Markets are called mixed/choppy this a.m. behind a mixed
overnight session.
When the overnight sessions ended July corn was up 4 cents, December
corn was up 4 cents, KC July wheat was up a penny, MPLS wheat was up 2, CBOT
wheat was up 4, July beans up a penny, and November soybeans down a penny. Outside markets have a US dollar about
unchanged at 83.21 on the cash index, equity futures are pointing towards a
lower start of down about 15-20 on the DOW, crude is down 90 cents, and gold is
off 4.50 an ounce.
Last night markets opened lower; but did manage to bounce as
the session went on mainly behind the concern of getting the corn crop
planted. This afternoon we will have
crop progress and the average estimate is all over the board; I have seen some
as high as 40-50% but most of them are closer to 30 %; just a huge range. 29% in 1984 is the slowest pace on record.
Bottom line is if we are something close to 30% and don’t
get going in the next few days the deferred forecasts are wet; with much of the
corn belt including parts of our area called for above normal moisture. Same with the 8-14 day; above normal for most
of the corn belt and once again including our area. We will take the moisture with arms wide
open; but many parts of the corn belt are not looking for it. From what I hear this might lead to some planting
in the mud and that might open up more concerns later down the road.
The other thing that our slow crop opens the door to;
include early freeze, pollination possibilities when it is hot and dry, and no
early relief to the tight old crop situation.
When I look at the balance sheets that the USDA provided I question
how important or critical the current slow corn planting place is. But only because I don’t know what it could
mean to production. Could production
ideas still range from 13.0-15.0 billion despite slow planting? How many acres will we need to lose for the
market to be trading production closer to 13 billion then the present 14
billion that was estimated on Friday?
And if we dig deeper I question how fast demand bounces back; if we grow
a 13-14 billion bushel crop can we gain back most of the demand we lost the
past couple of years? Can we gain back
more than we lost? If we are going to
gain demand back will it have to come from a lower price? If so how low of a price?
Other news out there this a.m. include export inspections
that will be out at 10. As mentioned
above this afternoon we will have crop progress/condition report. Later this week we will have a NOPA soybean
crush number out and that will be a good gauge on soybean demand. Have we curbed any? Or do we still have some
potential fireworks in the future?
South Korea does have a tender out for more corn. Last week they bought 400k tones of corn/feed
wheat.
We did see a little cold weather in some of the upper
eastern corn belt; but CBOT wheat futures are not responding and it doesn’t
look like the damage was significant if any.
Bottom line is we are now in a weather market and we could
be and should be choppy and volatile.
Keep in mind that one of these days too much rain will be a bad thing to
our prices.
In regards to wheat I think it is a potential big sleeper as
I thought the USDA overstated HRW production.
But we need to keep in mind that the issue with wheat isn’t our crop;
the issue or thing holding wheat back is the crops around the world. Production estimates are for bigger crops in
Australia, Ukraine, Russia……….etc. Basically
the whole world can raise wheat and the latest USDA forecast is that the whole
world will raise wheat. So I think wheat’s
game is now what happens in other places.
Perhaps when the combines hit the United States we can get a spike up;
but basically the USDA said it doesn’t matter what we raise because everyone
else will be picking up the pieces. Now
the thing to keep in mind for wheat grown in the world is similar to what the
USDA did for our corn crop the last couple of years. Early projections seem to be the potential;
but are they realistic? Meaning we could
easily see some of those production slip ups.
Keep in mind that the 2010 rally started because of the Russian wheat
crop and that didn’t start moving our market until July and into August.
Please give us a call if there is anything we can do for
you.
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