Tuesday, July 30, 2013

Opening Comments 7-30-2013

Markets are called better this a.m. behind a firmer overnight session.  Dead cat bounce?  Or reversal in the happening?

In the overnight session corn was up 4-5 cents, KC wheat was up 2, MPLS wheat was up 3, CBOT wheat was up 3, and Soybeans were up 4-6 cents.  At 8:20 outside markets have a US dollar about unchanged at 81.637 on the cash US dollar index, crude is down 70 cents at 103.84 on the September contract, gold is off 4 bucks, and the DOW futures are pointing towards a positive 40 point start.

Not much new news that I see out there this a.m.; the main headline is markets overdone and due for a bounce and weather.  On the weather front we see more talk about the crop falling further behind; but the main headline that the funds seem to be focused on is cool and wet which has to be considered bearish prices and leads to a bigger crop.  As I mentioned yesterday I think we have some potential issues down the road; but it is hard to argue the fact that corn is filling much better in the weather we have had this year versus what we had last year.  Yes hit and miss areas are bad; but the question I still see out there is..... “ is this crop only 33 bushels bigger than last year’s?”

I have seen some advisors and others in the trade talking about much bigger corn yields.  Not going to argue whether that is agronomically correct; but it is the headline the many are throwing out at this time. 

Crop conditions didn’t provide much market direction yesterday with most of the conditions steady.  Soybeans dropped; but that was it.

We did sell some soybeans to unknown this a.m.; most likely China.

Also looks like Egypt is tendering for some wheat; doesn’t look like the US will get any of that business.  Wheat exports overall have been solid and if we can keep up the pace and get more swing business you could see talk a tighter US wheat balance sheet; so perhaps wheat can lead us higher????

It looks like Japan has resumed US white wheat imports; after having that GMO wheat headline a few months back.

Also looks like the EU raised their wheat crop estimate to 131.7 MMT versus the 128.9 MMT they previously had.

This morning I had a not good conversation for winter wheat and basis.  I was applying a train of HRW out and the buyer didn’t want the train because it was too high and protein.  In the past few days I have seen more than one comment about max protein levels for contracts.  My comment back to the buyer was it might be a struggle today but won’t these mills want the higher protein winter wheat if North Dakota spring wheat ends up being 12 or 13 pro.  His thoughts were if that happened we would just completely kill the mill demand for winter wheat.

Now don’t get me wrong there are still some markets that are and will look for protein; such as the gulf market.  But as it sits right now I scratch my head when I try to figure where one will go with 14 pro winter wheat from locations that don’t spread well to the export markets.

I think the old crop corn market is still in discovery mode.  No clue what I can sell today; but also not a very good handle on what it would take to actually buy some corn from the producer.  

A lot of our markets are like that; very soft bids; but has anything actually traded much cheaper than it did a week or two ago?  Not much for some of the grains is my opinion.  Don’t get me wrong we still have a huge inverse between old crop and new crop and at some point they come together for the row crops.  I just don’t know if that day is as soon as it appeared based on the recent basis weakness.

Sunflower market is very similar.  Bids are ugly; but I don’t think I can exactly buy sunflowers much cheaper then I could a week or two ago.  The thing end users need to realize is that producers don’t have to sell it cheaper just because they say they want to buy it cheaper.  Be it corn, soybeans, millet, milo, sunflowers, and even wheat.  Many producers don’t have to sell it period; but end users need to always buy and stock their shelves or have their end product for sale.

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