Opening Grain Market Comments 8-22-13

Markets are called weaker this morning behind a weaker overnight session.

In the overnight session old crop corn was down 2, new crop was down 5 cents, KC wheat was 2-4 cents lower, MPLS wheat was off 4 cents, CBOT wheat was down 4, and soybeans were down 13 in the Nov contract.  At 8:00 outside markets have crude about unchanged, the US dollar firmer by 300 ticks or so with the cash index at 81.52, gold is up 5 bucks, and the DOW futures are pointing towards a positive start of about 50 points.

Weakness in the overnight session seemed to come from a radar showing some moisture in parts of Iowa, Nebraska, Illinois, Wisconsin, and MN.  It doesn’t look very wide spread; but I did see some areas on http://www.cocorahs.org/ showing up with ½ inch to as much as about 1 ½ inches.  A little late?  Or just in time?  Either way probably doesn’t matter as the main headline that the funds will see is some moisture in some areas that could really use it.  Sure plenty more areas still need plenty more moisture but keep in mind that the funds tend to trade perception more than reality.

We did have export sales out this a.m.  Wheat came in at 18 million bushels which was in line with the market expectations and above what we need on a per week basis.  Total commitments are up 40% from last year; but some in the industry question if we can hit the 14.9 million bushels per week that we need with solid exports expected out of the Black Sea region.  One important thing for wheat sales is the fact that the trend the past few weeks has slowed dramatically over the past couple of months.  In early June into July we had several weeks of 20-30 million bushels with one week over 35 million and another over 50 million.

Soybeans sales and soybean commitments year to date are good for new crop soybeans.  Coming in at 34 million and 692 for the upcoming year; but the sales today were well below the market expectations.  The market had expected 1.35-2.00 MMT this week; but we only came in at 926k tones or 34 million bushels.  Old crop sales for beans were 800,000 bushels.

Corn sales were also disappointing.  Old crop at 2.3 million bushels and new crop of 17.1 million bushels.  Combined sales of 493k tones were below market estimates of 550-750k tones. 

For more info on the exports you can check out CHS Hedging export sales recap.  http://chshedging.com/UserFiles/Documents/2013/Export%20Sales/export%20sales082213.pdf

The other news to watch is more pro farmer crop tour.  The thing to keep in mind on this is the variance potential in the sampling methods.  Don’t get me wrong it is very good info; but it shouldn’t be as accurate as the USDA.

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

Pro Farmer Crop Tour Tweets

Here are some Pro Farmer Crop Tour Tweets

Opening Grain Market Comments 8-20-2013

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

In the overnight session corn was down 6 cents, KC wheat was down 1, MPLS wheat was unchanged, CBOT wheat was down 5 cents, and soybeans were down 10-12 cents.  At 8:10 outside markets have the US Dollar weaker by 300 ticks or so with the cash index at 80.92, gold is unchanged, crude is down 1.50, and the DOW futures are pointing towards a positive start of about 15 points.

Looks like a little correct after yesterdays very strong day in the row crops.  The strength came from hot and dry weather forecasts, along with some short covering in the corn market.  Some are questioning if we have over done things to the upside; in particular soybeans.  That tends to happen in weather markets and markets in general were the funds are involved.  Keep in mind just a few short weeks ago most of the market had threw in the towel for soybeans; with some thinking that we might be headed for single digits.  Now many are starting to talk about $14 and $15 soybeans…… perhaps using a little caution as everyone is getting bulled up is warranted.

We did have crop conditions out yesterday afternoon and they showed a decline in conditions; maybe a high more than expected.  Here is the CHS Hedging Recap of the conditions

https://www.chshedging.com/UserFiles/Documents/2013/Research/USDA%20Crop%20Progress/Crop%20Progress081913.pdf

Stats Canada will have numbers out tomorrow.  The market is looking for increases versus last year for both canola and wheat.

