Tuesday, June 18, 2013

Planting Progress- Opening Comments 6-18-2013

Markets are called mixed to better this a.m. behind a mostly firmer overnight session.

In the overnight session KC wheat lead the strength up 6 cents, MPLS wheat was up 4, CBOT wheat was up 4 cents, July soybeans were up 5 cents, November soybeans were up 2 cents, corn was unchanged on old crop and new crop corn was down a penny.  At 8:15 outside markets have the US dollar up slightly with the cash index at 80.95, gold is down 9 bucks an ounce, crude is up 50 cents a barrel, and the equity futures are pointing towards a positive start in the DOW of about 20 points.

Headlines this a.m. include a technical bounce for KC wheat; after putting in 12 month lows yesterday KC wheat reversed took out the previous day’s session and closed higher.  Perhaps it can lead to more short covering?  Keep in mind that the funds are short plenty of wheat and the big headline or focus for wheat hasn’t been our lack of crop.  It has been the world market; while much like the fact that our news of a bad US crop has been built into the price perhaps finally the world crop news has also been built into the price.  Plus keep in mind that the crop forecasted by the USDA in other parts of the world isn’t in the bins yet.

Corn had similar type price action yesterday; good for the charts on the December corn; leaving a key reversal.  But not as strong as of a reversal off in a sideways market versus wheat’s reversal happening at lows for the year.  But bottom line supportive and perhaps a reason for the funds that are short to consider to cover a little bit.  Plus next week we have a USDA report that could (most think should) show a decrease in corn acres planted.  Will it be more then the market expects is the real question?

The other big news out yesterday was the crop conditions and planting update.  Nothing to note that was a big surprise.  Don’t get me wrong you can find some friendly information; but just not new information.

There was no corn total planting numbers; but we did have state breakdowns.  Both IA and MN came in at only 94% planted; so while the big headline comes off as everything is planted that doesn’t seem to be the case.

Corn conditions did jump 1% in the G/E category to 64%.  The big thing here will be the trend over the next few weeks; has our crop improved and thus yield potential improved?  If that is the trend over the next month it is hard to see prices really wanting to take off.  Overall the crop is well behind schedule with emergence and silking behind.

Soybean conditions came out at 64% G/E up from 56% a year ago.  Soybean plantings came in at 85% versus the 91% average.

Spring wheat planting came in at 92% with North Dakota at 86%.

Sunflower planting jumped to 55% with North Dakota at 63% versus 89% on average.

For all of the talk of the late planting the headlines with the averages are not exactly super bullish. They say we are behind and have issues; but how major are the issues?  I guess that’s something that only mother nature will really know.  We will get an update at the end of the month; but as far behind as we are most in the trade expect a resurvey for planting acres.  Which to me means the USDA can give us a bearish number with a built in excuse?

Here is a CHS Hedging Planting recap for more info.

Yesterday we also had the NOPA May Crush numbers; they came in bigger then estimates at 122.6 million bushels.  That says that we have a massive year over year cut to happen over the next couple months if we are not going to exceed the USDA forecast.  20% or so; which would be one of the bigger cuts ever.  To cut demand typically you need one of two things; no supply or higher prices.  I think we may struggle with the supply for sale; but it might (hopefully) takes higher prices to get that type of demand curb as well.

I believe the KCBT will start to report more harvest activities today.  So far we haven’t seen many and they have all be all over the place.  The one common comment I have seen is poor quality; light test weight with high shrunken and broken.  That means that yields are probably a little lighter than expected but it also means that it might not be milling quality wheat.

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