Thursday, August 8, 2013

Opening Comments 8-8-13 - USDA Report Preview

Markets are called better this a.m. behind a bounce in the overnight session.

Old crop corn was up 5, new crop was up 3-4, KC wheat was up 3 cents, MPLS wheat was up 3, CBOT wheat was up 2, and Soybeans ranged from up 11 to up 16.  Outside markets at 8:20 have the US Dollar off 100 points, crude is off a buck, gold is up 6 bucks, and the DOW futures are pointing towards a positive start of 60-70 points.

This a.m. we did have export sales out.   Below is the CHS Hedging recap of them………..I didn’t see anything great or bad.  Overall the wheat number was good on  per week basis and on top side of the estimates, beans strong on new crop while ok on old crop and overall  above estimates, corn was good on old crop, but the total was under the trade estimates.

The other big thing we have will be the USDA report on Monday.  The main thing here is that the market is looking for big carryout numbers for new crop to still be in the cards for both corn and beans.  Each of the last couple of years the USDA started off with big carryout numbers in their May/June reports; but by the time August/September came around those carryout levels got smaller and smaller. 

The market isn’t looking for that to happen this time; they are still looking at overall big crops and carryout numbers more than two times what they have been the past few years.  Now the one positive I mentioned yesterday is the fact that this is all getting to be old news and hopefully priced into the marketplace.  But the reality is that our markets can very much over do price moves.

Here is the CHS Hedging Recap/Ideas for the report.

Not much else to report; you will notice that the weekly wheat sales do show big numbers to Brazil.  When I was talking to a buyer this a.m. he thought that had something to do with the KC Sept gaining on the KC Dec; he mentioned that the gulf basis actually felt a little weaker. 

Fundamentally I view it as very good that KC Wheat spreads continue to come in.  Especially given the fact that we are still harvesting some wheat in the US and some guys have just got done.  Basis is suppose to be the weakest and spreads should get the widest at the tail end of harvest; because the guys should be full and bought what they need.

Bottom line KC Sept gaining ground on KC Dec is one very good fundamental sign.  Hopefully sometime in the future we can see wheat help support the other markets?

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