The other big news hitting the wires yesterday was the Pro Farmer Crop Tour.  Day 1 of the tour saw Ohio corn yield at 171.6 bu/acre versus the last USDA estimate of 172 bu/acre.  Last years the tour put Ohio at 110.5 but the actual Ohio yield came in at 123.  Over the last 3 years the tour has been about 4 bu under the USDA for OH.

For South Dakota the tour had 161.8 bu/acre, over the last 3 years the tour has averaged about 3-4 bushels under the actual USDA numbers.

For soybeans the Pro Farmer Crop tour put the average soybean pod count in a 3’ x 3’ area in OH at 1284 versus the 3 year average of 1163; while South Dakota had an average bean count of 1,015 versus the average of 984.

Sorry that comments have been hit and miss and short lately; but things have been very busy lately with wheat harvest and producer marketing in general. 

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

Opening Grain Market Comments

Markets are called firmer this morning behind a firmer overnight session lead by short covering and weather forecasts.

In the overnight session corn was up 10 cents, KC wheat was up 5, MPLS wheat was up 6, CBOT wheat was up 6, and soybeans were up 20-22 cents.  At 8:15 outside markets have the US dollar about unchanged, DOW futures are about unchanged, gold is about unchanged, and crude oil is down 50-60 cents a barrel.

Last night our markets started higher last night on weather forecasts that are dry and warm for some areas.  The heat is needed in some areas; but hot and dry as beans are finishing up isn’t exactly the best for yields.  I have also seen plenty of concern that the top end of corn yields is getting took off.  Here is CHS Hedging Weather info from this a.m.

https://www.chshedging.com/UserFiles/Documents/2013/Research/Weather/8.19.13%20agtraderbriefusacountryhedging.pdf

Other then weather it seems to be about the funds.  The big headline for the funds is they have plenty of room to buy; overall they still have a big short in corn and wheat.  Here is CHS Hedging CFTC Recap

http://chshedging.com/UserFiles/Documents/2013/Research/CFTC%20Commitments%20of%20Traders/CFTC081613.pdf

As for news this week we should find plenty.   Weather forecasts will continue to changing and we will have the normal export shipments and crop progress/condition report today.  Later in the week export sales and ethanol numbers.  But we will also have the Pro Farmer Crop Tour and with how info flows now days this could really help make our market more volatile.  The best way I know how to follow is twitter; use hash tag #pftour13.

Here is one of the tweets I seen this a.m.

1.       Katie Micik‏@KatieMDTN25m

After 5 stops in SD, corn avg 158 bpa compared to 3 yr avg of 119.6 bpa. Avg Pod counts much lower 776 v 984.6 #pftour13

With the late developing crops many are thinking that the POD counts for beans will be low.  The bean crop being behind is also the reason why many are view the recent weather forecast as much more bullish for soybeans then for corn.

As for marketing I think we need to keep in mind that unless we really see things get bad and get worse very fast we still likely have a burdensome fundamental situation.  We are still looking at a corn carryout more than two times the present carryout. 

As for the soybean fundamental situation a drop in yield quickly cuts the carryout there; but keep in mind many feel that demand might be overstated.  China imports in particular. 

For example purposes let’s say our corn yield loses 5 bushels an acre.  That’s roughly 440 million bushels.  If we lose any demand at all; which based on the last USDA report how the USDA curved demand as supply fell; you have to assume happens.  We still have roughly a carryout still 2 times the present carryout.  Could corn yield lose more than 5 bushels an acre?  Sure; but keep in mind that last week most thought the USDA yield was light; many in the industry are still thinking yield could get closer to 160.  Bottom line is until this big headline changes we have to be cautious of the funds.

We need to get the funds to want to get long, we don’t want to simply see them cover some shorts here and there.  We need a headline were they decide to support our prices.  I don’t know that we have that today.  I think we are going the right direction; but I am in the mindset that if one is under sold or under hedged that making some catch up sales on bounces wouldn’t be the worst idea in the world.  Now if I already have done a good job making sales then some patience is warranted depending on situations.

