Opening Comments 5-13-2013

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

When the overnight sessions ended July corn was up 4 cents, December corn was up 4 cents, KC July wheat was up a penny, MPLS wheat was up 2, CBOT wheat was up 4, July beans up a penny, and November soybeans down a penny.  Outside markets have a US dollar about unchanged at 83.21 on the cash index, equity futures are pointing towards a lower start of down about 15-20 on the DOW, crude is down 90 cents, and gold is off 4.50 an ounce.

Last night markets opened lower; but did manage to bounce as the session went on mainly behind the concern of getting the corn crop planted.  This afternoon we will have crop progress and the average estimate is all over the board; I have seen some as high as 40-50% but most of them are closer to 30 %; just a huge range.  29% in 1984 is the slowest pace on record.

Bottom line is if we are something close to 30% and don’t get going in the next few days the deferred forecasts are wet; with much of the corn belt including parts of our area called for above normal moisture.  Same with the 8-14 day; above normal for most of the corn belt and once again including our area.  We will take the moisture with arms wide open; but many parts of the corn belt are not looking for it.  From what I hear this might lead to some planting in the mud and that might open up more concerns later down the road.

The other thing that our slow crop opens the door to; include early freeze, pollination possibilities when it is hot and dry, and no early relief to the tight old crop situation.

When I look at the balance sheets that the USDA provided I question how important or critical the current slow corn planting place is.  But only because I don’t know what it could mean to production.  Could production ideas still range from 13.0-15.0 billion despite slow planting?  How many acres will we need to lose for the market to be trading production closer to 13 billion then the present 14 billion that was estimated on Friday?  And if we dig deeper I question how fast demand bounces back; if we grow a 13-14 billion bushel crop can we gain back most of the demand we lost the past couple of years?  Can we gain back more than we lost?  If we are going to gain demand back will it have to come from a lower price?  If so how low of a price?

Other news out there this a.m. include export inspections that will be out at 10.  As mentioned above this afternoon we will have crop progress/condition report.  Later this week we will have a NOPA soybean crush number out and that will be a good gauge on soybean demand.  Have we curbed any? Or do we still have some potential fireworks in the future?

South Korea does have a tender out for more corn.  Last week they bought 400k tones of corn/feed wheat.

We did see a little cold weather in some of the upper eastern corn belt; but CBOT wheat futures are not responding and it doesn’t look like the damage was significant if any.

Bottom line is we are now in a weather market and we could be and should be choppy and volatile.  Keep in mind that one of these days too much rain will be a bad thing to our prices.

In regards to wheat I think it is a potential big sleeper as I thought the USDA overstated HRW production.  But we need to keep in mind that the issue with wheat isn’t our crop; the issue or thing holding wheat back is the crops around the world.  Production estimates are for bigger crops in Australia, Ukraine, Russia……….etc.  Basically the whole world can raise wheat and the latest USDA forecast is that the whole world will raise wheat.  So I think wheat’s game is now what happens in other places.  Perhaps when the combines hit the United States we can get a spike up; but basically the USDA said it doesn’t matter what we raise because everyone else will be picking up the pieces.  Now the thing to keep in mind for wheat grown in the world is similar to what the USDA did for our corn crop the last couple of years.  Early projections seem to be the potential; but are they realistic?  Meaning we could easily see some of those production slip ups.  Keep in mind that the 2010 rally started because of the Russian wheat crop and that didn’t start moving our market until July and into August. 

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