Thursday, May 30, 2013

Opening Comments - GMO Wheat found 5-30-13

Markets are called mixed to weaker this a.m. behind a weaker overnight session.

When the overnight session paused old crop corn was down 2 cents, new crop corn was down 3 cents a bushel, KC wheat was down 6 cents a bushel, MPLS wheat was down a penny a bushel, CBOT wheat was down 8 cents, July Soybeans were down 9, and November soybeans were off 4 cents.  Outside markets have a US dollar down a little with the cash index at 83.460, gold is up 16.50 bucks an ounce, crude is down 1.25 a barrel, and the stock market looks to start near unchanged with the DOW futures up 9 points. 

A couple news items out today/yesterday.  First off weather is still leading our markets; mainly for delays; but I have seen comments of some of the deferred forecasts opening up.  It also looked liked Northern ND missed the rain last night and that might allow for some more spring wheat to get planted.

The big question is how many acres will not get planted?  Where will those acres shift to?  Will they go prevent plant?  Will some take prevent plant and then try un-insured soybeans?  How many acres will need to get replanted? Yield loss already seen? Etc…………Bottom line lots of questions in regards to our production possibilities.  Which means we have added some premium into the market.  Is it justified?  Doesn’t look like it needs to be there if you look at the advisor’s updated balance sheet ideas.  But it really depends on how things develop as production possibilities have a big risk should this weather continue; plus they have the summer heat risk.

At the end of the day with all of our unknowns I don’t think you can say our market will be X price in a month, two months, or 5-6 months from now.  As far as I am concerned we have the potential to see corn any place between its present level to a few dollars higher or lower.  All up to mother nature and other unknown future factors.  The one thing I would say is that the longer or higher new crop corn goes the less demand we are promoting and the USDA had said in its last USDA Supply and Demand report that demand for corn would grow by nearly 2 billion bushels and that would still leave us with a  2 billion bushel carryout; versus the 759 million bushel carryout we presently have.  So in my opinion the job of the market is still to find demand; so I will remain cautious getting too bulled up.  I think we need to remember to reward the rallies and realize that the likely hood of us going to this year’s highs because of wet weather is low.  Perhaps another unknown reason could take us there but wet weather?????

No exports today because of the holiday earlier in the week.  Those are delayed until tomorrow and ethanol numbers are delayed until this a.m. at 9:30.  The ethanol numbers will be key to help us see if demand is staying strong for old crop corn.

The other big news out there this a.m. is the fact that GMO wheat was found in an Oregon farm.  What it means to the market is still up in the air; but the kneejerk reaction is not positive.  Below are a couple articles on the GMO wheat.  Notice the one indicates Japan cancelling a tender.  We don’t need to have a reason for our buyers not to come here; we are already not super competitive in the export market.  The one small positive I see that Paris wheat was up so maybe that is helping narrow the spread between our wheat and other countries????

Other news out there.  Yesterday China cancelled some old crop soybeans and this a.m. they bought some new crop soybeans.  We seem to be seeing more questions on the old crop demand for beans as well as export demand for old crop corn.  But lately some ideas for new crop demand have shifted a little more friendly and I think that is one of the reason for the rally; we are questioning production while see a small increase in new crop demand for corn/beans.

Wheat we continue to question the production; but we haven’t seen any great demand headline news either with the exception of SRW or feed wheat; China has had decent interest in buying that.  But for milling wheat we haven’t seen much for interest.

The other couple of headlines I seen this a.m. include one indicating that US corn acre loss ideas may be exaggerated and another comment that China might be cancelling Brazilian soybean purchases.