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

Opening Marketing Comments 8-14-13

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

Corn was up 1-2 cents, KC wheat was down 1-2, MPLS wheat was down 1, CBOT wheat was down 1, and soybeans were down 7-9 cents.  At 8:20 outside markets have the US dollar about unchanged, gold about unchanged, crude down 60 cents a barrel, and equity futures pointing towards a weaker start of about 25 points.

Yesterday we saw corn melt down and make new lows; after having had a report that had production and stocks well under the trade estimate on Monday.  Hard to pin point yesterdays weakness other then saying that big money just didn’t believe the USDA report; I seen a lot of comments that indicated they though the yield would increase.  I even seen one article of one company indicating a 53 field tour came up with 198 bu/acre.  As for the small bounce in the overnight session I would think that had something to do with the fact that we had made new lows.  We should see a little bounce on perhaps some fund profit taking along with perhaps some end user interest at lower selling.

The other thing we need to remember in regards to our prices and this latest USDA report is the fact that we still have plenty of corn.  Yes the production was much less then expectations, but a carryout of 1.8 is still over a billion bushels more than the present carryout.  The question we should ask our self is what level or carryout causes the funds to cover shorts?  When is the price cheap enough?  And what type of production or carryout do we need to get the funds to want to not only cover shorts but to go long.

Later this a.m. we will have ethanol numbers out; the market will be watching that.

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

Opening Grain Market Comments 8-13-13

Markets are called better this a.m. on follow threw from yesterday’s report and a firmer overnight session.

In the overnight session corn was up 3-4 cents, KC wheat was 3 higher, MPLS wheat was up 3, CBOT wheat was up 4-5 cents, and soybeans were up 8-10.  At 8:10 outside markets have the US Dollar up 400 points at 81.7 on the cash index, crude is about unchanged at 106 on the September contract, gold is down 2 bucks an ounce, and the equity futures are pointing towards a positive start of about 35 points for the DOW.

Today it seems to be about the USDA report we had out yesterday and how weather will allow the crop to finish off.  Below are some CHS Hedging links, the first one is a good recap of the USDA report, the second is a video of the report, and the last is the crop condition update.

https://www.chshedging.com/UserFiles/Documents/2013/Research/Fundamental%20Summary%20and%20Price%20Expectations/Fundamental%20Summary%20Aug13video.pdf

http://www.youtube.com/watch?v=xTcV2RL7WLE&feature=youtu.be

http://chshedging.com/UserFiles/Documents/2013/Research/Commodity%20Comments/Crop%20Progress%20081213.pdf

As for the report it came out friendly and bullish versus the trade estimates.  But I don’t know that the actual headlines are so friendly that we need to go screaming higher for an extended period of time.  We should continue to see a little short covering bounce, but the big headlines for our corn and soybean carryout’s are still bearish versus the present year and versus the past several years.  Now if mother nature makes the crops smaller things could get tighter and right now mother nature looks to be dry in many key soybean growing areas.

But the big headline of a corn carryout of 1.8 billion bushels is not exactly super bullish; so if this wasn’t an extreme game changing report perhaps we have some risk that this is just a short covering rally.  They say short covering rallies are short lived.  I also read and listened to a lot of info since the USDA report came out and many thoughts are that the corn yield goes up from here.

This is from Lasalle wire last night…………… “Ear counts in the 10 objective yield states were the 3rd highest ever…but the USDA derived ear-weight is the 3rd lowest in the last 10 years. This is leading many to believe that this is the lowest crop estimate for the year / upcoming crop estimates will be larger. We lean in that direction, too…however, for stats purposes, we will use the USDA crop estimate for now. It still leads to plenty of carryover stocks for 2013-14.”

Bottom line is I think for saying that a bottom is in purposes I would have rather seen a more bearish report; so the market could say now what.  But what the USDA gave us was a report that is leaving many in the trade thinking the crop gets bigger.

Technically what the corn market does in the next few days and how it finishes off the week will be rather important.  If we can hold and bounce just a hair higher we can leave a lot of buy signals on some of the charts.

