Tuesday, May 28, 2013

Opening Comments 5-28-13

Markets are called better this a.m. behind a firmer overnight session; that was lead by new crop corn up 11 ½ cents in the overnight session, old crop corn was up 4 cents, KC wheat was up a penny, MPLS wheat was unchanged, CBOT wheat was up a penny, old crop soybeans were up 13, and new crop soybeans were up 16 cents.  At 8:15 outside markets have a US dollar slightly firmer with the Cash US Dollar index at 83.840, gold is down 4 bucks an ounce, crude is up 1.28 a barrel, and stock market futures are pointing to a plus 120 point start on the DOW.

Rain makes grain; but only if it is timely and not all at once.  Overnight strength seemed to come from the flooding and fact that too many areas have and will continue to receive too much grain.  Parts of Iowa are under water which leads to a couple things.  First off will we get the balance of the corn planted?  Will we have to replant much that was planted?  Plus another hundred agronomic questions/bullish arguments that happen when we have too much moisture.

Same type of statements and question marks are out there for ND planting for both spring wheat and corn.  Did we get it all in?  Now ND not getting corn in isn’t a major market mover.  But ND not getting spring wheat planted could be and the corn belt having issues with too much water is potentially a severe issue.

This afternoon we will have a crop progress update; ideas are corn planting between 85-90%.  If we are at the top end of that range or higher I could see our little rally from too much rain quickly turn around.  But if we are on the low end of the range or less we may be opening a major question mark on US corn production. 

Soybean planting is pegged this afternoon at 50% and spring wheat planting is pegged at about 80%.  Wet weather might also be losing some double crop soybean acres.

I was gone late last week; but it does look like basis was under pressure for some of the grains. Soybeans in particular seen huge drops.  I have noticed to arrive bids softer for corn, spring wheat, and winter wheat.

Also take note that despite the ugly looking winter wheat crop that is out there; many end users are bidding a big inverse between old and new crop wheat. 

I did see late last week that we sold some Soft Red Wheat to China; it also looked like China bought some new crop corn.  It is nice to see some demand and longer term I think that demand is what will or won’t drive our prices.   If we get these crops in and IF we grow anything close to trend line the job of the market will be to find demand.  Those are a couple big IF’s as it stands right now and that is why we have and are adding in some premium into our markets.  Now can this present little rally we have develop into more?  Without a doubt if the funds decide to look at the headlines there is really no limit where we can get to; but fundamentally if we look deeper into the balance sheets the job of our market will be to find demand; until we have curbed present supply outlook dramatically. 

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