Opening Grain Market Comments 6-21-2013

Markets are called mixed this a.m. behind a mixed overnight session.  Outside markets are more stable they the past couple of days so hopefully they don’t turn into a reason to see pressure in the grains.

When the overnight session ended July corn was down 5 cents a bushel, KC wheat was about unchanged, MPLS wheat was unchanged to down 2, CBOT wheat was off a penny, July soybeans were up 2, and November soybeans were down 6 cents.  At 8:10 outside markets have crude about unchanged, gold is up 6 bucks or 24 bucks above its overnight low, the US dollar is up a couple hundred points with the cash index at 82.16, and it looks like a small bounce at least for the start of the stock market; with the DOW futures up about 50-60 points.

Not a lot of new news out this a.m. for price direction.  I did see some adjustments from some for the crop sizes in different places around the world.  Coceral estimate for EU corn crop is up to 66.1 MMT from it’s previous estimate of 64.4 MMT.  They pegged the EU soft weat crop at 130.7 MMT; which is a 3 MMT increase from their last estimate.

Abiove slightly lowered their estimate for the Brazilian soybean crop to 81.6 MMT versus 82.1 MMT previously and the USDA at 82.0 MMT.  The Buenos Aires Cereals exchange left their estimate of Argentine soybean crop unchanged at 48.5  MMT which is well below the USDA estimate  of 51.0 MMT

This afternoon we will have the USDA monthly cattle on Feed report.

US House failed to pass the Farm Bill.

July options expire today.

Next week it will be about weather and the USDA report.  I can’t tell right this second what weather would be super bullish or bearish.  Lots of different local spots looking for different weather to help development.  As for our area I am hoping we get moisture with some heat; let’s just keep the hail away. 

Technically the bean market not holding the 15.00 level on the July contract is a little scary.  The corn price action also has to be a black eye on the technical side; especially for new crop December corn.  It once again tested the 5.70-5.80 (which means 5.00 to 5.20 off the combine corn) range in the past few days; but once again failed to break above.  What will it take to break above?

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

Planting Progress- Opening Comments 6-18-2013

Markets are called mixed to better this a.m. behind a mostly firmer overnight session.

In the overnight session KC wheat lead the strength up 6 cents, MPLS wheat was up 4, CBOT wheat was up 4 cents, July soybeans were up 5 cents, November soybeans were up 2 cents, corn was unchanged on old crop and new crop corn was down a penny.  At 8:15 outside markets have the US dollar up slightly with the cash index at 80.95, gold is down 9 bucks an ounce, crude is up 50 cents a barrel, and the equity futures are pointing towards a positive start in the DOW of about 20 points.

Headlines this a.m. include a technical bounce for KC wheat; after putting in 12 month lows yesterday KC wheat reversed took out the previous day’s session and closed higher.  Perhaps it can lead to more short covering?  Keep in mind that the funds are short plenty of wheat and the big headline or focus for wheat hasn’t been our lack of crop.  It has been the world market; while much like the fact that our news of a bad US crop has been built into the price perhaps finally the world crop news has also been built into the price.  Plus keep in mind that the crop forecasted by the USDA in other parts of the world isn’t in the bins yet.

Corn had similar type price action yesterday; good for the charts on the December corn; leaving a key reversal.  But not as strong as of a reversal off in a sideways market versus wheat’s reversal happening at lows for the year.  But bottom line supportive and perhaps a reason for the funds that are short to consider to cover a little bit.  Plus next week we have a USDA report that could (most think should) show a decrease in corn acres planted.  Will it be more then the market expects is the real question?

The other big news out yesterday was the crop conditions and planting update.  Nothing to note that was a big surprise.  Don’t get me wrong you can find some friendly information; but just not new information.

There was no corn total planting numbers; but we did have state breakdowns.  Both IA and MN came in at only 94% planted; so while the big headline comes off as everything is planted that doesn’t seem to be the case.

Corn conditions did jump 1% in the G/E category to 64%.  The big thing here will be the trend over the next few weeks; has our crop improved and thus yield potential improved?  If that is the trend over the next month it is hard to see prices really wanting to take off.  Overall the crop is well behind schedule with emergence and silking behind.

Soybean conditions came out at 64% G/E up from 56% a year ago.  Soybean plantings came in at 85% versus the 91% average.

Spring wheat planting came in at 92% with North Dakota at 86%.

Sunflower planting jumped to 55% with North Dakota at 63% versus 89% on average.

For all of the talk of the late planting the headlines with the averages are not exactly super bullish. They say we are behind and have issues; but how major are the issues?  I guess that’s something that only mother nature will really know.  We will get an update at the end of the month; but as far behind as we are most in the trade expect a resurvey for planting acres.  Which to me means the USDA can give us a bearish number with a built in excuse?

