Opening Grain Market Comments 5-31-2013

Markets are called mixed this a.m. behind a choppy mixed overnight session.

Old crop corn was up a penny in the overnight, new crop corn was down a penny, KC wheat was off 3 cents, MPLS wheat was down 3 cents, CBOT wheat was down 5 cents, July soybeans up 12 cents a bushel, and November soybeans were up 8 cents a bushel.  At 8:15 outside markets have the US dollar up a couple hundred points, gold down 5 bucks an ounce, crude down a buck a barrel, and equity futures pointing to a lower stock market with the DOW futures down about 80 points.

Not tons of news out this a.m.; end of month so maybe some position squaring.   But primarily we are in a weather market; but debates as to which type of weather is bullish and what type of weather is bearish remain.  Bottom line is the story of slow planting leading to loss and shift of acres along with potential yield loss is the bullish headline we have today.

Yesterday we had plenty of talk on the GMO wheat and this a.m. I see another comment that South Korea posted postpones a planned US Wheat tender.  But yesterday by the end of the day we had got to nearly unchanged despite the GMO wheat news.  It does look like it is putting a little pressure on White Wheat basis; but we don’t have much of that in our area; we are mainly hard red winter and dark northern spring wheat growers. 

Producer selling slowed yesterday.  We had seen a small pick up when local corn cash price off of the combine hit 5.00; it did manage to pull a little higher than that; but right now is a few pennies back below that mark.  To me it feels like some more guys would like to make a few more sales around 5.00; but also see a lot more interest at the 5.25 to 5.50 level.   As for the country in general my sources say overall producers are probably only 5% sold for new crop versus 20-25% on average.  So lots more selling to come at some point as guys remain undersold; good or bad.

Old crop movement has been very slow but basis is also hit and miss and a little defensive.  The inverse scares the end users and many sources indicate most ethanol plants have about 0 coverage for August/September corn.  Makes shutting down easy; but the tight ethanol stocks and strong margins should they remain in a couple months give the potential for a big push on the little bit of corn that is left out there.  Bottom line is old crop corn basis and bean basis could still see some major fireworks; there are just too many variables to know for sure or know when and how these fireworks might occur.

Not a lot of other news out this a.m. other then the export numbers.

Old crop corn sales were bad at 3.4 million bushels; but the new crop corn sales showed good demand coming in at 31.1 million bushels.  That is helping 13/14 commitments catch up to last year’s pace but still about 20 million bushels behind new crop sales last year at this point.  Keep in mind the USDA has a big year over year forecast for US corn exports.

Soybeans had another net cancellation for old crop of -4 million bushels. But new crop were also strong at 27.8 million bushels.  Soybean meal sales were very strong and have now once again passed the USDA projection for the marketing year.

Old crop wheat sales came in at 1.3 million bushels; but we are down to 1 week of old crop left so not a surprise.  New crop sales where good at 26.8 million bushels.  We are about 70 million ahead of new crop sales last year at time and the USDA is expecting a decrease year over year.  Keep in mind that most of these new crop sales are SRW; not the milling wheat.

I don’t see much else going on today; I think Sunday night trade could be interesting; but it will be a weather trade.  Problem is I don’t know what type of forecast will be bullish and what type will be bearish.  I know the extreme wet and cool will be bullish; but forecasts in the middle and not super extreme could be view differently depending what the traders think we have in the ground versus what is in the bags yet.

The one thing to keep in mind that as things go is we will see green stuff; some might be super wet; but most will be green; a heck of a lot greener then last year.  So the perception that many see doesn’t have to be acres that need to be replanted; they could just see the green good looking stuff out there and there will be some of that and right now a lot more of the “good looking” stuff then a year ago.  That doesn’t mean that yields will be great; but perception of the crop will be negative in 30 days; unless we just have massing flooding.

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

Thanks

Closing Grain Market Comments 5-30-2013 - GMO wheat ???

Markets closed mixed to weaker today despite the very weak US dollar.

Old crop corn closed down 11 cents, new crop corn was down 3 cents, KC wheat was down 2, MPLS wheat was unchanged, CBOT wheat was off 4 cents, July soybeans down 6, November soybeans up a penny a bushel, the stock market bounced a little with the DOW up 22 points, crude up 50 cents a barrel, gold was up 21 bucks an ounce, and the US dollar got hammered down 670 on the June US Dollar Futures at 83.035.

Good news is that most of our markets closed well of the lows; the bad news was we couldn’t continue the recent strength despite gold strengths and the US dollar’s weakness.  Wheat did close about a dime off of its lows in most of the contracts and that wasn’t a bad close especially with the negative headline or press going on with the GMO wheat found in Oregon. 

As I mentioned this a.m. I don’t think the GMO wheat deal changes anything; but it did cause Japan to cancel a white winter wheat tender and some of the articles I read indicated China might be a little scared or cautious.   The bottom line is with our exports already struggling we don’t need more issues that cause our demand to be softer.  Having said that my sources tell me that happened was a farmer in Oregon found a couple volunteer wheat plants in a field and had them checked out.  So I don’t think we have a major quantity to worry about; but I guess only time will tell.  Bottom line is today’s price action wasn’t super bad given the weak opening we had via this news. 

On the wheat side of things I also noticed that plenty of areas down south look to be getting hammered with some moisture.  This opens a couple questions; first off is double crop soybeans.  Next and for wheat is quality concerns.  As for harvest updates I haven’t seen much; (heard of 6 rail cars total with pro any place between 10-13…..but moisture of 14 or higher) I did hear of a couple loads of higher pro coming off in Oklahoma but I haven’t heard many major updates or yields.  Weather looks to be slowing things down and things have really just started or are trying to get started.

The other thing on wheat and moisture is we could see some basis appreciation on the good quality wheat.  I think this is a little early but something to watch. 

6-10 day maps have below normal temps in our area and other parts of the Western Corn belt.  While the heart of the corn belt – Iowa/Illinois as well as the far Eastern part of the HRW belt as SRW areas have above normal precip.  Our area looks to have average moisture in the most recent 6-10 day forecast as does North Dakota.

So it looks like we could be open for time for sunflower planting and it also looks like ND could be open to finish up spring wheat.  Many areas plant until June 15^th from what I am told.  A lack of heat units might be a concern.

Overall from what I hear weather is bullish just because of the fact that we don’t have everything planted for corn/spring wheat and it looks like we will fall further behind on soybeans plus we could lose some double crop soybean acres.

Fundamentally I have seen some updated corn balance sheet numbers from a couple different firms.  Most indicate acres down 3-4 million or so; with yield down to the 150-155 area; but carryout numbers still seem to be big with most ranging from 1.5 billion bushels to 2.00; with most at 1.7 billion or so.  As for my thoughts on yield I still think we have the potential to see corn yields as low as 130 or as high as 180 and mother nature will decide how they end up. 

