USDA Report Recap - Market Comments

Below is a USDA report recap

US Ending Stocks 2013
	April #	March USDA #	Avg Guess	Range of Guesses
Corn	0.757	0.632	0.824	0.625 - 0.925
Soybeans	0.125	0.125	0.138	0.107 - 0.160
Wheat	0.731	0.716	0.731	0.700 - 0.755
World Ending Stocks 2012/13
	April #	March USDA #	Avg Guess	Range of Guesses
Corn	125.3	117.48	120.2	108.13 - 125.00
Soybeans	62.6	60.21	60.1	56.76 - 61.00
Wheat	182.3	178.23	178.6	176.90 - 180.00
South American Production Numbers
	April #	March USDA #	Avg Guess	Range of Guesses
Brazil Corn	74.0	72.5	72.90	69.10 - 76.40
Argentine Corn	26.5	26.5	25.586	24.0 - 26.50
Brazil Soy	83.5	83.5	82.543	81.0 - 83.60
Argentine Soy	51.5	51.5	50.502	49.00 - 52.00

It looked like the markets traded the US corn carryout numbers right out of the gates; but then as they got further into the report seen the world carryout numbers and things sold off.

Overall one probably considers the report a non-event; friendly US carryout versus estimates; but negative on the world carryout side of things.  At 12:30 we have corn near unchanged but spreads very firm, beans are off 3-4 cents, and wheat is down 15-17 cents.  Corn and beans are very close to where they were before the report came out and wheat isn’t much worse but it is off a few pennies.

Some talk is out there that the weakness in wheat is just as much from a buy the rumor sell the fact for the freeze concerns as well as the fact that we still have yet to see an USDA announcement for the sale of SRW wheat that was rumored to have happened last week. 

Overall the report tells me that weather should become more important and the fact that our balance sheets are tighter in the US then the trade had guessed should also be supportive; it just isn’t supportive today.  Think about it this way; the first thoughts after the March stocks report were that carryout would be 850 million bushels to a billion bushels for US corn.  But instead the numbers came in at only 757 million bushels; a 125 million bushel increase; only about 1/3 of the 400 million bushels that the USDA had found in the stocks report. 

I think if it wasn’t for the negative world balance sheet numbers that we could easily be limit up on corn; after all we did shoot up about 20 cents right after the initial release of the update USDA Supply and Demand report.

The big negative on the report is the increased world carry out numbers as seen above.  But keep in mind that most of that is coming from China and over the last couple weeks we have seen plenty of talk of China looking to buy wheat and new crop corn.  Some of my sources indicate that much of the grain stored in China has major quality concerns and might not be something that can be used.  So if our increased supply isn’t used able supply how bearish is it?

Watch to see how we close today as that will be important for the charts.  The other thing I would look for is wheat to move back to a follower; it had been leading the markets but today’s report probably says wheat should now follow corn again.  That doesn’t mean that wheat can trade on its own; it just means that its own story probably won’t be a headline like it has been.  After all the actual frost damage probably won’t be known for some time.

With the report behind US our marketing plans/ideas should start to focus more on weather and demand.  We dodged a bullet today and hopefully that gives us a chance to make some higher sales at better levels; but we also need to keep in mind that long term supply looks to increase and today’s report showed us that global demand might be a little softer too.  So we should realize that new crop corn and prices in general will have plenty of risk should weather not be an issue.

I haven’t seen much for updated basis values; I have calls in but no real response.  I would think that producer movement remains slow and that basis should bounce for corn; but it could be a little hit and miss as there are just so many areas that have an either extreme surplus or defeincey of corn.  Keep in mind that most ethanol plants are plugged for the next couple of months and the spread inverting more should also draw out more supply from the commercials as they won’t want to carryout corn in an inverted marketed.

Wheat basis is mixed; but I think it should have a downward bias.  Moisture in our area might help a little more old crop move; guys will feel a little better and might not hold as much if we wouldn’t have got this snow storm.

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

Opening Comments 4-10-2013 - Freeze in US Wheat - USDA April 10th Supply and Demand report table

Markets are called mixed this a.m. on a choppy mixed overnight session; but really we are in a wait and see mode.  Waiting for the USDA report which is out at 11 a.m. central time.  One of our brokers used to say it best; “may as well go home and come back at 11”  and that is the same thing today.  What happened last night and what happens in the next couple of hours will take a back seat to the USDA report.

In the overnight session corn was unchanged, beans were also unchanged, KC wheat was off a nickel a bushel, MPLS wheat was off 4 cents a bushel, and CBOT wheat was off a penny.  Outside markets have DOW futures up a little bit, the US dollar near unchanged, gold is down 10 bucks and ounce, and crude is down 40 cents.