Here is a CHS Hedging Planting recap for more info.

https://www.chshedging.com/UserFiles/Documents/2013/Research/USDA%20Crop%20Progress/Crop%20Progress061713.pdf

Yesterday we also had the NOPA May Crush numbers; they came in bigger then estimates at 122.6 million bushels.  That says that we have a massive year over year cut to happen over the next couple months if we are not going to exceed the USDA forecast.  20% or so; which would be one of the bigger cuts ever.  To cut demand typically you need one of two things; no supply or higher prices.  I think we may struggle with the supply for sale; but it might (hopefully) takes higher prices to get that type of demand curb as well.

I believe the KCBT will start to report more harvest activities today.  So far we haven’t seen many and they have all be all over the place.  The one common comment I have seen is poor quality; light test weight with high shrunken and broken.  That means that yields are probably a little lighter than expected but it also means that it might not be milling quality wheat.

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

Thanks

Opening Grain Market Comments 6-14-2013

Markets are called mixed this a.m. behind a overnight mixed overnight session. 

July corn was up 6 cents, Dec corn was unchanged, KC wheat was off a penny and half, MPLS wheat was unchanged, CBOT wheat was down 2 ½ cents, July soybeans were up 9 cents, and November soybeans were up 5 cents.  At 8:10 outside markets have the US dollar up a couple hundred points at 80.90 on the cash index, gold is up 8 bucks an ounce, crude is up about 1.20 a barrel, and the stock market futures are pointing towards a slightly lower start with the DOW futures off about 24 points.

Not a lot of news out this a.m.  After spreads got hit hard yesterday they seem to have bounced in the overnight session so the main headline seen this a.m. is tightness on old crop and thus bull spreading. 

Weather remains a wild card and likely will until we see how many acres got lost or switched.  Right now it does look like things are warming up in plenty of areas.  It does look like Iowa will continue to get hit with moisture and the remaining bean acres could be really questioned.  Same thing can be said for some of the major crops that North Dakota grows such as sunflowers and spring wheat. How many acres won’t get planted?

The one thing we have to ask our self is the areas right besides those spots that didn’t get planted……….are they garden type spots?  Can they make up for the drowned out spots?  For some of the crops maybe the answer is yes; but right now the drowned out spots seem to get bigger and cover more area in the very heart of the growing regions for corn and soybeans as well as sunflowers and spring wheat.  Bottom line is our current weather situation as it pertains to our fundamentals is very much up in the air. 

The first answer we should get is the June 28^th acre report.  But keep in mind this is a survey that has already went out.  So how accurate will it be?  Will the USDA make notes that because of all of the delays that they will re-survey in July and or August?

If that’s the case will it open the door to late a lack of adjustments in the July report?  If we still have a 2.0 billion bushel carryout in the July report will the market be able to hold up?  What about when we will we actually see corn developed enough to have a better chance of quantifying the yield and actual production?  In my opinion that won’t be until the August report or maybe later?  So is there a risk that the USDA doesn’t give the bulls or the funds a fundamental reason to want to get long our markets.  Yes…………a risk……………doesn’t have to play out that way but we need to realize that there is a risk that the USDA is very late to the party and there is also a risk that they just simply never show up.  If carryout is actually closer to 1 billion would they get their fingers caught in the cookie jar if they kept it closer to 1.5 or 2 billion bushels of corn? 

The bottom line is there are so many un-known factors and question marks out there that the market really should be range bound; at least until we see some of those cards dealt and laid out on the table.  The next big card will be the USDA acre and stocks report at the end of June.  We could see the weather cards any or even everyday; just depends how mother nature wants to play the game.

So for marketing ever day that goes by that we don’t get that rally that many think will happen; realize that the likely hood slips a little or the window closes a little more.  So be pro-active and comfortable knowing the risks.  Don’t get into a corner where you are forced to sell grain at a time or levels you really might not like.

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

Opening comments ahead of USDA Report 6-12-2013

Well it’s hurry up and wait time.  Markets are called mixed this a.m. but it’s all about the USDA report that will be out in a few hours at 11 a.m. central time.  The prices before then won’t matter much as the USDA report should give us a little updated fundamental information.

In the overnight session corn was down 2-4 cents, KC wheat was 2-4 lower, MPLS wheat was unchanged, CBOT wheat was off 4-6 cents, July soybeans were up 3 cents a bushel, and November soybeans were down 3 cents a bushel.  Outside markets are fairly stable today with the US dollar about unchanged with the cash index at 81.189, crude is up about 80 cents a barrel, gold is down 3 bucks an ounce, and equity futures point towards a positive 70-90 point start in the DOW.

Like I mention above its not were our markets start before the USDA report but how then end up after the USDA report that’s important.

