Morning Comments 10-16-12

Markets are seeing a small bounce on Tuesday a.m.

Around 9:20 we have corn up 6 cents, beans are up 11, KC wheat is up 7, MPLS wheat is up 6, and CBOT wheat is up 7.  Outside markets have a softer US dollar with the cash index at 79.428, crude is floating near unchanged, and equities are firmer with the DOW up 99 points.

First off crush sunflowers went down twice yesterday; first when they did normal bids; but then again at 5 the crush markets took bids down another 50 cents.  This a.m. with the small bounce in bean oil they are only down another 35-40 cents.  Bottom line is the sunflower market in general is seeing a little pressure; I don’t think it is from our area in general; but further North.   One good thing I see on the sunflower market is that many areas are getting close to being done so even though there is some pressure today it feels like we are getting near a support area.  I do think that producer ownership might keep a lid on things unless demand really picks up as it seems like everyone has way more sunflowers in the bins then they normally do.  So for sunflowers to run after harvest producers will have to be very tight fisted.

Not tons of new news out this a.m. it seem more like a dead cat bounce or Turn around Tuesday; our markets have been just a little over done the past couple of sessions.

We did fail to completely close the “gap” left on beans; so that has lead to a little more technical buying.  We also sold 110k tones of beans to unknown; once again most likely China.

Corn harvest was 79% complete; hopefully that means we are getting close to a seasonal bottom or have already made that bottom.  It does feel like basis wants to move higher; but buyers are very hit and miss with many starting to go more to a hand to mouth versus deferred ownership.  Many of our ethanol buyers just can’t lock in good margin on deferred slots so it doesn’t make sense to have tons of ownership at a loss.  Some buyers also think that many of the elevator piles this year might have to get picked up earlier because of condition.  That I would agree with.

Weather remains very dry in Australia; while most of South America is on the good to wet side.  So ideas remain that the Australia wheat crop is getting smaller; while prospects are for a huge South America Bean crop.  Now is it early for that?  Yes as they are just planting; but it is a headline and headlines are what we need to have the funds involved.

If we are going to turn this thing around we really want to see headlines switch to strong demand and I don’t think that has much of a chance of happening for anything other than beans any time soon.  So if we rally look for beans to lead the way.  Now after the first of the year perhaps that changes and demand for wheat or corn could lead us up then; but right now neither corn or wheat seem to be great candidates for leading our markets higher.  As they both lack demand; having said that they seem to have be near support areas too given the tightening balance sheets; so I don’t look for either of them to lead us much lower.  I think the next real big movement will be beans; up if we find solid demand or have any weather issues in South America or down should the crop be much bigger, demand slip, or we just fail to give the funds a reason to be long.

With the greatly volatile markets and unknown factors out there please give us a call if you want help doing a marketing plan or if you would like to have some offers out there.  And make sure that you are comfortable given the sever possibilities that are out there.

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

Thanks

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

Overnight Highlight's from Country Hedging's Tregg Cronin 7-24-12

Outside Markets: Dollar Index up 0.072 at 83.778; NYMEX-WTI down $0.17 at $87.99; Brent Crude down $0.31 at $102.94; Heating Oil down $0.0114 at $2.8075; Livestock markets are mostly firmer; Gold down $3.10 at $1574.00; Copper is down $0.0200 at $3.3610; The Yen and Aussie are firmer while all other major currencies are weaker; Cocoa and Cotton are firmer, while all other major currencies are firmer; S&P’s are up 3.00 at 1340.75, Dow futures are down 15.00 at 12,630.00 and Treasuries are lightly mixed.

Equity futures are mostly steady, although most everything was lower in the overnight until German Chancellor Merkel came out in opposition to Moody’s knocking Germany’s credit rating outlook to negative from stable.  She reiterated Germany will remain in stable financial condition through sound fiscal policies, and markets seemed to like it.  It didn’t push any confidence towards Spain, however, with their 10-year Treasury yields rising towards 7.53% and their Credit Default Swaps up to 640bp.  Balancing the gloom from Spain was China’s manufacturing sector clawing back towards growth in July.  The HSBC PMI for July rose to 49.5 from 48.2 in June.  This would seem to suggest the monetary easing done the last several weeks is having an effect.

More rains fell overnight in the upper Midwest, dropping in MT/ND/SD/MN with nice rainfall occurring in the Twin Cities this morning.  A path from Alexandria, MN to Rochester has already received upwards of 1” with no signs of the system quitting anytime soon.  The 5-day forecasted precip map shows the current system to continue across the Great Lakes Region and drop down into the ECB with IN/OH/WI/MI receiving 1.00-2.50”.  IA/MO/NE/KS should be quiet aside from the occasional pop up shower.  Temps in the corn belt yesterday were hot with 90’s in the north of I-80 and 100’s elsewhere.  The weekend should once again be dry, with chances of rain in IA/IL by the first part of the week, although coverage amounts differ.  Temps will cool into the mid to upper 80’s for most areas next week with some low 90’s possible in the West.  The 11-15 map is showing a general drink for the corn belt, but not much confidence at this point.  NOAA’s maps were notably hotter and drier than the privates we subscribe to.  Australia is dormant.

Additional selling pressure showed up at the overnight open last evening, and has carried through this morning led by the soy complex.  Soybeans once again found themselves down as much as $0.57 after dropping near limit the prior session.  The maps turning a bit more favorable definitely has some thinking this soybean crop is still salvageable, although one must certainly acknowledge the run we were on and how badly we needed a correction.  Private scouts continue to cut yields, and most are giving almost no yield chance to double crop acres.  If, and it’s a big if, the rains fall as scheduled, it would seem we can stabilize this crop, but few think we can push yields back above 40bpa which is where they need to be to stifle this rally.  Dec corn saw only moderate losses overnight.

The crop conditions declines yesterday were supportive for corn, although it seemed as though the drop on soybeans wasn’t enough to please the trade.  In overnight headlines, The Ag Minister of Kazakhstan cut their export forecast to 10MMT, down from 12.1MMT last year.  They were likely to harvest 12.8MMT, not the 14MMT previously forecast.  It would seem FSU crops are not done declining.  The government also scrapped transportation subsidies due to rising commodity prices.  Russia has exported 902,000MT of grain in the first 18 days of the marketing year consisting mainly of wheat.  More chatter overnight about the Pacific moving into El Nino and this affecting Aussie and Indian crops.  FWIW, El Nino is typically associated with above average South American crops.