The only other thing I really see out there this a.m. is more talk about is weather and that seems to be supportive; but also could be a buy the rumor sell the fact.  For wheat in particular there has been the talk of the frost and last night it sounded like plenty of places got cold; but the forecast was in the news for a while; so will it be enough for wheat to continue its strength.

Here is a Reuters article on the weather.  Keep in mind that today’s report should help set the stages as to how important weather will or won’t be based on how tight our current balance sheet is or isn’t.

Freeze harming US wheat; rain and snow stall corn seeding - RTRS

10-Apr-2013 07:26

• Winter wheat in southwest Plains likely harmed
• Rains and snow keep spring fieldwork at a minimum
• Moisture to help ease drought stress

By Sam Nelson
CHICAGO, April 10 (Reuters) - Freezing temperatures early on Wednesday likely harmed winter wheat in the southwest Plains, while rain and snow in the Plains and Midwest slowed or stalled corn plantings even as they eased drought stress, an agricultural meteorologist said.
"There was probably some damage to wheat, it dropped to the teens (degrees Fahrenheit) to low 20s F in the Texas Panhandle and down to 12 F this morning in southeast Colorado," said Andy Karst, meteorologist for World Weather Inc.
Karst said the cold snap harmed wheat from southwest Kansas into western Oklahoma and into the Texas Panhandle.
"It will be cold again tomorrow, so there will probably be more damage," he said.
Heavy snowfall blanketed the northern Midwest at mid-week with 20 inches of snow in Valentine, Nebraska and 6.0 inches to 12.0 inches or more elsewhere, according to Karst.
Rains of 1.0 to 2.0 inches or more covered most of the western Midwest and the rainfall will move into the eastern Midwest Wednesday and Thursday, he said.
"Moisture in the western Midwest will be beneficial, it won't end the drought but it will add to soil moisture levels," Karst said.
Delays in corn plantings will be widespread this week and only sporadic seedings will take place next week.
"This will shut down plantings for now, and next week, there may be rain off-and-on which will slow fieldwork," he said.
U.S. farmers are not happy with the cold and snow that may be causing more harm to their winter wheat crop but the April showers are being welcomed following the worst drought in over 50 years that trimmed crop output last year and has been stressing the winter wheat crop.
The U.S. Department of Agriculture (USDA) on Monday said 36 percent of the U.S. winter wheat crop was in good to excellent condition, up from 34 percent a week ago but well below the year-ago rating of 61 percent. (Full Story)
The drought has taken a toll on the winter wheat crop that has broken away from its winter dormant or hibernation status and is now growing, leaving it vulnerable to harm from cold weather or another spate of dryness.
Drought conditions are retreating slowly in the U.S. Plains, according to a report issued last Thursday by a consortium of state and federal climatologists.
Don Keeney, meteorologist for MDA Weather Services said that at the end of March, 6 inches to 8 inches (15 cm to 20 cm) of rain were needed to bring soil moisture levels back to normal in much of Nebraska and a corner of northeast Kansas.
Keeney said 2 inches to 4 inches (5 cm to 10 cm) were needed in the balance of the central Plains and western Iowa.

The Drought Monitor report, which tracks the U.S. land area stricken by drought on a weekly basis, said the Plains, which have been the hardest hit, was seeing improvement because of rains and snow in the past two months.

(Editing by Bernadette Baum)
((sam.nelson@thomsonreuters.com)(1-312-408-8721)(Reuters Messaging: sam.nelson.thomsonreuters.com@reuters.net))

  

Here is the USDA report table; from RTRS as well.

RPT-TABLE-USDA April crop supply and demand summary - RTRS

10-Apr-2013 07:52

April 5 (Reuters) - This table summarizes key production data from the U.S. Department of Agriculture's supply/demand report, which will be released at

11:00 a.m. CDT (1600 GMT) on Wednesday, April 10.

U.S. ending stocks are in billions of bushels. World ending stocks and
production are in millions of tonnes.
The 2012/13 marketing year for wheat began on June 1, 2012, and will end on
May 31, 2013. For corn and soybeans, the 2012/13 marketing year began on Sept.
1, 2012, and will end on Aug. 31, 2013.