As for the soybean market I think we are in the stage were our crop will be made or not made.  So weather will be very important over the next few days and weeks.  We have potential to add back to our soybean yield or continue to take it lower depending on how mother nature shakes things out.

As for wheat I thought the report was good; but we also need to remember that plenty of our competitors had their crops raised.  Yes our wheat carryout is as low as it has been in years but one other headline is record world production.  Record production is not a bullish headline.

Overall for risk management purposes I think we need to be cautious thinking that we have this super rally coming; I just don’t see fundamentals at this point telling me to buy buy buy………… now maybe down the road things will change if crops get smaller.  But we need to keep in mind that we didn’t exactly lose carryout one for one as we did production.  So in the future if we do lose more production look for the USDA do use their magic pen again and simply drop demand to partially offset any production loses.

I think for risk management purposes one needs to keep eyes open and realize that yes the report yesterday was a step in the right direction; but in the very near future there is no guarantee we will be higher than we were before the USDA report; so find a way to make comfortable marketing decisions.

As for what we really need to go higher.  I think it is simply a catalyst that helps turn the charts and gets the funds back closer even.  Now I don’t know what that catalyst is; I hoped it was going to be yesterdays report; but as I sit right now I question that the report was enough.  Bottom line is we need something to turn around the sell momentum that the funds seem to have.

Opening Grain Market Comments - USDA Report Preview Numbers

Markets are called are called mixed to better this a.m. behind mixed overnight session and ideas of short covering ahead of Monday’s USDA Supply and Demand Report.

When the overnight session ended corn was down 1, KC wheat was up 3 cents, MPLS wheat was up 3, CBOT wheat was up 3, and soybeans ranged from up 8-11 on the various months.  At 8:20 outside markets have crude up a buck, the DOW futures off about 30 points, gold off a buck, and the US dollar up a 100 ticks or so at 81.10 on the cash index.

It looks like it’s about what the funds want to do and then hurry up and wait for the USDA report on Monday.  Funds are short some corn and wheat so could we see a little short covering ahead of the report?

As for beans I have seen several end users firm up their basis levels in the past few days.  Producer selling for old crop is light and we have seen a small bounce in the posted basis levels in many areas.  One local SD processor is posting 30 cents better this a.m. then they did on Wednesday.  The old crop bean situation is tight and mother nature is not helping the end users find new crop early. 

Corn basis has also felt firmer the past few days; but I have also seen some drop bids.  One of the ethanol plants we ship to now claim to be covered on rail corn until October.  I also seen a couple shuttle/exploder buyers drop some old crop bids yesterday.  I think the old crop corn situation will be very choppy; if someone needs it they probably have to pay up because it is hard to find.  If they don’t need it and places get full or covered it will be hard to move it at much if any premium to new crop.  Locally it feels like we are getting near the stage where it might get hard to move; but it really depends when we actually can get some new crop coming off.

The birdseed market continues to see the buyers running for the hills.  I do think if we can get bean oil to stabilize and bounce that they will be in buying.  But right now they are all thinking that corn and beans are going to lose another 50 cents to buck or more.  So they wait as they see big crops with a lack of issues and thus they think prices are going to get cheaper.  They don’t want to have high priced product on the store shelves should their competitors end up buying stuff cheaper.  So they are all in the sit and hold.  I have a feeling that we are only one catalyst away from many coming all in at once to try and buy; but we need that catalyst first.

As for the USDA report here is a recap of the estimates.  This comes from the Van Trump report.

