Tuesday, April 29, 2014

Grain Market Comments 4-29-14

Grain markets are called mixed this morning after a mixed overnight session that when ended saw corn up 4 cents, KC wheat off a couple pennies, MPLS wheat off 2 cents, CBOT wheat off a penny, and beans up 1-2 cents.  At 8:05 outside markets have the DOW mini futures pointing towards a positive start of about 40-50 points, crude is up 50 cents, gold is down 3 bucks an ounce, and the US Dollar is near unchanged at 79.77 on the cash index.

Yesterday’s crop report progress report helped spark some more life into the corn market in the overnight session as the progress came in at 19% corn planted; which was below the estimate and the 5 year average.  It is well ahead of last year and ahead of 2011 and it is very similar to the 2009 level which happened to be the best yielding crop so far.

Bottom line the market is adding in premium because of mother nature and concern of delayed plantings; personally I think moisture longer term makes grain.  I just think that the American Farmer continues to make advancements every year and I think it is very unlikely that we actually lose tons of corn acres in the nation.  Don’t get me wrong we could see acres slide in some areas and we could see some prevent plant acres in other areas; but the USDA didn’t exactly use all of last year’s prevent plant acres in the March planting intentions either.  If you remember at that time many thought our acres would increase as we went forward; now maybe mother nature will prevent that from happening?  But today are they any less???

Also when I look and see parts of Iowa in the drought monitor and then see rain hit Iowa and the market then go up it really makes me scratch my head.  Delays in plantings means one of two things cool or wet.  Cool is a concern and should be a concern; but longer moisture helps make more grain.  Maybe I just suffer from backyardagains as rain in central and western South Dakota is welcomed.  To me with the amount of money that has been spent to upgrade land and equipment via bigger machines and more tile to help control water it is hard to paint a picture where we don’t get the majority of the corn planted.

Here is more info on crop progress report from yesterday.  It is from CHS Hedging; it does have a very good breakdown on page 3 showing corn planting on this week per year.

Basis does feel weaker for most of the grains as the rail situation continues to add some volatility to the marketplace.  I think higher protein spring wheat offers might trade but basis for most of the others grains feels weaker; but that really depends on how bids are getting structured because of the big influence that rail freight has. 

Another negative for basis is another increase in freight rates.  As example all of our wheat for MWC ships on CP cars; the CP has a rate increase effective May 1.   Doesn’t seem to matter that we still have cars ordered for well before that. 

We are now offering a new crop millet program with an Act of God clause; if you want more info please give us a call.

Birdseed sunflower market in general feels weaker as we have shipped a lot of rail sunflowers the past couple weeks; enough that some buyers have cancelled some orders.  I still think the sunflower situation is very tight; but we might have the flowers just in wrong spots.  Feels like South Dakota has too many sunflowers, and ND doesn’t have enough.  The big increase in freight rates going north has a spillover effect that maybe isn’t getting the birdseed/crush spread to where it should be?

Here is more market info from CHS Hedging Morning Highlights

Morning Highlights

By Phyllis Nystrom

  • As of 6:45 AM CT: US dollar index down .031 at 79.666, crude oil up 56 cents at $101.40, ULSD up 1 ½ cents, gasoline up a penny, natural gas unchanged, gold down $9.60 at $1289.10, European Stoxx up .87%, Nikkei closed down .98%, Hang Seng closed up 1.45%.
  • The 1-5 day maps look slightly drier for the central Midwest, but not much fieldwork will get done with light rains in the forecast through Friday.The 6-10 map looks wetter for the northwestern Midwest. Southern Plains remain dry.
  • The US and EU are imposing new sanctions on allies of Russian President Putin.Pro-Russian rebels are holding a group of German and other OSCE military observers for a fourth day and have seized more public buildings in the Donetsk region.
  • First notice day for May grain futures is tomorrow, Wednesday, April 30th.Long positions are reported after the close today and risk taking delivery.
  • Effective May 1st, the new daily trading limit in corn will be 35 cents, $1.00 in beans, 45 cents for CBOT wheat, 50 cents for KC wheat, 3 cents in bean oil and $30 in bean meal.Limits will be recalculated in six months.
  • Corn planting is 19% complete, on the low end of expectations and well below the 28% average.Next week’s average pace is 42% and with the current cool, wet forecast it doesn’t look likely that we’ll catch up this week.The crop can be planted in hurry if necessary, last year 40% of the crop was planted in one week!
  • Major states completion: IL 32%, IA 15%, IN 8%, MN 4%, NE 20%.
  • Yesterday’s export inspection included a corn vessel bound for China off the PNW.This would be the first full corn cargo for China since January.
  • A 60 million gallon/year ethanol plant in Virginia that was completed in 2010, but never operated, is reportedly now grinding corn.
  • Corn deliveries are estimated at 0-200 contracts.
  • Syngenta says they do not expect any official word on approval by China of MIR162 until this summer, based on past practices. China announced that 1.124 mmt of MIR162 corn has been rejected.
  • The CK/CN carry continues to trade from 5 – 6 ¼ cents.Overnight it was 5 ½ - 6 cents.
  • May corn has closed higher in four out of the last five sessions.If May corn closes the month above $5.02, it will be the fourth higher monthly close in a row and the longest run of monthly gains since October 2010.
  • The US Dept. of Ag forecasts that China will be the world’s largest corn importer by 2021.They are expected to import 2% of their consumption needs this year.
Outlook: Corn continues to trend higher on delayed planting.

  • US soybean planting is 3% complete versus 4% average.IL 2% done, IA 0, IN 1%, KS 1%, NE 6%
  • Crushers are rolling bids to the July, check your markets.
  • Brazilian sources indicate 7 bean boats are headed to the US totaling 356 tmt.
  • Another new contract high in May meal on Monday.
  • No bean deliveries are expected on first notice day.
  • The SK/SN inverse widened overnight, trading from 8 – 9 ½ cents.
Outlook: Soybean trading was two-sided overnight with less than a 10 cent range in the May contract.  Look for a choppy session.

  • HRW continues to gain strength from a dismal outlook for moisture over the next 10 days.Other wheat areas of the world, including the EU, western FSU and western Australia are experiencing good growing conditions.
  • The wheat tour should have numbers for OK, NE and CO on Wednesday and for KS on Thursday.The tour covers from Manhattan to Colby today.
  • Winter wheat conditions fell 1% to 33% good/excellent. 18% of the crop is headed versus 26% on average.
  • Spring wheat planting is 18% complete vs. 30% average.
  • Argentina has approved an additional 500 tmt of 13/14 wheat exports, bringing the official exportable surplus to 1.5 mmt.
  • Egypt’s Supplies Ministry says they have bought 350 tmt of local wheat since April 15, about 40% more than over the same period last year.
  • Ethiopia is tendering for 70 tmt of optional origin milling wheat.
Outlook: Wheat is easing lower after several days of higher closes and in spite of declining conditions, rising tension in the Ukraine and dryness in the Plains.  Could still see a choppy day.

Grain Merchandiser
Midwest Cooperatives
605-295-3100 (cell)
605-258-2166 (fax)

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