Thursday, May 9, 2013

Opening Comments 5-9-2013 USDA report preview


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

When the overnight session paused July corn was unchanged as was December corn, KC wheat was up a penny, MPLS wheat was off a penny, CBOT wheat was off 2, old crop soybeans were up 6 cents a bushel, and November soybeans were down a penny a bushel.  Outside markets are also fairly choppy with the US dollar up slightly with the cash index at 81.99, crude is off 50 cents, gold is off 10 bucks an ounce, and equity futures are pointing towards an unchanged start.

We had export sales out this a.m. and tomorrow we will have the May USDA Supply and Demand report.  Otherwise we seem to be in a weather market and one that seems to be controlled more by money flow then anything.   It hasn’t seem to matter if producers or buyers are interested in a given day for some time.

As for export sales kind of a non-event this a.m.  Corn sales were below expectations as well as the needed levels to hit the USDA present projections.  Will they be lowered on Friday?  Old crop wheat sales were also below the needed levels.  Soybeans sales were above needed level and positive for the first time in 3 weeks but nothing great.  Soybean meal sales continue to be positive; but also continue to slow down from the super strong pace we have had.

Last week we had super strong new crop sales for the big three grains; but that wasn’t the case this a.m.  New crop wheat sales came in at 8.3 million bushels; which is less then ½ of last week, corn sales for new crop came in only at 6.7 million bushels which was about ¼ of the previous week, and new crop soybeans sales came in at 14.4 million bushels also about 1/3 to ¼ of last week’s new crop sales.

The big thing that stands out for new crop sales is the fact that wheat is well ahead of where it was a year ago and corn and beans are well behind were they were at a year ago.  If you look at present balance sheet projections or thoughts.  (The actual first new crop USDA balance sheets will be out tomorrow Friday May 10th)  One would think that we need to increase our corn and soybean exports versus this year or have massive carryout numbers simply based on the increased acres and fact that odds favor a little better yield versus last year’s drought impacted crops.  While our wheat ideas today are that the crop is smaller year over year and thus we will have less to export.  Bottom line is it could mean less wheat business as we go forward and hopefully it means more corn and soybean business as we go forward.

Weather still looks to be neutral for our markets; with the deferred slots still fairly open in the major parts of the corn belt.  Time however keeps going by and field work is slow in the corn belt; much got hit with a small amount of moisture yesterday; maybe not enough to push things back several days but probably enough to slow things down or halt things for a day or maybe two?  Next week’s crop progress report will be very important; but so will the deferred forecasts.

Tomorrow we have USDA report…….below is recap of trade estimates.  Typically I like taking a little risk off ahead of the USDA reports.  Not sure if that is the right move or not; really depends on how comfortable one is in the present marketing plan.  I would point out that there could be some huge risk; very un-likely and I still think we could and should see a weather rally at some point for the row crops. 

But here is the risk that I see and it is in regards to new crop corn primarily and remember corn seems to be king; so that risk could be transferred on to the other grains fairly easily.  The risk is that our new crop carryout number comes in much higher than the 2 billion bushels; maybe add to that a favorable forecast Sunday night along with planting progress better than expected and we could see extreme pressure and how knows how low the funds could drive us.  Now I think it is unlikely that the USDA does that and I think our old crop tightness is for real and that should keep some support for new crop but if we want to look just at the demand side you can make some big arguments that the USDA pencils our new crop corn carryout 200-500 million bushels above the 2 billion. 

For one we seem to have an ethanol blend wall; secondly as mentioned above we are well behind last year’s new crop corn exports; but more than that is we seem to have some talk of big crops in other places in the world.  Can we really just turn on a light switch and gain the exports back because now we need them?  How about feed demand how fast can that actually increase?  Then we have the production side of things; the USDA has had a history of overstating production; while will they not do that once again tomorrow?

If we look at the big picture we need to realize that a decent crop at all can leave us with a 2 billion bushel plus carryout while still needing to increase demand more year over year then we have EVER done in HISTORY.  That is scary and so is the fact that this is a USDA report as the logic they use should tell us as marketers that there is no guaranteed what they will print; right or wrong.  Bottom line is we could have plenty of risk and if you are not comfortable with it maybe do something about it?

What would one do?  That is a big struggle as I don’t really like making sales at present levels; nor do I like spending tons of money to buy the put options.  Perhaps the short dated new crop options are a move but who knows.

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


As mentioned here is the USDA estimates.

The below is coming from the Van Trump Report.



US Ending Stocks 2012/13 

May #
April USDA #
Avg Guess
Range of Guesses
Corn
???
0.757
0.749
0.684 - 0.800
Soybeans
???
0.125
0.123
0.107 - 0.130
Wheat
???
0.731
0.733
0.720 - 0.747

US Ending Stocks 2013/14


May #
Feb Ag Outlook
Avg Guess
Range of Guesses
Corn
???
2.177 
1.993
1.387 - 2.427
Soybeans
???
0.250
0.236
0.147 - 0.325
Wheat
???
0.639
0.658
0.486 - 0.800

Global Ending Stocks 2012/13


May #
April USDA #
Avg Guess
Range of Guesses
Corn
???
125.290
125.646
123.500 - 132.100
Soybeans
???
62.630
62.300
61.111 - 63.000
Wheat
???
182.260
181.528
178.300 - 183.200

Global Ending Stocks 2013/14

May #
Avg Guess
Range of Guesses
Corn
???
151.695
130.000 - 168.300
Soybeans
???
68.991
64.000 - 83.000
Wheat
???
184.368
175.000 - 195.800

US Wheat Production


May #
2012 Totals
Avg Guess
Range of Guesses
All Wheat
???
2.269
2.062
1.832 - 2.190
All Winter
???
1.646
1.497
1.359 - 1.604
Hard Red Winter
???
1.004
0.776
0.676 - 0.875
Soft Red Winter
???
0.420
0.504
0.473 - 0.636
White Winter
???
0.222
0.217
0.204 - 0.226

South American Production


May #
April USDA #
Avg Guess
Range of Guesses
Brazil Corn
???
74.000
74.708
73.000 - 77.500
Brazil Soy
???
83.500
82.807
81.500 - 83.500
Argentine Corn
???
26.500
25.583
24.000 - 26.500
Argentine Soy
???
51.500
50.714
48.500 - 51.500









Jeremey Frost
Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670

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