US 2013/14 Production Estimates

	August Est.	Average	Range	2013	2012
Corn	slight increase	14.036	13.485-14.384	13.950	10.780
Corn Yield	slight increase	158.0	155.1-161.2	156.5	123.4
Soybeans	slight decrease	3.35	3.268-3.42	3.420	3.015
Soybean Yields	slight decrease	43.7	42.5-44.5	44.5	39.6

US 2012/13 Wheat Production

	August Est.	Average	Range	2013	2012
All US Wheat	slight increase	2,120	2,079-2,150	2,114	2,269
All Winter Wheat	slight increase	1,545	1,517-1,570	1,543	1,645
Spring Wheat	slight increase	514	474-538	513	542
Durum Wheat	slight increase	59	56-62	58	82

US 2013/14 Ending Stock Estimates

	August Est.	Average	Range	July
Corn	slight increase	2,013	1,498-2,367	1,959
Soybeans	decrease	262	131-325	295
Wheat	slight increase	579	509-653	576

US 2012/13 Ending Stock Estimates

	August Est.	Average	Range	Previous USDA
Corn	small decrease	722	537-750	729
Soybeans	small decrease	123	110-135	125

US 2013/14 World Ending Stock Estimates

	August Est.	Average	Range	Previous USDA
Corn	increase	152.36	148.0-159.0	150.97
Soybeans	slight increase	74.39	72.5-76.0	74.12
Wheat	decrease	171.10	168.0-174.0	172.38

US 2012/13 World Ending Stock Estimates

	August Est.	Average	Range	2013	2012
Corn	slight increase	124.33	123.0-126.8	123.57	132.42
Soybeans	slight decrease	61.46	61.0-62.5	61.52	54.98

When we have reports what I like to do ahead of them is look and see where the market might be leaning.  Where is the most risk at?  Where is the most reward at?  What do the estimates say as far as what is built into the market?  I am not going to spend much time on my opinion as to what I think the USDA will show; because what I see happening is a report that hopefully finally builds into it all of the negative aspects that we have traded over the past several weeks.  Hopefully it is a catalyst that says ok, now what.

As for areas of risk the one thing that stands out to me a little bit is the soybean yield.  You will notice above that everyone is at or lower than the present USDA number.  Looking at the weekly crop condition ratings is it possible that the yield actually goes higher??????  As for reward I would think that any of the bottom end production or carryout estimates could spark some fireworks with how the funds look to be sitting heading into the report.  I also think that wheat demand has been strong enough and we have enough small issues around the world that perhaps we could see both the world and US balance sheets tighten up a little more than expected.  Will corn still be king or could wheat lead the row crops higher?

I could spend hours talking or writing about the report with all the possible outcomes.  The bottom line heading into a report is to get one self in a comfort zone and how one gets there is different for everyone.

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

Opening Comments 8-8-13 - USDA Report Preview

Markets are called better this a.m. behind a bounce in the overnight session.

Old crop corn was up 5, new crop was up 3-4, KC wheat was up 3 cents, MPLS wheat was up 3, CBOT wheat was up 2, and Soybeans ranged from up 11 to up 16.  Outside markets at 8:20 have the US Dollar off 100 points, crude is off a buck, gold is up 6 bucks, and the DOW futures are pointing towards a positive start of 60-70 points.

This a.m. we did have export sales out.   Below is the CHS Hedging recap of them………..I didn’t see anything great or bad.  Overall the wheat number was good on  per week basis and on top side of the estimates, beans strong on new crop while ok on old crop and overall  above estimates, corn was good on old crop, but the total was under the trade estimates.

http://chshedging.com/UserFiles/Documents/2013/Export%20Sales/export%20sales080813.pdf

The other big thing we have will be the USDA report on Monday.  The main thing here is that the market is looking for big carryout numbers for new crop to still be in the cards for both corn and beans.  Each of the last couple of years the USDA started off with big carryout numbers in their May/June reports; but by the time August/September came around those carryout levels got smaller and smaller. 

The market isn’t looking for that to happen this time; they are still looking at overall big crops and carryout numbers more than two times what they have been the past few years.  Now the one positive I mentioned yesterday is the fact that this is all getting to be old news and hopefully priced into the marketplace.  But the reality is that our markets can very much over do price moves.

