Friday, June 28, 2013

opening comments before usda report 6-28-13

Well not much to say this a.m.

It’s just a hurry up and wait for the USDA report out at 11 a.m. central time.  Overnight markets were choppy and fairly close to home; July corn ended unchanged, December corn was down 2, KC was up 1, MPLS was up 2, CBOT wheat was up 2, July beans up 3, and November soybeans were up 2.  Outside markets have gold down another 20 bucks an ounce under 1200 now at 1192 an ounce, crude is up a quarter a barrel, the US dollar is about unchanged with the Cash index at 82.88, and the stock market futures are pointing towards a lower opening with the DOW futures off 52 points.

It’s really just about the USDA report today.  Now if it is a non-event the market will continue to focus on weather.  Most are saying weather is ideal; but I am not even going to go down the weather road debate.  I will leave that up to the agronomists and traders.

The one thing we have to worry a little bit about this report is living up to the expectations.  Most everyone is expecting a bullish old crop number for corn and soybean stocks.  Will it be bullish enough?  Most everyone is also looking for a decline in acres; will they decline enough?

Here is recap of the estimates.

Tables from the Van Trump report
USDA June Acreage Worksheet 

June #
March #
2012 Final
Ave. Trade Guess
Range Estimates
Corn
???
97.282
97.155
95.313
94.200 - 96.900
Soybeans
???
77.126
77.198
77.933
77.100 - 79.240
All Wheat
???
56.440
55.736
55.902
55.200 - 56.400
Spring W
???
12.701
12.289
12.132
11.700 - 12.700
Durum W
???
1.751
2.123
1.699
1.550 - 1.800
US June Grain Stocks Worksheet

June #
March 1
June 1, 2012
Ave. Trade Guess
Range Estimates
Corn
???
5.399
3.148
2.845
2.725 - 2.952
Soybeans
???
0.999
0.667
0.442
0.413 - 0.500
Wheat
???
1.234
0.743
0.745
0.718 - 0.781


Jeremey Frost
Grain Merchandiser

Midwest Cooperatives

Thursday, June 27, 2013

Hedge Strategies ahead of USDA Report 6-27-2013

Another hurry up and wait day for our markets as we await the USDA report out tomorrow.

When everything was said and done we had July corn up 3, Sept corn down 2, December corn down 6, KC wheat down 4, MPLS wheat was down 12 on the July, MPLS September was unchanged, CBOT wheat was off 3 cents, July soybeans were 14 higher, Nov beans down 1, US dollar about unchanged, gold down 29 bucks, crude up 1.25, and the DOW up 114 points.

Very wild day for the spreads today ahead of the report.  At one time MPLS July was up 12-13 cents only to close down 12 ½.  Most of the bids have long been moved to the September contract; but the price action today on spreads was probably just a small preview of what the spreads will do in terms of volatility as the USDA report comes out.  It really seemed like a lot of bullish bets have been placed the past few days which opens up the door to a potential buy the rumor sell the fact.

Going into these type of potentially volatile reports a guy wants to make sure that they are comfortable in their marketing plan.  For some that might mean doing nothing; but for others it might mean making a few catch up sales or getting some protection in place.

Here are some various strategies that one might use.  Just remember that no strategy is right for everyone and for some doing nothing isn’t wrong either. 

When you go into these reports you can look at thousands of different strategies; but remember if you are buying options right before a major report you are paying an inflated priced because usually implied volatility has risen heading into the reports.  So sometimes you can buy an option right before a USDA report; get the direction right and maybe even have the market move as much as expected only to see that option value not move nearly as much as one might have hoped for.  A lot of unknowns get answered in the reports and as soon as those unknowns are answered some of the premium (volatility premium) comes out in a hurry.

Bottom line before placing any of these trades make sure that you understand them and are comfortable with the risks and rewards with the various trades.  Keep in mind that futures and options are risky and not for everyone.