Open interest changes yesterday included an increase of 8,860 corn, 4,140 wheat, and 1,540 soy oil.  Beans were down 6,110 and meal was down 4,200.  Chinese markets dropped sharply overnight with soybeans down 70.25c, meal down $18.20, oil down 186c, corn down 6.75c and wheat up 1.25c.  Paris wheat is down 23c, Rapeseed is down 28c and UK feed wheat is down 20c.  Overnight headlines said the US won’t be the only one with a below trend corn crop as yields in the EU are forecast to be down 12% from last year to 6.73MT/ha.  This would be the lowest yield since 2007.  France and Germany, the wheat exporters of the EU, are in better shape and have been raising crop estimates, however.  Doane Advisory Service kicked off their annual crop tour yesterday and said yields in IL were 27% smaller than a year ago and 21% below the final USDA forecast in the three crop districts they looked at.  Yields ranged from 70-202 within a 30 mile stretch.  Soybean yields were forecast down 16% from last year and 27% from the USDA’s guess in Jan.  

Call things weaker today as we continue to consolidate the rally from the last couple weeks and as rains fall across the upper-corn belt.  The market believes the soybean crop is still salvageable, and as long as that is the case, we can take premium off.  We’ve been goaded into believing wet maps before and it has proved to be for naught.    Bottom line is soybeans have an incredibly tight balance sheet with trend line yields and those look less likely today.  Make good sales along the way, but the final note hasn’t been sung yet.

Trade as of 7:10

Corn down 8-13

Soy down 29-34

Wheat down 9-18

The Spring Wheat Tour begins today so expect yields from ND throughout the session with the tour wrapping up on Thursday.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlight's from Country Hedging's Tregg Cronin 7-23-2012

Below is from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.176 at 83.654; NYMEX-WTI down $2.61 at $89.20; Brent Crude down $2.90 at $103.93; Heating Oil down $0.0676 at $2.8567; Gold down $10.80 at $1571.70; Copper down $0.0915 at $3.3570; The Yen is firmer, but all other major currencies are weaker; Most all of the softs are weaker; S&P’s are down 15.50 at 1343.00, Dow futures are down 151.00 at 12,622.00 and Treasuries are firmer.

Financial markets are getting rocked this morning as investors grow weary of Spain’s worsening economic picture and as their borrowing costs push to new Eurozone records over 7.50% on the 10-year.  Six more Spanish banks are said to be getting ready to tap bailout facilities in coming days.  RBC Capital Markets said in a statement they have advocated staying away from Spanish and Italian markets and they see no reason to change this view.  This will push borrowing costs higher and increase the likelihood of an emergency EU-Summit and further bailout funding.  Energy markets are responding in kind as well, slashing off significant premium following the strong runs they had last week.  The CRB-Index should trade sharply lower today after hitting the highest levels since May.

Rain totals over the weekend were heaviest in SD/MN/MT and more rain fell south east of the Ohio river.  Totals were heaviest in S-SD where the southern part of the state saw localized totals up to 2.5”.  This rain was needed very badly, especially ahead of the extreme heat the next 3-days.  More rain is falling across SD this morning.  5-day forecasted precip maps show much of the northern corn belt to receive a good soaker the next 1-3 days.  Heaviest totals should be in MN/WI/N-IL/N-IN/MI/OH.  Temps the next 3-days will be over 100* for almost everyone south of I-80.  6-10 days maps show chances of scattered precip around, but no soaking event.  The 11-15 has some rain in the WCB and in WI, but again no concentrated event.  Temps are expected to remain normal/above, but nothing extreme like this week.  90’s will be common place in the WCB.  The 11-15 sees some additional ridging to occur bringing average rains to MT, the Dakotas and north of I-80, but dry to the south.  Less than ideal, but the rains this week should help stabilize things.

Some pretty heavy profit taking hitting our space overnight, thanks in large part to the outside markets and a general sell mentality, but the maps taking on a bit more favorable tone is probably also contributing.  As many have said, rains cans till help the soybeans at this point and the corn in the west, but the temps the next 3-days will do their best to push things backwards further.  Condition ratings are expected to drop another 3-5% on both corn and beans.  The constant talk of demand destruction already taking place isn’t making anyone happy either.  These crops are still in the discovering phase, however, and until we discover how small this crop is, it will be difficult to take prices considerably lower to where end users are willing to step up.  Big ranges last night: corn 33c, beans 56c, wheat 37c.

In headlines, JP Morgan said July rain has improved yield prospects across eastern Australian canola and wheat areas.  JP is estimating total winter crop production in the three eastern states is now estimated at 19.7MMT vs. ABARES latest guess at 18.4MMT.  Western Australia is equally as important, however, as the majority of the exporting facilities are located on the west side of the island.  The Chinese Customers Administration said June soybean imports were up 31% y/y to 5.62MMT.  June corn imports were 528,647MT and wheat imports were 216,742MT.  Jordan finally bought the 100,000MT of wheat they retendered for twice at $343/MT from Ukraine for Aug/Sept delivery.  Also, Ukraine was reported to have harvested 15.86MMT of grain as of July 20^th, about 72% of the total are seeded.  Yields were 2.22MT/ha.  This compares with 19.33MMT last year and a yield of 2.89MT/ha.  Spring planted acres were up 17.1%.  The Financial Times carried a story about US meat companies importing Brazilian maize due to its competitiveness.  Link below.

Open interest changes during Friday’s session included an increase of 4,400 wheat, corn up 9,780, beans up 680, meal up 180, and soy oil down 5,260.  Chinese markets were mixed with beans up 9.25c, meal down $3.80, soy oil down 122c, corn up 0.25c and wheat down 11c.  Malaysian palm oil was down 52 ringgits, Paris Milling wheat is currently down 19c, Rapeseed down 16c and UK feed wheat is off 19.0c.  There was some heavy length added by the speculative funds in corn and wheat last week, and I’ll have a better breakdown in tonight’s comments.  Also worth noting spec funds are now long natural gas, something which hasn’t been the case since 2007.

Things are likely to be weaker the majority of today, and then we’ll get a look at crop conditions after the close and see if this crop is still slipping.  There are some very good looking fields in the upper corn belt, and the weekend’s rains as well as those forecasted should go a long way to stabilizing some of those.  The more confidence a guy has in his crop, the more aggressive he should be taking advantage of these record prices.  The market is not going to pay you to store the crop this year, so keep that in mind.

http://www.ft.com/intl/cms/s/0/41ce586c-d29d-11e1-abe7-00144feabdc0.html#axzz21Ra2DwYK

     

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights for 7-18-2012 from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.289 at 83.321; NYMEX-WTI down $0.47 at $88.74; Brent Crude down $0.29 at $103.69; Heating Oil down $0.0058 at $2.8364; Cattle steadyish and hogs weaker; Gold down $12.10 at $1577.40; Copper down $0.0015 at $3.4530;  The Yen is firmer, but all other major currencies are firmer; Cotton and Lumber are firmer, but all other softs are weaker; S&P’s are down 4.50 at 1354.00, Dow futures are down 33.00 and Treasuries are slightly bid.

