Opening Comments 8-5-13

Markets are called weaker this a.m. behind a weak overnight session and idea’s that we have a huge crop with ideal weather.

When the overnight session ended September corn was down 9, December corn was down 5, KC wheat was down 4, MPLS wheat was down 3, CBOT wheat was down 3, August soybeans were down 12, September beans down 21, and November soybeans down 7.  At 8:20 outside markets have the US Dollar unchanged, crude is down a little over a buck a barrel, gold is off 4 bucks an ounce, and the DOW futures are pointing towards a softer start of about 20 points.

This a.m. the big headline remains rains hitting and good weather for most areas.  The funds keep taking this headline and selling down our grains.  Yes we have an issue and concern with crop development; but it is not taking center stage right now.  Taking center stage is the idea of huge crops on huge acres both here at home and in other parts of the world.  It really feels like we are in the ECON 101 stage were high prices have cured high prices via huge acres and questions on demand.

INFORMA will have some crop estimates out this a.m. and a week from today the USDA will have their monthly Supply and Demand report.  Perhaps we can get a little bounce or some of short covering ahead of this report.  I am not sure what yield or production INFORMA will peg things at; but I did see Doanes crop tour at 161.2 bushels per acre last week on corn and soybeans at 43.2 bpa.

As we sit presently most of the info really should be known and more and more people and even producers are moving to the bear camp.  The funds have moved to an extreme position in regards to short corn.  But that doesn’t mean they can’t continue to jump on the short side and push this thing lower.  It does say that we are just one catalyst away from a potential bounce.  But what catalyst could happen to turn things around?  As it sits right now an early freeze is the most likely option; but maybe it will just simply turn around when we finally have everything price in.  At a point when most least expect it?

Here is CHS Hedging CFTC Recap. 

https://www.chshedging.com/UserFiles/Documents/2013/Research/CFTC%20Commitments%20of%20Traders/CFTC080213.pdf

Maybe China will help out in the near future.  It sounds like they have some major issues for many of their grains.  This is what the Van Trump Report mentioned about China this a.m. “The worst "Heat Wave" in the past 140-years has killed dozens and left crops severely stressed in many Chinese cities to the south and east. Shanghai, where average July highs are in the mid 80s to low 90s, hit the century mark 14 different days in July. From what I am hearing little relief is expected in this region, as triple-digit heat is likely to persist well into early August across these same areas. It is being reported that crops in these areas are starting to really run into problems. Certainly worth keeping on the radar screen.”

As for today we will have a crop progress report out this afternoon and this a.m. we will have export shipments as well as INFORMA.

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