The below are hedge trades for those that feel they want some sort of protection.  Opposite type of trades could be made for bullish bets; but producers probably should be looking at hedging or protecting unsold inventory.

Hedge 1 – Simple purchase of a put.  What strike and what month are the real question.  First off what are you trying to protect?  Old crop or new crop?  Which one has the most risk?  How much money do you want to spend and what is the potential reward?  For me if I am going to buy a put to protect me from a train wreck from the USDA report I want to be an August serial month; which follows the September board.  Now if I am looking to protect from lower prices via the weather continuing to be ideal that wouldn’t be the month I would use.

But for just protecting the report I like using August because I feel the most risk from the report is to the July contract followed by the September and then December contract. 

Bottom line is I want to distinguish where my risk is at that I am trying to protect.  In this case I am just looking at report protection; nothing more.

So I personally go with the August option. 

So hedge 1 is simply buying a 5.50 August Corn put for 12 cents.  Why do I choose a 5.50 strike instead of at the money 5.70 for 21 cents.  Here is where I look at the what if’s.  So if I want to protect a negative report; I want to protect a big negative report.  So I compare spending 12 cents for a 5.50 or 21 for a 5.70 and say what happens to these if the market goes up; while that is easy they are both worthless in a hurry. If the market goes sideways then the 5.70 out performs the 5.50.  But what happens if a week from now September corn is at 5.00 or 4.50.  Not that I think that will happen; but you have to ask yourself if the old crop story somehow gets shut down via this report is weather going to help it find support????  Right now it doesn’t look like it.

So if we go to 5.00 on the September board would I be better if I owned 5.70 puts or 5.50; while the answer is 5.70’s unless you spent an equal amount of money on each of the strikes and in that case you would be much better owning more of the 5.50 versus.  As example say you want to protect 100,000 bushels do you spend the 21 cents on 20 contracts or 21,000 buying the 5.70 strikes?  Or for your $21,000 do you buy 35 contracts at $600 bucks a piece or 12 cents a bushel?  If we go to 5.00 your 20 contracts of 5.70 would be worth $70,000; but your 35 contracts of 5.50 puts would be worth $87,500.  If we go to 4.50 the 20 contracts of 5.70 puts would be worth $120,000 but the 35 contracts of 5.50 would be worth $175,000.

So there is hedge 1; buying a put; as mentioned for above reasons I like protecting where I think the most risk is from the report.  Not where the most risk is from yields or production (which won’t be updated in this report).  Thus I think I would choose the 5.50 August strikes.

Hedge 2 is buying the put and selling a call to pay for the put.  Here is where things get interesting and more complicated as via selling a call you open up the door for margin calls.  So you could look at selling a 6.00 August call; but personally I don’t think I would sell a call option against old crop corn.  So I would look to sell probably a December corn call.  What strike?  There it depends on comfort and what your bias is for the report.   The biggest home run and bank for your buck would be to sell an at the money corn call (5.40) and use that to buy say 3 to 1 of the 5.50 August puts. 

Take the same example above; if we have 5.00 corn and you did this on 100,000 bushels; your put portion would be worth $150,000; and worth $300,000 at 4.50.  But in exchange for this you might have margin calls and you have capped your upside on 100,000 bushels of December corn at 5.40.   Plus even though the trade is a free trade it does cost money to put it on.  You get paid for the calls that you sold but you have to margin them up and will continue to margin them up as the market rises.  But you also have to pay for the 5.50 August puts that you buy.

Hedge 3 would be similar to hedge 2; but instead of selling the at the money corn call one sells the 6.50 Dec corn call and buys the 5.50 August put.  Net cost being 1-2 cents; but here again net cost; not net cash out of pocket.  This gives you some protection 1 to 1 ratio but doesn’t lock you into a corn HTA type of sale until we get to 6.50; know don’t get me wrong you would have margin calls well before Dec corn got to 6.50; but unless December corn is above 6.50 on November 22 you won’t have a short futures position at some point. 

