USDA Crop Report Preview, 2011-2012 Corn, Soybean, Wheat balance sheet projections, trade estimates,

Markets closed sharply higher today for most of the grains; as dry hot weather in the south and wet cool rainy weather in the North helped propel wheat prices firmer.  Crude up over 5.00 a barrel didn’t hurt either.

Corn was up 21 cents on the old crop, Dec corn was up 17 cents, KC wheat was up 41 cents, MPLS wheat was up 41, CBOT wheat was up 31 cents, soybeans where up 9-11 cents, crude up a little over 5.00 a barrel, crush sunflowers up 15 cents a cwt, equity markets where firmer with the DOW up 46 points, and the US dollar is weaker with the cash dollar index down 180 at 74.661.

Overall a good/great day for most of the commodities; but was today just a dead cat bounce ahead of further losses in the days, weeks, and months to come?  Only time will tell but many of the commentaries I read/listen to indicate that it might be just that a selling opportunity; today’s crop progress report was a little of a surprise with the corn planting ahead of what most had anticipated it at?  It should also be noted that despite the nice gains seen today our grains and the outside markets that seen some strength are any where close to where they where versus last week’s highs; so technically a bounce like today (1/4 to ½ ) of what was lost last week is usually only considered a natural correction.

We did have export inspections out this week and we continued the pace that we have the past few weeks in that wheat met or exceeded their per week sales numbers needed to meet current USDA projections while corn and beans both failed to meet their needed numbers.  Wheat came in at 34.6 million bushels, corn was at 27.8 million bushels (15 million or so off of what is needed), and beans came in at 6 million bushels (also about ½ of what is needed on a per week basis to meet current USDA projections).

This afternoon we had the crop progress/conditions report out; corn planted came in at 40% versus 13% last week, an average of 59%, and expectations of 30-35%.  For more info on the crop progress report please see Country Hedging Link at  http://www.countryhedging.com/media/Research/Archive/2011_05_09Crop Progress5-9-2011.pdf

Later this week we will have one big news item out for the grains and that will be the updated S & D tables; they will also have their first 2011-2012 balance sheets out.  When you look at the ranges of estimates you can see why we have been a little volatile as of late.  (Many unknowns and uncertainties as see via wide ranges).

Estimates are shown in the table below

Carryout in million bushels
2010-2011	Average	Range	Last Month
Corn	665	565-700	675
Soybeans	153	140-180	140
Wheat	844	825-868	839
Carryout in million bushels
2011-2012	Average	Range	Last Month
Corn	811	575-1,025	n/a
Soybeans	176	122-250	n/a
Wheat	674	432-800	n/a

The way I look at the above is that the market is basically looking for a decrease on wheat stocks year over year; undefined on soybeans, and mixed on corn but slightly more looking for an increase year over year.  I think big risk is what the market isn’t looking for happening and that to me is wheat.  If the wheat projected carryout comes in above the average trade estimate which would basically say we end up producing and using the same amount of wheat; if that happens and no one is looking for it to happen it becomes a big price risk especially given the huge volatility we have seen as late; I can’t count how many 50 cent moves in 2-3 days that wheat has had over the past month.

New crop corn also could come under some pressure if we see the billion or so bushel carryout as a billion bushels is thought to be a magically number to the markets.  If we get the crop in the ground while taking away a threat that next year’s ending stocks will be as tight as this years carryout; if not tighter then the new crop corn could see tremendous downside pressure at least in the short term. Weather likely keeps premium in these markets no matter what the report says and fund money flow direction also likely keeps the markets volatile; but the report coming in negative, weather breaking, and the funds continuing their sell off’s that started last week is a possibility and a reason to practice good solid risk management.

If we do see something solid change from a fundamental standpoint and it happens at a time when the markets are talking deflation or money outflow our risk is simply huge; technically many have mentioned the fact that the volatility we have seen lately is usually around market tops.  Bottom line is one probably should be ready to pull the trigger on profitable sales with very little notice. 

 Please give us a call if there is anything we can do for you.

Grain Market Comments Day ahead of USDA Report

Grain Markets closed mixed to weaker the day before the monthly USDA Supply and Demand report.

Old crop corn was off 6 cents, new crop was off a dime but traded another 3 cents lower at the 2:00 time, KC wheat was off 3 cents, MPLS wheat had nearby up 10 cents, Sept MPLS was up 2, CBOT wheat was unchanged, equities and outside markets reversed and closed down very hard from last night’s highs; the DOW was off 143 points, crude off 2.50 which is over 5.00 a barrel off of it’s highs, and the US dollar near unchanged at 82.60 on the cash index well off of the 81.72 lows it had.