Before the report comes out we will have ethanol numbers; but otherwise it is just about the USDA report and the weather.  Too much rain in areas like North Dakota, Iowa, and parts of MN remains very bullish due to the loss of acres, prevent plant acres, agronomic issues, and replanting acres.  While rain in the eastern corn belt is probably seen as bearish prices as most of the crop is in and they are not really behind schedule from a historic basis.  The 6-10 day forecasts have above normal temps for our area and above normal to normal precipitation for our area.  Many areas need some heat.

Continue to watch for plenty of debate on weather.

For wheat we continue to lack issues elsewhere in the world; plenty of issues with the HRW crop and possible issues with the spring wheat crop.  But we still are not getting the business we really need.

As for the report we could easily just trade it for a few minutes or it could change our trend for a month or more.  Most likely the market will take a wait and see confirmation until we get more weather information and the updated acre and stocks report on June 28^th.  It just seems like we have way to many unknowns to take all of the premium we have in our market out and at the same time should the USDA come in below the grain markets expectations the market might take a wait and see approach or confirmation that demand will stay strong.

Bottom line is that today is all about the USDA but it remains to be seen if tomorrow or a week from now we will still be talking about the USDA report from today or if the market will be looking at other information such as weather and what it will do to supply.

Not much else to say today; just make sure you are comfortable going into the report later this a.m.

Still time to make some sales or get some protection in place if you are not.  Just remember the fine line from making fear decisions and good business decisions; no operation is the same and thus no % sold level is right for everyone. 

Don’t forget we will have our weekly meeting in Onida this afternoon at 3:00; we will be going over the USDA numbers at that time.

Thanks

Opening Comments - GMO Wheat found 5-30-13

Markets are called mixed to weaker this a.m. behind a weaker overnight session.

When the overnight session paused old crop corn was down 2 cents, new crop corn was down 3 cents a bushel, KC wheat was down 6 cents a bushel, MPLS wheat was down a penny a bushel, CBOT wheat was down 8 cents, July Soybeans were down 9, and November soybeans were off 4 cents.  Outside markets have a US dollar down a little with the cash index at 83.460, gold is up 16.50 bucks an ounce, crude is down 1.25 a barrel, and the stock market looks to start near unchanged with the DOW futures up 9 points. 

A couple news items out today/yesterday.  First off weather is still leading our markets; mainly for delays; but I have seen comments of some of the deferred forecasts opening up.  It also looked liked Northern ND missed the rain last night and that might allow for some more spring wheat to get planted.

The big question is how many acres will not get planted?  Where will those acres shift to?  Will they go prevent plant?  Will some take prevent plant and then try un-insured soybeans?  How many acres will need to get replanted? Yield loss already seen? Etc…………Bottom line lots of questions in regards to our production possibilities.  Which means we have added some premium into the market.  Is it justified?  Doesn’t look like it needs to be there if you look at the advisor’s updated balance sheet ideas.  But it really depends on how things develop as production possibilities have a big risk should this weather continue; plus they have the summer heat risk.

At the end of the day with all of our unknowns I don’t think you can say our market will be X price in a month, two months, or 5-6 months from now.  As far as I am concerned we have the potential to see corn any place between its present level to a few dollars higher or lower.  All up to mother nature and other unknown future factors.  The one thing I would say is that the longer or higher new crop corn goes the less demand we are promoting and the USDA had said in its last USDA Supply and Demand report that demand for corn would grow by nearly 2 billion bushels and that would still leave us with a  2 billion bushel carryout; versus the 759 million bushel carryout we presently have.  So in my opinion the job of the market is still to find demand; so I will remain cautious getting too bulled up.  I think we need to remember to reward the rallies and realize that the likely hood of us going to this year’s highs because of wet weather is low.  Perhaps another unknown reason could take us there but wet weather?????

No exports today because of the holiday earlier in the week.  Those are delayed until tomorrow and ethanol numbers are delayed until this a.m. at 9:30.  The ethanol numbers will be key to help us see if demand is staying strong for old crop corn.

The other big news out there this a.m. is the fact that GMO wheat was found in an Oregon farm.  What it means to the market is still up in the air; but the kneejerk reaction is not positive.  Below are a couple articles on the GMO wheat.  Notice the one indicates Japan cancelling a tender.  We don’t need to have a reason for our buyers not to come here; we are already not super competitive in the export market.  The one small positive I see that Paris wheat was up so maybe that is helping narrow the spread between our wheat and other countries????

Other news out there.  Yesterday China cancelled some old crop soybeans and this a.m. they bought some new crop soybeans.  We seem to be seeing more questions on the old crop demand for beans as well as export demand for old crop corn.  But lately some ideas for new crop demand have shifted a little more friendly and I think that is one of the reason for the rally; we are questioning production while see a small increase in new crop demand for corn/beans.

Wheat we continue to question the production; but we haven’t seen any great demand headline news either with the exception of SRW or feed wheat; China has had decent interest in buying that.  But for milling wheat we haven’t seen much for interest.