------------------------------------------------------------------------------

                    USDA 2012/13 U.S. grain and soybean ending stocks  

            USDA April      Average of      Range of          USDA March

            2012/13         analysts'       analysts'         2012/13

            end-stocks      estimates       estimates         end-stocks

            estimates                                         estimates

Wheat        _____           0.727          0.700-0.755       0.716

Corn         _____           0.812          0.625-0.925       0.632

Soybeans     _____           0.136          0.107-0.160       0.125

-----------------------------------------------------------------------------

                 USDA 2012/13 global grain and soybean ending stocks  

            USDA April      Average of      Range of         USDA March

            2012/13         analysts'       analysts'        2012/13

            end-stocks      estimates       estimates        end-stocks

            estimates                                        estimates

Wheat         _______       178.550      176.900-180.000     178.230

Corn          _______       119.104      108.130-125.000     117.480

Soybeans       ______        59.810       56.760-61.000       60.210

-----------------------------------------------------------------------------

                            USDA world production  

                Apr USDA       Mar USDA       Apr USDA    Mar USDA

                2011/12         2011/12        2012/13     2012/13

                estimate       estimate       estimate    estimate

Argentina wheat   _____            15.50      _____       11.00

Australia wheat   _____            29.92     _____       22.00

Canada wheat      _____            25.29     _____       27.20

EU-27 wheat      ______           137.23    ______      132.25

India wheat       _____            86.87     _____       94.88

FSU-12 wheat     ______           115.03      _____       77.21

Russia wheat      _____            56.24      _____       37.72

Kazakhstan wheat  _____            22.73       ____        9.84

Ukraine wheat     _____            22.32      _____       15.76

China corn       ______           192.78     ______      208.00

Argentina corn    _____            21.00      _____       26.50

South Africa corn _____            12.42      _____       13.00

FSU-12 corn       _____            34.12     _____       32.18

Ukraine corn      _____            22.84      _____       20.92

Brazil corn       _____            73.00      _____       72.50

Argentina soy     _____            40.10      _____       51.50

Brazil soy        _____            66.50       _____       83.50

Jeremey Frost

Grain Merchandiser

Midwest Cooperatives

Opening Comments 4-9-2013

Markets are called mixed this a.m. after a choppy mixed overnight session.

The overnight session paused with nearby corn up 3 cents, new crop corn down a penny, beans off 1 ½ cents a bushel, KC wheat down ½ , CBOT wheat down 2 ½ , and MPLS wheat down 2.  Presently the US dollar is weaker with the cash index off over 300 points at 82.430, equity futures are pointing towards a small positive start, gold  is up a couple bucks, and crude is down 20 cents a barrel.

Not a ton of new news this a.m. and really we are nearing a wait and see mode; waiting for Wednesday’s updated USDA Supply and Demand report.  We did have crop conditions out yesterday but the only thing really noted was the wheat conditions which saw a small improvement in the eastern part of the US.

Estimates for the report this week are for an increase in the corn carryout; yet some in the trade might be looking for the USDA to do what it’s done the past couple of years and that is basically ignore the stocks report versus the trade estimates as each of the last two years the March stocks reports came in below trade estimates which would lead guys to think feed usage would be increase in the April report; but instead each of the last two years feed usage was not increased; it was left unchanged one year and decreased the other.  Perhaps it is just a bounce or some profit taking via the shorts; but the reason it looks like some are a little friendly for the report is the firming spreads.  The May-July corn spread has gained a good 5-6 cents off of its lows in the past day or two.

Sounds like CONAB raised their corn production in Brazil while dropping their Bean production.

Still seeing some talk of demand concern as it relates to the China bird flu and what that will do to soybean demand and bean meal demand.

Sounds like Brazil soybean harvest is about 80% complete.

Basis for corn, winter wheat, and spring wheat feels steady.  But without much nearby demand; most end users are full nearby and with corn that means the coverage they are looking for is under an inverted board; while the market in general is looking for a carry.

Cool winter weather could start making a headline for planting delays.  But you really can’t talk big time about it when the planting progress isn’t even getting reported.  But it should be on the radar as we go forward; also talk of some of the ND and part of MN acres switching could hit headlines in the next few weeks.

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

Closing Comments - a few days before big April USDA Supply and Demand Report

Grain markets had a nice little bounce today lead by a weather scare (frost threat and last week’s frost damage) for wheat.

KC wheat lead the strength up 19 cents, MPLS wheat was up 12, CBOT wheat was up 14 cents, nearby corn was up 5, July corn up 2, new crop Dec corn was down 3 cents, soybeans were up 16 cents a bushel on the old crop, crush sunflowers were up 20 cents a cwt, the dollar is up with the cash index at 82.779, the stock market managed a bounce after being down earlier in the session the DOW ended up closing up 48 points, and crude is up about 90 cents a barrel.

We did have crop conditions/progress this afternoon.  No update on corn planting; but the end of the report did say it expected to report nationwide corn and spring wheat planting progress next week.  We did get an update on the winter wheat conditions and we saw a 2% increase in the G/E slot; mainly coming from the eastern corn belt states or areas that plant SRW.

 This a.m. we had export shipments and they came in mixed.  Rather poor for corn, while good to decent for both wheat and soybeans.

Technically some of the wheat charts did clear some resistance today; and a bullish report on Wed could take us back to the level we had before the March stocks report took us down at the end March.  CBOT May wheat managed a close above the 61.8 retracement as well as the 20 day moving average.  The next couple days could easily look like a break of resistance or a simple head fake should we get a negative USDA report on Wed.