GRAINS-Hesitant market weighs GMO wheat case - RTRS
30-May-2013 07:01

    * Non-authorised GMO wheat found on northwest U.S. farm
    * Japan cancels tender, raising risk for U.S. exports
    * New-crop corn falls for first time in six sessions
    * Market assessing crop risks from heavy U.S. rain

(Updates with European trading, adds new quotes, changes byline/dateline)
    By Gus Trompiz and Colin Packham
    PARIS/SYDNEY, May 30 (Reuters) - U.S. wheat prices eased on Thursday as the
discovery of an unapproved genetically modified (GMO) variety in the
northwestern United States raised a risk for exports and encouraged the market
to take a breather after weather-fuelled gains.
    Japan, the top importer of U.S. wheat, cancelled a tender to buy U.S.
western white wheat after the U.S. government announced on Wednesday it had
found a GMO wheat sprouting on a farm in the state of Oregon. [ID:nL3N0EB1JC]
    Asian countries led by Japan are major buyers of U.S. white wheat, a variety
used for food, and sensitivities there over GMO crops for human consumption
could slow buying.
    "The finding of GMO in wheat is certainly a factor that has weighed on wheat
prices," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
    "I won’t be surprised if other countries start cancelling or reducing their
purchases of U.S. wheat, particularly Asian countries, putting pressure on wheat
    Traders said it was too early to say if the case would have significant
consequences for exports but in a sign of possible effects beyond Asia, the
European Union said it would test incoming U.S. white wheat shipments for GMO
content. [ID:nL5N0EB1KH]
    "The market is going to need U.S. wheat, we won't be able to do without it,
so that could mean more checks and more sanitary certificates," a European
export trader said.
    "There is a question mark now and this could affect the attitude of certain
    The discovery of GMO wheat encouraged a lull in the market after worries
about wet weather in the United States pushed wheat and corn prices higher on
Wednesday. [ID:nL3N0EA1YG]
    Chicago Board of Trade July wheat <WN3> fell 0.8 percent to $6.97-1/2 a
bushel by 1138 GMT, after ending Wednesday up 1.3 percent.
    Concerns that portions of the U.S. wheat crop could be harmed by the
persistent rainfall and, in some areas, flooding, have supported the market.
    Unfriendly crop weather will also support prices of soybeans and corn, with
excessive rain late this week expected to further slow U.S. plantings.
    Farmers in the United States slowed the pace of planting in the past week as
rain delayed the tail-end of corn seeding and pushed soybean planting to its
slowest pace in 17 years, the USDA said on Tuesday. [ID:nL2N0E91F8]
    "We're still in quite a nervous context with the rain and flooding," another
European trader said of U.S. crop conditions.
    "There is a lot of uncertainty in the market."
    The most actively traded December corn <CZ3> fell 0.7 percent to $5.62 a
bushel, halting a five-day rally. November soybeans <SX3> slipped 0.2 percent
$12.85-3/4 a bushel, off Wednesday's 3-month top of $12.95.
    But spot soybeans <SN3> extended losses, pressured by Wednesday's news that
China, the world's largest buyer of the oilseed, had cancelled an order for U.S.
soy. [ID:nL2N0EA0IG]
    * Prices as of 1138 GMT
  Product              Last    Change   Pct Move End 2012 Ytd Pct
  CBOT wheat <Wc1>      697.50   -5.25   -0.75   778.00  -10.35
  CBOT corn <Cc1>       664.75   -0.25   -0.04   698.25   -4.80
  CBOT soy <Sc1>       1496.75   -5.00   -0.33  1418.75    5.50
  Paris wheat <BL2c1>   206.00    1.50   +0.73   250.25  -17.68
  Paris maize <EMAc1>   232.50    6.50   +2.88   237.75   -2.21
  Paris rape <COMc1>    434.75   -0.25   -0.06   456.25   -4.71

  WTI crude oil <CLc1>   92.41   -0.72   -0.77    91.82    0.64
  Euro/dlr <EUR=>         1.30           +0.11

WRAPUP 2-US GM wheat find threatens exports, stokes consumer fears - RTRS
30-May-2013 06:53

    * Japan cancels tender to purchase some U.S. wheat
    * EU preparing to test incoming shipments
    * Importers to seek details from U.S. government

    By Risa Maeda and Charlie Dunmore
    TOKYO/BRUSSELS, May 30 (Reuters) - Unapproved genetically
modified wheat found growing in the United States is threatening
the outlook for U.S. exports of the world's biggest traded food
commodity, with importers keenly aware of consumer sensitivity
to gene-altered food.
    Major importer Japan has cancelled a tender offer to buy
U.S. western white wheat, while other top Asian wheat importers
South Korea, China and the Philippines said they were closely
monitoring the situation.
    "We will refrain from buying western white and feed wheat
effective today," Toru Hisadome, a Japanese farm ministry
official in charge of wheat trading, told Reuters.
    The European Union is preparing to test incoming shipments,
and will block any containing GM wheat. [ID:nL5N0EB1KH] Chicago
Board of Trade wheat futures <Wc1> fell 0.5 percent on Thursday.