Here is the CHS Hedging Recap/Ideas for the report.

https://www.chshedging.com/UserFiles/Documents/2013/Pre%20USDA%20Report%20Comments/080713.pdf

Not much else to report; you will notice that the weekly wheat sales do show big numbers to Brazil.  When I was talking to a buyer this a.m. he thought that had something to do with the KC Sept gaining on the KC Dec; he mentioned that the gulf basis actually felt a little weaker. 

Fundamentally I view it as very good that KC Wheat spreads continue to come in.  Especially given the fact that we are still harvesting some wheat in the US and some guys have just got done.  Basis is suppose to be the weakest and spreads should get the widest at the tail end of harvest; because the guys should be full and bought what they need.

Bottom line KC Sept gaining ground on KC Dec is one very good fundamental sign.  Hopefully sometime in the future we can see wheat help support the other markets?

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

Opening Grain Market Comments 8-7-2013 - EPA Mandate

Markets are called mixed this morning behind a choppy mixed overnight session.

When the overnight session ended corn was up 2-3 cents, KC wheat was down 2 cents, MPLS wheat was down 3-4 cents, CBOT wheat was down 2-3, and soybeans were up 1 to up 9.  At 8:20 outside markets have the US dollar off 100 points or so at 81.495 on the cash index, crude is off 40 cents, gold is down a buck, and it looks like the DOW will start off 60 points.

Sounds like the EPA opened the door for lower 2014 ethanol mandate. 

Below is from DJ NEWS

DJ DJ UPDATE: U.S. EPA to Signal Changes Ahead for Ethanol Mandate

  (Updates with formal announcement, reactions)

  By Ryan Tracy

  WASHINGTON--The Environmental Protection Agency said Tuesday it will propose

cutting next year's federal mandate for using alternative motor fuel, a reversal

that comes as Congress heightens scrutiny of the program.

  The agency said it would seek to reduce the amount of "renewable" fuel that

the oil industry must blend into the U.S. gasoline supply, a move that could

shrink the market for ethanol and other products.

  A 2007 law calls for the U.S. to consume ever-rising amounts of renewable

fuel, mainly corn ethanol made in the U.S. But the agency acknowledged Tuesday

that the U.S. is approaching a "blend wall" -- the point at which the market

can't absorb any more ethanol without using new types of fuels that aren't

widely sold.

  "It's a significant development for the EPA to overtly state that it intends

to be flexible," said Jason Bordoff, director of Columbia University's center on

global energy policy. Mr. Bordoff has called for the agency to reduce the

renewable-fuel requirement, saying that not doing so could cause an increase in

gasoline prices.

  The EPA announcement came as part of the rollout of the final requirement for

2013, which will remain unchanged at 16.55 billion gallons of ethanol and other

fuels, up more than 1 billion gallons from the previous year.

  The lion's share of that mandate -- about 13.8 billion gallons -- is expected

to be met with ethanol from Midwestern corn, with ethanol made from Brazilian

sugarcane, diesel-motor fuel made from soybeans and other fuels making up the

rest.

  The 2013 mandate puts government-required ethanol consumption at close to 10%

of the U.S. gasoline supply. Most gasoline today contains no more than 10%

ethanol.

  Next year, the mandate is set to rise again, but U.S. gasoline consumption is

expected to be flat as Americans continue to drive more fuel-efficient cars.

"EPA does not currently foresee a scenario in which the market could consume

enough ethanol" to meet the 2014 requirements outlined in the law, the EPA said

in a fact sheet released Tuesday.

  "The administration now acknowledges the blend wall as real and unavoidable,"

said Stephen Brown, vice president for federal government affairs at Tesoro

Corp. (TSO). "A clear signal is also being sent to Congress that additional

authority to address the blend wall may be needed via legislation."

  Reps. Fred Upton and Henry Waxman, the top Republican and Democrat,

respectively, on the House Energy and Commerce Committee, have said they are

discussing possible changes to the renewable-fuel law.

  The ethanol industry has said major changes aren't necessary because refiners

can switch to higher ethanol blends, which so far are not being sold widely even

though the EPA says they are safe for new vehicles.