More important than whether Wednesday’s USDA report is bullish or bearish on actual hard numbers is how bullish or how bearish versus what the market is expecting.  Could the numbers be bearish enough to give us another leg down in the grains?  Sure that is possible but it really depends on what the market or “crowd” is actually trading. 

Below is DJ Survey for this week’s USDA Report.

04/08 08:42a CST  DJ SURVEY: April World Grain, Soybean Carryout

  CHICAGO--The following are analysts' estimates in millions of metric tons

for 2012-13 worldwide grain and soybean ending stocks, as compiled by Dow Jones

Newswires.

  The U.S. Department of Agriculture is scheduled to release updated supply

and demand tables at noon EDT (1600 GMT) Wednesday. Parentheses denote the

number of estimates in that average and range.

04/08 06:35a CST  DJ SURVEY: April U.S. Grain, Soybean Carryout

                                                                                                 Mar

                                                                                                2012-13 2011-12

                                                 Average    Range              USDA    USDA

   Corn (21)                           0.824   0.625-0.925          0.632   0.989

   Soybeans (21)                0.137   0.107-0.160            0.125   0.169

   Wheat (21)                       0.731   0.700-0.776           0.716   0.743

                                                                 Corn   Soybeans  Wheat

   ABN Amro                                         0.875   0.160    0.746

   ADM Investor Services                0.824   0.150    0.732

   AgriSource                                        0.850   0.135    0.750

   AgriVisor                                            0.825   0.155    0.716

   Allendale                                           0.882   0.139    0.722

   Alpari                                                  0.925   0.150    0.740

   Citigroup                                            0.813   0.135    0.722

   Doane Advisory Srvcs                   0.882   0.130    0.776

   Farm Futures                                   0.756   0.148    0.755

   Futures International                   0.708   0.131    0.717

   Global Comm Analytics                0.625   0.107    0.706

   Jefferies Bache                               0.857   0.125    0.716

   Kropf and Love                               0.882   0.140    0.741

   Newedge USA                                0.800   0.135    0.723

   Olympus Futures                           0.845   0.115    0.700

   Prime Ag Consultants                   0.882   0.150    0.746

   Rice Dairy                                          0.857   0.125    0.741

   Risk Management Commodities  0.787   0.135    0.710

   RJ O'Brien                                         0.865   0.130    0.732

   US Commodities                            0.832   0.140    0.720

   Water Street Solutions                0.739   0.150    0.749

                                                                                 Mar

                                                                                 2012-13 2011-12

                                 Average    Range              USDA    USDA

Corn (11)              120.2   116.0-125.0           117.48  131.16

Soybeans (12)    60.1    58.21-62.0               60.21   55.25

Wheat (12)          178.6   176.9-180.0           178.23  196.47

                                                 Corn  Soybeans  Wheat

ABN Amro                            122.0    61.0    180.0

ADM Investor Services        121.0    61.0    179.0

AgriVisor                               121.0    61.0    178.5

Allendale                             121.12   60.18   178.34

Alpari                                     117.9    61.0    179.5

Doane Advisory Srvcs          n/a     59.0    179.6

Farm Futures                       118.3    59.1    176.9

Futures International        116.0    58.7    177.5

Jefferies Bache                  121.5   58.21    178.0

Olympus Futures              122.0    60.0    178.0

Prime Ag Consultants         125.0    62.0    180.0

Water Street Solutions       116.5    59.8   178.11

Other news today includes the fact that corn spreads did firm up a little bit today as the May gained on both the July and Dec corn contracts.  Basis locally feels heavy for nearby corn; but some of the excess corn has been sold off to the local feed lots so if a big end user came in and wanted to buy a couple shuttles worth corn wouldn’t be cheap.  Ethanol plants seem to be covered for April and May but June forward is a different story.

Wheat basis feels softer on the spot floor; but the storm that is coming might slow down rail movement too and that along with producers going to the field isn’t going to help supply so perhaps we can see a little basis bounce?

I think heading into the report this week we need to realize that stages are likely set for another big movement.  One of our brokers today mentioned a 800 million bushel corn carryout could be limit up and 900 could be limit down.  What happens if the number is 650 million or a billion?  Could we have another dollar move in a couple days?  Who knows for sure; but I would guess that either of those extremes could give us big movement.  For those that made sales ahead of the last USDA report maybe now is a place to look to buy a cheap call option to re-own bushels should we have a bullish surprise?  And for those with too much unsold inventory there really is never anything wrong with spending a little bit of money to buy puts and establish floors.  They would have worked really good ahead of the last report.