Financial markets are fairly subdued this morning as we await the second testimony in front of Congress from Fed Chairman Ben Bernanke.  At first, markets didn’t like the somewhat hawkish tone he took yesterday, and started to sell off.  By the close, however, investors seemed to realize his stance hadn’t changed all that much and instead focused on some better than expected Q2 earnings.  In other news, the Bank of England policy makers may reconsider the case for an interest-rate cut after assessing the European debt crisis.  They did vote to increase their bond buying program by 50 billion pounds.  The Czech Republic’s borrowing costs fell to an all-time low at today’s auction.  The average accepted yield on the 2021 security fell to 2.316%.  Their rating is A1.

Some badly needed rains fell in parts of the northern plains last night with KELOLAND reporting 1.0” amounts in Winner, SD and as much as 3.0” between Aberdeen and Webster, SD.  Elsewhere, areas along the ND/MT border picked up between 0.10-0.50” with localized amounts near 1.0”.  That system continues to track across SD and MN this morning and should impact WI later today.  5-day forecasted precip maps show WI getting 1.4” by Monday while IN could see a broad 1.0” and areas SE of there should also see meaningful rainfall.  IA/IL/NE/MO should be quiet.  Not a ton of change on extended maps with the 6-10 seeing scattered precip across the Midwest, but nothing of huge totals.  The 11-16 calls for weak riding to bring average/below precip and average temps.  Dry weather continues to dominate Australian wheat growing areas and should continue to do so the next 10-days.  Most areas are in good shape following decent precip recently, but the forecast is not a good one.

Similar to the day before, grains are starting out on a weak note, enduring a bit of profit taking as prices pushed to either new contract highs yesterday or remained near the highs for the move.  Wire services continue to be flooded with stories about supply and demand, which is keeping grains uneasy enough at the moment.  Lots of price forecasts are being thrown out this morning including Newedge saying corn may rally to $8.50 as production continues to drop.  Their yield forecast fell to 134.9bpa.  Accuweather dropped their yield forecast to 138bpa.  It would seem corn prices above $7.50 are pricing in a yield below 140, but not quite towards 130bpa.  If we can’t get a pattern change over Iowa the next 10-days, we should make a push through all-time highs at $7.99 ¾.

Headlines last night included India saying it will consider limiting the quantity of food commodities that traders can stockpile as the weakest monsoon in three years fuels a food price rally.  At the same time, 60% of their growing region has received below average monsoon rains.  A survey for the Cattle on Feed Report Friday says feedlots placed 1.5% less cattle than a year ago, inventories will be 2.56% higher, and marketings will be down 5.977%.  Many think feedlots pulled back on the reigns already last month, but declining pasture conditions probably added more cattle than people realize.  The Australian Bureau of Meteorology said there is a 60-70% chance Australia will receive below-median rainfall the next 3-months due to El Nino.

Pork prices in China fell last week, but have been showing signs of stabilizing.  Average wholesale price was $3.20/kg, down 0.7% w/w.  Last week’s prices were still down 23.5% y/y.  As US pork prices continue to fall, may be easier for China to import pork as opposed to bring in feed supplies such as corn and meal.  In export news, Jordan once again canceled a tender for 100,000MT of wheat (second time now).  Japan was also said to have canceled a tender to buy 320,000MT of feed wheat and barley due to high prices, but have since retendered.  Russia harvested 17MMT of grain up to July 17^th vs. 14.64MMT last year as the drought ripened things faster this year.  O/I changes yesterday included an increase in corn of 11,970, wheat up 380, soybeans up 5,320, meal up 4,160 and oil up 1,060.  Chinese markets were slightly weaker overnight with soybeans down 6.50c, meal up $3.00, oil down 43c, corn down 3.50c, and wheat down 6.50c.  Paris wheat is currently down 1.50%, Rapeseed down 0.77% and UK feed wheat is down 0.91%.

Call things lower today as we chop around and continue to consolidate the recent gains.  It certainly doesn’t feel like the top is in considering the weather pattern is far from changed and the supply hasn’t stopped going down.  Demand stories are popping up on corn daily, but until we determine the supply, we can’t assume the rationing job has been completed.  Soybean and wheat have their own stories to keep them supported, but it does feel like one big trade.  Constantly assess available supplies and % marketed.

Trade as of 7:15

Corn down 2-5

Soy down 3-5

Wheat down 2-9    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Steinhoff's over night comments

Below is Country Hedging's Chris Steinhoff's overnight comments

Crude oil is 30 cents lower, ethanol is 2 cents lower…gold is down $10.00, silver is 28 lower…Dow, Nasdaq and S&P futures are weaker…US$ index is 0.270 firmer

Corn….two sided trade overnight but lower this morning on a bout of profit taking and appears to be sliding further as the work day begins

                …scattered but unconfirmed rumors of China cancelling corn cargoes

                …very little rain fell yesterday/overnight…temps heat back up

                …crop is most likely smaller today than it was yesterday….

                ….signs of demand slowing may not be enough, it may be a market where we need to  put people(end users) out of business

                What price is that? $8.00, $9.00 or even $10.00…may depend on how small this crop gets

Trading 4 to 8 lower…profit taking

Soybeans….not much rain and running out of time as the crop will be earlier than most think and rains may be too late when they come

                …beans also see supplies become tighter faster than demand slows

                …China is always a threat to buy something

                …US meal sales have been very strong….china crush margins have been negative for months

Trading 2 to 5 lower

Wheat…winter wheat harvest is on downhill slide with yield reports consistently a little better than expected

                …spring wheat harvest begins in earnest in SD and scattered in MN and ND

                …expectations are for a good yielding crop…..protein expected to be high

                …japan seeks 120tmt feed wheat

                …Australia sees 9 month wheat exports at 14mmt, up 16% from year earlier

Trading 5 to 10 lower…

afternoon grain market comments from Country Hedging's Tregg Cronin 7-12-2012

Below is from Country Hedging's Tregg Cronin

No full write up today, but some comments worth sharing:

First up, both weather services we use were less aggressive with rains in the central belt this weekend.  One is looking for spotty rains across E-IA/IL/WI/MI/N-IN now thought to be less than 0.20”.  The Northern Plains should be quiet the next 5-days.  The other said they reduced their 1-5 day coverage 5% to 40% through Monday.  Then the heat gets turned back on beginning early next week with Chicago forecast to hit 100* on Tuesday.  10-day highs for select cities below:

Sioux Falls: 87, 92, 91, 92, 92, 93, 89, 92, 94, 92

Omaha: 91, 95, 97, 95, 95, 95, 94, 95, 98, 96

Des Moines: 90, 93, 94, 96, 96, 95, 93, 98, 95

Decatur: 92, 90, 89, 93, 93, 93, 93, 92, 96, 95

Marshall, MN: 88, 89, 91, 90, 91, 88, 89, 93, 88

Indianapolis: 91, 85, 86, 90, 91, 91, 90, 89, 91, 94

Madison, WI: 91, 94, 92, 90, 94, 94, 91, 89, 93, 95

Very few overnight lows below 70* it should be pointed out, and even during the chances of rain for the ECB, most fail to move below 90* for a daily high.  Worth pointing out the sharp rebound in Nat Gas prices around midsession when the maps came out.  Hotter next week? 

More and more anecdotal reports from the WCB about how dry things are getting with S-SD talking of chopping silage already before nitrates move into the plant and render it useless.  SW-MN is also hurting bad for a rain, and according to boots on the ground need one in the next 10-days or else….  Scattered headlines had the wheat market moving higher today including the Russian Grain Union stating the entire Russian grain harvest would be below 80MMT.  This likely implies a wheat crop around 46MMT vs. the USDA’s latest guess at 49MMT.  Paris Milling Wheat finished up 3.0% today, and one trader said there was talk of Black Sea export controls, but those seem unlikely at the moment.  Keep in mind, however, it was late July/early August when Russia banned exports in 2010.  We made our blow off top the first week of August, sold off until November before rallying into the 2011 highs near $9.00 basis Chicago Wheat.   There were also rumors running around Indian wasn’t going to allow wheat exports, presumably because of high food inflation.  Lastly, contacts suggested China was sniffing around for cash wheat for feed stock, but basis moves didn’t imply same.

Corn yield ideas continued to move lower today with Rosenthal Collins dropping their estimate to 135bpa while NewEdge cut theirs to 139.9bpa.  As noted in yesterday’s commentary, RJ ‘O Brien’s two analysts are using 140-141, but both said when taking a look at state yield data, it doesn’t take much imagination to move it below 140bpa.  Another interesting tidbit from today’s session was DTN took a look at comparable drought year’s and the differential between planted and harvested acres.  In 1988, 2002 and 2005, harvested acres were typically 10% less than planted vs. the current year’s 9.2%.  If the 10% is used, another 312mbu can be shaved off our production.  For every half a million acres which come out of the harvested column, subtract 73mbu if we take the 146bpa as fact.

As noted in this morning’s comments, China did hold a successful state reserve auction on soybeans overnight where 99% of the 394,000MT offered were purchased at a price between $16.87-17.11/bu.  Their markets were down 41c.  This is the function of the market: go to a price which discourages the buying of US soybeans.  As evidenced by Brazilian basis levels today, up 20c to +200Q, it will be US beans they have to stop buying as South America doesn’t have any.  Speaking of exports, soy complex exports continue to be incredibly strong.  In the last week, exporters sold 12.2mbu, way above the 2.5mbu needed per week.  The USDA will have a difficult time justifying further demand cuts if this keeps up.  Bean Oil and Meal were also very strong, wheat was mediocre and corn was weak.

Traders were making note of RIN prices today, which have rallied to $0.0345/gln from around $0.01/gln at the June lows.  When these start approaching $0.10/gln it will be significant and worth noting as the rationing process of corn rolls on.  Barge freight continues to push higher as low water inhibits grain movement.  CIF corn bids were slightly weaker on the front end, but 1c firmer for new crop.  More chatter about Brazilian maize trading into South Carolina with the first vessel said to be on the move.  Again, more instances of rationing.  The spread between live cattle and feeder cattle continues to blow wider thanks to rallying corn, improving cattle crush calculations.  Still not a business a guy wants to leap in to with both feed, but better than something that isn’t so great.

If you noticed yesterday in the comments, any and all protein premiums have been wiped out of spring wheat.  Right now, wheat is wheat.  ND weather has been a bit cooler/wetter than SD weather, so possible high protein isn’t uniform, and Canadian weather likely less threatening than ND for same reasons.  Scales in the country are around -2/+2c a 1/5.  It would seem the elevators in the northern plains are content to let the farmer store grain when there are no carries on the board, and the farmer wants to utilize his new storage.  With that in mind, expect limited carries and small inversions to persist in Minneapolis wheat as has been the case the last several months.  As the market wants the wheat it’s going to have to bid for it and keep spreads firm, but farmers aren’t being paid to store spring wheat, and that is something they should realize.

Grains are up nicely on the week, and should try to carry gains into the weekend tomorrow.  I don’t know too many who want to be short going into a weekend in which rain chances are iffy at best.  Our markets don’t feel like they’re done going up just yet, but the demand destruction taking place is clear and present.  When it matters, it’s really going to matter.  Keep making sales, especially on wheat as historically these prices are near the upper 10-15% of historic ranges and at harvest no less.  A couple pictures to follow:

   

North East, IA near Decorah.

Sláinte.

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Country Hedging Mid Day in the Markets 7-12-2012

Midday In The Markets

GRAINS

Grains and oilseeds are climbing higher as we wonder just how small the corn and bean crop are going to be. We’re seeing plenty of buying today; it appears no one wants to be short. Export sales were good for beans. Wheat continues to follow row crops also finding extra support from production problems in the Black Sea and Japanese buying. Soybean spreads are still weaker. Soybean fundamentals are still bullish, but the elephant in the room is how much will China pay for beans if their economy is slowing down? China sold 390,090 mt of beans from reserves today.

Export Sales: In thousand tons

                Old         New

Corn:     172.7     492.1

Wheat:                 311.8

Beans:  332.1     427.1

Meal:    95.7        74

Oil:         34.4        -0.5

LIVESTOCK

Once again higher corn prices and slow demand for beef continue to put pressure on cattle. Weekly export data showed a net sales of 17,300 tons, down 2,600 tons from last week. With a stronger dollar and a majority of “grilling” holidays behind us, exports will continue to hold sway over the market. Also, an abundance of supply as more cattle come off drought-ravaged pastures into the market will be detrimental to prices as well. Lean hogs are trading higher today on firmer cash prices and as packers buy hogs to fill out the week’s slaughter quota. Yesterday’s average cash hog price form Iowa/ Southern MN was $97.30, up $2.26.