The other couple of headlines I seen this a.m. include one indicating that US corn acre loss ideas may be exaggerated and another comment that China might be cancelling Brazilian soybean purchases.

GRAINS-Hesitant market weighs GMO wheat case - RTRS

30-May-2013 07:01

    * Non-authorised GMO wheat found on northwest U.S. farm

    * Japan cancels tender, raising risk for U.S. exports

    * New-crop corn falls for first time in six sessions

    * Market assessing crop risks from heavy U.S. rain

(Updates with European trading, adds new quotes, changes byline/dateline)

    By Gus Trompiz and Colin Packham

    PARIS/SYDNEY, May 30 (Reuters) - U.S. wheat prices eased on Thursday as the

discovery of an unapproved genetically modified (GMO) variety in the

northwestern United States raised a risk for exports and encouraged the market

to take a breather after weather-fuelled gains.

    Japan, the top importer of U.S. wheat, cancelled a tender to buy U.S.

western white wheat after the U.S. government announced on Wednesday it had

found a GMO wheat sprouting on a farm in the state of Oregon. [ID:nL3N0EB1JC]

    Asian countries led by Japan are major buyers of U.S. white wheat, a variety

used for food, and sensitivities there over GMO crops for human consumption

could slow buying.

    "The finding of GMO in wheat is certainly a factor that has weighed on wheat

prices," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

    "I won’t be surprised if other countries start cancelling or reducing their

purchases of U.S. wheat, particularly Asian countries, putting pressure on wheat

demand."

    Traders said it was too early to say if the case would have significant

consequences for exports but in a sign of possible effects beyond Asia, the

European Union said it would test incoming U.S. white wheat shipments for GMO

content. [ID:nL5N0EB1KH]

    "The market is going to need U.S. wheat, we won't be able to do without it,

so that could mean more checks and more sanitary certificates," a European

export trader said.

    "There is a question mark now and this could affect the attitude of certain

buyers."

    The discovery of GMO wheat encouraged a lull in the market after worries

about wet weather in the United States pushed wheat and corn prices higher on

Wednesday. [ID:nL3N0EA1YG]

    Chicago Board of Trade July wheat <WN3> fell 0.8 percent to $6.97-1/2 a

bushel by 1138 GMT, after ending Wednesday up 1.3 percent.

    Concerns that portions of the U.S. wheat crop could be harmed by the

persistent rainfall and, in some areas, flooding, have supported the market.

    Unfriendly crop weather will also support prices of soybeans and corn, with

excessive rain late this week expected to further slow U.S. plantings.

[ID:nL2N0EA0FJ]

    Farmers in the United States slowed the pace of planting in the past week as

rain delayed the tail-end of corn seeding and pushed soybean planting to its

slowest pace in 17 years, the USDA said on Tuesday. [ID:nL2N0E91F8]

    "We're still in quite a nervous context with the rain and flooding," another

European trader said of U.S. crop conditions.

    "There is a lot of uncertainty in the market."

    The most actively traded December corn <CZ3> fell 0.7 percent to $5.62 a

bushel, halting a five-day rally. November soybeans <SX3> slipped 0.2 percent

$12.85-3/4 a bushel, off Wednesday's 3-month top of $12.95.

    But spot soybeans <SN3> extended losses, pressured by Wednesday's news that

China, the world's largest buyer of the oilseed, had cancelled an order for U.S.

soy. [ID:nL2N0EA0IG]

   

    * Prices as of 1138 GMT

  Product              Last    Change   Pct Move End 2012 Ytd Pct

                                                                   

  CBOT wheat <Wc1>      697.50   -5.25   -0.75   778.00  -10.35

  CBOT corn <Cc1>       664.75   -0.25   -0.04   698.25   -4.80

  CBOT soy <Sc1>       1496.75   -5.00   -0.33  1418.75    5.50

  Paris wheat <BL2c1>   206.00    1.50   +0.73   250.25  -17.68

  Paris maize <EMAc1>   232.50    6.50   +2.88   237.75   -2.21

  Paris rape <COMc1>    434.75   -0.25   -0.06   456.25   -4.71

  WTI crude oil <CLc1>   92.41   -0.72   -0.77    91.82    0.64

  Euro/dlr <EUR=>         1.30           +0.11

WRAPUP 2-US GM wheat find threatens exports, stokes consumer fears - RTRS

30-May-2013 06:53

    * Japan cancels tender to purchase some U.S. wheat

    * EU preparing to test incoming shipments

    * Importers to seek details from U.S. government

    By Risa Maeda and Charlie Dunmore

    TOKYO/BRUSSELS, May 30 (Reuters) - Unapproved genetically

modified wheat found growing in the United States is threatening

the outlook for U.S. exports of the world's biggest traded food

commodity, with importers keenly aware of consumer sensitivity

to gene-altered food.

