Opening Comments day ahead of USDA report 7-10-2013
Markets are called mixed as we wait for the USDA report
tomorrow.
In the overnight session corn was down 2 cents, KC wheat was
unchanged, MPLS wheat was unchanged, CBOT wheat was unchanged, and soybeans
ranged from down 2 to up 3 cents. At 8:20
outside markets have a US dollar off a couple hundred points, gold up 7 bucks,
DOW futures pointing towards an unchanged start and crude up 2 bucks a barrel.
It’s about two things in our markets right now. First off and probably most importantly it’s
about weather. I have seen more comments
recently about heat dome’s and ridges as well as agronomic concerns ranging
from the corn rolling, to bad bean stands, to bad corn root systems. The market seems to be adding back some of
the weather premium that it had took out; now for how long is the question. It looks like a high percentage of corn will
be pollinating towards the end of the month so each weather forecast could move
our markets.
I am no agronomist and to be very honest to me it is hard to
drive by a field and say this one has 150 potential and this one has 200 or
100. Many producers are screaming about
the crop conditions; some days the trade seems to care; many days it seems to
be more of a rain makes grain trade; right or wrong.
The other thing it is about is the report tomorrow. Most don’t look for tons of major
adjustments; but the report probably tells us how important the weather
becomes. The thing to watch the could be
the most bullish and also the most disappointing is the old crop stocks. Are we at pipeline stocks so our old crop
corn and soybean carryout’s don’t go much if any lower? Or will tomorrow be the start of the biggest squeeze
in history?
As for the new crop portion it is hard for me to think that
the USDA prints something bullish. Maybe
they should; but if you look at the headlines since the last report you have to
think that both corn and soybean production is up. Will it be offset by demand? If old crop ends up tighter that gives new
crop less of a starting inventory spot.
Why do I think it will be hard for us to get a bullish new
crop number. Because of the two major
headlines we have seen since the last report; about a month ago. First off we had the June 28th
acre update; in which they increased acres for both corn and soybeans. At one point the market had priced in less
corn acres being planted; and hence the pressure on the market when we had more
acres planted than expected.
Secondly and most importantly is the yield for this report
has nothing to do with ear counts or pod counts. I believe it just comes from statistics. What statistic have we seen every week for
the past month. Crop conditions every Monday
afternoon and they have improved or been flat every week for both corn and soybeans. So if crop conditions are improving how can’t
the USDA increase yield?
I know the agronomic debates and concerns that many have
over our crop; but if you are looking at the headline of crop condition how has
the crop got smaller over the past month if conditions have improved??????
Bottom line is I don’t see a bullish new crop number coming
out on this report. If a bullish new
crop number happens we likely don’t see it until August or later. Now that doesn’t mean that weather come
Friday or Monday couldn’t have us off to the races; but that is still to be
determined by mother nature.
Here are the numbers,
last month and trade estimates for the USDA Supply and Demand report that is
out at 11:00.
These come from the Van Trump Report.
Take note that overall the market is looking for decreases
in carryout’s almost across the board.
How bullish of a report has our market priced in the past couple of
sessions? Will the USDA have different
logic then our traders figuring their carryout estimates? Have to really believe the risk is for a
negative curveball from the USDA report and believe that if we have bullish
numbers we don’t see them for a few months.
|
|
July Est.
|
June #'s
|
Avg. Trade Guess
|
Trade Range
|
|
2012/13
|
|
|
|
|
|
Corn
|
???
|
0.769
|
0.725
|
0.537 - 0.800
|
|
Soybeans
|
???
|
0.125
|
0.121
|
0.104 - 0.135
|
|
2013/14
|
|
|
|
|
|
Wheat
|
???
|
0.659
|
0.632
|
0.566 - 0.690
|
|
Corn
|
???
|
1.949
|
1.896
|
1.618 - 2.338
|
|
Soybeans
|
???
|
0.265
|
0.263
|
0.164 - 0.329
|
|
|
July Est.
|
June #'s
|
Avg. Trade Guess
|
Trade Range
|
|
2012/13
|
|
|
|
|
|
Corn
|
???
|
124.310
|
124.222
|
122.600 - 127.590
|
|
Soybeans
|
???
|
61.210
|
60.938
|
|
|
Wheat
|
???
|
179.870
|
179.344
|
177.000 - 181.030
|
|
2013/14
|
|
|
|
|
|
Corn
|
???
|
151.830
|
152.404
|
149.700 - 158.897
|
|
Soybeans
|
???
|
73.690
|
73.557
|
69.486 - 75.000
|
|
Wheat
|
???
|
181.250
|
180.293
|
175.000 - 183.000
|
|
|
July Est.
|
June #'s
|
2012 Totals
|
Avg. Trade Guess
|
Trade Range
|
|
All Wheat
|
???
|
2.080
|
2.269
|
2.057
|
1.942 - 2.140
|
|
All
Winter
|
???
|
1.509
|
1.654
|
1.507
|
1.454 - 1.555
|
|
Hard
Red
|
???
|
0.781
|
1.004
|
0.773
|
0.730 - 0.808
|
|
Soft
Red
|
???
|
0.509
|
0.420
|
0.525
|
0.478 - 0.552
|
|
White
|
???
|
0.219
|
0.222
|
0.214
|
0.199 - 0.220
|
|
Spring
|
???
|
NA
|
0.542
|
0.499
|
0.452 - 0.540
|
|
Durum
|
???
|
NA
|
0.082
|
0.063
|
0.055 - 0.080
|
Jeremey Frost
Grain Merchandiser