though both corn and beans had very strong new crop sales they are still behind last years at this time.

Wheat sales were 18.3 million for new crop which puts their new crop commitments at 127.6 million bushels versus 68.2 million last year at this time.  Old crop wheat sales came in at 8.1 million bushels just below what we need on a per week basis to meet present USDA projections.

Soybean meal sales remain strong; off from the last couple of weeks but still at 93.3 k tones leaving us needing to cancel about 8.2 each week to not go over the USDA estimate.

The wheat tour had a day 2 yield estimate of 37.1 bu down from 43.7 from last year on the same leg of the tour.  The tour has OK at just 25.5 bu/acre versus 36 last year and a crop size of 85 million versus 155 million last year.  Day 1 had the yield just slightly below last year.  Look for the areas looked at today to continue the down trend in yield.  The one thing that many on the tour have said is they are using what the yield potential is and I did see a tweet that mentioned their method is likely to overstate yields because of where the crop is at.  Bottom line is we are not getting quiet as bullish info from the tour as we would have liked.  Perhaps it will come today?  Or perhaps things are still up in the air a little bit based on what mother nature does over the next few days/weeks ahead?  The other possibility is that we likely won’t have good info or accurate info until the combines roll.  Harvest rally set up this year?  Could happen easily if we see a scare for the row crops around the same time.

As we go forward over the next couple of days we need to watch tour results and weather.  Weather likely being the thing that could easily move our markets.

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

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