  Having the EPA tweak the requirements to provide flexibility "is exactly how

the program was designed to work," said Brooke Coleman, executive director of

the Advanced Ethanol Council, which represents developers of alternative fuels.

"There are no problems with the program on the horizon that can't be fixed

administratively."

  Write to Ryan Tracy at ryan.tracy@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

  (END) Dow Jones Newswires

  08-06-13 1353ET

  Copyright (c) 2013 Dow Jones & Company, Inc.

Chain Link: [CS20130806002209]

[Related Stories]

I did see an increase in the Australia wheat on once estimate.  Also seen that Iraq bought Australian and Canadian wheat while Egypt bought Romanian and Ukraine wheat.

USDA did report sale of 220k tones of soybeans to China for the 13/14 marketing year.

We will have weekly ethanol numbers out today.

Big news will be on Monday with the USDA report.  Market is looking for bigger corn yields and smaller soybean yields; but carryout numbers are expected to be high as the market is still looking for carryout numbers to be over two times what they presently are for both corn and soybeans.

One good news or possibility of good news is that everyone is jumping on the bear bandwagon.  A year ago before this report everyone was and had been jumping on the bull bandwagon.  The August report came out and corn made its highs and basically traded lower ever since.  Yes it had a couple bounces but the trend for a year has been down. 

What made the high last year with the report?  Everyone was bullish, everyone thought it was going higher, we had been going up since June, the crop had continued to get smaller, and we had the fund plenty long.

What do we have right now?  Nearly everyone is bearish, most everyone things it is still going lower, we have been going down since June 20^th or so, the crop has got bigger or at the very least not got much smaller, and we have the funds plenty short (record depending on how you look at it). 

Don’t get me wrong I am not saying the low’s have to be in and this thing has to turn around; because we all know the funds could just continue to lay into this market.  What I am saying is that a lot of this bearishness that we presently have is getting built into the market.  I think the USDA report has a chance to be a sell the rumor, but the fact event.  A 14 billion bushel crop with 2 billion carryout is old news.  So if that’s what the USDA reports on Monday do the funds need to keep selling this thing down for that reason??????

Don’t forget this afternoon we will have our weekly marketing meeting in Onida at 3:00.

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

Opening Grain Market Comments 8-6-2013

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

When the overnight session closed September corn was up 3 cents, December corn was down a penny, KC wheat was up a penny, MPLS wheat was up 2, COBT wheat was up 2, and beans were unchanged on the August to down 8 on the November contract.  At 8:10 outside markets have crude about unchanged, gold down 16 bucks an ounce, the US dollar off 130 points with the cash index at 81.735, and the DOW futures pointing towards at negative start of 20-30 points.

It has been all about the funds selling these markets.  The main reason they keep selling is the headline of good weather; that lacks the headline of hot and dry.  Yes some areas remain dry and haven’t got hit with the moisture that some have; but the headline leading almost any grain wire for the past several weeks has been cool and wet in the forecast and that’s pretty close to how it has happened.

Egypt did put a tender out yesterday afternoon for shipment Sept 21 to Sept 30.

Crop conditions yesterday showed an increase in both corn and beans.  Something that doesn’t happen that often in August.

Estimates for next week’s report are. 

Corn Production of 14.036 billion bushels with yield of 158 versus 13.95 billion last month and 156.5.

Bean production of 3.357 billion bushels on yield of 43.7 versus 3.42 billion last month and yield of 44.5.

Wheat production of 2.12 billion versus 2.114 last month.

Carryout for new crop corn of 2.013 billion versus 1.959 last month.  Soybean carryout of 262 million bushels versus 295 last month.  Wheat carryout of 579 million bushels versus 576 last month.

Old crop corn carryout of 722 million bushels versus 729 last month.  Soybeans at 123 versus 125 last month.

Two big important things for the crop report.  First off year over year you can see why the funds might not want to be long grain.  Market is and has been looking for both corn and soybean carryout to be at least double of what it presently is.  Not bullish to any fund manager who is looking at the headlines.

