Tuesday, August 6, 2013
Opening Grain Market Comments 8-6-2013
Markets are called mixed this a.m. behind a mixed choppy overnight session.
When the overnight session closed September corn was up 3 cents, December corn was down a penny, KC wheat was up a penny, MPLS wheat was up 2, COBT wheat was up 2, and beans were unchanged on the August to down 8 on the November contract. At 8:10 outside markets have crude about unchanged, gold down 16 bucks an ounce, the US dollar off 130 points with the cash index at 81.735, and the DOW futures pointing towards at negative start of 20-30 points.
It has been all about the funds selling these markets. The main reason they keep selling is the headline of good weather; that lacks the headline of hot and dry. Yes some areas remain dry and haven’t got hit with the moisture that some have; but the headline leading almost any grain wire for the past several weeks has been cool and wet in the forecast and that’s pretty close to how it has happened.
Egypt did put a tender out yesterday afternoon for shipment Sept 21 to Sept 30.
Crop conditions yesterday showed an increase in both corn and beans. Something that doesn’t happen that often in August.
Estimates for next week’s report are.
Corn Production of 14.036 billion bushels with yield of 158 versus 13.95 billion last month and 156.5.
Bean production of 3.357 billion bushels on yield of 43.7 versus 3.42 billion last month and yield of 44.5.
Wheat production of 2.12 billion versus 2.114 last month.
Carryout for new crop corn of 2.013 billion versus 1.959 last month. Soybean carryout of 262 million bushels versus 295 last month. Wheat carryout of 579 million bushels versus 576 last month.
Old crop corn carryout of 722 million bushels versus 729 last month. Soybeans at 123 versus 125 last month.
Two big important things for the crop report. First off year over year you can see why the funds might not want to be long grain. Market is and has been looking for both corn and soybean carryout to be at least double of what it presently is. Not bullish to any fund manager who is looking at the headlines.
Second the trend; ideas are that the corn crop is getting bigger and that the soybean crop is getting smaller.
The question we should really be asking ourselves when it comes to marketing is what is a fair price if we have a 2 billion bushel carryout? The answer should be we don’t know. Plus when we say 2 billion it sounds like a lot; but with demand at 11-13 billion a 2 billion carryout is not the same as it was in the 80’s or 90’s. It is a much different game.
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