Hedge 4 adds another twist and that is buying a put and then selling one call and buying a higher strike call.  For simple purposes we will say buy the August 5.50 put sell the December 6.00 call and buy the December 6.50 call.  Net cost is about a penny or two.  What this trade does is it caps the margin requirement and gives you as a producer re-ownership above 6.50.    So you have 1-1 protection below 5.50 basis the September contract until 7-26 when the August put expires; as for the new crop if December corn is below 6.00 you have nothing; if it is between 6.00-6.50 you have something similar to an HTA at 6.00 and if we go over 6.50 you start gaining again.  Not a bad move; a known cost.

Hedge 5 would be selling a call and use that money to buy a put spread.  In this example sell maybe a December 6.00 call; buy a December 5.30 put and sell a December 4.70 put.  Not sure that I like this trade; but many would prefer to buy and sell options in the same strike month and not have the calendar exposure.  This would be more of a new crop play.  Cost on this trade above is about 7 cents a bushel; it gives you a ceiling of 6.00 on your corn while giving you 60 cents protection; for a cost of 7 bucks.  The bad thing about this trade is the fact that the 5.30-4.70 put spread won’t be at 100% value until December corn is well below 4.70 or until options expire.  Via selling the put you have capped your protection and you won’t realize near as much profit as hoped for should we fall; at least not nearly as fast as one things because of how time value works.

Hedge 6 would be a calendar trade.  As example some might look to buy an August 5.70 put and sell a September 5.30 put; net cost of about 8-9 cents.  Easy to manage trade in many cases and the thing it does is it lets gamma work for you.  The August 5.70 put will trade like a futures contract much sooner than a 5.30 September put.  It is a good trade that if managed properly can easily win more than 50% of the time; the problem with it you just are never going to hit a home run.

Hedge 7 would be a different type of calendar trade; one that the stock market guru’s use a little more.  Sell the 5.30 August put and buy the 5.30 September put; in this example you are just trying to get longer protection and the most the trade can cost you is what you spend on it.  Or about 6 cents in this example.  Hedge 6 has a short option that will be out there after your long option expires; this is the opposite.  The difference is in this trade you are buying and selling the same strike; in the above you have a higher strike bought and a lower longer dated strike sold.

As you can see I think I could go on and on with various trades.  I am not saying that anyone needs to have any trades on; after all they cost money and some of these ratio strategies cost plenty in commission.  But you want to be comfortable in your marketing plan.  Keep in mind that no one move is right for everyone; as all of you have different risks and goals.


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


Thanks

Opening Comments day ahead of big USDA report

Markets are called mixed to better this a.m. as they hurry up and wait for the USDA quarterly grain stocks and acre update report which will be out Friday June 28th at 11:00 central time.

In the overnight session July corn was up a penny, December corn was down 2 cents, KC wheat was up 5 cents, MPLS wheat was up 3 cents, CBOT wheat was up 4 cents, July beans 8 cents higher, August soybeans 6 cents higher, and November soybeans 3 cents higher.  At 8:10 outside markets have the US dollar about unchanged with the cash index at 82.93,  gold is up 2 bucks an ounce, crude is up 50 cents a barrel, and the stock market looks like it has a big bounce continuing with the DOW futures up about 90 points.

Big thing is tomorrow’s report; which I will go over shortly.  The other couple things have been ethanol numbers yesterday, wheat harvest, weather, export sales this a.m., and the outside markets.

Yesterday we had ethanol production.  It bounced back matching its highest levels since June of 2012; and ethanol stocks had a small decline.  Keep in mind here that seasonally we see some summer shut downs for maintenance.  Plus my sources tell me that guys simply can’t get ethanol sold and make margins for August/September.  So most still lack coverage; which means things could be very volatile for this industry later this summer.