Second the trend; ideas are that the corn crop is getting bigger and that the soybean crop is getting smaller.

The question we should really be asking ourselves when it comes to marketing is what is a fair price if we have a 2 billion bushel carryout?  The answer should be we don’t know.  Plus when we say 2 billion it sounds like a lot; but with demand at 11-13 billion a 2 billion carryout is not the same as it was in the 80’s or 90’s.  It is a much different game.

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

Thanks

Closing Grain Market Comments 8-5-13

Markets closed ugly today with corn DOWN 3-7 cents, KC wheat was off 11 cents, MPLS wheat was down 8, CBOT wheat was down 15, new crop soybeans were down 2, the US dollar was unchanged, the DOW was off 46 points, and crude was down 40 cents.

Grain markets really seem like they simply want to work their way lower or at least that’s what the funds are drying to do is grind our markets lower.   It feels like we may have had a little panic producer selling today and more and more are getting bearish; so maybe we can eventually find a bottom.  I guess it always feels darkest at the bottom.  But just the fact that the only real positive we can talk about for the grain markets is the fact that everyone is getting too bearish isn’t a good sign.  The funds have showed us many times over the years that they can really extend price moves.

Don’t get me wrong  you can find a couple other positives; but nothing that is headline leading or good enough to help our markets bounce.  We still have the freeze card and slow development of the crop card in the deck.  But the major card that lead our rallies the past two years simply hasn’t shown up.  As we have had plenty of moisture (in most areas) and we haven’t had too much heat.  Sure we could find more demand but many of the pro’s are going to start arguing that if we don’t find demand in a hurry we could continue under pressure and fundamentally it is hard to argue against them.

Crop conditions this afternoon showed the headline why we have been under pressure.   As corn and soybean conditions were both improved; it really appears we have had ECON 101 do its job as the high prices have helped spark production both in the US and around the world and demand is simply soft or at the very least not strong enough to pull us higher at this time.  Maybe end users should be jumping on the prices we presently have?  But most are not and that’s one thing that adds to our markets over doing the moves.  End users don’t give the market support on the price breaks like perhaps they should and producers tend not to sell as much as maybe they should on the rallies.  That along with the funds is why our markets really tend to overdo price moves.

As mentioned this afternoon we had a crop progress report.  Here is the CHS Hedging comments on it.

http://chshedging.com/UserFiles/Documents/2013/Research/USDA%20Crop%20Progress/Crop%20Progress%20080513.pdf

You will notice that both corn and soybean conditions jumped 1% in the G/E category; with both presently at 64% good to excellent.  The other thing you will notice is we seldom see conditions jump in August.  Typically as the crop progresses and matures conditions drop.  But that wasn’t the case this last week.

Top Third’s comments from Mark Gold today mentioned it was the first time he had ever seen the conditions improve in August.  Bottom line is mother nature has been much more friendly to our crops the past few months then it was the past few years during this time period.

Here are Top Third’s comments referencing the conditions improving.

http://www.topthird.com/content/audi/close.wma

The other piece of news this a.m. was export shipments.  Which were good for wheat and corn and poor for soybeans.  Wheat came in at 25.5 million bushels, corn was 15.1 million bushels, and soybeans were 1.4 million bushels.

The other info I seen out was INFORMA’s crop estimates.  Not sure how important the actual numbers are; but I think the trend is something to watch. 

Corn yield they pegged at 158.6 bushels per acre; with total production of 14.140 billion bushels.  Basically looking for an increase in production with bigger yields.

For soybeans they pegged it at 42.7 bushels per acre with a total production of 3.266 billion bushels. 

As we get closer to figuring out the crop size demand will start to be important.  As it sits now many question if the presently forecasted demand can actually be hit.  Plus many such as Mark Gold above think the crops are actually bigger then some of the forecasted numbers.  Many think we will be swimming in grains and that’s just another reason we seem to be struggling.  Headlines of 2 billion bushel carryout or 14. Billion bushels of production isn’t exactly a headline to get funds to buy.

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

Thanks