Opening Comments 5-29-2013
Markets are called mixed this a.m. behind a mixed overnight
session.
When the overnight session ended old corn was down a penny,
new crop corn was up 2 ½ cents a bushel, KC wheat was unchanged, MPLS wheat was
up a couple pennies, CBOT wheat was off 2 cents, and both old/new crop soybeans
were about unchanged. Outside markets
look like we have a weaker start in line for the DOW with futures pointing
towards a lower start of about 60 points, the US dollar is down about 400
points with the June futures back below 84 trading at 83.780, gold is up 5
bucks an ounce, and crude oil is down 70 cents a barrel.
A couple pieces of news out this a.m. First off I seen an announcement come over that
China cancelled 147,000 tons of old crop soybeans. We already have crushers rolling bid and “saying”
they are covered for a couple months and lately the export game for old crop
soybeans hasn’t been strong. This is just
a little more un-needed headline weakness.
I don’t know that fundamentally anything has changed for old crop
soybeans as things are tighter then tight; but when you have basis nearly a
buck softer at some crush plants and you see headlines of old crop exports
cancelled you don’t have a super bullish market either.
The other bid news out was late yesterday’s crop progress
and condition report. Winter wheat
condition was unchanged, soybeans came in a 44% planted, spring wheat was 79%
planted, corn was 86% planted, and corn emergence was 54%. Overall positive to prices; the fact that we
didn’t get lots done in the last week isn’t new news. I think the weather forecasts remain
important.
The other thing about the planting progress is you have two
sides to the story. The big story that
many see are the headlines; such as corn 86% planted versus an average of about
90 %. Corn emergence at 54 % versus 67 %
on average. Spring wheat at 79% versus
86% on average. On the surface these
numbers say we have done a good job catching up.
But the million dollar questions should be; how much corn
will need to be re-planted? With the
final 13-14 million acres of corn get planted?
How much potential corn yield has been lost or is that all still up in
the air depending on mother nature?
Will the balance of the spring wheat get planted? ETC ETC…….. plenty of bullish things
happening with our delays and unknown agronomic/growing effects of our weather.
So will the traders and more importantly the funds look at
the headlines and say everything’s fine so sell……sell…….sell? Or will they look a little deeper and decide
maybe it’s time to buy….buy….buy? I don’t
know that answer; I do think some charts are looking a little better so I lean
towards the side that we potentially add a little more premium. But I also think that longer term the job of
our market is to find demand at least until we know we have cut supply
dramatically.
Not much for other news out there this a.m. the reaction to
the China cancellation will be important.
Later this week we will have ethanol numbers and export numbers. But also month end which could lead to some
position squaring.
Smithfield foods is close to a deal to sell to Shuanghui
Group from China.
Forecasts look very wet for the Western corn belt. Iowa in particular……..overall I say the
forecasts are positive to prices; but my opinion isn’t that important. At some point if we do get the grains planted
we need to remember that moisture won’t be the thing that likely runs us
up.
I did see that SovEcon pegged the Russian wheat crop at 50
MMT versus the USDA at 55 MMT and for exportable supply they are at 13-15 MMT
versus the USDA estimating 18 MMT. For
wheat to rally we are going to want to see more headlines like this; we need to
cut some supply in other places in the world so we can spark some demand
interest for US wheat. A lack of demand
for US wheat is really keep wheat from having a good fundamental reason to
rally.
Don’t forget we will have our weekly marketing meeting in
Onida at 3:00 today.
Please give us a call if there is anything we can do for
you.