As for my thoughts on the USDA report in early June; I think we will struggle to see a carryout anything under 1.9 billion; I look for the USDA to leave things fairly close to unchanged and I think the risk is that they leave the yields unchanged and production unchanged but because of our bounce on the board they lower expected new crop demand.  Why would they leave the yields unchanged; first off remember last year and previous years?  They don’t have a big history of major adjustments in this report; secondly they already dropped our yield via the slow planting as noted in their May Supply and Demand report.  Plus despite the re-plant acres, agronomic unknowns, the fact is that on May 20^th we had 71% of the corn planted; not far off of average and this week we had 86% planted also not far off of average.  Now I am not saying I will agree with the USDA logic; I just think the likely hood of them lowering production in this coming report is slim.  And if they do lower the production I think they lower demand similar and leave carryout unchanged.  Keep in mind they are already forecasting a 1.9 billion bushel demand increase over this  year.  So they seem to be using the logic of more supply equals more demand and thus less supply equals less demand.

I did see a rumor that China canceled some Brazilian soybean purchases.  Now does that mean they come back to the US?  Probably not as they cancelled some of ours just a few days ago.  Perhaps they are simply looking at the discount new crop is.  As end users of products when you have an inverse you don’t want to have a single extra product or bushel on hand.

Look at it this way if beans are worth 14 dollars today; but 12 dollars next week; how many of those $14.00 beans would you want to have if you thought your competitors would be able to sell beans just a hair over 12.00 in a few days.  Not many.  Bottom line with inverses guys don’t want to have any extra ownership; but the lack of ownership can also cause huge price explosions at the end. 

A good example of that is the fact that I know of a couple different ethanol plants that use a fair amount each month; buyers have told me they have about 0 ownership.  Yet that will be the slot when things are maybe as tight as they have every been historically.  Could we see some old crop basis fireworks?  Without a doubt.

Another way to look at the inverted markets; such as we have between old crop and new crop is the present millet old crop new crop spread.  If old crop millet is 50 bucks or so how many buyers want to have any old crop left when new crop is coming in that they can buy for 16 bucks?  Not much.  If you were a merchandiser or buyer for a company and had all your bins full with the high priced 50 buck old crop millet and then new crop came and went and your competitors where buying 16 bucks.  Do you think you would still have a job?

Bottom line is we have several markets that have some big inverses in them presently.  Some are cash prices inverses like millet, others have basis inverses as well as inverses in the board such as soybeans, corn, spring wheat, and milo; and others such as winter wheat just have a basis inverse.  These inverses and market structures should add to our price volatility.  We should see cat and mouse games; where the last guy selling something someone needs to get by to new crop gets paid in gold; but the next guy gives it away.

It might be easier to figure the inverses and marketing out if they would tell us exactly how much demand there will be and the exact date new crop will be ready.  But those are changing all the time.  We don’t know if ethanol production in a couple months will be much stronger, much weaker, or the same as it is now.

                

Opening Comments - GMO Wheat found 5-30-13

Markets are called mixed to weaker this a.m. behind a weaker overnight session.

When the overnight session paused old crop corn was down 2 cents, new crop corn was down 3 cents a bushel, KC wheat was down 6 cents a bushel, MPLS wheat was down a penny a bushel, CBOT wheat was down 8 cents, July Soybeans were down 9, and November soybeans were off 4 cents.  Outside markets have a US dollar down a little with the cash index at 83.460, gold is up 16.50 bucks an ounce, crude is down 1.25 a barrel, and the stock market looks to start near unchanged with the DOW futures up 9 points. 

A couple news items out today/yesterday.  First off weather is still leading our markets; mainly for delays; but I have seen comments of some of the deferred forecasts opening up.  It also looked liked Northern ND missed the rain last night and that might allow for some more spring wheat to get planted.

The big question is how many acres will not get planted?  Where will those acres shift to?  Will they go prevent plant?  Will some take prevent plant and then try un-insured soybeans?  How many acres will need to get replanted? Yield loss already seen? Etc…………Bottom line lots of questions in regards to our production possibilities.  Which means we have added some premium into the market.  Is it justified?  Doesn’t look like it needs to be there if you look at the advisor’s updated balance sheet ideas.  But it really depends on how things develop as production possibilities have a big risk should this weather continue; plus they have the summer heat risk.

At the end of the day with all of our unknowns I don’t think you can say our market will be X price in a month, two months, or 5-6 months from now.  As far as I am concerned we have the potential to see corn any place between its present level to a few dollars higher or lower.  All up to mother nature and other unknown future factors.  The one thing I would say is that the longer or higher new crop corn goes the less demand we are promoting and the USDA had said in its last USDA Supply and Demand report that demand for corn would grow by nearly 2 billion bushels and that would still leave us with a  2 billion bushel carryout; versus the 759 million bushel carryout we presently have.  So in my opinion the job of the market is still to find demand; so I will remain cautious getting too bulled up.  I think we need to remember to reward the rallies and realize that the likely hood of us going to this year’s highs because of wet weather is low.  Perhaps another unknown reason could take us there but wet weather?????

No exports today because of the holiday earlier in the week.  Those are delayed until tomorrow and ethanol numbers are delayed until this a.m. at 9:30.  The ethanol numbers will be key to help us see if demand is staying strong for old crop corn.

The other big news out there this a.m. is the fact that GMO wheat was found in an Oregon farm.  What it means to the market is still up in the air; but the kneejerk reaction is not positive.  Below are a couple articles on the GMO wheat.  Notice the one indicates Japan cancelling a tender.  We don’t need to have a reason for our buyers not to come here; we are already not super competitive in the export market.  The one small positive I see that Paris wheat was up so maybe that is helping narrow the spread between our wheat and other countries????

Other news out there.  Yesterday China cancelled some old crop soybeans and this a.m. they bought some new crop soybeans.  We seem to be seeing more questions on the old crop demand for beans as well as export demand for old crop corn.  But lately some ideas for new crop demand have shifted a little more friendly and I think that is one of the reason for the rally; we are questioning production while see a small increase in new crop demand for corn/beans.

Wheat we continue to question the production; but we haven’t seen any great demand headline news either with the exception of SRW or feed wheat; China has had decent interest in buying that.  But for milling wheat we haven’t seen much for interest.

The other couple of headlines I seen this a.m. include one indicating that US corn acre loss ideas may be exaggerated and another comment that China might be cancelling Brazilian soybean purchases.