    Major importer Japan has cancelled a tender offer to buy

U.S. western white wheat, while other top Asian wheat importers

South Korea, China and the Philippines said they were closely

monitoring the situation.

    "We will refrain from buying western white and feed wheat

effective today," Toru Hisadome, a Japanese farm ministry

official in charge of wheat trading, told Reuters.

    The European Union is preparing to test incoming shipments,

and will block any containing GM wheat. [ID:nL5N0EB1KH] Chicago

Board of Trade wheat futures <Wc1> fell 0.5 percent on Thursday.

    GM wheat was discovered this spring on a farm in the west

coast state of Oregon, in a field that grew winter wheat in

2012. USDA officials said on Wednesday that when a farmer

sprayed the so-called "volunteer" plants with a glyphosate

herbicide, some of them unexpectedly survived.

    Scientists found the wheat was a strain field-tested from

1998 to 2005 and deemed safe before St. Louis-based biotech

giant Monsanto <MON.N> withdrew it from the regulatory approval

process on worldwide opposition to genetically engineered

wheat.[ID:nL2N0EA1LI]

    No GM wheat varieties are approved for general planting in

the U.S. or elsewhere, the USDA said. The EU has asked Monsanto

for a detection method to allow its controls to be carried out.

    With high consumer wariness to genetically-modified food,

few countries allow imports of such cereals for direct human

consumption. However, the bulk of U.S. corn and soybean crops

are genetically modified. 

    

    RAPESEED, RICE

    The latest finding revives memories of farmers unwittingly

planting genetically modified rapeseed in Europe in 2000, while

in 2006 a large part of the U.S. long-grain rice crop was

contaminated by an experimental strain from Bayer CropScience

<BAYGn.DE>, prompting import bans in Europe and Japan.

    The company agreed in court in 2011 to pay $750 million to

growers as compensation.

    Asia imports more than 40 million tonnes of wheat annually,

almost a third of the global trade of 140-150 million tonnes.

The bulk of the region's supplies come from the United States,

the world's biggest exporter, and Australia, the No. 2 supplier.

    The USDA said there was no sign that genetically engineered

wheat had entered the commercial market, but grain traders

warned the discovery could hurt export prospects for U.S. wheat.

    "Asian consumers are jittery about genetically modified

food," said Abah Ofon, an analyst at Standard Chartered Bank in

Singapore. "This is adding to concerns that already exist on

quality and availability of food wheat globally."

    European traders said Black Sea and EU wheat was well

positioned to benefit in any displaced demand for U.S. grain.

But some were more pragmatic on the overall impact.

    "The market is going to need U.S. wheat, we won't be able to

do without it, so that could mean more checks and more sanitary

certificates," one European dealer said.

    "Japan is in a position to be selective and to react

sharply. It has other suppliers and the financial means to be

choosy and pay more if needed. This is not necessarily the case

for (top global wheat importer) Egypt which is in a difficult

financial situation."

   

    BUYERS CAUTIOUS

    A major flour miller in China, which has been stocking U.S.

wheat in recent months, said importers will tread carefully.

    China has emerged as a key buyer of U.S. wheat this year,

taking around 1.5 million tonnes in the past two months. Chinese

purchases in the year to June 2014 are estimated to rise 21

percent to 3.5 million tonnes, according to the USDA, with most

shipments coming from the United States, Australia and Canada.

    The Philippines, which buys about 4 million tonnes of wheat

a year and relies mainly on U.S. supplies, is waiting for more

details before acting, an industry official in Manila said.

    "I won't be surprised if other countries start cancelling or

reducing their purchases of U.S. wheat, particularly Asian

countries, putting pressure on wheat demand," said Joyce Liu, an

investment analyst at Phillip Futures in Singapore.

    Genetically modified crops cannot be grown legally in the

United States unless the government approves them after a review

to ensure they pose no threat to the environment or to people.

    Monsanto in a statement posted on its website said: "While

USDA's results are unexpected, there is considerable reason to

believe that the presence of the Roundup Ready trait in wheat,

if determined to be valid, is very limited."

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

800-658-3670

605-295-3100 (cell)

605-258-2166 (fax)

jeremey.frost@chsinc.com

www.midwestcooperatives.com

http://grainmarketingplans.blogspot.com/

 Follow On:

This communication may contain privileged and/or confidential information and is intended only for the use of the individual or entity to which it is addressed.  If the reader of this message is not the intended recipient, you are hereby notified that any unauthorized dissemination, distribution, and/or use of this communication is strictly prohibited.   This communication makes no representation or warranty regarding the correctness of any information contained herein, or the appropriateness of any transaction for any person.  Nothing herein shall be construed as a recommendation to buy or sell any commodity contract.  There is a risk of loss when trading commodity futures or options.

opening grain market comments - record planting?

