Wednesday, May 1, 2013

Opening Comments - Wheat tour Recap Day 1

Markets continued yesterdays late selloff in the overnight session; with soybeans leading the pressure down.

In the overnight session corn was off 7-9 cents, soybeans were down 32 on the May contract, July beans were off 20 cents, November soybeans were down 12 cents a bushel, KC wheat was off about a dime, MPLS wheat off about 11, and CBOT wheat off 11 cents.  Outside markets look like a little risk off day and that might have helped pressure our grains a little last night.  Presently DOW futures are pointing to a slightly lower start, crude is off about 2.50 a barrel, gold is off about 14 bucks an ounce, and the US dollar is weaker.  The weaker dollar should help out our grains but it really hasn’t had the correlation as of late that it used to.

First day of the wheat tour came off as friendly with one leg about 10 bushels an acre less than last year, CO about 14 million bushels less than last year, and 11 bushels an acre less in NE.  Today is expected to show worse results.  The tweet I seen this a.m. said “ Field 1. Outside of Goodman. Visual yield 12.

More info on day one of the door is below at bottom of the email.

Looks like some of the pressure in soybeans is coming from economic data out of China with their PMI coming in disappointing at 50.6 versus 50.9 last month.  This leads to questions about their demand for grains.

Latest forecasts show that much of the corn belt to get hit over the next 72 hours.  I did hear of some snow hitting parts of eastern South Dakota overnight and some talk yesterday was off a foot or so of snow in Iowa.

Deferred forecasts do look like they might have a window to get something done as many of the 6-10 and later forecasts are calling for below normal moisture now; but some areas are still cool.  We should stay rather choppy and volatile as more forecasts come out.  Bottom line is weather could be causing some acres to shift out of corn into either another crop or possibly even prevent planting.  There is also a good relationship between yield and planting.  But we need to keep in mind that 2009 which was one of the best yielding years ever also started late.  Weather in June/July/August is really what should make or break this crop.

Sounds like another freeze could hit much of the HRW belt tonight through Friday.   One thing to keep in mind is that so far the HRW has been hit with a couple different freeze events; but yet the tour isn’t finding much freeze damage more drought damage than anything.  The actual freeze damage might not show up until the combines hit.

We will have more wheat tour info as the day goes along and at 9:30 ethanol numbers will be out.

Other than that we should trade weather and maybe some technical trading.  One thing that we are really still missing for our markets to take off is demand and the headline to get the funds in their buying.  For us to have a true bull market we need to have solid demand and good money flowing coming into our markets.  Without them longer term rallies are probably suppose to be sold or used to take some risk off the table.  Outside markets should continue to make one nervous and our job over the next year or so is still going to be finding some demand; more year over year demand then we have ever done.  Keep in mind that pro’s and advisors are probably going to be selling the rallies until something changes with demand or the crop prospects really get ugly.

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

Below is a forward from one of our buyers that is one the crop tour.  I got this late last night

Feel free – it should be coming out in reports tomorrow also.

Jay A. Johnson
VP of Purchasing and Quality
Hesco, Inc
(605) 884-1115

From: CO-Pierre, Jeremey Frost []
Sent: Tuesday, April 30, 2013 10:29 PM
To: Jay Johnson
Subject: Re: winter wheat tour - saw your bullish report

Thanks for update. Do care if I share this with my producers/contacts.

Sent from my iPhone

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

This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

On Apr 30, 2013, at 10:25 PM, "Jay Johnson" <> wrote:
The first day of the winter wheat tour is completed and despite the tweets that went out today from different sources on the tour that sent the wheat market on the rise -  the results were not too bad for the 2013 crop.  I was on the yellow route that went through the Northern 3rd of the state.  Our group estimated 43 bushels per acre for the day – which ended up being the average for those touring the Northern ½ of the state along with groups that also went into Southern Nebraska.  The central part of Kansas and western Kansas was in tougher shape – but yields in those areas are still in the teens and 20’s for averages and there is a sentiment that farmers will not plow them up as they want ground cover to avoid any potential soil erosion – therefore adding to the ending stocks versus just taking an insurance payment for a total crop loss.  The day’s average of 43.8 bushels per acre for the entire group (20 cars) is the 4th highest 1st day total in the past 8 years.  Larger than 2009, 2010 and 2011 – so despite the concerns you have heard in the media – the first day numbers were decent.  Our group also stopped by local elevators in Lucas and Zurich, KS and both indicated they expect a record wheat crop due to the acres that were planted this past fall.  The wheat is a couple weeks behind – but with moisture they should have a good crop.

Folks from  Colorado were also present.  They reported they anticipate 20% abandonment of acres in Colorado – mostly south of the I-70 line.  They felt there was real good potential in the northern portion of the state.  They estimated yields in Colorado to be 34 bushels per acre for the 11 stops they had on their way to Colby, KS.  They also anticipate their crop is about 3 weeks behind schedule. 

Nebraska wheat staff reported on the condition in Nebraska and they anticipate Nebraska taking a big hit.  In the Chappelle area (southwest) crop insurance agents projected a yield of 3 bushels to the acre for a few growers.  In the panhandle they anticipate 10 to 50 bushels per acre – depending on moisture that was real hit and miss out there.  In the southern part of the state some areas received adequate moisture where other areas did not and about 10% of the crop did not emerge.  They anticipate statewide yields to average in the 30’s per bushel. 

Wednesday is anticipated to be tougher news as the southwest portion of Kansas is in tough shape due to the drought and some freeze damage – but we will see in person tomorrow.  It is also supposed to snow and sleet tomorrow – so the moisture will be good for the crop. 

Jay A. Johnson

Jeremey Frost
Grain Merchandiser
Midwest Cooperatives

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