GRAINS-Hesitant market weighs GMO wheat case - RTRS

30-May-2013 07:01

    * Non-authorised GMO wheat found on northwest U.S. farm

    * Japan cancels tender, raising risk for U.S. exports

    * New-crop corn falls for first time in six sessions

    * Market assessing crop risks from heavy U.S. rain

(Updates with European trading, adds new quotes, changes byline/dateline)

    By Gus Trompiz and Colin Packham

    PARIS/SYDNEY, May 30 (Reuters) - U.S. wheat prices eased on Thursday as the

discovery of an unapproved genetically modified (GMO) variety in the

northwestern United States raised a risk for exports and encouraged the market

to take a breather after weather-fuelled gains.

    Japan, the top importer of U.S. wheat, cancelled a tender to buy U.S.

western white wheat after the U.S. government announced on Wednesday it had

found a GMO wheat sprouting on a farm in the state of Oregon. [ID:nL3N0EB1JC]

    Asian countries led by Japan are major buyers of U.S. white wheat, a variety

used for food, and sensitivities there over GMO crops for human consumption

could slow buying.

    "The finding of GMO in wheat is certainly a factor that has weighed on wheat

prices," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

    "I won’t be surprised if other countries start cancelling or reducing their

purchases of U.S. wheat, particularly Asian countries, putting pressure on wheat

demand."

    Traders said it was too early to say if the case would have significant

consequences for exports but in a sign of possible effects beyond Asia, the

European Union said it would test incoming U.S. white wheat shipments for GMO

content. [ID:nL5N0EB1KH]

    "The market is going to need U.S. wheat, we won't be able to do without it,

so that could mean more checks and more sanitary certificates," a European

export trader said.

    "There is a question mark now and this could affect the attitude of certain

buyers."

    The discovery of GMO wheat encouraged a lull in the market after worries

about wet weather in the United States pushed wheat and corn prices higher on

Wednesday. [ID:nL3N0EA1YG]

    Chicago Board of Trade July wheat <WN3> fell 0.8 percent to $6.97-1/2 a

bushel by 1138 GMT, after ending Wednesday up 1.3 percent.

    Concerns that portions of the U.S. wheat crop could be harmed by the

persistent rainfall and, in some areas, flooding, have supported the market.

    Unfriendly crop weather will also support prices of soybeans and corn, with

excessive rain late this week expected to further slow U.S. plantings.

[ID:nL2N0EA0FJ]

    Farmers in the United States slowed the pace of planting in the past week as

rain delayed the tail-end of corn seeding and pushed soybean planting to its

slowest pace in 17 years, the USDA said on Tuesday. [ID:nL2N0E91F8]

    "We're still in quite a nervous context with the rain and flooding," another

European trader said of U.S. crop conditions.

    "There is a lot of uncertainty in the market."

    The most actively traded December corn <CZ3> fell 0.7 percent to $5.62 a

bushel, halting a five-day rally. November soybeans <SX3> slipped 0.2 percent

$12.85-3/4 a bushel, off Wednesday's 3-month top of $12.95.

    But spot soybeans <SN3> extended losses, pressured by Wednesday's news that

China, the world's largest buyer of the oilseed, had cancelled an order for U.S.

soy. [ID:nL2N0EA0IG]

   

    * Prices as of 1138 GMT

  Product              Last    Change   Pct Move End 2012 Ytd Pct

                                                                   

  CBOT wheat <Wc1>      697.50   -5.25   -0.75   778.00  -10.35

  CBOT corn <Cc1>       664.75   -0.25   -0.04   698.25   -4.80

  CBOT soy <Sc1>       1496.75   -5.00   -0.33  1418.75    5.50

  Paris wheat <BL2c1>   206.00    1.50   +0.73   250.25  -17.68

  Paris maize <EMAc1>   232.50    6.50   +2.88   237.75   -2.21

  Paris rape <COMc1>    434.75   -0.25   -0.06   456.25   -4.71

  WTI crude oil <CLc1>   92.41   -0.72   -0.77    91.82    0.64

  Euro/dlr <EUR=>         1.30           +0.11

WRAPUP 2-US GM wheat find threatens exports, stokes consumer fears - RTRS

30-May-2013 06:53

    * Japan cancels tender to purchase some U.S. wheat

    * EU preparing to test incoming shipments

    * Importers to seek details from U.S. government

    By Risa Maeda and Charlie Dunmore

    TOKYO/BRUSSELS, May 30 (Reuters) - Unapproved genetically

modified wheat found growing in the United States is threatening

the outlook for U.S. exports of the world's biggest traded food

commodity, with importers keenly aware of consumer sensitivity

to gene-altered food.

    Major importer Japan has cancelled a tender offer to buy

U.S. western white wheat, while other top Asian wheat importers

South Korea, China and the Philippines said they were closely

monitoring the situation.

    "We will refrain from buying western white and feed wheat

effective today," Toru Hisadome, a Japanese farm ministry

official in charge of wheat trading, told Reuters.

    The European Union is preparing to test incoming shipments,

and will block any containing GM wheat. [ID:nL5N0EB1KH] Chicago

Board of Trade wheat futures <Wc1> fell 0.5 percent on Thursday.

    GM wheat was discovered this spring on a farm in the west

coast state of Oregon, in a field that grew winter wheat in

2012. USDA officials said on Wednesday that when a farmer

sprayed the so-called "volunteer" plants with a glyphosate

herbicide, some of them unexpectedly survived.

    Scientists found the wheat was a strain field-tested from

1998 to 2005 and deemed safe before St. Louis-based biotech

giant Monsanto <MON.N> withdrew it from the regulatory approval

process on worldwide opposition to genetically engineered

wheat.[ID:nL2N0EA1LI]

    No GM wheat varieties are approved for general planting in

the U.S. or elsewhere, the USDA said. The EU has asked Monsanto

for a detection method to allow its controls to be carried out.

    With high consumer wariness to genetically-modified food,

few countries allow imports of such cereals for direct human

consumption. However, the bulk of U.S. corn and soybean crops

are genetically modified. 

    

    RAPESEED, RICE

    The latest finding revives memories of farmers unwittingly

planting genetically modified rapeseed in Europe in 2000, while

in 2006 a large part of the U.S. long-grain rice crop was

contaminated by an experimental strain from Bayer CropScience

<BAYGn.DE>, prompting import bans in Europe and Japan.

    The company agreed in court in 2011 to pay $750 million to

growers as compensation.

    Asia imports more than 40 million tonnes of wheat annually,

almost a third of the global trade of 140-150 million tonnes.

The bulk of the region's supplies come from the United States,

the world's biggest exporter, and Australia, the No. 2 supplier.

    The USDA said there was no sign that genetically engineered

wheat had entered the commercial market, but grain traders

warned the discovery could hurt export prospects for U.S. wheat.