Markets are called mixed this a.m. behind a mixed overnight session.

When the overnight session ended old crop corn was up 2 cents a bushel, new crop corn was down 2 cents, KC wheat was down a penny, MPLS wheat was up a penny, CBOT wheat was down 2 cents, old crop soybeans up a penny, and new crop soybeans down 8 cents.  At 8:15 outside markets have crude off about 50 cents, the US dollar off a couple under points with the cash index at 84.039, gold off 11.50 an ounce, and stock futures pointing to about a 15 point lower start for the DOW.

Old crop firmness still being seen as producers are not really interested in selling much old crop grain.  Weakness in the new crop seems to come from the idea’s that we will show a record planting progress in this afternoons crop progress report.  I have seen just a huge range of estimates; most seem to line up that the market is looking for 60-65% corn planted and 20-25% soybean planting.  The one comment that I have seen is the fact that these reports usually lag.

Weather has halted planting in our area and other areas in the Western Corn Belt; but it looks like the eastern corn belt continues to make progress.  Our area the moisture helped greatly and I would think it leads to some more producer interest in marketing some grain.  ND did see good moisture too and that might curb some acres in both spring wheat and corn. 

Overall I think weather is still a wild card.  Today’s crop progress report will tell us if we are in a “rain makes grain” state or if we are still concerned about the lack of progress and possible yield losses along with acre losses.  Usually the Monday afternoon reports are old news fast; but today’s might be a little more important than normal. 

This morning we will have export shipments out at 10:00. 

I did see a estimate that increased Russia wheat crop this a.m.  We to keep in mind that we are not the only wheat exporter in the world and we typically only export a little under half of our crop size.  So if we don’t have a crop to export and other countries do we might not have a major change in our ending stocks.  Our domestic use for wheat is about 1.3 billion bushels this last year and about a similar forecast for this coming year.  If we have a carry in of 731 million bushels; we only need about ¼ to 1/3 of a crop to satisfy our domestic needs and that’s assume that wheat for corn stays strong.  We have some issues in HRW; but the SRW wheat crop looks to be plenty big and spring wheat is still up in the air; but I know guys that have it planted are sitting well.  Bottom line is that for wheat to really rally we probably need an issue someplace else in the world.  The issue in hard red winter wheat country is known; but it isn’t enough by itself to cause a major rally like we would like.  It could be if the funds decide to run it with a headline; but at the end of the day we will need some demand.  It will be hard for us to see demand if our competitors are swimming in grain.

One possibility that this afternoon’s report has is acting like a sell the rumor event.  Meaning everyone is expecting a huge corn crop progress number.  If we get it what reason will they now have to sell us off?  Could the market start looking at the fact that many areas to the east of us may have lost some yield potential?  It just seems to me that old crop stocks are so tight and basis is so strong that it should have some spillover effect to new crop.  I don’t know that it is enough to take new crop prices higher but could it stall off the pressure until later? 

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

Grain Price and Market Comments 5-17-2013

Markets are called mixed to weaker this a.m. behind a mixed overnight session.

When the overnight session paused old crop corn was down ¾ of a penny a bushel, new crop corn was down ½ of a cent, old crop soybeans were up 5 ½ cents a bushel, new crop soybeans up 2 cents a bushel, KC wheat down 3, MPLS wheat was off a penny, and CBOT wheat was off a nickel.

At 8:15 outside markets are surging with the US dollar up 620 points at 84.206 on the cash index, equity futures point to a positive start of about 40 points on the DOW, crude is up a buck, and gold is down another 11 bucks.

The US dollar took out last year’s highs and is now at its highest spot since late June/Early July of 2010.  As mentioned a few times the last couple of days our grains made our lows June 29^th 2010; the day before the June 2010 USDA stocks and acre update.  At that time July corn on the board got down to 3.25.  The US dollar isn’t at its highs it made it June of 2010; but it is trading at about the same level it was a week or so after the grains made their lows.  Not a good reason for the funds to get super interested coming back into commodities.  Spec money seems to prefer the commodity play as a hedge against inflation and inflation typically happens more with a weaker US dollar.  A stronger US dollar also doesn’t help our export potential; it makes us more expensive as we try to sell grain.

It does look like parts of the EU have some decent rains forecasted and that is pressuring the wheat market a little bit.  I have also seen comments about the recent moisture and expected moisture in the United States in the next few days; those comments indicate that because of the slow developing winter wheat crop the moisture could be beneficial. 

INFORMA is expected to release its acre estimate updates this a.m.  The market might be watching to see if they think we have added prevent plant acres or lost acres in general do to the moisture.  I am not sure if they will have a production number.  The thing about the slow planting and production numbers is the fact that we can afford to lose some based on our present balance sheet.  It might take losing some to get the funds interested.  Think of it this way; they look at the USDA numbers and see 14 billion bushel production and 2 billion bushel carryout; none of them say well that’s bullish I should buy.  It probably takes losing the top end of the current ideas before we have a real good chance of getting the funds too interested. 

