Monday, May 20, 2013

opening grain market comments - record planting?

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

When the overnight session ended old crop corn was up 2 cents a bushel, new crop corn was down 2 cents, KC wheat was down a penny, MPLS wheat was up a penny, CBOT wheat was down 2 cents, old crop soybeans up a penny, and new crop soybeans down 8 cents.  At 8:15 outside markets have crude off about 50 cents, the US dollar off a couple under points with the cash index at 84.039, gold off 11.50 an ounce, and stock futures pointing to about a 15 point lower start for the DOW.

Old crop firmness still being seen as producers are not really interested in selling much old crop grain.  Weakness in the new crop seems to come from the idea’s that we will show a record planting progress in this afternoons crop progress report.  I have seen just a huge range of estimates; most seem to line up that the market is looking for 60-65% corn planted and 20-25% soybean planting.  The one comment that I have seen is the fact that these reports usually lag.

Weather has halted planting in our area and other areas in the Western Corn Belt; but it looks like the eastern corn belt continues to make progress.  Our area the moisture helped greatly and I would think it leads to some more producer interest in marketing some grain.  ND did see good moisture too and that might curb some acres in both spring wheat and corn. 

Overall I think weather is still a wild card.  Today’s crop progress report will tell us if we are in a “rain makes grain” state or if we are still concerned about the lack of progress and possible yield losses along with acre losses.  Usually the Monday afternoon reports are old news fast; but today’s might be a little more important than normal. 

This morning we will have export shipments out at 10:00. 

I did see a estimate that increased Russia wheat crop this a.m.  We to keep in mind that we are not the only wheat exporter in the world and we typically only export a little under half of our crop size.  So if we don’t have a crop to export and other countries do we might not have a major change in our ending stocks.  Our domestic use for wheat is about 1.3 billion bushels this last year and about a similar forecast for this coming year.  If we have a carry in of 731 million bushels; we only need about ¼ to 1/3 of a crop to satisfy our domestic needs and that’s assume that wheat for corn stays strong.  We have some issues in HRW; but the SRW wheat crop looks to be plenty big and spring wheat is still up in the air; but I know guys that have it planted are sitting well.  Bottom line is that for wheat to really rally we probably need an issue someplace else in the world.  The issue in hard red winter wheat country is known; but it isn’t enough by itself to cause a major rally like we would like.  It could be if the funds decide to run it with a headline; but at the end of the day we will need some demand.  It will be hard for us to see demand if our competitors are swimming in grain.

One possibility that this afternoon’s report has is acting like a sell the rumor event.  Meaning everyone is expecting a huge corn crop progress number.  If we get it what reason will they now have to sell us off?  Could the market start looking at the fact that many areas to the east of us may have lost some yield potential?  It just seems to me that old crop stocks are so tight and basis is so strong that it should have some spillover effect to new crop.  I don’t know that it is enough to take new crop prices higher but could it stall off the pressure until later? 

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