Opening Grain Market Comments 6-17-13
Markets are called lower this a.m. behind a lower overnight
session.
In the overnight session July corn was down 2 cents, new
crop corn was down 6 cents, KC wheat was down ½ of a cent a bushel, MPLS wheat
was down 2 cents, CBOT wheat was off 5 cents, July soybeans down 12 cents,
August beans down 9 cents, and November soybeans down 14 cents a bushel. At 8:10 outside markets have a US dollar
about unchanged with the cash index at 80.69, gold is down 3 bucks an ounce,
crude is up 30 cents a barrel, and it looks like a strong start for the DOW
with the DOW futures pointing towards a positive 110-120 point start.
Pressure in the overnight session seemed to come from
weather; but trying to decipher when rain makes grain versus planting delays,
acres losses, and other agronomic issues such as nitrogen loss isn’t easy. Some of the deferred forecasts have plenty of
heat; but also plenty of areas that have above normal moisture. So if the crop is planted that would be
basically ideal; but if the crop isn’t planted then ideal conditions don’t
matter. Bottom line is until the market
gets some sort of confirmation from the USDA and get their heads around what
damage(yield loss/acre loss/switching) was or wasn’t done you could see some
volatile price action for our markets on the weather headline. Until the USDA prints smaller production and
smaller carryout numbers it will be tough for wet and warm weather to be still
considered bullish. If weather is going to
drive us higher we likely need hot and dry; which in the short term could cause
pressure. Now hot and dry during
pollination or when the crop is made could cause some fireworks.
We
will have some news out today. First off
we will have export shipments out at 10:00.
Later this a.m. we will have NOPA crush numbers out. The average trade
estimate for NOPA's May data is a crush value around 117.6-118.1 mb, roughly
15% less than a year ago. Soyoil stocks are estimated at 2.522 billion pounds.
This afternoon we will have planting progress and crop
conditions. Most are looking for an
increase in the G/E corn ratings; which would mean an uptrend for the ratings;
something that if continues longer term will make rallies tough; if our crop is
improving and getting bigger.
Soybean planting progress and spring wheat progress will be
watched closely today. But like corn
which last week was 95% the weekly numbers don’t tell us what actually didn’t
get planted. We are not expected to see
a corn planting number; so we really don’t know what corn wasn’t planted or
what was switched. We hope to get some
more of that info on the report at the end of June in the acre update; but
there is a good chance some of that info has to get resurveyed.
Bottom line is the bullish card of acre loss and acre switch might
not be laid out on the table for several months and that’s assuming that it is
actually a bullish card. That we did in
fact loss plenty of acres. Keep in mind
that several are still thinking soybean acres are increase from the March
report.
Wheat harvest should give more info this week then last. But keep in mind the wheat story is still a
world story; it hasn’t been a story about the US for some time. The headlines are that the world has plenty
of wheat.
Here is link to the CHS Hedging CFTC data from Friday.
The one positive I see is that the funds have plenty of room to
buy. But that doesn’t mean they will;
heck they could continue to jump on the bearish bandwagon and really decide to
get short our markets. That’s probably
our risk; that the funds decide the headlines are just too bearish to be long
grains; so they decide to push the evelope on the short side. If we look at price targets on the short side
should “big money” decide that is the game to play we will be more then scared. It is scary ugly what could happen if our
fundamentals that the USDA printed last week are accurate and the funds decide
to get short the grains. The bottom line
in regards to the funds is we need to give them a reason to not go short or
better yet a reason to buy.
Please give us a call if there is anything we can do for
you.
Thanks