    "Asian consumers are jittery about genetically modified

food," said Abah Ofon, an analyst at Standard Chartered Bank in

Singapore. "This is adding to concerns that already exist on

quality and availability of food wheat globally."

    European traders said Black Sea and EU wheat was well

positioned to benefit in any displaced demand for U.S. grain.

But some were more pragmatic on the overall impact.

    "The market is going to need U.S. wheat, we won't be able to

do without it, so that could mean more checks and more sanitary

certificates," one European dealer said.

    "Japan is in a position to be selective and to react

sharply. It has other suppliers and the financial means to be

choosy and pay more if needed. This is not necessarily the case

for (top global wheat importer) Egypt which is in a difficult

financial situation."

   

    BUYERS CAUTIOUS

    A major flour miller in China, which has been stocking U.S.

wheat in recent months, said importers will tread carefully.

    China has emerged as a key buyer of U.S. wheat this year,

taking around 1.5 million tonnes in the past two months. Chinese

purchases in the year to June 2014 are estimated to rise 21

percent to 3.5 million tonnes, according to the USDA, with most

shipments coming from the United States, Australia and Canada.

    The Philippines, which buys about 4 million tonnes of wheat

a year and relies mainly on U.S. supplies, is waiting for more

details before acting, an industry official in Manila said.

    "I won't be surprised if other countries start cancelling or

reducing their purchases of U.S. wheat, particularly Asian

countries, putting pressure on wheat demand," said Joyce Liu, an

investment analyst at Phillip Futures in Singapore.

    Genetically modified crops cannot be grown legally in the

United States unless the government approves them after a review

to ensure they pose no threat to the environment or to people.

    Monsanto in a statement posted on its website said: "While

USDA's results are unexpected, there is considerable reason to

believe that the presence of the Roundup Ready trait in wheat,

if determined to be valid, is very limited."

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

 Follow On:

This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

Opening Comments 5-29-2013

Markets are called mixed this a.m. behind a mixed overnight session.

When the overnight session ended old corn was down a penny, new crop corn was up 2 ½ cents a bushel, KC wheat was unchanged, MPLS wheat was up a couple pennies, CBOT wheat was off 2 cents, and both old/new crop soybeans were about unchanged.  Outside markets look like we have a weaker start in line for the DOW with futures pointing towards a lower start of about 60 points, the US dollar is down about 400 points with the June futures back below 84 trading at 83.780, gold is up 5 bucks an ounce, and crude oil is down 70 cents a barrel.

A couple pieces of news out this a.m.  First off I seen an announcement come over that China cancelled 147,000 tons of old crop soybeans.  We already have crushers rolling bid and “saying” they are covered for a couple months and lately the export game for old crop soybeans hasn’t been strong.  This is just a little more un-needed headline weakness.  I don’t know that fundamentally anything has changed for old crop soybeans as things are tighter then tight; but when you have basis nearly a buck softer at some crush plants and you see headlines of old crop exports cancelled you don’t have a super bullish market either.

The other bid news out was late yesterday’s crop progress and condition report.  Winter wheat condition was unchanged, soybeans came in a 44% planted, spring wheat was 79% planted, corn was 86% planted, and corn emergence was 54%.  Overall positive to prices; the fact that we didn’t get lots done in the last week isn’t new news.  I think the weather forecasts remain important.

The other thing about the planting progress is you have two sides to the story.  The big story that many see are the headlines; such as corn 86% planted versus an average of about 90 %.  Corn emergence at 54 % versus 67 % on average.  Spring wheat at 79% versus 86% on average.   On the surface these numbers say we have done a good job catching up.

But the million dollar questions should be; how much corn will need to be re-planted?  With the final 13-14 million acres of corn get planted?  How much potential corn yield has been lost or is that all still up in the air depending on mother nature?   Will the balance of the spring wheat get planted?  ETC ETC…….. plenty of bullish things happening with our delays and unknown agronomic/growing effects of our weather.

So will the traders and more importantly the funds look at the headlines and say everything’s fine so sell……sell…….sell?  Or will they look a little deeper and decide maybe it’s time to buy….buy….buy?  I don’t know that answer; I do think some charts are looking a little better so I lean towards the side that we potentially add a little more premium.  But I also think that longer term the job of our market is to find demand at least until we know we have cut supply dramatically.

Not much for other news out there this a.m. the reaction to the China cancellation will be important.  Later this week we will have ethanol numbers and export numbers.  But also month end which could lead to some position squaring.

Smithfield foods is close to a deal to sell to Shuanghui Group from China.

Forecasts look very wet for the Western corn belt.  Iowa in particular……..overall I say the forecasts are positive to prices; but my opinion isn’t that important.  At some point if we do get the grains planted we need to remember that moisture won’t be the thing that likely runs us up. 

I did see that SovEcon pegged the Russian wheat crop at 50 MMT versus the USDA at 55 MMT and for exportable supply they are at 13-15 MMT versus the USDA estimating 18 MMT.  For wheat to rally we are going to want to see more headlines like this; we need to cut some supply in other places in the world so we can spark some demand interest for US wheat.  A lack of demand for US wheat is really keep wheat from having a good fundamental reason to rally.

Don’t forget we will have our weekly marketing meeting in Onida at 3:00 today.

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

Closing Grain Market Comments - USDA Crop Progress Update 5-28-13

Markets closed mixed today with the row crops leading the way and wheat lagging behind.

Old crop corn closed up 9 cents, December corn was up 14 ½ cents a bushel, KC wheat was down 2 cents, MPLS wheat was up a penny, CBOT wheat was down 4 cents a bushel, July soybeans were up 33 cents, November soybeans were up 40 cents, the US dollar is up with the June contract at 84.310, gold was off 7 bucks an ounce, crude up about a buck a barrel, and the stock market had a nice bounce with the DOW up 106 points.

Very strong day for the grain markets; new crop soybeans and new crop corn in particular.  July beans also managed a new high close for the year today.  The strength in the new crop row crops comes from weather and a lack of planting progress.  Ideas are that we have lost some corn acres to prevent plant plus we are potentially losing some soybean acres and spring wheat acres to the same thing.   Some soybean acres might also be getting lost from the slow wheat harvest; not allow for as many double crop acres as expected. 

I did see a couple different advisors selling some new crop corn and soybeans today; and one that I listen to mentioned maybe having a recommendation out in the morning on new crop soybeans.  Comments like “reward the rally” being used.  One thing to keep in mind is the fact that if we are losing corn acres some might get to soybeans.    Also seen a comment that mentioned guys maybe taking prevent plant on corn and then going back into the ground with soybeans un-insured.  I don’t know exactly how that process would work but I can see the logic in it.

