Markets are called better this a.m. on follow threw from
yesterday’s report and a firmer overnight session.
In the overnight session corn was up 3-4 cents, KC wheat was
3 higher, MPLS wheat was up 3, CBOT wheat was up 4-5 cents, and soybeans were
up 8-10. At 8:10 outside markets have
the US Dollar up 400 points at 81.7 on the cash index, crude is about unchanged
at 106 on the September contract, gold is down 2 bucks an ounce, and the equity
futures are pointing towards a positive start of about 35 points for the DOW.
Today it seems to be about the USDA report we had out
yesterday and how weather will allow the crop to finish off. Below are some CHS Hedging links, the first
one is a good recap of the USDA report, the second is a video of the report,
and the last is the crop condition update.
As for the report it came out friendly and bullish versus
the trade estimates. But I don’t know that
the actual headlines are so friendly that we need to go screaming higher for an
extended period of time. We should
continue to see a little short covering bounce, but the big headlines for our
corn and soybean carryout’s are still bearish versus the present year and
versus the past several years. Now if
mother nature makes the crops smaller things could get tighter and right now
mother nature looks to be dry in many key soybean growing areas.
But the big headline of a corn carryout of 1.8 billion
bushels is not exactly super bullish; so if this wasn’t an extreme game
changing report perhaps we have some risk that this is just a short covering
rally. They say short covering rallies
are short lived. I also read and
listened to a lot of info since the USDA report came out and many thoughts are
that the corn yield goes up from here.
This is from Lasalle wire last night…………… “Ear counts in the 10 objective yield states were the 3rd highest ever…but
the USDA derived ear-weight is the 3rd lowest in the last 10 years. This is leading many to
believe that this is the lowest crop estimate for the year / upcoming crop
estimates will be larger. We lean in that direction, too…however, for stats
purposes, we will use the USDA crop estimate for now. It still leads to plenty
of carryover stocks for 2013-14.”
Bottom line is I think for
saying that a bottom is in purposes I would have rather seen a more bearish
report; so the market could say now what.
But what the USDA gave us was a report that is leaving many in the trade
thinking the crop gets bigger.
Technically what the corn
market does in the next few days and how it finishes off the week will be
rather important. If we can hold and
bounce just a hair higher we can leave a lot of buy signals on some of the
charts.
As for the soybean market I think
we are in the stage were our crop will be made or not made. So weather will be very important over the
next few days and weeks. We have potential
to add back to our soybean yield or continue to take it lower depending on how
mother nature shakes things out.
As for wheat I thought the report was good; but we also need
to remember that plenty of our competitors had their crops raised. Yes our wheat carryout is as low as it has
been in years but one other headline is record world production. Record production is not a bullish headline.
Overall for risk management purposes I think we need to be
cautious thinking that we have this super rally coming; I just don’t see
fundamentals at this point telling me to buy buy buy………… now maybe down the
road things will change if crops get smaller.
But we need to keep in mind that we didn’t exactly lose carryout one for
one as we did production. So in the
future if we do lose more production look for the USDA do use their magic pen
again and simply drop demand to partially offset any production loses.
I think for risk management purposes one needs to keep eyes
open and realize that yes the report yesterday was a step in the right
direction; but in the very near future there is no guarantee we will be higher
than we were before the USDA report; so find a way to make comfortable
marketing decisions.
As for what we really need to go higher. I think it is simply a catalyst that helps
turn the charts and gets the funds back closer even. Now I don’t know what that catalyst is; I hoped
it was going to be yesterdays report; but as I sit right now I question that the
report was enough. Bottom line is we
need something to turn around the sell momentum that the funds seem to have.
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