Sounds like South America is giving some support to the bean market.  Argentine producers don’t seem to be interested selling and are reluctant sellers; the crushers down there have only been able to buy 10.7 MMT versus 12.5 MMT a year ago; despite a larger crop.  Also hearing talk of an on again off again strike in some Brazilian ports.  We did sell a few old crop soybeans to unknown today; as well as new crop soybeans to both unknown and China.

Weather should be the driving factor; but we probably won’t know until Monday if it is a rain makes grain or if moisture is taking away some of the top end yields via late planting and if it is losing acres.  Plenty of debate around on that topic.  Some guys are “mudding it in” and that also might cause some issues later.  The other thing to remember about the late planting is the fact that some of its effects won’t be known for several months. 

Below is comment on weather from the LaSalle Group  “Weather appears to be bearish for the most part.   Probably had record week of corn planting.   Farmers going 24 hours per day.   Heavy rains are starting to fall in the NW of the corn belt and will continue to move eastward into next week.   Most of the heaviest amounts should be confined to the Dakota's and Minnesota.   Temps will warm following the rains and dry out in most of the belt.   Would think corn progress is somewhere between 60 - 65% and beans 20 - 25%.”

Old crop soybeans and corn remain extremely tight; with good margins for the ethanol plants and that should help ease some of the weakness seen in new crop should things pan out the way some are thinking.  But it will only take us so far; plus the funds seem to own some old crop futures; they might not want to hold on if they think that new crop is bearish.

The other thing I have noticed a lot the past couple of weeks is the fact that many advisors are bearish and making sales for 2013 crop and some for 2014.  I don’t think producers are following them and that is one component missing from making a possible bottom.  We have many in the industry bearish, we have spec’s bearish, but we don’t have too many bearish producers.  Markets like to turn when everyone starts betting on the same thing; we don’t have that yet. 

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

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

800-658-5535

Market Comments - Slow corn planting Continues

Markets are called choppy/mixed this a.m. behind a mixed overnight session.

July corn was off 3 cents, December corn was unchanged, KC wheat was off 2 cents, MPLS wheat was up 2 cents, CBOT wheat was up 2, old crop beans off a penny, and new crop beans up 2 cents.  Outside markets have the US Dollar about unchanged, crude off 30 cents a barrel, gold off 11 bucks, and equity futures pointing towards an unchanged start on the DOW.

The May contracts expire at noon today; hopefully those levels can act as some price targets for the July contracts.  The May corn is about 70 cents higher then July, May soybeans are a 1.10 higher than July, and MPLS May wheat is 43 cents higher than the July MPLS Wheat contract.  Yesterday May corn and May soybeans had incredible strength and were the main headline for the rest of the strength in the grain complex.  This a.m. both of those markets are up 4-7 cents; but very thinly traded.

Yesterday afternoon we had a crop progress update that showed corn only 28% planted.  Yet last night we didn’t mustard much strength in the corn market.  Why?  The funds just don’t seem to care and the end users are not ready to panic and push this thing higher; at least not yet.  We want to be patient in waiting for better prices; yet we also should try to be pro-active.  Not easy to do both at the same time.

Last year when did the drought start?  But when did the market finally start to trade it?  The drought was going on the whole time that planting was well ahead of schedule but the market didn’t trade it until June 18^th; that Sunday night the market opened up strong and by the close on Monday we had a positive 28 cents on December corn. 

When did the USDA acknowledge the dry situation?  Not until the July crop report.  Last June they didn’t decrease the yield despite the early dryness that was seen.  Their May number was actual an increase from their outlook numbers that came out in February. 

So when will the USDA or the funds acknowledge or trade the present slow planting situation?  Well first off the USDA did drop yield from the outlook form; so in a sense they have acknowledged it.  But to what extent should be the question and maybe that won’t be known until we actually have a better idea of when the crop get’s planted.

Perhaps the market is trading this current situation and not the fear of how bad it could get?  Bottom line is we have plenty of question marks and still don’t know the answers, and we don’t exactly have a history telling us we will trade worst case right away.  The funds might be late to the game or then the outcome of the game might just not be known.  I think that is the case; we really don’t know how production will shake out and we probably don’t have a reason to run things up today.  IF things change and we end up with a big production number the market will need to do its job of finding demand.  If we stay on the present path the market might just be slow to re-acting.  Bottom line with all of this is to realize what is bearish out there and what is bullish out there.  Thus in your grain marketing plan realize that the market doesn’t have to trade what you or I think it bullish it and the funds will have a mind of their own; so be pro-active or find a way to get yourself comfortable.

