Wednesday, September 18, 2013

Opening Grain Market Comments 9-18-13

Markets are called mixed this a.m.

In the overnight session we had corn unchanged, KC wheat up a penny, MPLS wheat up a penny, CBOT wheat up a penny, and soybeans off 6 cents a bushel.  At 8:10 outside markets have crude up about 50 cents a barrel, gold down 8 bucks, and the DOW futures pointing towards about an unchanged start.

Markets started rather firm yesterday off of the FSA data; but didn’t manage to hold the gains as we simply lack a bullish headline that interests the funds for corn and wheat.  While we have failed to continue to feed the bull for soybeans; fundamentally many think that soybeans still have a bullish story; but the latest headlines have been slightly better than expected early yields, moisture in areas that still have green beans, and simple technical selling.  We also need to consider the world soybean story; which has a big carryout and even close to a record stocks to usage; those headlines are a little early because we are no place close to having a South America bean crop and should have plenty of weather scares as we move forward.

Sounds like both China and unknown reported more US soybean purchases this a.m.  I read something that indicated the sale of the beans to China was the 5th largest ever.  Will it be enough to help push our markets back up?

We will have the grain stocks report on September 30th.  That is the next “big” USDA report.  Personally I feel we have a little risk that soybeans come in higher then estimates just because of the fact that as tight as things are suppose to be and with a late harvest it hasn’t felt like we have had cash basis on fire.  With a late harvest and no early beans to speak of and one of the tightest carryout numbers of all time one would think that basis would be very firm; but that hasn’t been the case; so I do feel we could have a bearish surprise on the soybean stocks.

We will have ethanol numbers out later today and exports out in the a.m.  Watch both of those for more fundamental price direction.

Overall the big thing that the grain markets need is a bull story.  Everyone loves a bull story; the funds in particular.  I just don’t know when or if that bull story will show up but until it does it feels like the funds simple don’t care to own our grains.  Hopefully they don’t decide to get even shorter.

Locally we have started to see a little corn getting harvested.  Not much and most of it is wet; but we are getting very close.  As for marketing it still feels like there is a little better nearby basis then for a month and a half from now.  The trick for us is going to be if we can get rail cars in to capture that premium; while making the various specs.  As example some ethanol plants and other end users will take corn up to 17-18 moisture; others need to be 14.5-15.0. 

Bottom line if you think you will have some corn in the next week or two make sure to check with us as we might be able to do something to get some sort of premium and potentially even waive some or part of the drying costs.


Tuesday, September 17, 2013

Opening Grain Market Comments 9-17-13

Markets are called better this a.m. after a firmer overnight session that seemed to gain most of its strength when FSA acre numbers came out this a.m.

When the overnight session ended corn was up a dime, KC wheat was up 5, MPLS wheat was up 3, CBOT wheat was up 7, and soybeans were up 17 cents.  Outside markets at 8:10 have the US dollar weaker by about a 100 ticks, crude down nearly a buck at 105.75 on the Oct contract, gold down 3 bucks, and the DOW future pointing towards a start of about unchanged.

Looks like the markets bounced a little off of some chart support plus this a.m. we got FSA data that comes off as bullish.  I say “comes off” as bullish because you can read in many different places how the FSA data has never lined up perfectly to what the USDA uses.  So the headline off more prevent planted acres comes off as very bullish. 

Corn had prevented plantings reported at 3.57 million acres and 91.43 million acres enrolled in subsidy programs.    For soybeans we had FSA prevented plantings reported at 1.69 million acres this morning and 74.66 million acres planted enrolled in subsidy programs.  Now the big headline tells the funds that harvest acres need to go down.  But as mentioned I am not positive that’s how it will shake out because there is a history of the FSA numbers and USDA numbers be different.

Yesterday we did have crop conditions out; not much for surprises other then the fact that we did have corn harvested reported.

Here is the CHS Hedging recap of the weekly condition report.

As for cash markets; look for the nearby to continue to show pressure for local markets.  Why and why so generic?  Because we simply can’t get enough trucks or rail cars to move the product that is trying to move ahead of fall harvest.  Plus we have a little new crop corn coming in to a few locations.  I expect to see basis get extremely wide for some of the grains in the short term.  Longer term I do think we could see a bounce; but over the next month or so it just feels like we are going to get ran over with product.

Please give us a call if there is anything we can do for you.

Wednesday, September 11, 2013

Opening Comments 9-11-2013 - USDA Report Preview

Markets are called mixed this morning as it appears the trade is a hurry up and wait for the USDA report which is out Thursday at 11 a.m. central time.