ENERGY & FINANCIALS

Stocks continue to fall as investors lose hope of QE3. Not even the good economic data was able to revive their spirits. US jobless claims were down 26,000 to 350,000. Global economic growth is still weighing on the markets as investors wait for Friday’s reveal of more Chinese numbers and any further developments in the euro zone crisis. Gold is down $8.90 at $1,566.80. Crude is down $0.67 at $85.14. The Dollar is up $0.12 at $83.85. It looks like the dollar may be shaping into a “head and shoulders” pattern, so that should give us something to watch as well.

Jenna Roe

800 328-6530

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Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight Highlights from Country Hedging's Tregg Cronin 7-12-2012

Outside Markets: Dollar Index up 0.181 at 83.749; NYMEX-WTI down $1.00 at $84.81; Brent Crude down $1.18 at $99.05; Heating Oil down $0.0416 at $2.7202; Cattle are lower, hogs are firmer; Gold down $11.40 at $1564.10; Copper is down $0.0510 at $3.3965; The Yen is firmer, but all other major currencies are weaker; Softs are mostly weaker; S&P’s are down 10.25 at 1326.00, Dow futures are down 87.00 at 12,449.00 and Treasuries are a bit better.

Grabbing headlines this morning is the weakness in the EURUSD cross which has pushed the euro down to the lowest level since June of 2010 at 1.2189, while the US Dollar makes 2-year highs.  Nice if you’re going to Europe in the next year.  The other striking thing is how investors are still searching for short term safe havens.  German, Dutch and Swiss 2-year treasury yields are now negative, meaning you’re going to pay those governments interest to hold on to your money just so you know you’ll get it back in two-years.  After early gains, Spanish 10-year yields are back to 6.69% and Italy at 5.87%.  The data out of Europe this morning was factory orders which showed a 0.6% rise in May from April, but France and the Netherlands were weaker than expected.

Rains have fallen across the Dakotas in the last 12 hours, and continue to work East across both states this morning.  Totals so far look like a trace to possibly 0.25” with heavier amounts in the NE portion of both states.  Otherwise, additional rain fell across the Delta, putting the 4-day total at 0.75-3.0” in most areas.  5-day forecasted precip is showing continued rainsa cross the Delta with the northern tip of this system reaching up to S-IL/S-IN/OH and bringing anywhere from 0.50-1.50” in the heaviest areas.  ND and N-MN could also see more rain by the end of the weekend.  The 6-10 day models remain highly divergent with the American showing widespread rain across the Midwest, but the Euro limiting rains to the Delta/TN/KY with some chances in the far NW-Corn belt, but nothing organized.  Continue to stick with the euro until proven otherwise.  The 11-15 shows rains in the central Midwest, bringing rains to most corn belt areas.  Temps should remain above normal throughout the period with warmer temperatures in the upper-Midwest.

After the incredibly volatile session yesterday which saw prices hit lows and then rally slightly into the close, that momentum is carrying into the overnight and early morning session with corn up double digits, wheat up around 7-9c and soybeans posting very slight losses.  It looks clear the selloff was overdone yesterday, especially as the rumors Sec Vilsack was going to address the RFS mandate proved to be false, but the technical damage had already been done.  Fortunately, markets are focusing on the bullish fundamentals this morning.  A further correction shouldn’t be ruled out as these markets can easily set back further while keeping the uptrend in place, but these markets should remain supported by fund interest and eager end users to extend coverage on any big break.

Overnight headlines included Pakistan resuming wheat exports after almost a year as its grain becomes internationally competitive.  Small volume were sold for spot shipments to Malaysia and Indonesia.  13.0% milling wheat is being sold around $295-298/MT C&F.  Pressuring a bit to soybeans was China selling 390,090MT of soybeans from government reserves in an auction Thursday to sharply better demand according to CNGOIC.  The government sold 379,488MT at CNY 4,005 ($17.11/bu) in provinces with a heavy crush presence.  This is the function of the market: get China to sell its reserves down and stop buying US beans.  We’re not at that price yet.  Strategie Grains downwardly revised its EU 12/13 grain harvest by 2.4MMT to 278.8MMT.  Corn and wheat were both cut.

From Morocco we learn their wheat crop has dropped 40% y/y to 5.1MMT due to drought.  Imports are expected to pick up.  In tender results, Japan bought 131,379MT of US milling wheat from the US for Aug 21-Sept 20 shipment.  Our favorite investment bank ($GS) raised their price forecasts on corn to $6.90/bu, their wheat forecast to $7.70/bu and soybeans to $16.25 due to drought concerns.  Their corn yield estimate is now 143.5bpa.  There were 25 Chicago wheat re-deliveries overnight as well as 462 soybean oil.  Open interest changes during yesterday’s session included an increase of 17,070 corn, 16,440 beans, 2,120 meal and 2,370 oil.  Wheat was up 6,810.  Chinese beans were down 41c, meal down $13.10, oil off 122c, corn down 1.50c and wheat down 8.50c.  Paris Milling wheat is up 1.42%, Rapeseed down 0.88%, Canola down 0.83% and UK feed wheat is up 0.60%.

Call things better to begin with today as cooler heads prevail and the bullish fundamentals matter.  Rains this weekend will be falling in areas which could help the soybeans still, but questions have to be raised about the corn, and the WCB crops don’t look on tap for a soaking rain just as temperatures build back above 90 degrees.  Yesterday’s price action caught a lot of people off guard, so make sure you level marketed is where you want it based on your production prospects.

Trade as of 7:05

Corn up 11-14

Soy up 2-5

Wheat up 7-9

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Morning Note - From Country Hedging's Joel Fitch 7-12-2012

Good morning,

Markets are rebounding after yesterday’s report.  Again for the corn it felt like the USDA was being pretty realistic for what we know.  On the beans I think that they are underestimating old crop exports and could be underplaying new crop demand.  Little more bullish wheat news out of Russia as the Stavropol region is worse than previously estimated. 

Weather today is dropping some moisture in the Delta and up into Tennessee.  There could be light chances in IL, IN, and Kentucky, but Friday is the more likely chance to get anything.  It feels like it only really matters for the beans in a lot of locations.  The 1-5 and the 6-10 are still for above average temperatures and for limited chances of rain in the ECB.  The delta should be improving with the weather pattern. 