For new crop grain marketing I think we are entering the weather stage.  Plenty of upside potential should we add some weather premium back in; but also plenty of risk should mother nature decide this is the year we grow trend line or better yields with no hiccups along the way.  Should the later happen the bulls will struggle as we will be in a situation that we have to find a tremendous amount of demand (more than we ever have year over year) or be faced with the biggest corn carryout in years.    Bottom line is if or when we get some bounces for new crop prices risk is probably suppose to be took off.  We can look back and say we should have done it months ago; which perhaps that is the case.  But also every day that goes by without weather premium added back into the market; every day we get closer to downside risk and what one doesn’t want to do is somehow get in the situation where you end up making big percentage sales at what ends up being a blow off bottom. 

Don’t forget we are still offering free delayed price on most of the grains.  Most of the programs are free until new crop; call for more details.

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

Thanks

Daily Summary from CHS Hedging's Chris Steinhoff

Crude oil was mixed and choppy early before firming later in session…DJIA is lower as N Korea threatens war, US companies report earnings etc etc…Grain get back to the 1:15pm CST close in Chicago and KC and 1:30pm CST in Mpls…looks like Chicago forgot to change when they post settlemetns

Corn===front end buying led the strength and also firmed spreads..CK was up 4-5,   CZ was down 3,  K/N settled at a 15 inverse

                ===RIN values were up, leading some to believe that helped the front month corn contracts

                ===volumes were modest as traders try to square positions ahead of Wednesday report after liquidating longs last week

                ===average trade guess on carryout is 812-824, depending on the survey…Some unusually low estimates: lanworth is 632, GCA is 625, Macquarie is 686 and a few more around 700mb skew the                       average to lower!!!

                ===bird flu in China still sees headlines as it sounds like a 7^th person dies

                ===seems like options volume picked up from large traders, possibly in anticipation of the USDA report

                ===export inspections of 10.1mb is well below the 17+/-mb needed weekly…is there any evidence the USDA will change exports?

                ===hearing a barge tries to get through lake pepin on the Miss River. It could lead to the open of the upper Miss River system…fertilizer north?

                ===CME plans to introduce an ethanol RIN contract by the end of May

                ===Some corn fields have seen some planting while other fields are ready..awaiting warmer temps, insurance and forecasted rains

                ===CIF  was up 1 to 2…processors were mostly unchanged  but looking for June forward

Beans===double digit gains led by SK as SK was up 15 cents… SX struggled to stay positive but last tick was up 4 cents

                ===possible short covering was seen as traders position themselves ahead of the USDA report on Wednesday

                ===Will USDA raise carryout like many expect? 50/50 chance

===bird flu in China causes worry about Chinese soy and meal demand as reports of killing birds circulate..Pigeons now seem to have the strain…but the problem doesn’t seem as bad as thot

last week

                ===export inspections of 15.3 was nearly triple the weekly needed amount as US exports remain stronger than needed

                ===S America harvest expands as Brazil is on the last 25% of harvest. Logistics remain back logged but they seem to be getting by

                ===China has been, almost unusually quiet in the export front, as they work thru the arriving boats

                ===K/N was firmer at a 19+ inverse as movement is quite slow and demand stays steady

                ===CIF was steady to a nickel better..processors were mostly steady to slightly better with quick ship bids

Wheat===double digit gains, led by HRW on nervousness about recent frost damage to the OK crop

                ===Meanwhile wheat looks pretty good in parts of KS and MT..(see link to article below)

                ===China pretty much admits they bought up to 1mmt of US wheat last week…it has not been reported through the daily announcement system, so inspections will need to be watched later

this summer

                ===KC was up 19  , CME was up  12 and MGEx was 12 ¼ higher

                ===KC spot was 2 to 5 lower for the 11.60 to 12.20 pro

                ===MGEx 14 spot is 90 to 107…seems like farmer has moved the low pro spring wheat and is sitting on a fair amount of higher pro

                ===export inspections were 27.2mb, above the 22.5mb needed weekly as we enter the last 60 days of the wheat marketing year

http://www.hutchnews.com/Todaystop/Sun--Bick-wheat-improvement-

From: opisethanol@opisnet.com [mailto:opisethanol@opisnet.com]
Sent: Monday, April 08, 2013 10:38 AM
To: OPIS Ethanol Updates
Subject: BIOFUELS UPDATE: ***RINs Rally into The 80s and 90s as Word of New EPA Estimate Spreads

2013-04-08 11:37:27 EDT
***RINs Rally into The 80s and 90s as Word of New EPA Estimate Spreads

It may not qualify as RINsanity, but values for 2013 Renewable Identification Numbers, or RINs, are up sharply this morning, in recognition of the revelation that 500 million less RINs were carried over from 2012, according to numbers released by the Environmental Protection Agency over the weekend.