In the overnight session corn as unchanged, KC wheat was unchanged, MPLS wheat was up a penny, CBOT wheat was unchanged, and soybeans were up 3 ½ cents.  At 8:00 outside markets have the US Dollar unchanged, crude about unchanged, gold down 2 bucks an ounce, and the DOW futures pointing towards a start of about unchanged.

Very quiet trade last night as well as the past few days.  Basically feels like the market is waiting for some questions to get answered.  How big or big are our fall crops and what is the USDA going to say about crop size as well as demand.  As it sits right now we do have harvest activity happening in different areas of the US and overall I would say the theme seems to be “better than expected” for corn yields.  But it is very early and most seem to be in the camp that corn yields could go either way; with a slight downward bias.  The problem for corn is that unless demand can really pick up a couple bushel an acre drop in yield is still going to leave us plenty of corn.

Bottom line is a headline of 1.5-2.0 billion bushel carryout for corn isn’t attracting money flow’s attention and that is what we are really in need of.  A headline that gets the funds buying some more of our grains; a corn and wheat headline in particular. 

Most thing that the big headline out of the report on Thursday will be the beans and most look for corn and wheat to follow the soybean price action.  Now how much corn and wheat follows will be questioned.

As for the beans most are looking for a big drop in yield; some are in the camp that our crop is smaller than a year ago.  When everything is said and done I think that is a possibility just based on weather; but I also think we have some risk that the USDA looks at the crop conditions being 20% better than a year ago and prints a much bigger production number then most in the market believe.  Plus there are a few analysts out there that actually thing soybean yield isn’t going down as much as what most of the crowd thinks.

Below are the estimates for the report; they come from the Van Trump Report.  The one thing that really stands out to me is the huge estimate range for production.  The soybean range for production is bigger than the last carryout numbers we had a month ago.  When looking for risks heading into reports sometimes we want to look at what everyone is thinking won’t happen.   You will notice below that the every estimate for soybean production is less than last month.  I would be more then shocked if the USDA left bean production unchanged; but we are dealing with the USDA.

Here is link to CHS Hedging Pre-Report write up.  Very good info and good explanation as to the numbers they feel the USDA will print.

USDA September Crop Report - US Production Cheat Sheet

Average Trade Guess
Trade Range
August Est.
2012 Final #
Corn Production
13.330 - 14.013
150.200 - 157.200
Harvested Acres
87.000 - 89.140
Soybean Production
2.980 - 3.239
39.000 - 42.400
Harvested Acres
75.100 - 77.000
Global Ending Stocks

Average Trade Guess
Trade Range
August Est.

115.860 - 125.000
59.700 - 62.220

169.350 - 175.720
125.920 - 152.000
67.100 - 75.000
US Ending Stocks

Average Trade Guess
Trade Range
August Est.

0.579 - 0.769
0.107 - 0.145

0.477 - 0.600
1.147 - 2.296
0.114 - 0.230

Please give us a call if there is anything we can do for you.

Tuesday, September 3, 2013

Opening Grain Market Comments 9-3-13

Markets are called better this a.m. behind a very firm overnight session that was lead by soybeans.

When the overnight session ended we had soybeans up 46 cents, KC wheat up 5, MPLS wheat up 4, CBOT wheat up 6, and corn up 6.  Outside markets at 8:00 have the US dollar up 200 points with the cash index at 82.318, crude about unchanged at 107.50, gold up 2 bucks, and the DOW futures pointing towards a positive start of about 100 points.

A very choppy volatile trading session last night.  In the soybean market in particular.  We gapped higher by opening up around 37 cents higher, then moved up to nearly 50 higher, only to break some 26 cents, before moving higher getting to up 50 cents with just a few minutes before the end of the session

Why so strong in the soybean market?  First off we did have some longs exit late last week before the long weekend.  So perhaps some of them wanted to get back in?  Overall it looked like most called the moisture that we got over the corn/bean belt over the weekend as expected to less than expected.  Plus the forecast doesn’t show much moisture any time soon.  Many are saying that it will be too little too late when/if the moisture hits.

Fundamentally many are talking about even lower bean yields with some thinking perhaps we will be less than year ago.  So many are jumping on the bandwagon that we need to ration off demand.  One thing to keep in mind is that the USDA had big increased year over year in demand; so don’t be surprised if the USDA report we get Thursday the 12th shows some demand coming off the table to offset production decreases.

Corn and wheat seem to just be following the bean market.  Not exactly super willing followers either; at least not yet.  Now if the bean market is for real and it looks to be that right now.  One has to thing that it gives some support to corn and wheat; if for nothing else for acre purposes in the coming year.

Please give us a call if there is anything we can do for you.


Monday, September 2, 2013

charts 9-2-13

posted some charts for soybeans, corn, and KC wheat

next few sessions should be very important to direction