As for other news out there; we really don’t have much other then weather and crop progress/conditions.  Crops are extremely behind average and the wheat crop remains very poor.

I did see some updates from CNGOIC on the Chinese crops; they pegged corn at 214 MMT versus the USDA at 212 on Friday.  They pegged the soybean crop at 4% less than a year ago at 12.3 MMT.  Wheat at 121.9 MMT versus 121 that the USDA had on Friday.  These are all for the 2013/14 crop size.

Forecasts still see dry weather the next couple of days but a system later this week.  I know I am praying for us to get some of the moisture and I seen a couple forecasts that have us with up to a 60% chance on Saturday.

South Korea did buy some optional origin feed wheat as well as optional origin corn.

I did see a comment that as much as 30% of the corn could get planted this week; so some of the estimates for next week are 50-60% planted.  What number would be bullish enough for our markets to have a leg up?  What number would be bearish enough for the funds to try and sell this thing down?

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

Opening Comments 5-10-2013 USDA Report Day - Limit move coming up?

Markets are called choppy to start this a.m. but it is a wait and see day.  Hurry up and wait for the USDA report that will be out at 11:00 central time.

Corn was down 3-4 cents, KC wheat was off 4-8 cents, MPLS wheat was off 4, CBOT wheat was off 4-7 cents, old crop beans up a couple, and new crop beans down a couple.  Outside markets are pointing to a slightly firmer opening in the DOW, the US dollar continues its strength up a couple hundred points, crude is down a couple bucks, and gold is getting hit hard down 38 bucks an ounce.

With gold and crude price action it really looks like a risk off day for the commodities; but for the grains it will all be about the report out at 11.  The report should help set the stages to how important weather is; it will tell us if we need to curb more old crop demand or find more new crop demand.  The big question or concerns we really need to watch for continue to be the world crop sizes and the new crop balance sheets.

USDA estimate are below.

The below is coming from the Van Trump Report.

US Ending Stocks 2012/13  May # April USDA # Avg Guess Range of Guesses Corn ??? 0.757 0.749 0.684 - 0.800 Soybeans ??? 0.125 0.123 0.107 - 0.130 Wheat ??? 0.731 0.733 0.720 - 0.747 US Ending Stocks 2013/14 May # Feb Ag Outlook Avg Guess Range of Guesses Corn ??? 2.177  1.993 1.387 - 2.427 Soybeans ??? 0.250 0.236 0.147 - 0.325 Wheat ??? 0.639 0.658 0.486 - 0.800 Global Ending Stocks 2012/13 May # April USDA # Avg Guess Range of Guesses Corn ??? 125.290 125.646 123.500 - 132.100 Soybeans ??? 62.630 62.300 61.111 - 63.000 Wheat ??? 182.260 181.528 178.300 - 183.200 Global Ending Stocks 2013/14 May # Avg Guess Range of Guesses Corn ??? 151.695 130.000 - 168.300 Soybeans ??? 68.991 64.000 - 83.000 Wheat ??? 184.368 175.000 - 195.800 US Wheat Production May # 2012 Totals Avg Guess Range of Guesses All Wheat ??? 2.269 2.062 1.832 - 2.190 All Winter ??? 1.646 1.497 1.359 - 1.604 Hard Red Winter ??? 1.004 0.776 0.676 - 0.875 Soft Red Winter ??? 0.420 0.504 0.473 - 0.636 White Winter ??? 0.222 0.217 0.204 - 0.226 South American Production May # April USDA # Avg Guess Range of Guesses Brazil Corn ??? 74.000 74.708 73.000 - 77.500 Brazil Soy ??? 83.500 82.807 81.500 - 83.500 Argentine Corn ??? 26.500 25.583 24.000 - 26.500 Argentine Soy ??? 51.500 50.714 48.500 - 51.500

I did actually see a little producer movement pick up late yesterday.  Which was probably just the right thing to do ahead of a USDA report as we never know what wild card they may through on the table.

I do continue to see some comments on the Australia wheat crop size; mainly comments that moisture is needed.  To get a bull market we will need some issues with some of our competitors and Australia is one of them.

South American has bought about 400k tones of corn and wheat combined this week; with most of it either out of South America or optional – origin. 

The Buenos Aires Cereals exchange left their estimate of the Argentine soybean crop unchanged at 48.5 MMT; versus the USDA at 51.5 before today’s update.  They also left their corn number unchanged at 24.8 MMT versus the USDA at 26.5 MMT.

Weather is still a mixed bag and today’s report as well as Monday’s crop progress will tell us how important it is.  Keep in mind that one day we will go from weather and moisture causing delays and acre losses to the mind set of rain makes grain.  That is part of the reason it has been hard to rally our markets behind the idea that we won’t get it planted or will be losing acres.

Watch the weather this weekend and see if any of the possible freezes develop.

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