I seen a couple different comments showing various weather maps asking the question.  “Bearish or bullish?”  It looks like parts of Iowa will continue to get moisture in the days to come.  Basically to me it looks like we have spots that rain would be beneficial and then we have others that it will continue to hurt progress and may damage what is already in the ground.  Bottom line is we have had issues planting basically since the season started; we have been behind and now the market realizes that we MIGHT have a major issue.  I still think it is undetermined and up to mother nature.

One of my wheat buyers today mentioned the fact that some Hard Red Winter Wheat business was going down; but we ranged anywhere from 40 bucks to 70 bucks a ton too expensive.  This really opened my eyes a little bit on the wheat situation.  Don’t get me wrong I still see some friendly things happening and I think our crop gets smaller; but longer term we need demand.  It won’t matter what we don’t have if the other guys (Russia and other wheat producing nations) have more than enough to make up for our lack of supply.  Now that doesn’t’ mean a weather story can’t happen or develop someplace else in the world at some time.  But today we don’t have that story. 

The story we have for wheat is a bad United States wheat crop; which is old news and been talked about since it was planted in the dust last fall.  The other story we have is big rebound in production in almost every wheat producing nation.  That my friends isn’t bullish.  It was nice for us to see some Soft Red Wheat business last week with China; but that is just more feed wheat business.  The area we need demand is milling wheat.  Bottom line don’t fall victim to backyardagains; looking at the lack of wheat in the United States and think we have to go higher.  If that was the case we would have already rallied.  Now if the funds or “big money” decide to start talking about our lack of wheat sure we could rally; but longer term we need to find a way get that missing piece of the puzzle called demand.

As for news today this a.m. we had export shipments out.  They were very good for wheat; while bad or soft for corn and beans.  The corn and bean numbers lately make one wonder if the door isn’t opened to the USDA lowering the export projection.

The other news out today was this afternoons crop progress report. 

Corn planting came in at 86%.  Bottom end of the ranges I had seen; which were 85-90 %.  Fundamentally it says we still have 13-14 million acres of corn left to plant or nearly 2 billion bushels of possible production.  But keep in mind that if we don’t plant any more acres and we yield the 158 that the USDA is presently using while harvesting 92% which is about average.  We still have production of about 12 billion bushels.  This year we are only projected to use about 11.1 billion bushels which means we still need to find demand of nearly a billion bushels year over year.  So tonight’s crop progress numbers are bullish but longer term do they say we need to run up like we did this last year?  In my opinion not yet. 

If this news can give help us keep the rally going personally I think I would consider “rewarding the rally” a little bit.   Perhaps use a rally to catch up on some sales for those that are uncomfortable for what you do or don’t have sold.   For some that might mean some sales for others maybe just using some options to protect your bottom side risk would be a good play?

The one good thing the weather has done is give the funds a reason to look at the grains.  Right or wrong at least we have a possible positive headline to get the funds interested and if they do decide to get interested we could easily over do a move to the upside.  Longer term present prices levels could easily look very good.

Soybean planting came in at 44%; which is below the average and slightly below the estimates that I had seen which were around 50% planted.  I don’t know that we have a major issue here yet and I look for more acres to slide into beans from corn.    But just like corn we have some wet weather forecasts and if the funds decide to get on board who knows where this thing could go; longer term and fundamentally I think risk is to the downside as I think the job of the market is to find demand. 

Spring wheat planting came in at 79% planted below the average of 86%.  But here also weather looks like it could cause some acres to get switched to prevent plant. 

Winter wheat G/E conditions where left unchanged. 

Other things that stand out in the crop progress report; include the fact that the eastern part of the corn belt is now ahead of average for planting progress.    Corn emergence came in at 54% which isn’t as far behind the 67% average as one would have thought a couple weeks ago. 

Here is CHS Hedging Recap of the USDA crop condition/planting progress report.

https://www.chshedging.com/UserFiles/Documents/2013/Research/USDA%20Crop%20Progress/Crop%20Progress052813.pdf

The sunflower market felt a little softer today; with bids down a little from the offers that had got filled/traded last week.  Or maybe a better way to say it is the bid/ask spread just widened out a little again; as I don’t know of anyone that is really a willing seller at a cheaper level then they where last week.

Corn and wheat basis both remain very choppy.  Some guys have interest in buying while other like some local ethanol plants are fairly covered.  Expect things to stay choppy; you have to be bullish corn basis in general with the ethanol numbers; but the inverse is too bid for anyone to want to hold any length through the inverse. 

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

Job of the Market - newsletter article

Here is rough draft of newsletter article that I wrote today.  It will go out in a few weeks.

The Job of the Market

Knowing what the present “job of the market” is key in determining the right path in your grain marketing plan.  What do I mean by the “job of the market”?  No I am not talking about making it so everyone struggles and many lose in trading grain futures; the market always has and always will find a way to hurt the most possible.

But the “job of the market” I am referring to is what is the price job of the market.  Do we need to create demand?  Or do we need to curb demand?  Do we need to promote additional supply?  Now for some products it is as simple as ECON 101 where high prices promote more supply and also curb demand; while low prices take out the incentive for supply and help demand.  But in commodities such as grains it is a little trickier; because of all of the factors that go into making or breaking both supply and demand; plus the fact that the more we have the easier it is to use a little more.

Last year’s drought was a good example where the “job of the market” was to curb demand.  We needed to go high enough so that we wouldn’t use product too fast and so we wouldn’t run out of product.  How did we do that?  Prices went higher causing less usage; but also causing things like exports to drop and imports to happen. 

This year as things sit the “job of the market” is to find demand.  Now as I hint to above the grain markets seem to be able to find a little demand just via having a little more supply.  But if we want to ask our what is the “job of the market” and use some of the USDA production numbers we will find that the “job of the market” for corn and beans is to find demand.   Latest forecasts have big year over year production increases; as I write this wet weather leading to flooding and lost acres is taking production potential down.  But down enough for the “job of the market” to be to curb demand like its job was last year?  No……….at least not yet.

So how do you find demand?

I really don’t need to answer the question how do you find demand because we all know the easiest way to find additional demand is via lower prices.  So in marketing what does that tell a guy?  To me it says be pro-active and maybe use a couple other risk management slogans like  “Reward the rallies” or  “You don’t go broke making sales that make $ense”

I don’t mean to be super bearish nor do I want to promote panic selling.  But when I am deciding what to or not to do when it comes to the pricing and protection of grain prices.  What the “job of the market” is has to be a consideration and what is the “job of the market” today with what is known.  Is it to promote demand or curb demand?  Keep in mind that you also want to consider things like money flow, spreads, technical outlook, weather, economics in the US and the World and the spillover effect on demand, and I want to make sure not to have backyardagains and realize that the crop sizes in other countries are becoming very important; so don’t let your marketing plan get hung up over one of the thousands of things to look at.

If you need some help with your grain marketing plan please give us a call.

