Friday, May 31, 2013

Opening Grain Market Comments 5-31-2013

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

Old crop corn was up a penny in the overnight, new crop corn was down a penny, KC wheat was off 3 cents, MPLS wheat was down 3 cents, CBOT wheat was down 5 cents, July soybeans up 12 cents a bushel, and November soybeans were up 8 cents a bushel.  At 8:15 outside markets have the US dollar up a couple hundred points, gold down 5 bucks an ounce, crude down a buck a barrel, and equity futures pointing to a lower stock market with the DOW futures down about 80 points.

Not tons of news out this a.m.; end of month so maybe some position squaring.   But primarily we are in a weather market; but debates as to which type of weather is bullish and what type of weather is bearish remain.  Bottom line is the story of slow planting leading to loss and shift of acres along with potential yield loss is the bullish headline we have today.

Yesterday we had plenty of talk on the GMO wheat and this a.m. I see another comment that South Korea posted postpones a planned US Wheat tender.  But yesterday by the end of the day we had got to nearly unchanged despite the GMO wheat news.  It does look like it is putting a little pressure on White Wheat basis; but we don’t have much of that in our area; we are mainly hard red winter and dark northern spring wheat growers. 

Producer selling slowed yesterday.  We had seen a small pick up when local corn cash price off of the combine hit 5.00; it did manage to pull a little higher than that; but right now is a few pennies back below that mark.  To me it feels like some more guys would like to make a few more sales around 5.00; but also see a lot more interest at the 5.25 to 5.50 level.   As for the country in general my sources say overall producers are probably only 5% sold for new crop versus 20-25% on average.  So lots more selling to come at some point as guys remain undersold; good or bad.

Old crop movement has been very slow but basis is also hit and miss and a little defensive.  The inverse scares the end users and many sources indicate most ethanol plants have about 0 coverage for August/September corn.  Makes shutting down easy; but the tight ethanol stocks and strong margins should they remain in a couple months give the potential for a big push on the little bit of corn that is left out there.  Bottom line is old crop corn basis and bean basis could still see some major fireworks; there are just too many variables to know for sure or know when and how these fireworks might occur.

Not a lot of other news out this a.m. other then the export numbers.

Old crop corn sales were bad at 3.4 million bushels; but the new crop corn sales showed good demand coming in at 31.1 million bushels.  That is helping 13/14 commitments catch up to last year’s pace but still about 20 million bushels behind new crop sales last year at this point.  Keep in mind the USDA has a big year over year forecast for US corn exports.

Soybeans had another net cancellation for old crop of -4 million bushels. But new crop were also strong at 27.8 million bushels.  Soybean meal sales were very strong and have now once again passed the USDA projection for the marketing year.

Old crop wheat sales came in at 1.3 million bushels; but we are down to 1 week of old crop left so not a surprise.  New crop sales where good at 26.8 million bushels.  We are about 70 million ahead of new crop sales last year at time and the USDA is expecting a decrease year over year.  Keep in mind that most of these new crop sales are SRW; not the milling wheat.

I don’t see much else going on today; I think Sunday night trade could be interesting; but it will be a weather trade.  Problem is I don’t know what type of forecast will be bullish and what type will be bearish.  I know the extreme wet and cool will be bullish; but forecasts in the middle and not super extreme could be view differently depending what the traders think we have in the ground versus what is in the bags yet.

The one thing to keep in mind that as things go is we will see green stuff; some might be super wet; but most will be green; a heck of a lot greener then last year.  So the perception that many see doesn’t have to be acres that need to be replanted; they could just see the green good looking stuff out there and there will be some of that and right now a lot more of the “good looking” stuff then a year ago.  That doesn’t mean that yields will be great; but perception of the crop will be negative in 30 days; unless we just have massing flooding.

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