Grain Market Comments 5-23-14
Grain markets are called slightly firmer this morning after
a slightly firmer overnight session that saw corn up 2 cents, KC wheat up 3,
MPLS wheat up 4, CBOT wheat up 4, old crop beans up 5, and new crop beans up
2. At 8:05 outside markets have crude up
40 cents, the DOW mini is about unchanged, gold is near unchanged, and the US
dollar is up a little with the cash index at 80.357.
Most feel that the strength overnight is a little profit
taking ahead of the long weekend; as well as some risk premium ahead of the
long weekend. Markets won’t open again
until Monday night after today’s session closes. Personally with the volatile markets we have
had; especially for beans it would surprise me at all to see beans see some profit
taking that puts pressure on that market by the end of the day. We also have option expiration today as the
June options expire.
I mentioned yesterday in the midday update phone call that
nothing should really surprise us for a move in beans.
Tight fundamental situations typically resolve rather violently; end users
that need beans will have to do whatever it takes to get coverage; but once
that coverage happens or they sense it can happen then bids can vanish. No one wants to be stuck with old crop beans
at 2.50 a bushel premium to new crop beans.
They will take everything they need; but if they can get to new crop and
buy a couple bucks a bushel cheaper believe me that’s what they will try to
do. Add to this the fact that beans
still have a positive old crop headline story that continues to lead to fund
buying interest and you have a rather volatile marketplace.
We are about a month away from when the funds really won’t
have much ownership left in the July contract; so we should be nervous on when
the tide turns. Bottom line is we need
to be aware that we could see pressure on the markets (beans in particular),
even if our fundamental situation hasn’t resolved. We could see a headline of more South
American beans hitting the US and even if it isn’t change our fundamental
situation it could be a catalyst that leads to fund selling and from what I hear
they simply have too much July ownership.
Don’t get me wrong old crop beans still have plenty of
potential but the price action and headlines are scary. We could be up a couple bucks more or give
all of this rally and then some away.
Just be prepared for a wild ride.
So far we haven’t seen corn, wheat, or even sunflowers
really follow the strength that beans have had.
The sunflower situation remains tight; but we just don’t have a lot of
demand right now. It feels like we have
way too many sunflowers in South Dakota which serves more of the birdseed
market and not nearly enough in North Dakota.
Here is some more market info. The first is morning comments from Tregg
Cronin with Halo Commodities
The below is from CHS Hedging Morning Highlights
Morning Highlights
By Joe Hofmeyer
- As
of 7:00 AM CT: US dollar index is up .19%at 80.379, European Stoxx is up
.12%, Nikkei closed up .87%, Hang Seng closed up .05%, crude oil is up 24
cents at $103.98 per barrel, and gold is down $1.50 at $1293.40 per ounce.
- Dry
weather in the Northwestern Midwest through Saturday will allow planting
progress to continue at its rapid pace. The 6-10 day forecast shows
improved chances of moisture in the Southern Midwest that will benefit
newly emerged corn and soybeans. Rains will continue in the Southern Plains
through May 27 relieving the drought stricken areas.
- The
northern tier of the Corn Belt is pushing hard to get crops planted ahead
of crop insurance deadlines and rains that are expected to move in within
the next 5 days.
- Germany’s
business confidence reading fell from 111.2 in April to 110.4 in May amid
signs that growth in the country’s economy will slow this quarter. Germany
is key to the euro area economic recovery efforts.
- Vladimir
Putin said Ukraine is in full-scale civil war after government troops
suffered their worst losses in battles with separatists.
- Rains
benefitted Nebraska and Kansas yesterday, while the states of Minnesota,
North Dakota, and Wisconsin stayed dry allowing planting progress to
continue in the areas that are furthest behind.
- Even
though good progress is being made, with corn planting behind in the North
and additional rains in the forecast, it is likely that corn will lose
some acres to either preventative plant or soybeans.
- Old crop
corn export sales were revealed at 20 million bushels yesterday by the
USDA. We only need 11.8 million bushels weekly to hit current USDA
projections.
- Basis
levels are steady to slightly better as producers are not moving grain
with their focus on planting.
- China will
auction 3.5 mmt of corn from its temporary reserves on May 29, according
to the National Grain & Oil Trade Center.
- The
CZ4/CH5 spread seems to be content to sit at slightly better than a 9 cent
carry for the time being.
Oilseeds
- July
soybeans put in a new contract high yesterday of $15.36 ¾, but settled the
day at only $15.18 ¾. The front end of the soybean curve is once again
showing strength overnight.
- July
soy-meal closed above $500 per ton for the first time yesterday, and has
continued to move higher in overnight trade.
- There is
some chatter that processors are contemplating switching bids from the
July to the August board.
- Old crop
soybean exports out of the U.S. were once again net positive yesterday at
6.04 million bushels. We simply cannot afford to continue to export
soybeans with our current domestic balance sheet.
- Talk of
South American soybeans being imported into the U.S. continues, but
quantifying the amount is proving difficult.
- China will
auction 300 tmt of soybeans from its temporary reserve on May 27,
according to the National Grain & Oil Trade Center.
Wheat
- Rains will
continue through May 27th in the Southern Plains with general
coverage of 2 inches according to Commodity Weather Group LLC.
- Precipitation
looks to hold off in the Northern spring wheat growing geographies until late
in the weekend, which will allow planting to continue to advance in both
the U.S. and Canada.
- Old crop
wheat (crop year ending May 31st) exports yesterday were
revealed at 5.2 million bushel. This is behind the needed weekly pace to
hit USDA projections.
- Kazakhstan
agreed to sell 100 tmt of wheat to China for the 2014/15 crop year.
Kazakhstan exported 10 tmt of wheat to China last year.
- South
Australian sub-soil moisture is adequate to excellent in most areas with
producers gearing up to plant.
Jeremey Frost
Grain Merchandiser
Midwest Cooperatives
800-658-5535
800-658-3670
605-295-3100 (cell)
605-258-2166 (fax)