For wheat harvest updates; the biggest common thing I have seen reported has been “better than expected”.  The protein in central Kansas looks to be a little on the low side too; which would go along with better yields.  The nearby KC July contract has been under severe pressure the past 3-4 sessions and the main reason has been wheat harvest.  One thing we need to keep in mind here is we are never going to hear all of the bad stories as to how much wheat was already bailed up or disked under.  The only thing we are going to hear about for harvest updates is what is left; so the tendency should be to report the better stuff.  I did ask a couple wheat buyers if the areas that had these good yields had expected good yield and the answer I got was yes………but the yields seem to be a little better then these areas had expected and most are starting to figure a bigger Kansas crop then what the last USDA report had.

Even locally the little bit of winter wheat that is left seems to have improved over the past month.  Bottom line for wheat is we still have the bearish world story and now some of the mustard is getting took off of the story about how bad the crop is down south.  I did read a comment this a.m. about parts of Australia starting to see a little stress.

Weather seems to be ideal in many areas and I can’t say that it is super bearish or super bullish.  Really depends what got planted; which we should have a better idea on tomorrow.  I would say I see more rain makes grain comments then comparisons to 1993; but I think this card hasn’t been plaid out yet and it is really too hard to say what weather card is bullish or bearish; so many areas looking for different things.  The thing we don’t have is that big headline driving the funds to our markets because of weather.

Export sales this a.m. were good for wheat at 26.9 million bushels.  Old crop corn was also surprisingly good at 13.3 million bushels; which isn’t a big number but we only needed 5.2 million on a per week basis to meet USDA’s latest corn export projection.

Old crop soybeans were only 500,000 bushels; but new crop beans came in at 16.5 million bushels.

The corn number is supportive; as is the wheat number but the bean number isn’t nothing great.

Below are the projections for Friday’s report; this is from the Van Trump Report.


US June Acreage Worksheet

June #
March #
2012 Final
Ave. Trade Guess
Range Estimates
Corn
???
97.282
97.155
95.313
94.200 - 96.900
Soybeans
???
77.126
77.198
77.933
77.100 - 79.240
All Wheat
???
56.440
55.736
55.902
55.200 - 56.400
Spring W
???
12.701
12.289
12.132
11.700 - 12.700
Durum W
???
1.751
2.123
1.699
1.550 - 1.800
US June Grain Stocks Worksheet

June #
March 1
June 1, 2012
Ave. Trade Guess
Range Estimates
Corn
???
5.399
3.148
2.845
2.725 - 2.952
Soybeans
???
0.999
0.667
0.442
0.413 - 0.500
Wheat
???
1.234
0.743
0.745
0.718 - 0.781

Just a few comments on this report; more this afternoon with some trade strategies then as well.  Many are talking about the fact that it is likely that the USDA has a re-survey for the acre portion.  I tend to agree; how can a report on June 1 really tell us what we did or didn’t get planted?  It can’t be 100% accurate.  This could be good or bad; just depends how the USDA wants to play it and how those that reported played it. 

As for the stocks number the big thing that sticks out to me is how much lower corn and beans stock estimates are versus last year.  200-300 million in each of those.  I read something this a.m. that made reference to the corn stocks projected to be the lowest in 16 years and the bean stocks the 3rd lowest in nearly 40 years.  Man the trade seems to be looking for some bullish numbers.  If they are correct and harvest is as late as it looks to be today we could really see some fireworks on the old crop supplies over the next couple months.  But are they looking for something too bullish?  Any chance the USDA prints something as bullish as the trade is looking for?

Also following up this report will be an updated July Supply and Demand; in my shoes I don’t see any major changes on that even if the USDA comes in well above or well below the trade estimates on Friday.  Keep in mind that back in March we came in some 400 million bushels or so above the trade estimate only to have the April Supply and Demand report show a carryout with an increase of about 150 million (memory off the top of my head).

This afternoon I will list a few trade strategies ahead of the report.  This will cover some option plays; but the bottom line for this report is one wants to be comfortable.  Realize how many times this thing has moved us limit one way or another.