Estimates for the corn crop are now ranging between the high 130s and the low 140s.  As we continue to tighten the corn market I think that there is more potential demand to ration.  We traded a good portion of last year with a carryout of near 800 mb and traded below the current corn price. 

Corn spreads have become quite minimal with the tightening of the supply.  This market should invert shouldn’t it.  Especially for the western corn belt, you are going to have to manage with inverses or at least very limited carries.  Depending upon profitability of the ethanol industry corn should want to move East more than usual with Chicago Beyond and the river being a good market.

Export sales were good for old crop soybeans again, we just haven’t stopped demand at these prices and that suggests that new crop demand could be stay robust at these prices as well.  Corn sales were okay 173 tmt old/ 492 tmt new.  Wheat was 312, kinda poor. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

Morning Note from Country Hedging's Joel Fitch - USDA Report Recap

Below is from Country Hedging's Joel Fitch

It has a recap on the USDA report that was out this a.m.

Good morning,

Here is the quick and dirty from the report.  The expectations are located below.

Corn ending stocks were raised for old crop to 903 from 851 on a cut to exports of 50 mb.  That is the only change for old crop.  It increases carrying by 50 mb.  For new crop the USDA cut yield down to 146.0 and harvested acres to the expected 88.9 million acres.  Feed and residual was cut by 650 mb down to 4.8 bb still bigger than last year.  Ethanol was cut 100 mb to 4.900 bb and exports were cut down to 1.6 bb.  So they cut demand by 1,055 mb and ending stocks are 1,183 mb.  These demand numbers seem more realistic to me given the likely pricing of this crop. 

World ending stocks were dropped 21.7 mmt.  US is the only major change to production.  Domestic feed, domestic use, and exports fall. 

Bean ending stocks were lowered by 5 mb because exports were raised 5 mb.  This is quite surprising and seems far too small a gain in exports.  Ending stocks for new crop fell 10 mb to 130 mb.  Yield was lowered to 40.5, but the acres jumped as the June 30^th report indicated – even though this number is too big due to the drought.  Demand was reduced.  Crush was cut by 35 mb and exports were lowered by 115 mb.  This is probably possible because of the high prices we are achieving in beans.

World ending stocks fall 3 mmt to 55.66 mmt.  12/13 World production is down 4 mmt from last month with the US being the only major change.  Demand categories fall here as well.

Wheat ending stocks were raised for 11/12 by 15 mb.  Minor changes.  12/13 ending stocks were cut to 664 down 30 mb from last month.  Supply change is negligible, but demand is altered feed is cut 20 mb and exports are raised 50 mb to 1.200 bb.

World wheat ending stocks are projected down 3 mmt to 182.44 as production falls 4 mmt in Russia, 2 mmt in Kazhakstan.  Demand projections fall slightly with feed, domestic use, and exports being cut.

By class wheat shows ending stocks tighter in 12/13 for HRW at 266 mb, SRW at 143 mb, and white wheat at 60 mb.  Ending stocks are projected to loosen for 12/13 in HRS at 155 mb, and Durum at 40 mb.  HRW 20% stocks/use, HRS 33% stocks/use, SRW 28.5% stocks/use, White 21% stocks/use, Durum 37% stocks to use.

Overall, while these cuts seem realistic to the production for corn as well as the demand side I think that the USDA is saying that these prices are doing enough to ration demand at the current levels of estimated production.  Soybeans production is too high by 40 mb to 80 mb because of the drought and double crop acreage.  Demand is hard to know on beans.  Price typically rations demand, but with China being the only major demand and the US being the only major supplier it is hard to guess what happens.  We should be back to looking at weather. 

Joel Fitch
Market Analyst
800-328-6530
651-355-3792
www.countryhedging.com

mid day update from Country Hedging's Chris Steinhoff 7-10-2012 day ahead of USDA report

Crude oil is down $1.00…US$ is 0.200 firmer…DJIA is  up 4 points…grains-can’t be up everyday

Corn---can’t be up everyday as traders think to tomorrow’s USDA and square up and take profits. Tomorrow report may be irrelevant as traders may not agree with USDA anyway….. Rain seems to stay 7 days out, and we now needed it last week.  Get to July 30 and rain will not make much of a difference and we will transition to a demand market. Markets are at the highs when news is at its worst…can news get much worse??? The US corn crop is smaller today than it was yesterday. Period…but we need to remember we have already rallied $2.00+…. So something is factored in. Hearing ethanol plants being told by management to cut grind 30% immediately. Talk of selling contracts back to elevators and no new DDG sales! Also hearing farmers on the fringes of the “new” corn belt realizing they can not grow dryland corn as weather doesn’t allow it…there was a reason the old timers grew wheat. Because the rain was Nov to May, Not may to July!!!!!!!!!!!!!!! Spreads are slightly weaker. We are beginning to see major signs of a demand slowdown. Farmgate offers now well above the market as many open orders have been achieved. Much speculation on the mandate and whether uncle sam ever considered what happens when the US sees a drought.

Soyabeans---world demand remains strong. Mainly China. US crusher watches beans go by door to the export market. Dryness hurts the beans to as beans are losing yield potential daily as well in many areas, but there remains time to still have a good crop. Where moisture allows there are still double crop beans being seeded, but those areas are scattered. Total planted/harvested acres may not be as high as predicted as summer dryness hurts the double crop option. New crop export book is large but then again there seems to be plenty of old crop book too yet to execute. SX:CZ is 2.14:1, so there is room for beans to run on the spread.

Wheat---SRW and HRW harvest moves fast as the crop is now 75+% in the bin. Spring wheat is coming on fast as warm and dry weather brings it early and harvest will be sooner than we think. Still has great potential but could use a few cooler temps and a shot of rain. MT has a few issues. MGEx is flat, KC and CME are carries…World still experiences a few production issues but Canada looks mostly OK and the US skated by without any major, major issues. Black Sea region has a weather issue as their production is still in question, which in turn brings into question their ability to export. USDA report tomorrow may not really mean much

***new crop train values are slashed as all the grain seems to be in the WCB and the RRs want this new grain to move to the PNW and the export market. Farmer selling is quiet and they are now bullish again…World has experienced drought in Russia, Ukraine, Argentina, S Brazil and other areas the past 12 months!!! Will the highs be seen in July????? Call if you need anything

Christopher Steinhoff
Market Analyst
800-328-6530
651-355-6558
651-355-3723 fax

www.countryhedging.com

Overnight Highlights from Country Hedging's Tregg Cronin 7-10-2012

Below is overnight highlight's from Country Hedging's Tregg Cronin

Outside Markets: Dollar Index down 0.050 at 83.111; NYMEX-WTI down $0.21 at $85.81; Brent Crude down $0.82 at $99.50; Heating Oil down $0.0060 at $2.7430; Fat cattle are weaker, feeders firmer and hogs softer; Gold up $7.40 at $1596.50; Copper down $0.0015 at $3.4300; The Euro and Franc are a hair weaker while all other major currencies are firmer; Coffee is the only weaker Soft commodity this morning; S&P’s are up 4.25 at 1353.50, Dow futures are up 52.00 at 12,737.00 and Treasuries are weaker.