Opening Comments 5-28-13

Markets are called better this a.m. behind a firmer overnight session; that was lead by new crop corn up 11 ½ cents in the overnight session, old crop corn was up 4 cents, KC wheat was up a penny, MPLS wheat was unchanged, CBOT wheat was up a penny, old crop soybeans were up 13, and new crop soybeans were up 16 cents.  At 8:15 outside markets have a US dollar slightly firmer with the Cash US Dollar index at 83.840, gold is down 4 bucks an ounce, crude is up 1.28 a barrel, and stock market futures are pointing to a plus 120 point start on the DOW.

Rain makes grain; but only if it is timely and not all at once.  Overnight strength seemed to come from the flooding and fact that too many areas have and will continue to receive too much grain.  Parts of Iowa are under water which leads to a couple things.  First off will we get the balance of the corn planted?  Will we have to replant much that was planted?  Plus another hundred agronomic questions/bullish arguments that happen when we have too much moisture.

Same type of statements and question marks are out there for ND planting for both spring wheat and corn.  Did we get it all in?  Now ND not getting corn in isn’t a major market mover.  But ND not getting spring wheat planted could be and the corn belt having issues with too much water is potentially a severe issue.

This afternoon we will have a crop progress update; ideas are corn planting between 85-90%.  If we are at the top end of that range or higher I could see our little rally from too much rain quickly turn around.  But if we are on the low end of the range or less we may be opening a major question mark on US corn production. 

Soybean planting is pegged this afternoon at 50% and spring wheat planting is pegged at about 80%.  Wet weather might also be losing some double crop soybean acres.

I was gone late last week; but it does look like basis was under pressure for some of the grains. Soybeans in particular seen huge drops.  I have noticed to arrive bids softer for corn, spring wheat, and winter wheat.

Also take note that despite the ugly looking winter wheat crop that is out there; many end users are bidding a big inverse between old and new crop wheat. 

I did see late last week that we sold some Soft Red Wheat to China; it also looked like China bought some new crop corn.  It is nice to see some demand and longer term I think that demand is what will or won’t drive our prices.   If we get these crops in and IF we grow anything close to trend line the job of the market will be to find demand.  Those are a couple big IF’s as it stands right now and that is why we have and are adding in some premium into our markets.  Now can this present little rally we have develop into more?  Without a doubt if the funds decide to look at the headlines there is really no limit where we can get to; but fundamentally if we look deeper into the balance sheets the job of our market will be to find demand; until we have curbed present supply outlook dramatically. 

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

Opening Grain Market Comments 5-22-13

Markets are called mixed this a.m. behind a mixed overnight session.

In the overnight session old crop corn was off 2 cents, new crop corn was up 3 ½, KC wheat was up 3 cents, MPLS wheat was unchanged, CBOT wheat was up 4 cents, old crop soybeans were down 3, and new crop soybeans were up 3 ½.  Outside markets have the US dollar about unchanged, crude oil is down 35 cents a gallon, gold prices are up 15 bucks an ounce, and stock futures are pointing to another firmer start.  More all time new highs for the DOW?

This a.m. we will have ethanol numbers out and that should help decide our old crop direction.  Pace has been good and the market is looking for that strong pace to continue based on the fact that ethanol margins have been very strong.

Technically we had an ok day for new crop corn yesterday; we made a new low for the move and managed to close positive; leaving a reversal on the charts; not a key reversal as we failed to take out the previous day’s highs but a good sign that the selling has at least paused for the time being.

No markets on Monday could keep things a little on the thin and choppy side the next couple of days.  Specs might not want to push things until they see the latest weather forecasts and update on planting.

I seen a couple different comments on weather this a.m.  One mentioned weather being supportive to prices via the idea that more planting delays and the last of the acres getting potentially shifted along with possible yield loss.  But I also seen another wire indicating some pressure on prices because of the weather.  I guess it really depends on what the eyes see. 

I did see some bean basis bids all out of bed yesterday; down 40 cents or so; many rolled to the August futures.  Very volatile.  I don’t know that guys are covered but some bids are indicating that they are.  If they are not covered then the end users could be playing with fire as a drop in flat price won’t scare out many producers to sell.  It could cause some elevators to pitch their length or sell DP bushels; but to me it looks like the processors are playing a dangerous game.  Perhaps the same can be said about old crop corn?  Volatile basis as we go forward; I notice wide bid ask spreads and basis values with huge spreads for various slots.

The USDA did report new crop corn sold to China this a.m. as well as some sold to unknown.  I think that helps show we have some value down towards these levels.

Not much else going on for our markets.  We will have our weekly MWC Round Table meeting today at 3:00 in Onida.  Hope some of you can make it then.

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

 Follow On:

This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

Closing Comments 5-21-2013

Markets closed mixed today in rather choppy to mainly weaker trade.

Old crop corn was down a dime, new crop corn was unchanged, KC wheat was off 7 cents, MPLS wheat was up 2, new crop spring wheat was down 2 cents a bushel, old crop sold beans were up 14 cents, new crop soybeans were down 4 cents, CBOT wheat was down a nickel, the US dollar ended near unchanged well off of its high, the stock market made more new all time highs on the DOW up 52 points, crude was off 55 cents, and gold was down 6 – 7 bucks an ounce.

I thought new crop corn had a great day today.  We had news that had some saying that new crop corn was done; but we managed to shake off the negative news of the best corn planting weak ever and close unchanged.  We held last Junes lows on the charts; we made new lows for the move and left a positive candle on the charts.  Now I don’t want to get super bulled up; but it did look like some seen the new crop corn as holding some value down here.  I know I had a couple different feeders trying to place orders to buy some new crop corn.

As for the fundamentals yesterday told us that almost 42 million acres should hit pollination around the end of July.  That maybe makes the market a little nervous as we have a lot bet on weather for that period. 

Technically July beans had a new high close for the year; making that chart look friendly.  We are just a few cents from the high trade of the year.  I have heard numerous comments that the old crop bean situation is simply not one that can be solved.  Some others comment that eventually we will import some soybeans and that will solve things?  Bottom line is the old crop soybean situation is very tight and the trend is up.

Otherwise not a lot of new news out today.  I did think today’s price action should remind us that the markets we trade are futures markets; so when we get news like best planting pace ever; but that news was expected we don’t have to have the type of price move that one would think.  With today’s technology news is instant and can be instantly priced into our markets.

That gives me some hope for new crop prices.  Everyone (advisors and others in the industry) is rather bearish new crop prices; because of our present fundamental outlook.  But is that already priced into the market?  The advisors will make the argument that guys will be forced to sell with the big crop coming; but will the guys?  Producers are in better situation then before; they have more bins then before.  Just because we grow more supply doesn’t guarantee that we will have more supply for sale; unless of course the price is right.

