Grain Market Comments Day ahead of USDA Report
Grain Markets closed mixed to weaker the day before the
monthly USDA Supply and Demand report.
Old crop corn was off 6 cents, new crop was off a dime but
traded another 3 cents lower at the 2:00 time, KC wheat was off 3 cents, MPLS wheat
had nearby up 10 cents, Sept MPLS was up 2, CBOT wheat was unchanged, equities
and outside markets reversed and closed down very hard from last night’s highs;
the DOW was off 143 points, crude off 2.50 which is over 5.00 a barrel off of
it’s highs, and the US dollar near unchanged at 82.60 on the cash index well
off of the 81.72 lows it had.
Very disappointing is how I would describe today’s price
action; starting with the outside markets as it looks like the market finally
got a bail out that it didn’t like.
Doesn’t happen very often; but probably due in my opinion as bail outs
with fake money might not be the answer.
Bottom line we saw the US dollar make a new low for the past couple of
weeks; but turn around and close positive leaving a bullish key reversal on the
charts. July beans left a near doji; but
also made a new high for the recent move and closed lower another technical key
reversal on the charts. Crude over 5.00
was good for the charts either; not a key reversal; but not anything good for
the technical picture.
Now perhaps we get a bullish report in the a.m. and our
outside markets recover behind the latest bail out overseas; but I think today’s
price action should really remind US to practice good risk management when
making our grain marketing decisions. December
corn didn’t trade positive at all today or last night and I seen yesterday
afternoon where some called it 10-15 firmer for Sunday night’s session just
because of the hot and dry weather that many are having. Yet a little system that left a little
coverage for parts of Iowa had new crop corn under pressure all day.
So keep in mind that even if everyone you know or everything
you read says that the market should or will go up; the market is the market
and it doesn’t have and seldom does listen.
Some say it is the markets job to do as much damage to as many as
possible. Now this might not be true;
but our grain market prices really do seem to move in an unpredictable pattern.
This afternoon we had crop conditions out and we seen a big
decrease with G/E conditions falling to 66% down from last week’s 72%. Perhaps a little bit more then expected; maybe
it helps open the possibility that we see a decrease in yield on the USDA
supply and demand report that is out in the a.m.
Spring wheat conditions decreased by 3% in the G/E and
soybean conditions decreased by 5%.
Below are the estimate for tomorrow’s USDA report.
The big numbers will be corn carryout; I think the others
are still followers; but the USDA could also throw out a curve ball at any
time.
Overall you can see that for present marketing year the trade
is looking for stock decreases for wheat, corn, and beans. When they are looking for a bullish report
and we get a neutral report it could open the doors for negative price action.
The same can be said for next year’s ending stocks; once
again the trade estimates are looking for decreases in carryout versus the May
numbers; over 100 million bushels for corn.
Which could happen and based on some comments production and yield could
be a lot lower then what is forecasted as many are very dry. But before this afternoon’s crop conditions
report one might have mentioned the fact that the USDA could have left corn
yield unchanged or even took the yield number bigger on the same ideas they had
in the May crop report. That we have a
crop in nice and early with good emergence and good crop conditions as reported
weekly.
|
2011/12 Ending Stocks Estimate
(billions of bushels)
|
||||
|
|
USDA
June |
Avg. Trade
Guess |
Avg. Trade
Range |
USDA
May |
|
Corn
|
?
|
0.821
|
0.688 - 0.901
|
0.851
|
|
Soybeans
|
?
|
0.189
|
0.130 - 0.218
|
0.210
|
|
Wheat
|
?
|
0.753
|
0.727 - 0.775
|
0.768
|
|
2012/13 Ending Stocks Estimate
(billions of bushels)
|
||||
|
|
USDA
June |
Avg. Trade
Guess |
Avg. Trade
Range |
USDA
May |
|
Corn
|
?
|
1.750
|
1.223 - 1.950
|
1.881
|
|
Soybeans
|
?
|
0.143
|
0.052 - 0.220
|
0.145
|
|
Wheat
|
?
|
0.714
|
0.647 - 0.772
|
0.735
|
|
2011/2012 Global Ending Stock
Numbers
|
||||
|
|
USDA
June |
Avg. Trade
Guess |
Avg. Trade
Range |
USDA
May |
|
Corn
|
?
|
127.630
|
126.000 - 128.800
|
127.560
|
|
Soybeans
|
?
|
52.090
|
51.000 - 53.000
|
53.240
|
|
Wheat
|
?
|
197.124
|
196.000 - 198.835
|
197.030
|
|
2012-2013 Global Ending Stock
Numbers
|
||||
|
|
USDA
June |
Avg. Trade
Guess |
Avg. Trade
Range |
USDA
May |
|
Corn
|
?
|
149.745
|
145.000 - 154.000
|
152.340
|
|
Soybeans
|
?
|
58.140
|
55.700 - 62.000
|
58.070
|
|
Wheat
|
?
|
184.791
|
180.800 - 190.674
|
188.830
|
I think that we can all find plenty of reasons for the
numbers to be much more bullish the then average trade estimate; but we need to
realize that there is also the chance that the numbers come in more bearish or
simply come in not as bullish as the market is expecting; plus I don’t know how
anyone can be super bullish the overall economic picture; 2008 has to be in the
back of one’s mind. One thing that
should be at the top of the bearish list has to be old crop corn export shipments;
they have been poor well below what is needed on a per week basis to meet
present USDA projections. Today’s corn
shipments where 17 million bushels which is nearly 20 million below what is
needed on a per week basis.
It might be a little late to protect one from the crop
report in the a.m. but it isn’t too late to stay aggressive or pro-active and put
yourself in a good comfortable spot for your grain marketing. If you need help writing a grain marketing
plan please give us a call.
Don’t forget that the markets will be open tomorrow when the
report comes out; this could make things a little more volatile than in the
past?
Thanks