The carryover of 2012 RINs into 2013 was just 2.1 billion gallons, down from the prior estimate of 2.6 billion gallons, and news of the lower number has sent bids streaking higher this morning. Latest bids for 2013 ethanol RINs were in the realm of 80-81cts/gal with confirmation that at least one transaction was done at 81.5cts/gal with sellers left over at 83cts/gal.

That would represent an increase of more than a nickel from Friday, and it would also represent a rebound of more than 25cts/gal from some of the softer numbers seen toward the end of March. The price for 2013 RINs began the year at just 7cts/gal, and then ascended to $1.10/gal during the worst of the winter buying frenzy.

There is less talk about biodiesel RINs, but sources say that prices continue to track around 10cts/gal above the ethanol RINs. A 92cts/gal deal was recorded this morning for 2013 RINs.

At least one exchange is excited about leveraging the volatility and the lack of transparency that has come to be associated with RINs trading. The CME has launched an effort to initiate a RINs futures market. OPIS will have more details on this effort today.

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

www.chshedging.com

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Midday Comments from CHS Hedging's Ami Heesch 4-8-2013

From: Heesch, Ami
Sent: Monday, April 08, 2013 11:21 AM
Subject: Midday Comments for Monday, April 8, 2013

Highlights….

China officials confirm last week’s rumors of them purchasing a number of SRW cargos for Jun-Aug…….

USDA S&D report to be released at 11 AM on Wednesday this week…..

Equity markets quiet this morning…….US$ up 0.057 at 82.708….CD$ down 0.0015 at 0.9796….gold down 4-5 at 1575……Mini Dow down 39 at 1445.00…S&P up 0.25 at 1546.25…..

Corn……

Struggles to stay in positive territory, despite solid gains in the wheat and soybean pits…….

Weekly export inspections were reported at 10.1 million bushels versus trade estimates of 14-18 million bushels…

Country movement fairly quiet this morning….basis not doing much…….

K/N spread at 12 ¾ inverse  (10 ¾-13 range)…..some think we will not see single digits on this spread given the lack of movement and current cash markets…..

Beans……

Bouncing back after three days of bashing……despite ongoing concerns of bird flu in China (21 cases reported so far …death toll at 6)…..

Weekly export inspections were reported at 15.2 million bushels versus trade estimates of 12-16 million bushels….

Technical buying, along with bargain hunters emerged , which pushed prices higher this morning……

Position squaring ahead of Wednesday’s USDA data could also be providing some underlying support in the soybean market……

Cash markets firm on lack of country selling……

K/N spread holds around a 20 cent inverse (17 ½ -20 ¼ )…..could go higher on continued strength in cash markets and a friendly USDA report on Wednesday…..

SA struggles with rains delaying soybean harvest in Argentina……port congestion continues and loading remain slow…….no news of more Chinese soybean purchases….

Wheat……

Strength coming from Chinese SRW purchases…….poor US Plains HRW conditions……cold weather conditions in parts of the Black Sea region…..

Weekly export inspections were reported at 27.16 million bushels, above trade estimates of 17-26 million bushels…..

China says they will look to source more SRW to replenish their reserves….could be as much as 2.0 million bushels…..

More rain/snow events headed for parts of the US Plains this week…..weekly crop conditions out this afternoon at 3PM Chicago Time……

Al / CHEDG

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Opening Comments 4-8-2013

Markets can now have opening calls again as today is the first day of the new trading hours.  The hours are a start at 7:00 p.m. each night; and then a break between 7:45 and 8:30 a.m.  So basically the pit will open at 8:30 a.m. central time and close at 1:15 p.m. central time.  For guys like me that means a lunch before 2 in the afternoon.  It could mean some elevators won’t be buying when the market is closed but I guess that will be up to the risk management departments.  Hopefully it adds back a little liquidity that it seemed to take away from being 22 hours a day.

Markets are called better this a.m. behind last night’s overnight strength that saw corn up 4 cents with the May-Dec spread firmer by a nickel.  Soybeans were up 11 when the overnight session paused.  KC wheat was up 7 cents a bushel, with MPLS up 4, and CBOT wheat up 3 cents a bushel which was nearly 7 cents off of its highs.

News today that we will want to watch include export shipments that should be out at 10 a.m. and then this afternoon we will have a crop progress/condition update.  I haven’t seen much improvement in the SD wheat.

Weather seems to be playing bullish a bullish card and bearish card.  The bullish card is delays and cool weather that isn’t helping planting progress.  On the bearish side of things many areas including ours have some moisture in the forecast.

Friday’s Commitment of Traders showed that the funds sold nearly 100,000 contracts of corn in the last week.  Which was perhaps even slightly more then what the trade thought.

The bird flu in China is still leading some headlines.