Very disappointing is how I would describe today’s price action; starting with the outside markets as it looks like the market finally got a bail out that it didn’t like.  Doesn’t happen very often; but probably due in my opinion as bail outs with fake money might not be the answer.  Bottom line we saw the US dollar make a new low for the past couple of weeks; but turn around and close positive leaving a bullish key reversal on the charts.  July beans left a near doji; but also made a new high for the recent move and closed lower another technical key reversal on the charts.  Crude over 5.00 was good for the charts either; not a key reversal; but not anything good for the technical picture.

Now perhaps we get a bullish report in the a.m. and our outside markets recover behind the latest bail out overseas; but I think today’s price action should really remind US to practice good risk management when making our grain marketing decisions.  December corn didn’t trade positive at all today or last night and I seen yesterday afternoon where some called it 10-15 firmer for Sunday night’s session just because of the hot and dry weather that many are having.  Yet a little system that left a little coverage for parts of Iowa had new crop corn under pressure all day.

So keep in mind that even if everyone you know or everything you read says that the market should or will go up; the market is the market and it doesn’t have and seldom does listen.  Some say it is the markets job to do as much damage to as many as possible.  Now this might not be true; but our grain market prices really do seem to move in an unpredictable pattern.

This afternoon we had crop conditions out and we seen a big decrease with G/E conditions falling to 66% down from last week’s 72%.  Perhaps a little bit more then expected; maybe it helps open the possibility that we see a decrease in yield on the USDA supply and demand report that is out in the a.m. 

Spring wheat conditions decreased by 3% in the G/E and soybean conditions decreased by 5%. 

Below are the estimate for tomorrow’s USDA report. 

The big numbers will be corn carryout; I think the others are still followers; but the USDA could also throw out a curve ball at any time.

Overall you can see that for present marketing year the trade is looking for stock decreases for wheat, corn, and beans.  When they are looking for a bullish report and we get a neutral report it could open the doors for negative price action.

The same can be said for next year’s ending stocks; once again the trade estimates are looking for decreases in carryout versus the May numbers; over 100 million bushels for corn.  Which could happen and based on some comments production and yield could be a lot lower then what is forecasted as many are very dry.  But before this afternoon’s crop conditions report one might have mentioned the fact that the USDA could have left corn yield unchanged or even took the yield number bigger on the same ideas they had in the May crop report.  That we have a crop in nice and early with good emergence and good crop conditions as reported weekly. 

2011/12 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	0.821	0.688 - 0.901	0.851
Soybeans	?	0.189	0.130 - 0.218	0.210
Wheat	?	0.753	0.727 - 0.775	0.768

2012/13 Ending Stocks Estimate (billions of bushels)
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	1.750	1.223 - 1.950	1.881
Soybeans	?	0.143	0.052 - 0.220	0.145
Wheat	?	0.714	0.647 - 0.772	0.735

2011/2012 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	127.630	126.000 - 128.800	127.560
Soybeans	?	52.090	51.000 - 53.000	53.240
Wheat	?	197.124	196.000 - 198.835	197.030

2012-2013 Global Ending Stock Numbers
	USDA June	Avg. Trade Guess	Avg. Trade Range	USDA May
Corn	?	149.745	145.000 - 154.000	152.340
Soybeans	?	58.140	55.700 - 62.000	58.070
Wheat	?	184.791	180.800 - 190.674	188.830

I think that we can all find plenty of reasons for the numbers to be much more bullish the then average trade estimate; but we need to realize that there is also the chance that the numbers come in more bearish or simply come in not as bullish as the market is expecting; plus I don’t know how anyone can be super bullish the overall economic picture; 2008 has to be in the back of one’s mind.  One thing that should be at the top of the bearish list has to be old crop corn export shipments; they have been poor well below what is needed on a per week basis to meet present USDA projections.  Today’s corn shipments where 17 million bushels which is nearly 20 million below what is needed on a per week basis.

It might be a little late to protect one from the crop report in the a.m. but it isn’t too late to stay aggressive or pro-active and put yourself in a good comfortable spot for your grain marketing.  If you need help writing a grain marketing plan please give us a call.

Don’t forget that the markets will be open tomorrow when the report comes out; this could make things a little more volatile than in the past?

Thanks

Closing Grain Market Comments 1-7-2013 USDA Supply and Demand Report Week

The grain markets started off on the right foot today with a  small little bounce.

When everything was said and down corn was up 5 cents on the nearby to 3 on the deferred months, beans close up 21 in the March contract, KC wheat was up 3-6, MPLS wheat was up 5, CBOT wheat was up 4, the US dollar is off 250 at 80.360 on the March contract, equities gave back a little today with the DOW off 51 points, crude, and gold where both near unchanged.