Having said that I really don’t want to get super bullish prices either; I think the right move has and will continue to be to make sales or get protection in place on rallies.  At least enough so that one is comfortable and doesn’t put themselves into have to sell situations.

Tomorrow we will have our weekly marketing meeting in Onida at 3:00.

As for news; tomorrow we will have ethanol numbers out and Thursday will be export sales.  Monday brings another update to crop progress; but otherwise weather and money flow should dominate our markets.  I don’t know what will get the funds interested in buying grains; but hopefully something can interest them.  On weather I think it is hit and miss what is bearish and what is bullish.  Might just depend what money manager wants to look at it first and what they see.  Will they say rain makes grain or will the focus be on the fact that North Dakota is only ½ planted on spring wheat and it doesn’t look like much if any is getting done this week.   Will they look at the fact that we still have about 28 million acres of corn let to plant?

A lot of unknowns out there and some of those could turn out to be bullish……but keep in mind that unknowns should be adding or keeping a little premium in our market.

Elsewhere basis felt mixed today; overall maybe a little firmer for corn, winter wheat, and spring wheat; but also hit and miss.  One local ethanol plant is indicating that he is covered until August and others don’t seem to need much for nearby corn.  They still struggle to sell ethanol in the Aug-Sept slot; which has basis defensive or at least choppy.  Shuttle bids seem to be much better for those slots; but yet our corn almost has to go to the local ethanol plants or if they do run someone will get paid fairly well on basis.

The birdseed market feels a little better; as we did trade some new crop flowers as well as summer slot offers today.

Don’t forget we are offering free delayed price on most all of the old crop grains and we have room at most of our elevators.

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

Thanks

Opening Grain Market Comments - Crop Progress update

Markets are called weaker this a.m. from an overnight session that was weaker and crop progress that showed corn planting almost back to an average pace.

In the overnight session old crop corn was down 13 cents, new crop corn was down 8 cents, KC wheat was off 9 cents, MPLS wheat was down 8 cents, CBOT wheat was off 10 cents a bushel, old crop soybeans down 2, and new crop soybeans were down 8 cents a bushel.  At 8:10 outside markets have a rebound going in the US dollar up 320 on the cash index at 84.056, gold prices are down 15 bucks an ounce, crude is down 35 cents a barrel, and equity futures are pointing to slightly firmer opening with the DOW up about 20 points.

The thing that stuck out to me the most this a.m. wasn’t the hard down for the corn market; but the fact that it was old crop leading us down.  At one time old crop corn was only down 2 cents; but it ended the night down 13; while new crop corn while new crop corn opened down about 7 cents and only managed to end the overnight session a penny weaker.  New crop corn only had about a 4 cent trading range in the overnight session. 

The reason for the pressure in case you haven’t heard was the fact that US corn planting was a record pace last week; at 43%; which based on March planting intentions is about 41.8 million acres of corn planted.  This was very close to the estimates; but a little on the high side and something negative for the bulls.  I think that is why we seen most of the pressure in the old crop.  Bearish info and the fund ownership seems to be in the old crop contract even though the news was really new crop news.

As mentioned yesterday with nearly half of the crop planted at once pollination could be a major issue.  Doesn’t mean it will be negative; but a lot will be riding on the market at one time; as pollination might not be as spread out as normal.  The other thing one has to ask is how many of the 41.8 million acres planted last week were planted via “mudding it in”?  How much yield loss do we potentially have with 72% of the crop planted after May 12^th?  What about the other 28 million acres still not planted?  Will they be?  Some of the forecasts are wet and the market isn’t giving producers an incentive to keep planting via prices going higher.

Bottom line is things look bearish today; but there are a couple small positives; or at least some unknowns out there that don’t have to shake out to lower prices.  They could and I think lower prices is our risk just based on the fact that as it stands today the market is probably trading a 13.5 to 14.0 billion bushel corn crop with a nearly 2 billion bushel corn carryout.  But is that old news and priced into the market like technical trading would say or is it yet to be priced in and a reason to be making some sales like many of the advisors are saying? 

Other then the crop progress we don’t have a lot of new news out there.  We have weather but now more see moisture as beneficial.  Now it is in some areas; but other areas it could lead to flooding in low spots which in turn might mean stuff needs to be re-planted and it looks to lead to some prevent planting or shift of acres.  The market hasn’t cared for some time and likely won’t; as we don’t have the demand for the crop potential as it stands today.   If we end up with a 13-14 billion bushel crop that means we need to find 2-3 billion bushels of demand for our carryout to stay the same as it is this year for corn.  This year we are scheduled or projected to use about 11 billion bushels; so the job of the market should we raise more corn is to find more demand.  That won’t happen just because we turn on a light switch; some might happen because it is available a little easier; but the way to find more demand is lower prices and even lower prices don’t guarantee that we get the demand.  Our competing nations like Brazil as example will be wanting to sell their corn.  Who’s to say that they don’t undercut our price should they raise a big crop?

Speaking of other countries who have had a history of under cutting our price; the Russia Grain Union raised total grain production to 90-100 MMT. 

We can talk and argue about the grain fundamentals and how demand will or won’t bounce back based on production.  But at the end of the day I am a firm believer that the fundamental that matters the most on a day to day basis is money flow.  I think longer term supply and demand is very important; but day to day; whether we go up or down it seems to come back to money flow and what “big money” or the funds want to do.  We need to give them a story; a reason to put some money in the grain market versus the stock market.  It doesn’t have to be a big story to start; but some sort of headline and then let the funds over do the move like they always have.  We don’t want them to get on the bear bandwagon.

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

Thanks

Closing Market Comments - Fastest corn planting pace ever! Old news? 5-20-2013

Markets closed mixed today in choppy trade.

Old crop corn which started firmer in last night’s session ended the day down 3 cents, new crop corn was up a penny, KC wheat was up 8 cents, MPLS wheat was up 8 cents, CBOT wheat was up 2 cents, old crop soybeans were up 16 cents, new crop soybeans were down 3 cents, gold was up 29 bucks an ounce, crude up 65 cents a barrel, and the US dollar showed some weakness with the June futures off 470 at 83.915.

This afternoon we got a little more answers on the Planting Delays/Yield loss versus “rain makes grain” debate via the crop progress/condition update. 

Corn planting came in at 71% planted; up 43% from a week ago; based on planting intentions that is some 41.8 million acres; versus the old record of 34.1 million acres of corn planted in one week.  On the positive note and talk of yield loss note; that means we still have about 28 million acres of corn to plant; after the optimal date.  Which most have as 5-10 to 5-20.  Based on some of the recent moisture and forecasted moisture you can make an argument that some of the last acres won’t get in and if they do get in they will be in very late.  So some of the bulls will still argue that we have a bullish card potential in yield loss and acre loss.  The other card that many will throw out that should have some merit is the fact that with basically ½ of the crop planted in a week pollination might be fairly tight and thus potentially leaves weather more critical during pollination period.