The big thing this week should be the USDA report.   Estimates are for a big increase in the carryout; mainly in corn with estimates in the 820 or so area.  If you throw out the couple estimates that are unchanged-lower despite the bearish stocks report you have estimates closer to 850-900 and to me it feels like the trade as been trading a 850-900 type number.  So hopefully any carryout that the USDA throws our way under 850 million bushels can be considered friendly versus what the trade has been trading. 

Here is a recap from last week for this week’s Supply and Demand report estimates

                             Wheat    Corn  Soybeans

Average trade estimate       0.727   0.812     0.136

Highest trade estimate       0.755   0.925     0.160

Lowest trade estimate        0.700   0.625     0.107

USDA March                   0.716   0.632     0.125

One scary thing has to be the fact that we have a 300 million bushel range.  If all the estimates were at 800-1 billion we might have a better chance to have a nice report.  But the estimate of 812 seems to be a little light of what the trade has been talking about.

I have mentioned many times of some of the bullish possibilities that could come out of the report; but the bottom line is the bullish scenarios are not very likely and if the trade isn’t looking for super bearish number it also becomes harder for us to see a bullish reaction and that is what we are really hoping for.  A bullish reaction; not simply bullish numbers as those are not going to be easy.

Lastly don’t forget what time of the year it is.  It is the time when we typically see some weather premium added into the market and seasonally a time when we should be looking to make some sales on the rallies; trying to take a little risk off the table.

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

Thanks

Closing Grain Market Comments 4-4-2013 - Grain Prices

The grain markets got beat up today in a choppy rather news lacking day.

Corn was down 12 on old crop, new crop corn was unchanged, soybeans seen new crop unchanged, while old crop beans were down 8 cents a bushel, kC wheat was down 14, MPLS wheat was down 5, CBOT wheat was off 3, equities bounced with the DOW up 56 points, the US dollar is back to about unchanged which is a big reversal from earlier trading, and crude ended the day down about a buck a barrel also about a dollar off of the lows.

Ugly day for the markets in general; but a couple of decent things did happen.  First off the US dollar got to its highest level since last July and managed to leave a Doji on most of the charts while trading above yesterday’s highs and yesterdays lows leaving a reversal on the charts.  Some would refer to it as a key bearish reversal as we had made a new high for the move and closed lower; other text book technical wouldn’t say it is a key reversal because we didn’t close below yesterdays lows.  Either way it is a sign that perhaps the dollar strength is due for a breather and that wouldn’t be bad for the grains. 

We need something to get some money flowing back into the grain markets to help stop the bleeding from the USDA report and a pull back or weakness in the US dollar which in turn helps makes our commodities that were are trying to export cheaper and leads to a risk on type attitude by the funds can be a start.

The other positive today that I seen was beans able to bounce well off of their lows and CBOT wheat hanging around despite all the other weakness around.  Perhaps CBOT wheat hanging around there was simply spread unwinding but CBOT wheat has always lead our bull market rallies. 

News out is that China bout 14-16 cargo’s of Soft Red Wheat; which could have also gave support to CBOT wheat; but at least that is demand support.  Nothing wrong at all with wheat bouncing from end user demand.

Exports sales were out this a.m. and they were nothing special for any of the grains.  Wheat came in at 5.2 million bushels of old crop sold; which is about ½ of what it needed to be on a per week basis to meet current USDA projections.  Beans came in at 14.4 on old crop which is about 3 times what they need to be and the best in 3 weeks.  Corn had its best week in 5-6 weeks at 13.9 million bushels which is very close to what it needs to be on a per week basis to meet present USDA projections.

We have started to see more estimates out for next week’s USDA report.  It seems like most are looking for a 200-400 million bushel increase in our present 632 million bushel carryout.  Not sure what the market is trading right now; but a dollar plus break in the board to me seems like they might be trading nearly all 400 million bushels.  (Hopefully that’s not sure wishful thinking.)

Here is a link to the CHS Hedging estimates.

https://www.chshedging.com/UserFiles/Documents/2013/Pre%20USDA%20Report%20Comments/040413.pdf

You will notice they have corn carryout at 857 versus USDA at 632.  Beans unchanged at 125 and wheat at 706 versus 716.  The report will be released Wednesday the 10^th at 11 am central time. 

I haven’t see all the estimates to know were exactly the average trade estimate is at; but I would guess based on the April stocks report that most estimates will be for rather decent increases for all three of the grains.  The good news is that hopefully any increases will already be priced into the markets and as the USDA shown us last week they can always throw curveballs that are not expected.