    GM wheat was discovered this spring on a farm in the west
coast state of Oregon, in a field that grew winter wheat in
2012. USDA officials said on Wednesday that when a farmer
sprayed the so-called "volunteer" plants with a glyphosate
herbicide, some of them unexpectedly survived.
    Scientists found the wheat was a strain field-tested from
1998 to 2005 and deemed safe before St. Louis-based biotech
giant Monsanto <MON.N> withdrew it from the regulatory approval
process on worldwide opposition to genetically engineered
    No GM wheat varieties are approved for general planting in
the U.S. or elsewhere, the USDA said. The EU has asked Monsanto
for a detection method to allow its controls to be carried out.
    With high consumer wariness to genetically-modified food,
few countries allow imports of such cereals for direct human
consumption. However, the bulk of U.S. corn and soybean crops
are genetically modified. 
    The latest finding revives memories of farmers unwittingly
planting genetically modified rapeseed in Europe in 2000, while
in 2006 a large part of the U.S. long-grain rice crop was
contaminated by an experimental strain from Bayer CropScience
<BAYGn.DE>, prompting import bans in Europe and Japan.
    The company agreed in court in 2011 to pay $750 million to
growers as compensation.
    Asia imports more than 40 million tonnes of wheat annually,
almost a third of the global trade of 140-150 million tonnes.
The bulk of the region's supplies come from the United States,
the world's biggest exporter, and Australia, the No. 2 supplier.
    The USDA said there was no sign that genetically engineered
wheat had entered the commercial market, but grain traders
warned the discovery could hurt export prospects for U.S. wheat.
    "Asian consumers are jittery about genetically modified
food," said Abah Ofon, an analyst at Standard Chartered Bank in
Singapore. "This is adding to concerns that already exist on
quality and availability of food wheat globally."
    European traders said Black Sea and EU wheat was well
positioned to benefit in any displaced demand for U.S. grain.
But some were more pragmatic on the overall impact.
    "The market is going to need U.S. wheat, we won't be able to
do without it, so that could mean more checks and more sanitary
certificates," one European dealer said.
    "Japan is in a position to be selective and to react
sharply. It has other suppliers and the financial means to be
choosy and pay more if needed. This is not necessarily the case
for (top global wheat importer) Egypt which is in a difficult
financial situation."
    A major flour miller in China, which has been stocking U.S.
wheat in recent months, said importers will tread carefully.
    China has emerged as a key buyer of U.S. wheat this year,
taking around 1.5 million tonnes in the past two months. Chinese
purchases in the year to June 2014 are estimated to rise 21
percent to 3.5 million tonnes, according to the USDA, with most
shipments coming from the United States, Australia and Canada.
    The Philippines, which buys about 4 million tonnes of wheat
a year and relies mainly on U.S. supplies, is waiting for more
details before acting, an industry official in Manila said.
    "I won't be surprised if other countries start cancelling or
reducing their purchases of U.S. wheat, particularly Asian
countries, putting pressure on wheat demand," said Joyce Liu, an
investment analyst at Phillip Futures in Singapore.
    Genetically modified crops cannot be grown legally in the
United States unless the government approves them after a review
to ensure they pose no threat to the environment or to people.
    Monsanto in a statement posted on its website said: "While
USDA's results are unexpected, there is considerable reason to
believe that the presence of the Roundup Ready trait in wheat,
if determined to be valid, is very limited."

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

Grain Merchandiser
Midwest Cooperatives
605-295-3100 (cell)
605-258-2166 (fax)

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