World equity markets are trading firmer this morning after the Eurozone drew up a Spanish aid blueprint for €100 billion bank bailout, a deal which is expected to see the first €30bn from the eurozone’s €440bn rescue fund.  The bailout will come with conditions such as stress tests for 14 of Spain’s largest financial institutions.  Other news included Chinese export and import growth both slowing in June, signs China could still be heading for a hard landing.  Exports rose 11.3% y/y, down from 15.3% in May.  Imports were up 6.3%, half of May’s 12.7%.  China’s trade surplus was $31.7 billion.  The other big news headline was word of PFGBest’s trading accounts being frozen on ideas customer seg funds could have been mismanaged.  Still in the early going for this story.

Before getting to specific weather, the National Climatic Data Center said the first six months of 2012 were the warmest of any year going back to 1895.  Drought now covers more than half the contiguous 48 US states.  The national temperature was 52.9 degrees through June, or 4.5 above average.  Rains in the last 24 hours were confined to the southern plains and delta where many states received 0.10-0.50” with localized amounts of 1.0”.  Nothing in the main corn belt states received rain.  Showers continue to work across the southern plains, Delta and SE-US this AM.  5-day forecasted precip is showing 0.4-0.8” totals for the Dakotas, nothing for IA/NE/WI/MO/KS, but IN/OH could still see some 1.0”+ total amounts.  The heaviest rains will fall in LA/AR/MS/AL/TN/GA/SC/NC with 1.5-6.3” possible.  That rain in IN/OH would be welcome.  Overnight 6-10 day maps are keeping the door open for more storms in the ECB on one model but not the other.  The Dakotas will be quiet.  The 11-15 has lots of rain in the central Midwest but needs verification.

Grains are trading weaker on a bit of profit-taking, led by wheat as the story remains a row crop one.  Between what looks to be already factored in crop condition ratings, and the PFGBest brokerage mishandling of customer accounts, both seemed like good enough reasons to set back a bit overnight.  Weather remains the dominant factor, and there are a bit better rain chances at the end of this week and in the extended maps, but this has been the case for much of June and July so far to no avail.  We are still trying to “realize” how small this crop actually is, and it doesn’t appear we’ve done that yet.  Already this morning, some are talking of national yields in the 130’s.  Today could also see some additional de-risking in front of tomorrow’s USDA report which could be bearish.

Overnight headlines included several from China which said summer grain output would hit a record 129.95MMT, up 2.8% y/y.  Of course it is.  June soybean imports were up 31% y/y and 6% from May at 5.62MMT.  Jan-Jun imports totaled 29.05MMT, up 22.5%.  In exports news, South Korean flour mills bought 26,500MT of US wheat from STX for Sept 15-Oct 15 shipment.  The wheat included 8.5-9.5% soft white at $301/ton, 11.5% HRW at $314/ton and 14.0% DNS at $368/ton, all FOB.  Japan is tendering this week for 131,379MT of US-wheat for Aug-Sep shipment.  According to yesterday’s COT report, speculators increased bullish bets on commodities by the most in 2-years.  Ethanol prices rose to the highest level in 7-months to $2.504 yesterday, thanks to rallying corn prices.

Open interest changes yesterday were rather impressive in corn, up 34,100 contracts with fresh money pouring in as the market hit limit up.  Wheat was up 710 contracts, beans up 890, meal down 3,420 and soy oil up 3,880.  The soybean stat is a bit concerning as the 40-60c rally clearly saw big changes in ownership, possibly from the commercials to the specs.  There were 220 redeliveries in Chicago wheat overnight.  Chinese beans were down 10.25c, meal up $5.20, corn down 2.50c and wheat down 3.75c.  Paris Milling wheat is down 1.1%, UK feedwheat down 1.08%, Paris Rapeseed down 0.58% and Canola is down 0.24%.  Corn export basis backed off at both export fronts and at most ethanol plants yesterday as demand continues to wane.  I’ll detail the COT in this afternoon’s writeup.

Call things weaker in the early going, but don’t rule out two-sided trade today.  Our limit up move yesterday clearly priced in part of the 8% drop in corn conditions and the 5% drop in soybean conditions.  That doesn’t mean we’ve penciled in the smallest crop size as little rain is on tap this week.  Still, we’ve likely earned some more choppy trade at least.  Review % sold ahead of tomorrow and especially with this latest brokerage debacle getting going.  USDA releases their WASDE at 7:30 CDT time tomorrow morning.

Trade as of 7:00

Corn down 6-8

Soy down 8-10

Wheat down 8-15    

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

USDA Supply and Demand Report Comments - Grain Market Comments

To start with today was a USDA report day and here is a recap of the report versus last month and versus trade estimates.  You can see that we got neutral to bearish report for corn, neutral to wheat, and neutral to friendly beans.  Price action indicated we had a bearish report for wheat; but the numbers really didn’t indicate that.  But wheat really has been a follower for some time as corn seems to remain king; especially on crop report days.

June 2012 USDA Supply & Demand Worksheet / Trade Guesses

2011/12 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	0.851	0.821	0.688 - 0.901	0.851
Soybeans	0.175	0.189	0.130 - 0.218	0.210
Wheat	0.728	0.753	0.727 - 0.775	0.768

2012/13 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	1.881	1.750	1.223 - 1.950	1.881
Soybeans	0.140	0.143	0.052 - 0.220	0.145
Wheat	0.694	0.714	0.647 - 0.772	0.735

2011/2012 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	129.19	127.630	126.000 - 128.800	127.560
Soybeans	53.36	52.090	51.000 - 53.000	53.240
Wheat	195.56	197.124	196.000 - 198.835	197.030

2012-2013 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	155.74	149.745	145.000 - 154.000	152.340
Soybeans	58.54	58.140	55.700 - 62.000	58.070
Wheat	185.76	184.791	180.800 - 190.674	188.830

As you can see we continued the trend of disappointment for the corn bulls with this latest USDA report as we once again left the numbers unchanged from last month.  The only change was a decrease in exports that was offset by an increase in ethanol usage.  No changes where done for new crop corn balance sheet at all.  It feels like the trade doesn’t believe the 166 bushel yield for new crop corn that was left unchanged; but eventually the trade will have to start believing or the number will have to come down.  I would say that we are very high priced if next January’s report shows the type of yield that is presently being used; so keep that into consideration as we move forward.  From what I hear most in the industry are using a corn yield someplace between 155-163.  Bottom line if we end up close to the 1.8 billion bushel carryout that is presently projected look for prices to drift lower.

