Monday, June 17, 2013
Opening Grain Market Comments 6-17-13
Markets are called lower this a.m. behind a lower overnight session.
In the overnight session July corn was down 2 cents, new crop corn was down 6 cents, KC wheat was down ½ of a cent a bushel, MPLS wheat was down 2 cents, CBOT wheat was off 5 cents, July soybeans down 12 cents, August beans down 9 cents, and November soybeans down 14 cents a bushel. At 8:10 outside markets have a US dollar about unchanged with the cash index at 80.69, gold is down 3 bucks an ounce, crude is up 30 cents a barrel, and it looks like a strong start for the DOW with the DOW futures pointing towards a positive 110-120 point start.
Pressure in the overnight session seemed to come from weather; but trying to decipher when rain makes grain versus planting delays, acres losses, and other agronomic issues such as nitrogen loss isn’t easy. Some of the deferred forecasts have plenty of heat; but also plenty of areas that have above normal moisture. So if the crop is planted that would be basically ideal; but if the crop isn’t planted then ideal conditions don’t matter. Bottom line is until the market gets some sort of confirmation from the USDA and get their heads around what damage(yield loss/acre loss/switching) was or wasn’t done you could see some volatile price action for our markets on the weather headline. Until the USDA prints smaller production and smaller carryout numbers it will be tough for wet and warm weather to be still considered bullish. If weather is going to drive us higher we likely need hot and dry; which in the short term could cause pressure. Now hot and dry during pollination or when the crop is made could cause some fireworks.
We will have some news out today. First off we will have export shipments out at 10:00. Later this a.m. we will have NOPA crush numbers out. The average trade estimate for NOPA's May data is a crush value around 117.6-118.1 mb, roughly 15% less than a year ago. Soyoil stocks are estimated at 2.522 billion pounds.
This afternoon we will have planting progress and crop conditions. Most are looking for an increase in the G/E corn ratings; which would mean an uptrend for the ratings; something that if continues longer term will make rallies tough; if our crop is improving and getting bigger.
Soybean planting progress and spring wheat progress will be watched closely today. But like corn which last week was 95% the weekly numbers don’t tell us what actually didn’t get planted. We are not expected to see a corn planting number; so we really don’t know what corn wasn’t planted or what was switched. We hope to get some more of that info on the report at the end of June in the acre update; but there is a good chance some of that info has to get resurveyed.
Bottom line is the bullish card of acre loss and acre switch might not be laid out on the table for several months and that’s assuming that it is actually a bullish card. That we did in fact loss plenty of acres. Keep in mind that several are still thinking soybean acres are increase from the March report.
Wheat harvest should give more info this week then last. But keep in mind the wheat story is still a world story; it hasn’t been a story about the US for some time. The headlines are that the world has plenty of wheat.
Here is link to the CHS Hedging CFTC data from Friday.
The one positive I see is that the funds have plenty of room to buy. But that doesn’t mean they will; heck they could continue to jump on the bearish bandwagon and really decide to get short our markets. That’s probably our risk; that the funds decide the headlines are just too bearish to be long grains; so they decide to push the evelope on the short side. If we look at price targets on the short side should “big money” decide that is the game to play we will be more then scared. It is scary ugly what could happen if our fundamentals that the USDA printed last week are accurate and the funds decide to get short the grains. The bottom line in regards to the funds is we need to give them a reason to not go short or better yet a reason to buy.
Please give us a call if there is anything we can do for you.