Dead cat bounce in oversold conditions is what described today’s bounce.  No real new news but a bounce off of the oversold conditions.  Perhaps some position squaring ahead of the USDA Supply and Demand report which is out on Friday.

Our markets got a lift Sunday night once the Chinese markets opened; they then stayed firm until about 9:30 when the pit opened and then traded choppy for much of the session before closing on the firm side.  Overall not a bad day; but really not great either as both corn and wheat where a good 5-10 cents off of their highs; beans closed solid.

Technically the bounce in beans might leave some talking about a double/triple bottom and a bounce off of trend line support.   The charts for corn and wheat have a small positive with today’s bounce; but we really need more than one day to call a bottom.  I would say things are very overdone and a bounce could happen at any time plus we seem to have most everyone in the market very bearish.  Things always look the brightest at the top and the darkest at the bottom.  Also if we look back a few months ago when wheat was trading around 9.00 for cash wheat and one talked about what would it take for us to have $10 or $12.00 wheat……….we would have said something to pick up the demand.  We would have said that we really need to get demand and the US needs to get some export business.  Well that is finally starting to happen; we have seen a small uptick in demand for both corn and wheat.  We are much more competitive today then we where a month or two ago.  Now is it enough demand for us to bounce?  Probably not by itself; but if that demand can slowly continue to increase it does give us a chance for a tighter balance sheet as we go forward.

I would say that in my opinion for wheat to be a really bull market we need a headline; and I don’t think us getting the export business we need to get is a headline.  The headline is still probably our bad crop in the ground; that is the one of the headlines that the funds and big money could jump on at some time.  But that really won’t be a headline for months; so in the meantime if we can pick up some demand we are not going to hurt our fundamental outlook. 

Bottom line is looking back our wheat outlook potential really should not have been hurt by the price break.  Now what is scary is what happens if that potential never turns into anything?  I think that is why marketing grain is so difficult; all of the unknown factors and the human emotions of greed and fear.  So don’t be afraid to take a step back and look at the bigger picture and if you have high priced targets ask yourself how can we get there.  If the only way to go higher is take a step or two or three backwards first will you be able to hold on during the step back when you know that the funds and money flow love to overdue grain price moves?

So looking forward one probably needs to ask what will happen for new crop values.  Corn in particular; what will it take to really get a rally going?  The answer is it will take a weather scare and probably the funds leaning the wrong way; talk of 4.00 corn; maybe talk of 3.00 corn.  In the very near future we will likely start to see extreme talk.  I noticed one advisor talking about $8.00 soybeans this week.  So if we are going to rally we will need to get guys leaning the wrong way which we might already be close to.  We then probably need prices at levels that attract some demand; which we might be close to.  But we also need a weather scare or some sort of fundamental catalysts that will drive buying.  Without that catalyst and with perfect weather there will be tremendous pressure and talk of lower prices as we go forward unless the USDA gives us a reason or tells us our fundamentals are much tighter.

So if we know today that with everything unchanged the path of least resistance is probably shorter term to the downside; what should we be doing today?  For some you might want to get a little pro-active for others perhaps you ride out the storm and wait for that weather scare rally or fundamental change.  Bottom line is today and for some time we have known that in the very near future talk will be of 150-160 bushel corn on 95-100 million acres; which will leave balance sheet expectations with a massive carryout. 

I have got a little off of center here; so I want to bring my focus back to this week’s USDA report.  As that is the next risk and possibly reward that our market has.  Idea’s are for an unchanged corn carryout numbers at 647 million bushel carryout.  I have seen many that think we could see harvested acres cut; but overall most look for production to be very close to the last estimate.  Most have exports coming down; but a few have feed usage up.  Bottom line is the trade seems to be looking for no change in the corn carryout.  Overall I would say that the market is looking for a neutral to bullish report for corn with the big wild card number really being feed/residual usage.  Normally if we are looking for a bullish report one would think the market has been firming up; but that hasn’t been the case for the past couple months.  So that is a little scary.

As for beans the latest estimate I have seen was for a 5 million bushel increase in carryout.  Neutral in my opinion.  I don’t think an overall carryout of 135 is bearish; but what could be bearish is the South American production forecasts.  Most are looking for an increase.

Wheat is expected to see a small decrease in carryout; but also an increase in wheat seedings. 

As we go into the report the main thing one wants to do is get themselves comfortable no matter what the USDA decides to say.  For some doing nothing is fine enough; for others have some sold or protection in place might be the right move.  What is scary is the fact that every year since 2007 corn has traded limit up or limit down following the release of this January report.  A limit down move following the 1.70 or so that we off of the highs is scary.  Perhaps just as scary is that a limit up move only get’s back about 1/3 to ¼ of what we have lost. 

If we happen to be limit down will many guys be forced to make some panic or fear sales?  If we are limit up will guys be holding off for more?  There is nothing wrong with waiting and seeing that the report says about future price direction and fundamentals but one might also want to be prepared for their next move no matter what curve gets thrown our way.

Overall the message of today’s comments isn’t to be scared into buying protection or making sales; nor is it to say that we shouldn’t sell anything down here.  It is more to be pro-active and get one’s self comfortable in our roller coaster market.

This week Wednesday at 3:30 we will have our MWC Marketing Hour Round Table meeting in Onida; at that time we will go over various strategies ahead of Friday’s report. 

Please give us a call if there is anything we can do for you.

Thanks

Report Day Overnight Highlights 1-11-13 from CHS Hedging's Tregg Cronin

Outside Markets: Dollar Index up 0.066 at 79.806; NYMEX-WTI down $0.77 at $93.05; Brent Crude down $1.57 at $110.32; Heating Oil down $0.0370 at $3.0173; Livestock markets are mixed with lower cattle and higher hogs; Gold down $11.20 at $1666.80; Copper down $0.0345 at $3.6755; Silver down $0.293 at $30.625; Softs quietly mixed; S&P’s up 0.75 at 1467.75, Dow futures are down 4.00 at 13,402.00 and Treasuries are lightly mixed.

Mixed equities in Asia overnight, while Europe is quietly better.  The NIKKEI was up another 1.40% last night after the new Prime Minister announced a Y10.3 trillion ($116 billion) economic stimulus package that the government expects to lift GDP by 2.0% and create 600,000 jobs.  The Yen has sold off promptly and is trading above 90.00.  The big data point from overnight was the Chinese Consumer Price Index which rose to 2.5% y/y from 2.0% in November and vs. a consensus of 2.3%.  This pushed the Shanghai Composite down 1.78% to the lowest close since 12/28, and could limit stimulus efforts by the government.  Argentina’s Credit Default Swaps are spiking this morning with the 5-yr CDS up 118bp to 1,914bp, the highest since 12/4.  Wells Fargo reports earnings before the bell this AM.

Some decent moisture the past 24 hours along the Mississippi River and Great Lakes Region with rain falling in most of the upper-Midwest.  This storm continues to dump precip in the ECB this morning.  Going to be some moisture around the next 5-days with the heaviest in the central and eastern corn belt.  Cold temps forecast by NOAA the next 6-10 days across the entire Midwest.  Two swaths of above normal precip will hit TX and then the upper-Midwest including SD/ND/MN/WI/MI, but below normal precip cuts the country in half and will leave CO/OK/KS/NE/MO/S-IL/TN/KY dry.  South American weather is attached and looks nearly ideal.  Only area of concern seems to be some heat and dryness in Argentina, but not yet a problem according to forecasters.

Feature of the overnight session would have to be the selling pressure witnessed in the soybean and products market.  At the lows, March soybeans were down 20c, but have pared around half of those losses.  Corn is content around $7.00, and probably should remain close to their until report time at 11:00 CDT.  The general expectation of the market is a friendly corn report which could benefit wheat, but larger production in the US/Brazil/Argy are expected to hinder soybeans.  Convenience table attached.  Limit moves have been achieved each of the last 6-years, but it wouldn’t surprise me one bit to see this be the one year which is close to “normal.”  Export business has been healthy this week and on wheat and beans, but corn remains notably absent. 

A little bit of tender business overnight with Japan buying 121,188MT of Australian wheat for the first time in six weeks.  There was no US or Canadian wheat.  This follows GASC’s tender in which they bought 1 cargo each of US and Canadian SRW, disappointing to most analysts.  Still rumors of China buying US and Canadian wheat, although split ideas about whether its HRS or SRW.  Indonesian mills also bought a cargo Aussie wheat at $351/MT C&F.  South Korea’s KFA bought 55,000MT of optional origin feed wheat from Cargill at $328.35/MT C&F for April.  South Korea’s Mills bought 39,500MT of Aussie hard wheat at $360/MT C&F for April shipment.  Taiwan’s MIPA is tendering for 60,000MT of optional origin corn next week.  Lots of export business, but very little US participation.  Indonesia is planning to cut their palm oil export tax, matching Malaysia and remaining competitive.  Palm Oil stocks rose to a record 2.63MMT last month, putting pressure on the global Veg Oil market.  Chicken wing prices are at new record highs just in time for the playoffs and Super Bowl.  See chart below.

Open interest changes during yesterday’s session included wheat down 5,520 contracts, corn up 6,090, beans up 110, meal up 2,750 and soy oil up 5,580.  Index fund rebalancing seems to be continuing as scheduled.  Interestingly, since January 4^th, corn open interest is up 27,439 contracts, despite the fact funds are supposed to be selling corn.  Chinese markets were mixed with beans up 8.75c, meal down $1.70, soy oil down 58c, corn down 0.25c, palm down 77c and wheat down 3.50c.  Malaysian Palm Oil was down 19 ringgit to 2,368.  Paris Milling Wheat down 1.12%, Rapeseed is down 0.22%, Corn is down 0.11%, UK feed wheat is down 0.72% and Canola is down 0.31%.

Not much matters until we get the report out in four hours.  We’ve got the pre-report expectations.  We’ve got the index fund rebalance on the downhill slide.  Now we just have to get the numbers.  A little discouraging we still aren’t mopping up export business left and right, but we are getting more competitive and the funds are still big shorts.  More fun later this morning.

Trade as of 7:20:

Corn flat down 2c

Soy down 3-8

Wheat up 1-2

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax

www.chshedging.com

CHS Hedging, Inc.
The Right Decisions for the Right Reasons

Closing Comments 2-5-13 - Pre-USDA Report Thoughts

Markets closed mixed today in a rather choppy trading session for the grains.

When things where all said and done corn was off 5 cents, soybeans were up 7 cents, KC wheat was off a dime, MPLS was down 5 cents, CBOT wheat was down 5 cents, equities bounced with the DOW up 99 points, crude was up 50 cents, the dollar is near unchanged, and gold is off 3.00 an ounce.

A disappointing day for the grain markets with a lack of headlines.  More so today’s weakness seemed to be follow threw selling from yesterdays turn around that the grains had.  We also seen a slight improvement in the South American weather forecasts; but it would be hard to blame that for the weakness in corn when we saw beans able to close higher.

The grain markets did do one thing positive and that was close about 4-7 cents off of their lows for corn and the three wheat contracts.

There is some precip for some HRW areas in the forecast that along with the weak HRW demand didn’t help out the wheat markets.  Canada reported lower than expected stocks this a.m. by about 1 MMT less then trade average; but that wasn’t enough for wheat to see much strength today.  One commentary that I listened mentioned the fact that India has a huge excess amount of wheat in stocks and much of it might come to the export market.  It wasn’t too long ago that they imported wheat; but now they seem to be a competitor.

Basis for the spot feels defensive for both HRW and spring wheat; as mills seem to have plenty of product as the railroad have caught back up the past few days.  To arrive basis for the planting months still feels firm; but nearby has a weaker tone as supply is moving. 

Corn basis feels firmer as producer selling slowed down on the price break today.  But I also had a local ethanol plant tell me he now has coverage out until the end of April.  I have to wonder how the regional effects of big crops/small crops is playing out.  I know that it has caused a lot of shifts to were our final destination is on corn.  The past few years a lot of corn out of our area went up toward ethanol plants in the northern part of the state because their corn crops were smaller; this year hardly any corn from our area is going that way.  It is all going either east or south if on trucks; or going on rail into some feed markets.

Bottom line is we should look for corn basis to be choppy and rather volatile as we go forward.  One other thing that will add to the volatility will be the spread between old crop and new crop.  As example if you wanted to lock in basis for August or after wheat harvest delivery of old crop corn you could lock in something around 1.20-1.30 over the December futures.  So what likely happens is that we see some super strong basis sometime this summer but we quickly or at some time fall apart into new crop basis levels which likely trade in the -50 to -80 under range. 

This presents some risk and potential opportunity.  As example if you think we will have another drought card show up this year perhaps the play is to lock in basis against the Sept or December futures on old crop corn.  Because my logic would say that a drought doesn’t do anything for old crop values; but it certainly could be a reason for the funds to decide to get long new crop corn.  Now were or when to lock in basis might be another question because we are extremely tight old crop; so perhaps that means one waits and looks for 1.50 or 2.00 over the December board???

At the end of the day the one thing one doesn’t want to do is give up the old crop new crop inverse.  So that means that one needs to either lock in basis or get stuff sold sometime before that inverse goes away.  As long as the inverse is around it is a good sign of more demand then supply.

The other thing that probably added a little weakness to our markets today is Friday’s report.  The USDA will have an updated supply and demand report out on Friday.  Below are the estimates

The U.S. Department of Agriculture is scheduled to release its estimates on Feb. 8 at 12 p.m. in Washington.

*T

              Crop Production                Previous

                                           USDA Estimates

                Average       Range        2013      2012

ARGENTINA

Corn              26.4      24.0-28.0      28.0      21.0

Soybeans          52.9      50.5-55.7      54.0      41.0

BRAZIL

Corn              71.3      69.8-73.5      71.0      73.0

Soybeans          82.7      81.0-84.0      82.5      66.5

Carryout forecasts…

Figures in the following tables are in millions of bushels.

                   2013 U.S. Inventory Forecasts

              Analysts Estimates

              Average        Range      Previous USDA

                                        2013    2012

Corn             616        502-697      602     988

Soybeans         130        103-140      135     169

Wheat            717        512-783      716     743

I do think there should be some risk that the USDA decides to be a little aggressive on the wheat exports and corn demand (ethanol and exports) because they have simply been horrible.  Perhaps they use a wait and see approach; but I think the risk has to be to the side of the USDA decreasing demand.  When we look longer out we also have to keep in the back of our mind that many are talking about 95-100 million acres of corn; with a yield of 140-170 that gives us potential production of 12.5-13 billion bushels to maybe as much as 16.5-17 billion bushels. 

If we are anywhere in that above production range we need to find a lot of demand year over year as this present year we are only projected to use about 11.1 billion bushels and that number could be falling with the slow ethanol production and lack of exports.   What is scarier is that history had never seen us drop the usage like we did this past year; but now potentially we have to up usage more than ever or risk having a huge carryout.  I guess we have been in the process of seeing how quickly we could curb demand or slow down demand over the past several months.  The very near future could be us seeing how quickly we can do the opposite.

I don’t want to sound to bearish for new crop prices; but I do want guys to realize the type of risk that we potentially have.  So the focus shouldn’t be to fear sell; but rather to realize that one might want to take advantage of any future rallies we may have because as things stand today the fundamental picture for prices 8-12 months from now isn’t for higher prices.  Sure some things could and probably will happen that will take the lowest possible out come out; such as drought persists, or strong outside markets that cause inflation talk and money flow into commodities, or any other black swan event such as import tax on Brazil ethanol or something else that could really give the ethanol industry a boost.

Don’t forget we will have our weekly MWC Marketing Meeting in Onida tomorrow Wednesday at 3:30

Thanks

Overnight Highlights from CHS Hedging's Tregg Cronin 3-22-2013

Outside Markets: Dollar Index down 0.146 at 82.593; NYMEX-WTI up $0.45 at $92.91; Brent Crude up $0.10 at $107.57; Heating Oil down $0.0034 at $2.8929; Livestock markets are mixed/weaker; Gold down $6.20 at $1607.60; Copper up $0.0280 at $3.4630; S&P’s are up 3.25 at 1542.25, Dow futures are up 33.00 at 14,381.00 and Treasuries are firmer.  

Despite the latest spate of headlines from Europe, global financial markets actually exhibiting a fair amount of calm and order.  While the NIKKEI fell 2.35% overnight, Europe is flat this morning and the FTSE MIB is actually up 0.35%.  Bond yields across Europe are easier this morning, and the Euro is rallying against all of its major trading partners.  The EURUSD +0.462%, EURJPY +0.266% and EURGBP +0.299%.  The latest headlines in the Cyprus Crisis is European officials rejecting an alternative plan from the Cyprus gov to save its banking sector and remain in the Eurozone.  Cyprus needs to raise €5.8 billion to avert crisis and secure bailout financing by Monday.  Expect a weekend chocked full of headlines heading into the Monday deadline.  No economic data today.

The last 24 hours saw precip in AR/S-MO, and some snow fell in NE/SD with more still falling this morning.  More precip will move into towards the weekend for the southern plains with all of KS expected to see 0.50-0.60” Sat/Sun.  This will push into MO as well where amounts will be slightly heavier.  OK sees moisture as well.  This system moves into IL/IN/KY/OH by Monday with S-IL seeing as much as 0.94”.  Following Sunday’s system, the Midwest will be quiet Monday through Friday.  NOAA’s maps continue to point cold and dry in the 6-10 with a slight moderation in the temps for the 8-14, but still fairly dry in that period.  Most of the WCB remains in some stage of drought and could use additional moisture as opposed to getting in the field early.

Slightly easier markets overnight as we consolidate recent gains in both grains and the sharp rally in oilseeds yesterday afternoon.  Unfortunately, there is no chatter on the wires this morning as to the reason behind the soybean rally yesterday.  Most traders will be watching the USDA website at 8:00am this morning to see if there were any sales reported to Washington.  The rally was back end led, but CIF traders noted as much as 770,000 bushels of new crop beans changing hands yesterday.  Between the logistical backups in Brazil, and the inability to source Argentine supplies until at least April (let alone their labor issues), it is possible we did some more old crop soybean business.  Corn and wheat seem to be running into soft cash markets following a solid week of movement by farmers.

Bloomberg released several polls ahead of next week’s USDA reports.  Rather than rehash them here, I’ve included them below.  Only blatant observations would be slightly lower corn acreage estimates, slightly higher soybean acreage and the trade clearly anticipating a bullish Mar 1 Stocks number.  With an average trade estimate below 5.00bbu, the trade is basically assuming Q2 corn feed demand didn’t slow to the level the USDA is currently implying.  Just looking at estimates, would appear 5.0-5.1bbu is the range: above 5.1bbu is bearish and below 5.0bbu is bullish.  News out of China overnight said March soybean imports may be 4.29MMT and 4.285MMT according to the Ministry of Commerce.  China needs around 4.8MMT a month for its crushing needs.  The slower pace of imports is thought to be due to logistical complications out SAM as opposed to slowing demand, but it’s too early to tell.  The USDA is currently estimating 12/13 soybean imports for China at 63MMT, although the average analyst estimate according to Bloomberg has slipped to 59MMT.

Japan bought 37,188MT of food wheat in an S-B-S tender overnight from Canada and Australia.  Articles from Russia said the price limit for purchasing milling wheat headed for state reserves in Aug-Sept is RU7,000/MT, or $210/MT ($5.71/bu).  They are clearly banking on a very large crop and declining global prices.  The Russian winter grain losses are being forecast at 1.3-1.6 million hectares vs. earlier estimates for 1.9 million according to the Ag Minister.  Cattle on feed report this afternoon at 2:00.  Estimates look like placements at 92.8%, marketings at 92.3% and Mar 1 on feed at 93.8%.

Overnight maps continue to look very dry for South America, although haven’t heard whether this is an issue or not.  Something to keep track of nonetheless.  Corn basis remains weak.  Wheat basis is steadying.  Everyone seems to be of the opinion wheat basis should get sloppy due to the amount of wheat left on farm.  While I agree with that in principle, it does concern me that logistics remain poor on rail, and that everyone seems to be of the same opinion on basis.  MWK/MWN is reluctant to trade a carry.

Open interest changes yesterday included another 12,640 contracts of corn, wheat down 690, beans up 1,560, meal down 1,310, soy oil down 4,480 contracts.  Corn open interest just keeps on climbing which is a short-term positive if the people doing the buying decide to defend their position.  Chinese markets were firmer with beans up 14c, meal down $0.40, soy oil down 35c, corn up 1.25c, palm down 15c and wheat up 0.25c.  Malaysian Palm Oil was up 47 ringgit at 2,493 (1.51%).  Paris Milling Wheat is up 0.10%, Rapeseed is up 0.16%, corn down 0.22%, UK feed wheat is unchanged and Canola is unchanged.

Call things a little bit weaker to start off with but keep an eye on the wires at 8:00am this morning or Monday morning.  Odds are good we did some export business to China per the rally yesterday.  Otherwise, the low volume chop ahead of the March 28^th reports could be setting in.

   

U.S. Soy Acres May Rise to Record, Survey Shows; Grain Area Up

2013-03-21 21:49:33.99 GMT

By Jeff Wilson

     March 21 (Bloomberg) -- U.S. farmers will plant the most

soybean acres ever, and corn seeding may rise to the highest

since 1936, according to a survey of 32 analysts by Bloomberg

News. Wheat acreage may rise to the highest in four years.

     The U.S. Department of Agriculture is scheduled to release

its estimates, based on a national survey of growers, on March

28 at noon in Washington.

     Below are the estimates of how much land farmers intend to

plant, in millions of acres.

*T

                  Crop Production           USDA Estimates

                                         February

               Average      Range         2013       2012

Corn             97.339    96.5-98.5      96.5     97.155

Soybeans         78.351    77.0-80.0      77.5     77.198

All Wheat        56.32     55.6-57.3      56.0     55.736

Spring Wheat     12.39    11.91-12.8       n/a     12.289

Durum Wheat       2.13      2.0-2.3        n/a      2.123

Firm Estimates                           All   Spring  Durum

                       Corn   Soybeans  Wheat  Wheat   Wheat

============================================================

ABN Amro Clearing        98.000  78.000  56.20  12.40  2.00

A/C Trading Inc.         97.500  78.500   n/a    n/a    n/a

ADM Investor Services    97.000  79.500  56.00  12.40  2.00

Advanced Market Concepts 98.500  77.400  56.50  12.80  2.20

AgriVisor LLC            97.000  78.500  57.00  12.80  2.20

Allendale Inc.           96.956  78.342  56.26  12.06  2.18

Alpari                   98.000  78.200    n/a    n/a   n/a

Citigroup Global Markets 96.800  77.600  56.10  12.32  2.19

Commodity Information    97.000  78.200  56.00    n/a   n/a

EFG Group                97.500  78.500  56.50    n/a   n/a

Farm Direction           97.500  78.200  56.20    n/a   n/a

Farm Futures             97.430  79.090  56.12  11.91  2.06

Fintec Group Inc.        98.000  77.000  56.00    n/a   n/a

Grain Service Corp.      98.200  78.000  56.50    n/a   n/a

Global Cmd Analytics     96.900  78.100  57.10    n/a   n/a

Hightower Report         97.500  78.500  56.50  12.50  2.10

Jefferies Bache          96.760  78.500  56.85  12.42  2.24

Kropf & Love             97.500  78.500  56.50  12.70  2.00

Linn Group               96.500  77.500  56.00    n/a   n/a

McKeany Flavell          97.800  77.900  55.60    n/a   n/a

Mcquarie Bank            96.600  79.700  57.30    n/a   n/a

Newedge USA LLC          97.500  78.800  56.80  12.80  2.30

Northstar Commodity      98.200  78.100  55.80  12.35  2.15

PIRA Energy Group        97.000  78.000  56.10    n/a   n/a

Prime Ag Consultants     98.000  80.000    n/a    n/a   n/a

Rice Dairy LLC           97.600  78.500  56.06  12.20  2.05

R.J. O’Brien             97.000  78.500  56.30  12.20  2.10

Risk Management          96.800  78.000    n/a    n/a   n/a

Stewart-Peterson         96.500  78.500  56.20  12.40  2.10

U.S. Commodities Inc.    97.500  77.500    n/a    n/a   n/a

Vantage RM               97.000  78.500  56.00    n/a   n/a

Water Street Solutions   96.800  79.100  56.14  12.05  2.18

U.S. Corn, Soybean Inventories Fell on March 1, Survey Shows

2013-03-21 21:17:43.537 GMT

By Jeff Wilson

     March 21 (Bloomberg) -- U.S. corn inventories on March 1

probably fell to the lowest in 15 years for the date, while

soybean stockpiles dropped to the lowest since 2004, according

to a survey of as many as 31 analysts by Bloomberg News. Wheat

inventories probably fell to a four-year low.

     The U.S. Department of Agriculture is scheduled to update

its reserve estimates with a quarterly report at noon on March

28 in Washington. Figures below are in billions of bushels.

*T

             U.S. March 1 Inventory Forecasts

          Average      Range             Previous USDA

                                  March 1, 2012  Dec. 1, 2012

Corn       4.995    4.743-5.248        6.023        8.030

Soybeans   0.948    0.900-1.059        1.374        1.966

Wheat      1.165    1.010-1.249        1.199        1.660

*T

*T

Analyst Estimates          Corn    Soybeans   Wheat

===========================================================

ABN Amro                   5.080    0.925    1.055

A/C Trading Inc.           4.950    0.940     n/a

ADM Investor Services      5.037    0.940    1.193

Advanced Market Concepts   4.783    1.015    1.125

AgriVisor LLC              4.990    0.955    1.180

Allendale Inc.             5.071    0.912    1.107

Citigroup Global Markets   4.960    0.984    1.211

Commodity Information      4.975    0.948    1.185

CHS Hedging Inc.           4.997    0.934    1.191

Doane Advisory             5.005    0.945    1.185

EFG Group                  5.000    0.960    1.190

Farm Direction             5.050    1.000    1.170

Farm Futures               5.248    0.972    1.125

Fintec Group Inc.          4.743    0.910    1.210

Grain Service Corp.        5.056    0.928    1.166

Hightower Report           5.025    0.955    1.200

Jefferies Bache            4.941    0.936    1.238

Kropf & Love               4.985    0.930    1.197

Linn Group                 5.020    0.912     n/a

Macquarie Bank             5.103    0.913    1.207

McKeany Flavell            5.020    0.900    1.010

Newedge USA LLC            4.948    0.921    1.205

Northstar Commodity        4.885    0.911    1.170

Prime Ag Consulting        5.100    0.940    1.200

Rice Dairy LLC             4.969    0.925    1.249

R.J. O’Brien               5.030    0.928    1.179

Risk Management            5.223    1.059    1.010

Stewart-Peterson           5.020    0.950    1.160

U.S. Commodities Inc.      4.952    0.970     n/a

Vantage RM                 4.750    1.050    1.150

Water Street Solution      4.916    0.926    1.162

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax

www.chshedging.com

CHS Hedging, Inc.
The Right Decisions for the Right Reasons