World corn stocks actually rose from last month for both the current marketing year and next year’s projection.  Another bearish headline that is being partially offset by the ideas that yields and crop production potential isn’t near where the USDA pegged it at.  But bottom line is the same here plenty of risk if the USDA doesn’t change and ideas have always been that big crops get bigger……..hasn’t it?

Bean numbers where good with the decrease in ending stocks for the US both this year and next; but the world numbers where increased. 

Wheat numbers still say that there is plenty of wheat in the US and in the world; but the trend is going the correct direction.  Less then last month in both the US and in the World for both last crop year and the present crop year which started June 1^st. 

Below is a little history of the crop supply and demand numbers; it comes from Mike Sperry……..the big think on it is looking year over year and month over month.  You will see that we now have a US and World wheat carryout numbers as low as they have been since 2008.  While we have corn numbers potentially as high as they have been since 2000 in the world with the US numbers pegged at their highest spot since 2005.  Bottom line is if those number or these trends don’t change things for corn price outlook are not very good.  I am in the camp that doesn’t believe the carryout or yield that the USDA posted today; but the below trend really shows one that there is plenty of risk so I am also in the camp of practicing good risk management.  Making some sales on the bounces and maybe buying some puts for protection or selling some covered calls.

World	/	US	Ending	Stocks	6/12/2012
Data	Provided	by	Central	Plains	Services,	L.L.C.
1	Metric Ton of corn = 39.36825 bu				Metric Ton of Wheat/Soybean = 36.7437 Bu
All	Ending	Stocks	expressed	in	Billions	of	Bushels
Year	Corn			Soybeans			Wheat
	World	US	Yld.	World	US	Yld.	World	US	Yld.
’00	6	1.899	1			-	7.5	0.876
’01	5.8	1.574	1.2			-	7.4	0.687
’02	4.8	1.087	1.5	0.178			6.1	0.491
’03	3.6	0.958	142.2	1.2	0.112	33.9	4.8	0.547	44.2
’04	5.1	2.113	160.4	1.8	0.256	42.2	5.6	0.54	43.2
’05	4.9	1.967	148	1.9	0.449	43	5.4	0.571	42
’06	4.3	1.304	149.1	2.3	0.574	42.9	4.7	0.456	38.6
’07	5.1	1.624	150.7	1.9	0.205	41.7	4.4	0.306	40.2
’08	5.7	1.673	153.9	1.5	0.138	39.7	6.1	0.657	44.9
’09	5.7	1.708	164.7	2.2	0.151	44	7.4	0.976	44.5
’10	4.9	1.128	152.8	2.6	0.215	43.5	7.3	0.862	46.3
’11	5.1	0.851	147.2	2	0.175	41.5	7.2	0.728	43.7
’12-’13 May Est	5.997	1.881	166	2.134	0.145	43.9	6.913	0.735	45.7
’12-’13 June Est	6.131	1.881	166	2.151	0.14	43.9	6.826	0.694	45.4

Question; anyone know what our low price has been since 2000 for corn?  Under 2.00 on the board; even in 2005 we where under 2.00 at one point in Dec of 2005.  Is our present pegged world corn estimate higher today then it ended up being when we where under 2.00 a bushel on the board for corn futures?  Yes it is.  Therein lies our risk

I don’t want to come off trying to tell one to panic sell as I have mentioned numerous times I am not that bearish; but I do want to come off as telling producers that we have perhaps more price risk then one might realize.  So if you need help marketing or want to look at some protection strategies please give us a call.

At 1:20 we have our markets show old crop corn down 9 cents, new crop corn is off by 13 cents, old crop beans are up 11, new crop beans are up about 6 cents, KC wheat is off a dime, MPLS wheat is off 12-15 cents, and CBOT wheat off 12 cents.  This are not the closes and the grain futures will be trading for about 30 minutes or so; but the above should be close to the settlements.

Outside markets are also still open but as of 1:30 equities are firmer with the DOW up about 100 points,  crude up about 70 cents a barrel, the US dollar near unchanged, and gold up 9.00 an ounce.

A little disappointing for the grains is the fact that we couldn’t brush off the bearish USDA numbers and trade positive for corn.  Perhaps if we consider the fact that we where not down the limit given the difference between new crop corn projected carryout versus the estimate you could consider today a small victory for bulls; but overall disappointing; nice to see the outside markets stabilize at least for a day.

As we go forward weather will be extremely important but it might be on the bulls to prove the USDA wrong, also important will be the outside markets and the June 29^th stocks and acre update. 

One thing that some have talked about is that they look for the USDA to cut yield in July but keep overall production for corn near unchanged behind ideas that the good spring allowed more corn to get planted.  We also have to remember last year’s stocks number for corn; one that caused July corn to be down over 70 cents a bushel.  Cash markets today and really all year have felt tighter then they did a year ago; but there will be the risk that our high prices or strong basis has curved some demand.  There might also be some risk out there that ethanol plants are much more efficient then they used to be; perhaps the 2.7 ethanol to bushel coversion get’s changed sometime?  Locally I know we have shipped milo to ethanol plants that never used it before and that means that they are not using as much corn.

The big thing that the markets will watch for fundamentally is if we do cut corn supply how much will we cut corn demand?  If you use some of the corn yields that some in the industry have thrown out there with the present demand forecast it is easy to get bullish in a hurry.  But ECON 101 should remind us that less supply also equals less demand; and that brings us back to what happened last July high prices curved demand and stocks came in higher then expected as we went from below 700 million bushel for a projected carryout to over 1.1 when all said in done on the September stocks report.

Don’t forget that we will have our weekly MWC Grain Marketing Round Table tomorrow at 3:00 in Onida; as we will discuss today’s report as well as go over charts and possible strategies to consider when pricing your crops.

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