Tuesday, July 16, 2013

Opening Comments - Bottom in?

Markets are called better as the crop conditions and latest weather forecasts sparked a rally in our markets last night.  Short covering is what most think?  But I guess how the weather actually shakes out probably will determine if the rally is a short covering thus short lived rally or if we have enough traders bearish enough that we have a reversal??

In the overnight session corn was up 11-13 cents, soybeans were 20 cents a bushel higher, KC wheat was up 6 cents, MPLS wheat was up 5-6 cents, and CBOT wheat was higher by 8 cents.  At 8:15 outside markets have a US dollar softer by 200 points, crude up 30 cents a barrel, gold up 5 bucks an ounce, and the stock market looks like it will open near unchanged with the DOW futures up a couple of points.

Two things; first off some were looking for crop conditions to continue the trend they had previously which was improvement.  But that wasn’t the case; as conditions dropped for corn, soybeans, and spring wheat.

Here is CHS Hedging recap of the conditions. 

Secondly and probably just as important is the weather forecasts.  First off remember these will continue to change numerous times. But basically what happened is the forecasts Sunday afternoon were for cool in plenty of areas and then the forecasts yesterday afternoon had turned drier with more heat.  Some areas really need some moisture and no one really wants much heat during pollination.

So the bottom line today is the headline looked to change a little with yesterdays crop condition recap and weather also looks to be a little more supportive to prices at least this second.  Two cautions about the little bounce we have in our markets.  First short covering can be short lived.  Secondly weather markets tend to change tons.

Elsewhere we did see our first load of new crop winter wheat get dumped this a.m.  Very high pro and surprisingly good test weight with the pro it had.

Attached is a crop condition rating index.  Notice that that so far 2013 is tracking 2011 fairly close.  But also take notice where the crop condition index is at versus a year ago.  We are probably a cool and wet forecast away from many talking about yield getting increased. 

The index at this point is very much in line with where it was at in the years we had yields of 145 ish to 165 ish; in 2008-2011.  Plus Indian, Ohio, and Illinois are higher than they have been over the last several years.

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