The most realistic or possible curveball for next week’s report looks to be a friendly curveball because the market has priced in bearish news.  Last week everyone was looking for a bullish report and the USDA has that ability to do what most think it won’t.  Maybe that is a stretch but it is possible that next week’s report does exactly what the last one did; catch as many off guard as possible.  We mentioned before last’s weeks report that a huge amount were bullish  (……… “that also left me feeling a little cautious.  First off the strong close by corn seemed to come from the funds and idea’s that this week’s report will be bullish.  The only bearish forecasts I have seen for the report are those worried about the fact that everyone seems to be bullish on it and I land in that camp”………) now as producers the only thing we can really hope for is that the funds lean a little too hard too much to the selling side and then the USDA throws another wild card our way; but this time hopefully bullish or just not as bearish as everyone is looking for.  Realistically it will not be bullish versus last month; but it could be bullish versus historical and it wouldn’t take much for it to not be as bearish as the crowd is looking for.

Having said that I don’t think I would be recommending to guys to go out and buy things back on the board right now.  If you want to play that game the right way is probably just via cheap call options as volatility is fairly cheap right now due to the skew that happens in grain market weakness.  Along those same lines just owning some puts in case the USDA was right and decides to take the whole 400 million bushel increase in carryout at once might not be a bad investment or at least a move that allows one to be comfortable.

The other thing we really need to keep in mind is that if our old crop carryout’s have increased as much as some are talking weather becomes less important for new crop prices via the fact we have a more comfortable starting spot.  That doesn’t mean we can’t or won’t have weather scares; we could have plenty and hopefully do have some power filled ones.  But supply and demand rules in the end and carryout’s of the 2.00-3.00 billion bushels like some are talking about for new crop are not bullish. 

On the flip side of things one might ask how much demand does a dollar a bushel break add back in? 

Elsewhere basis for wheat feels softer.  Spring wheat spot floor was rather weak today as it seems like some railroads are really catching up in a hurry.  Winter wheat basis is also a little defensive but the positive should be that some flour pricing has occurred and should continue to occur should the board continue to break.  Corn basis is choppy.  Still hard to find nearby homes; but I have also sold more the feed industry in the past few days then I had for a couple months combined so there is some end user pricing happening.

Sunflower market and birdseed in general feels like demand is decent but bids and offers are still wide and buyers simply don’t need much yet.  Supportive is the fact that the crush is competitive with the birdseed market.  Also new crop should be supportive as the acres came in a little light and more acres went to confections.

We are still offering free delayed price storage on wheat, corn, milo, sunflowers, millet, and soybeans at our locations.  Call for more details.

As guys get ready to get busy don’t forget to give us indications on the levels you would like us to call you about.  Many grain marketing plans make sales over the next couple of months because typically we add some weather premium into the seasonal price tendencies.

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

Some good info on USDA Stocks report

Some good info on USDA Stocks report........from Darrel Good


here is link


http://farmdocdaily.illinois.edu/2013/04/another-surprising-corn-stocks-estimate.html

Opening Comments 4-1-2013

Markets are continuing the pressure this a.m. from the melt down on Thursday’s USDA Stocks report.

At 9:15 nearby corn is off 32 cents, new crop corn is unchanged, Dec 2014 corn is up a nickel, soybeans are presently down 13, KC wheat is off 6 cents, MPLS wheat is down 5, and CBOT wheat is down a dime.  Outside markets are choppy with the equities near unchanged with the DOW up 7 points, the US dollar is weaker and that should be supportive with the cash index off 331 at 82.74, gold is up 3 bucks an ounce, and crude is down a buck a barrel.

Market is trying to determine where it needs to be after the report on Thursday that showed 400 million bushels more corn stocks then the average estimate.  Some now have carryout numbers in the 850-1.0 billion range with thoughts that it could be higher.  So basically our carryout nearly doubled on Thursday and that is why we have so much pressure.  The other reason for the sever pressure is the fact that the funds had loaded up looking for a bullish report.  When we didn’t get that we quickly made it so anyone that had got long in the past several months

Markets have made another leg down at 9:45 with corn now off 42 cents on the nearby.  Margin call selling?  Simply liquidation as anyone that got long any time the past couple months or basically since June sometime is now in the red. 

Export shipments will be out at 10:00; but don’t look for anything earth shattering………. I think we simply need to get through the next couple of days and see where end user demand shakes out. 

Basis surprisingly is still on the weak side of things so far today.  I do look for it to bounce but so far there is still a lack of homes out there for both nearby wheat and nearby corn.  End user pricing should be happening; but they might wait until they see something stabilize.

Going forward for old crop to really bounce we will need to see very good demand or find a reason for the funds to decide to get long.  New crop should be a weather story; but keep in mind that a bigger old crop balance sheet also gives us a bigger starting spot for new crop.  One of the 2013/2014 balance sheets I seen from one advisor was over a 3 billion bushel carryout.  Ouch.  Not that I think that is probable and I would question how possible; but it is and will be our risk.

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