Friday, June 14, 2013

Opening Grain Market Comments 6-14-2013

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

July corn was up 6 cents, Dec corn was unchanged, KC wheat was off a penny and half, MPLS wheat was unchanged, CBOT wheat was down 2 ½ cents, July soybeans were up 9 cents, and November soybeans were up 5 cents.  At 8:10 outside markets have the US dollar up a couple hundred points at 80.90 on the cash index, gold is up 8 bucks an ounce, crude is up about 1.20 a barrel, and the stock market futures are pointing towards a slightly lower start with the DOW futures off about 24 points.

Not a lot of news out this a.m.  After spreads got hit hard yesterday they seem to have bounced in the overnight session so the main headline seen this a.m. is tightness on old crop and thus bull spreading. 

Weather remains a wild card and likely will until we see how many acres got lost or switched.  Right now it does look like things are warming up in plenty of areas.  It does look like Iowa will continue to get hit with moisture and the remaining bean acres could be really questioned.  Same thing can be said for some of the major crops that North Dakota grows such as sunflowers and spring wheat. How many acres won’t get planted?

The one thing we have to ask our self is the areas right besides those spots that didn’t get planted……….are they garden type spots?  Can they make up for the drowned out spots?  For some of the crops maybe the answer is yes; but right now the drowned out spots seem to get bigger and cover more area in the very heart of the growing regions for corn and soybeans as well as sunflowers and spring wheat.  Bottom line is our current weather situation as it pertains to our fundamentals is very much up in the air. 

The first answer we should get is the June 28th acre report.  But keep in mind this is a survey that has already went out.  So how accurate will it be?  Will the USDA make notes that because of all of the delays that they will re-survey in July and or August?

If that’s the case will it open the door to late a lack of adjustments in the July report?  If we still have a 2.0 billion bushel carryout in the July report will the market be able to hold up?  What about when we will we actually see corn developed enough to have a better chance of quantifying the yield and actual production?  In my opinion that won’t be until the August report or maybe later?  So is there a risk that the USDA doesn’t give the bulls or the funds a fundamental reason to want to get long our markets.  Yes…………a risk……………doesn’t have to play out that way but we need to realize that there is a risk that the USDA is very late to the party and there is also a risk that they just simply never show up.  If carryout is actually closer to 1 billion would they get their fingers caught in the cookie jar if they kept it closer to 1.5 or 2 billion bushels of corn? 

The bottom line is there are so many un-known factors and question marks out there that the market really should be range bound; at least until we see some of those cards dealt and laid out on the table.  The next big card will be the USDA acre and stocks report at the end of June.  We could see the weather cards any or even everyday; just depends how mother nature wants to play the game.

So for marketing ever day that goes by that we don’t get that rally that many think will happen; realize that the likely hood slips a little or the window closes a little more.  So be pro-active and comfortable knowing the risks.  Don’t get into a corner where you are forced to sell grain at a time or levels you really might not like.

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

Jeremey Frost
Grain Merchandiser

Midwest Cooperatives

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