Jeremey Frost
Grain Merchandiser

Midwest Cooperatives

Tuesday, June 25, 2013

Opening Grain Market Comments 6-25-13 - USDA report guesses

Markets are called mixed to better this a.m. behind a firmer overnight session; which seemed to be more of a dead cat bounce after yesterdays pressure.

In the overnight session July corn was up 4 cents, December corn was up a penny, KC wheat was up 2-3 cents, MPLS wheat was up 3, CBOT wheat was up 4, July soybeans up 4, and November soybeans up 7 cents.  At 8:15 outside markets have a US Dollar about unchanged with the cash index at 82.46, crude up 50 cents, gold up 6 bucks, and the stock market looks to start firmer with the DOW futures up about 110 points.

First off the big news is still to come later this week in the form of an updated acre and quarterly stocks report.  Below are the estimates. 

Here is from the Van Trump report as I thought he said it very well

“Looking ahead...its all about Friday's USDA report and the "weather" during the next 45-days. Just remember, it's not always about playing "offense," having a strong "defense" is equally, if not more important.”

Tables also from the Van Trump report
USDA June Acreage Worksheet 

June #
March #
2012 Final
Ave. Trade Guess
Range Estimates
Corn
???
97.282
97.155
95.313
94.200 - 96.900
Soybeans
???
77.126
77.198
77.933
77.100 - 79.240
All Wheat
???
56.440
55.736
55.902
55.200 - 56.400
Spring W
???
12.701
12.289
12.132
11.700 - 12.700
Durum W
???
1.751
2.123
1.699
1.550 - 1.800
US June Grain Stocks Worksheet

June #
March 1
June 1, 2012
Ave. Trade Guess
Range Estimates
Corn
???
5.399
3.148
2.845
2.725 - 2.952
Soybeans
???
0.999
0.667
0.442
0.413 - 0.500
Wheat
???
1.234
0.743
0.745
0.718 - 0.781


The thing that stands out to me is the fact that we are expecting 303 million bushels less for corn then a year ago and expecting soybeans 225 million bushels less than a year ago.  Seems aggressive from the trade considering last year’s corn carryout and how and when the rationing happened.  Lots of rationing occurred last summer. 

Don’t get me wrong I think this year’s market is much tighter then last for both corn and soybeans.  But I have to wonder if the USDA will have a different time table as to when we use the product.  Keep in mind last year we had the drought already happening.  We also had the benefit of an early fall harvest.  Doesn’t look to be that way this year. 

If the average trade estimates are correct things could really get interesting for old crop corn and soybeans.

As for the acre side of thing; most think we get some sort of asterisk *.  How the market interprets what the USDA says might be more important then what they actually say.

The other big thing I see out there is the present trend of our crops.  Based on the weekly crop condition report.  The corn crop started off 7% less in the G/E this year compared to last.  But now this year’s crop has 9% more in the G/E then it did last year.  That trend is very important and if it continues it doesn’t spell out higher prices.


That’s about all I have today; I will be out at the Oahe Farm and Ranch show talking on grain marketing at 11:30 central time.

Monday, June 24, 2013

Closing Market Comments - crop progress update 6-24-2013

Markets closed mixed to mainly weaker today. 

July corn was down 8 ½ cents a bushel, September corn was down 13 cents a bushel, December corn was off 10 cents a bushel, KC wheat was down 17-21, MPLS wheat was down 6, CBOT wheat was down 17-19, July soybeans up 19, November soybeans unchanged, the US dollar up a little with the cash index at 82.45, the DOW was off 140 points, crude was up 1.20 a barrel, and gold was down 11 bucks an ounce.

Overall an ugly day; there were times when MPLS wheat and soybeans showed some promises.  But overall spreads where very volatile.  KC spreads seen the nearby KC July wheat contract lose a dime to the 2014 July wheat contract.  From what I heard was a little harvest pressure and some houses in KC getting lower protein.  Something that they might sit on and try to drive spreads wider. 