Kevin Van Trump had a good explanation of this in his morning wire today.  “Corn traders will be very interested to see this afternoons USDA "planting progress" numbers. There is no doubt farmers have been burning the midnight oil this past week. In fact several analyst believe Iowa planted over 50% of their crop and as a whole corn planting here in the US will be 60-70% complete vs. just 28% last week. This brings up a very interesting point: With close to 50% of the US crop ALL going in the ground (late) during the same 7-10 day planting window (May 10-20th), I am of the opinion, the price of poker for "pollination" just escalated dramatically. Meaning the mid-to-late-July time period will now be mission-critical for the US corn crop. Any type of extreme heat or dryness could put an abnormally LARGE portion of our crop at risk. Lets also not forget, as our good friend Chip Flory over at Pro Farmer points out, "the corn plant reaches physiological maturity about 56 days after pollination. That means the crop could still be trying to add yield when days are getting too short to gather all the energy needed." Right now I have to believe the market is currently trading a 153-158 type yield number. With over 95 million corn acres almost certain to go in the ground this type of yield does very little to excite the longer-term bulls. However, if we were to see the extend Jun-Jul-Aug forecast show more heat and less moisture, a sub-150 yield could start to become more of a reality and the bulls might once again start to run. Lets also keep in mind I am starting to hear a few more producers talking about switching to shorter varieties (some 82-day varieties even being discussed), the question is how dramatically will the shorter varieties affect overall yields?  With these cards still in the deck, I currently feel that most producers should sit tight with between 40-60% priced or hedged. “

Don’t look at the above comments he makes as super bullish; to me it just means he is comfortable not looking to sell more. But keep in mind that he has done a good job being pro-active and making sales. 

Overall if a guy has 0 sold and you see today’s crop progress report you shouldn’t get bulled up.  You should probably be looking for a spot to lay off some risk and make some sales.  Now our trade area is very tough; because we don’t have that super high APH like areas to the east of us do; we seem to be able to get either one of two things.  A great crop or little to no crop.   So I can more than understand how guys in our area are a little more on the fence for making new crop sales………especially as dry as it had been. 

Plus we are in an area that marketing seems to be a year behind.  Meaning many guys sell what they have in the bins or what they carried over from the previous year.  To the east of us they seem to sell a year out a little more often; with much more confidence.   But if you now have got some moisture and feel more comfortable about our new crop potential don’t be afraid to take some risk off the table should we get another bounce; especially for those bushels that you will have to move. 

Those “have to” bushels are the ones that a guy really needs to be pro-active on.  Having homes or something done in marketing that leaves you comfortable so you don’t get forced into unprofitable or unwanted sales. 

The scary thing for those that have nothing sold for new crop; is the fact that if things shake out negatively it could be sometime before we really get a chance to sell levels at or near today’s new crop bids.  The job of the market will be to find demand should we raise a 13.5-14.5 billion bushel corn crop. That means that we could be waiting for a long time before we see a bounce.  Having said that my hope is that the present carryout projection and crop size is already priced into the market.  I hope that the fact we planted nearly ½ of the crop in a week is already priced into the market.  I also hope that the old crop tightness spills into new crop support.  But as you can see that is a lot of hopes; and hope isn’t exactly the best friend when it comes to marketing or pricing grain.

The one thing that I believe the market does have under estimated is the current situation of most of the “American Farmers”; meaning most don’t have to sell to make payments.  Look at the guys in this area that tend to market a year behind.  Why do they do that? Because they can.

Plenty of producers have plenty of money and plenty of empty bin’s.  So low prices might not happen despite big carryout’s.  Even locally I ask myself what will cause a lot of grain to move?  The first thing I think of is insurance checks; giving guys cash flow.  Check mark one for not having to move grain.  Next is bin room; check mark two for not having to move grain with the lack of winter wheat crop in our area. 

The couple things that I see moving some grain are the comfort level increase via the recent moisture.  I think that will help some move and maybe a little moving before spring wheat harvest.  Maybe some spring wheat moving because many guys put spring wheat into the failed winter wheat and many guys still have most of last year’s (if not the last couple) spring wheat crop.  

The next thing I would see to push grain to move is emptying some bins for fall crop.  So perhaps the excess moves at harvest.  But will much more?  And if a guy ends up getting an ugly price off the combine will that cause him to hold off for even more later?

Bottom line is despite all of the bearish talk on supply and demand realize that one key component to supply has changed the last few years.  That is the success and financial situation of the American Farmer.  Many guys can afford not to move much grain; they simply don’t have to like they used to.

Back to the crop progress report.  Winter wheat condition was dropped 1 % point in the G/E category. I did notice that South Dakota was up 3% points……….that made me scratch my head.  Wondering if they no longer count all of the stuff that was zeroed out in the past week or so? Or maybe they seen the couple of summer fallow fields that did look like they had a small improvement?

Spring wheat planting came in at 67% planted which means it also has caught up to the 76% on average.  Keep in mind those averages are all skewed a little bit from last year’s super fast pace.  North Dakota is at 50% spring wheat planted and 61% corn planted; that is the area that looks like it could be losing some acres.  But based on conversations with contacts I am not so sure that we are losing any spring wheat acres yet.  By the sounds of it we could actually be gaining a few from the corn acres.  I think guys might have preferred to PP it; but much of the ground had got some fertilizer on it thus PP isn’t the best option. 

Soybean planting came in at 24% planted versus 42% on average. In line with estimates.

That is one thing we should take from these numbers this afternoon.  In line with estimates; not new news.  So don’t have to trade them; we could but we don’t have to and if we do we shouldn’t trade them for too long of a period.

Other news out today; include export shipments.  We seen decent wheat and corn numbers.  Both above what we need on a per week basis to meet current USDA estimates.  Beans were light only about ½ of what is needed on a per week basis.

Continue to see comments of bigger Russia wheat crop.  I still think that is early but it needs to be on our radar.  We need to see some sort of bullish news and preferably the demand kind for wheat to really rally.  It takes more than the old news of bad United States crop; otherwise we wouldn’t be under pressure.


Below are a couple of links from CHS Hedging; Crop progress info and CFTC Commitment of Traders.

https://www.chshedging.com/UserFiles/Documents/2013/Research/USDA%20Crop%20Progress/Crop%20Progress052013.pdf

https://www.chshedging.com/UserFiles/Documents/2013/Research/CFTC%20Commitments%20of%20Traders/CFTC051713.pdf

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

Thanks

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives