Markets are called mixed to weaker this a.m. behind a mixed
overnight session.
When the overnight session paused old crop corn was down ¾ of
a penny a bushel, new crop corn was down ½ of a cent, old crop soybeans were up
5 ½ cents a bushel, new crop soybeans up 2 cents a bushel, KC wheat down 3,
MPLS wheat was off a penny, and CBOT wheat was off a nickel.
At 8:15 outside markets are surging with the US dollar up
620 points at 84.206 on the cash index, equity futures point to a positive
start of about 40 points on the DOW, crude is up a buck, and gold is down
another 11 bucks.
The US dollar took out last year’s highs and is now at its
highest spot since late June/Early July of 2010. As mentioned a few times the last couple of
days our grains made our lows June 29th 2010; the day before the
June 2010 USDA stocks and acre update.
At that time July corn on the board got down to 3.25. The US dollar isn’t at its highs it made it
June of 2010; but it is trading at about the same level it was a week or so
after the grains made their lows. Not a
good reason for the funds to get super interested coming back into
commodities. Spec money seems to prefer
the commodity play as a hedge against inflation and inflation typically happens
more with a weaker US dollar. A stronger
US dollar also doesn’t help our export potential; it makes us more expensive as
we try to sell grain.
It does look like parts of the EU have some decent rains
forecasted and that is pressuring the wheat market a little bit. I have also seen comments about the recent
moisture and expected moisture in the United States in the next few days; those
comments indicate that because of the slow developing winter wheat crop the
moisture could be beneficial.
INFORMA is expected to release its acre estimate updates
this a.m. The market might be watching
to see if they think we have added prevent plant acres or lost acres in general
do to the moisture. I am not sure if
they will have a production number. The thing
about the slow planting and production numbers is the fact that we can afford
to lose some based on our present balance sheet. It might take losing some to get the funds
interested. Think of it this way; they
look at the USDA numbers and see 14 billion bushel production and 2 billion
bushel carryout; none of them say well that’s bullish I should buy. It probably takes losing the top end of the
current ideas before we have a real good chance of getting the funds too
interested.
Sounds like South America is giving some support to the bean
market. Argentine producers don’t seem
to be interested selling and are reluctant sellers; the crushers down there
have only been able to buy 10.7 MMT versus 12.5 MMT a year ago; despite a larger
crop. Also hearing talk of an on again
off again strike in some Brazilian ports.
We did sell a few old crop soybeans to unknown today; as well as new
crop soybeans to both unknown and China.
Weather should be the driving factor; but we probably won’t
know until Monday if it is a rain makes grain or if moisture is taking away
some of the top end yields via late planting and if it is losing acres. Plenty of debate around on that topic. Some guys are “mudding it in” and that also
might cause some issues later. The other
thing to remember about the late planting is the fact that some of its effects
won’t be known for several months.
Below is comment on weather from the LaSalle Group “Weather appears to be bearish for the most
part. Probably had record week of corn planting. Farmers
going 24 hours per day. Heavy rains are starting to fall in the NW
of the corn belt and will continue to move eastward into next week.
Most of the heaviest amounts should be confined to the Dakota's and
Minnesota. Temps will warm following the rains and dry out in most
of the belt. Would think corn progress is somewhere between 60 -
65% and beans 20 - 25%.”
Old
crop soybeans and corn remain extremely tight; with good margins for the
ethanol plants and that should help ease some of the weakness seen in new crop
should things pan out the way some are thinking. But it will only take us so far; plus the
funds seem to own some old crop futures; they might not want to hold on if they
think that new crop is bearish.
The
other thing I have noticed a lot the past couple of weeks is the fact that many
advisors are bearish and making sales for 2013 crop and some for 2014. I don’t think producers are following them
and that is one component missing from making a possible bottom. We have many in the industry bearish, we have
spec’s bearish, but we don’t have too many bearish producers. Markets like to turn when everyone starts
betting on the same thing; we don’t have that yet.
Please give us a call if there is anything we
can do for you.
Jeremey Frost
Grain Merchandiser
Midwest Cooperatives
800-658-5535
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