Old crop new crop corn spreads also had a very choppy volatile day.  Some of the bids for old crop corn have rolled to the September contract; while others remain against the July.  Bottom line is that spread has been choppy and likely stays choppy.  Producer movement for grains has really slowed so you would think that the spreads firm up.  But that wasn’t the case for all of the grains today; as mentioned above in reference to KC wheat. 

Wheat basis also felt a little heavy; plenty moving lately on basis contracts and my contacts indicated that the Gulf HRW basis traded 7-25 cents less than it did last week.  Perhaps another reason that KC wheat spreads moved wider.  The domestic markets don’t seem much weaker but I have locally seen a lot of basis contracts done and some mills have stepped back.  Plus it really only seems like 1 or two mills have supported basis at these type of levels.  Most others are waiting for new crop; not they will get much out of this area.

This a.m. we had export shipments out.  Good for soybeans and poor for wheat and corn.

This afternoon we had a crop progress update.  Not much for surprises the big thing is that the crop condition trend has improve for corn, spring wheat, and soybeans.  Both corn and soybeans improved 1 % in the G/E while spring wheat improved 2%. 

If that trend continues we really have to be concerned about the seasonal pressure that we have seen over the last 20-30 years.  I have a couple seasonal charts in my office for November soybeans and December corn and they look like we go off of a cliff right around the start of July.  (These seasonal charts are older ones and that trend hasn’t been the case the last couple of years)

As each of the last couple of years we have made our highs around the August crop report; but last year at this time our crops had started to feel the stress of the drought.  As it stands out the numbers have improved the past couple of weeks.  The corn crop is now back to its 5 year average; with an uptrend.


Here is CHS Hedging recap


Right now the market seems to be focused on a couple things.  Wheat harvest updates (today seen as bearish via surprisingly good yields noted in central KS), the outside markets (bearish the past few days with economic concerns…..particularly in China), weather (overall has to be a little bearish….at least on the headlines as rain makes grain), and position squaring ahead of the report on Friday (unknown).  Bottom line is the headlines today mainly said sell. 

Now as we get further into the wheat harvest could we see more disappointments start to hit the headlines?  Yes of course; but just by nature producers are conservative when it comes to estimating the yields; now perhaps the market isn’t.  Could we see the outside markets stabilize and maybe see our markets focus on the Chinese demand which has been very strong for wheat as of late; with many talking about a smoking gun in regards to China and wheat.   Yes we could.

We could also debate weather; as I know plenty of agronomists that are more than concerned in some areas.

Could Friday’s report show way less acres then expected?  Could our quarterly stocks be less than expected?  After all basis and the spreads have said for some time that old crop corn and beans are tighter then tight.  Sure could happen that way.

The other way these things could play out is similar to today’s price action and headline.  Our crop could get bigger, the KC wheat harvest might not be as bad as we once thought, we might have under estimated the old crop stocks, and we could continue to see weak outside markets or an overall economic meltdown.

Bottom line is I don’t think many if any are going to be smart enough to take all of the hundreds and maybe thousands of variables and determine exactly how these markets will shake out.  If they did why would they tell anyone?  Not to say that someone won’t get it right as someone will.  But for risk management purposes and grain marketing purposes our job it to treat the above as unknowns and make good business decisions that fit our individual goals in a way that at the end of the day we can say we are comfortable with the decisions that we make.


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

Opening Grain Market Comments 6-24-13

Markets are called mixed to weaker this a.m.; looks like a global risk off type of day with the Chinese stock market down 5.3%.  Also seeing the rain makes grain comment this a.m.

In the overnight session most of the grains gapped lower and other then July soybeans didn’t manage to even get back to unchanged; when the overnight session ended July corn was down 8 cents, December corn was down 13 cents, KC wheat was down 7 cents, MPLS wheat was down a penny, CBOT wheat was down 9 cents, July soybeans down a nickel, August soybeans down a dime, and November soybeans were down 14 cents.  At 8:20 it doesn’t look like the outside markets are going to help us any with the US dollar stronger at 82.718 on the cash index, crude is down 45 cents a barrel at $93.25, gold is off 5 bucks an ounce, and the stock market futures are pointing towards a lower start of about 120 points on the DOW.

