Markets are called mixed/better this a.m. behind a choppy
overnight session and supportive crop progress data last night.
Corn spend most of the overnight session firmer; but when
the overnight session paused it closed up ½ cent on the July contract, while December
corn was unchanged, KC wheat was up 3 cents, MPLS wheat was up 4-5 cents, CBOT
wheat was up 3, and soybeans were up 6 cents a bushel. Outside markets have a weaker US dollar with
the cash index at 82.10, equity futures are pointing towards a positive start
of about 40 points on the DOW, crude is off 40 cents, and gold is down 18 bucks
an ounce.
A little disappointing to see corn only mustard an unchanged
after the beating it took yesterday along with yesterdays crop progress coming
in at only 12% which would be the lowest since 1984. But I guess we will see how things shake out
with the pits re-open here in 15 minutes or so.
As for new news this a.m.; not much to report. We have a crop that is flirting with losing
acres and potentially yield; but we still have some open forecasts that might
allow for things to move quickly in a week or two.
One thing the trade seems to focus on is how fast acres can
be covered when given the opportunity.
Just look at your own operation; how many more acres can you do in a day
versus 5 years ago? What about 10 or 20
years ago? How much more efficient and
bigger equipment do you have?
Friday we will have an updated USDA Supply and Demand
report; with a first look at 2013/14 carryout levels. Market is looking for very little changes on
the old crop balance sheets; while they are looking for a big year over year
increase in the US carryout numbers for corn and soybeans; while they are
looking for a decrease in the US wheat carryout year over year. For the world numbers market is looking for
an increase across the board for carryout numbers in comparing this present
year versus new crop.
One thing that we have to keep in mind is what happens in
some of these other countries. I lot of
guys think that if we have more corn we will export more corn; but I don’t know
how easy it will be to regain some of that business that we have lost. It’s not like our competing countries are
just going to say go back to the United States we don’t want the export
business.
The export card is also a reason to not get over bulled up
on wheat; despite the horrible crop down south and locally. We still need to export some; keep in mind
that for wheat we are typically exporting around half of what we grow. On the positive side we could easily see some
hiccups around the world in the wheat production. I am hearing some concern in regards to
Australia who is presently seeding wheat.
I haven’t seen much for changes in the forecasts that pushed
us lower yesterday; but they do get updated numerous times a day; so keep your
eye open. From what I hear one more
major system in the heart of the corn belt could push things back close to
memorial day for many. Bottom line is in
regards to weather we should expect volatile choppy markets. One day they can be selling us off because
rain makes grain and the next they might run us up because things are so far
behind. Just depends what side of the
half empty glass “big money” sees on a given day.
The one thing that the late planting is opening up is
potential fireworks later. First off
late planting opens the door to potential early freeze production and quality
loss. It opens the door to early snow
storms that don’t allow for harvest to be complete in Oct/Nov. It opens the door to high potential of warm/hot
and dry weather during pollination. It
also opens the door for old crop tightness; in the past couple of years we seem
to have had some new crop early enough that we didn’t run out of the old crop
corn. How tight could things get come
August/September/October in some areas?
Bottom line is the market could look at the present weather
and sell things off or they could decide to look at it and run things up; not
sure which way they will look at it on a given day. But the present weather does open up some
other cards that potentially give us fireworks later. That doesn’t mean to get too bulled up; but
just realize that things tend to get over done in our markets. We go up and down more than we probably
should on many days. Stay disciplined
but get yourself comfortable and be pro-active as we really don’t know what the
next card that mother nature or “big money” will play. If we did these markets wouldn’t be called
future markets.
Please give us a call if there is anything we can do for
you.
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