Rain makes grain?  Or the risk off that lead to our gap lower opening last night?  Maybe both.  Weather looks ideal in some areas; but many agronomists are not as bullish on the crop as some of the traders seem to be.  Many areas lack heat while some areas actually need a drink. 

Bottom line is weather is a mixed big; but the headline looks to rain makes grain.  And with the outside markets struggling the demand question pops up fairly easily.

This afternoon we will have crop conditions and planting.  Most are looking for the crop ratings to improve across the board for corn, spring wheat, and soybeans.  That trend over the next few weeks will be important; if our crop looks to be getting bigger in the eyes of the traders.

Big news will be later this week in the form of the USDA report.  I haven’t seen many estimates for this yet.
I seen this comment from a wire this a.m.  “ A Tokyo based company expects CBOT corn futures to fall below $5.00 this week, and a large South Korean feed miller stated it has no plans for a corn tender this week because they expect the market to move lower.” 
In my opinion producers are very undersold for new crop corn; but equally end users are very uncovered.  When end users say no thanks I think the thing is going lower its like producers saying no thanks I think the thing is going higher.  Both are typically wrong moves; end users should buy at good value and producers should sell on high prices.  It doesn’t mean they should buy all their needs or a producers should sell all of their grain.  But both should practice good risk management; when they don’t it helps add to the volatile marketplace.

Overall we need to watch some of the info this week as some of the unknowns get answered.  But we also really have to watch the outside markets.  The DOW down a little here and there is ok for the grains; but a massive economic meltdown is not.  A very fine line.

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



Jeremey Frost
Grain Merchandiser

Midwest Cooperatives

Friday, June 21, 2013

Opening Grain Market Comments 6-21-2013

Markets are called mixed this a.m. behind a mixed overnight session.  Outside markets are more stable they the past couple of days so hopefully they don’t turn into a reason to see pressure in the grains.

When the overnight session ended July corn was down 5 cents a bushel, KC wheat was about unchanged, MPLS wheat was unchanged to down 2, CBOT wheat was off a penny, July soybeans were up 2, and November soybeans were down 6 cents.  At 8:10 outside markets have crude about unchanged, gold is up 6 bucks or 24 bucks above its overnight low, the US dollar is up a couple hundred points with the cash index at 82.16, and it looks like a small bounce at least for the start of the stock market; with the DOW futures up about 50-60 points.

Not a lot of new news out this a.m. for price direction.  I did see some adjustments from some for the crop sizes in different places around the world.  Coceral estimate for EU corn crop is up to 66.1 MMT from it’s previous estimate of 64.4 MMT.  They pegged the EU soft weat crop at 130.7 MMT; which is a 3 MMT increase from their last estimate.

Abiove slightly lowered their estimate for the Brazilian soybean crop to 81.6 MMT versus 82.1 MMT previously and the USDA at 82.0 MMT.  The Buenos Aires Cereals exchange left their estimate of Argentine soybean crop unchanged at 48.5  MMT which is well below the USDA estimate  of 51.0 MMT

This afternoon we will have the USDA monthly cattle on Feed report.

US House failed to pass the Farm Bill.

July options expire today.

Next week it will be about weather and the USDA report.  I can’t tell right this second what weather would be super bullish or bearish.  Lots of different local spots looking for different weather to help development.  As for our area I am hoping we get moisture with some heat; let’s just keep the hail away. 

Technically the bean market not holding the 15.00 level on the July contract is a little scary.  The corn price action also has to be a black eye on the technical side; especially for new crop December corn.  It once again tested the 5.70-5.80 (which means 5.00 to 5.20 off the combine corn) range in the past few days; but once again failed to break above.  What will it take to break above?


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