COMENTARY 11/20/14

Cattle areas will remain favorably-dry through the next 7-10 days as systems by-pass the region, while rains and/or snow breaks the dry pattern for SRW wheat areas.  The majority, 89% of U.S. SRW wheat was drier than usual over the last 30 days.  A strong system breaks should break the dry spell Sat-Mon.  In South America, several cool fronts produce widespread rain in Argentina, Brazil, and Paraguay the next week.  This should slow the already slow planting pace, but at the same time prevent dryness from becoming an issue through at least early Dec.  The nearby outlook should yield above-average rainfall of 1.75” – 3.50” impacting Brazil and Paraguay.  Argentina rainfall should be more average.

St Louis river levels DROPPING at +4.7ft  and forecast to be 2.4 by 11/25.  <- THIS FORECAST IS DANGEROUSLY LOW Good news is that we have a pretty decent chance for some accumulation Fri – Mon which should help the low water levels.  Mile Marker 632 – 635 CLOSED Fri 11/7 to daylight traffic for up to 14 days.  The Army Corps of Engineers is doing a matting project which was postponed until Dec but is now going forward.  This could be a giant wrinkle in an already taxed freight system during a record harvest.  It will slow loads moving south and empties moving north and cost a full tow as much as a 75 mile setback. The Upper Miss will start closing early this week and the Mid Miss the following week (this is a week earlier than normal due to low water and the Polar Vortex).  As the export transportation pipeline shrinks, it stresses the lower system to perform.

CORN      

UP 10         

FUND BUYING!  Final acreage numbers are still on the market’s mind, strong ethanol grind /margins, and decent export sales this am.  Export Sales were healthy at 35.8 mbu, exceeding both the trade’s 20-28 mbu range and the near-23/week pace needed, with big volume going to Japan.   The USDA announced a 101,600 K MT sale to Unknown for 14/15 delivery this morning too.  Ukraine’s Economics Minister raised the 14/15 grain export estimate 7% to 36.7 MMT as their export sales are exceeding expectations.

There are multiple origins offering cheaper corn than the U.S.  Private sources indicate China has recently bought approx 1.1 MMT of Ukrainian corn.  (Fundamentally, these are very bearish items – especially when we have such a huge crop in the bin).  Monday’s Export Inspections too were very disappointing at only 15.8 mbu.  This was well below expectations of 26-33 and 35.2 per week needed.   Sales NEED to be 30 million+ per week going forward.  Improving Brazil corn prices could raise area planted to corn according to private sources.

 The market has moved nearly 50 cents higher during October on no real change in fundamentals.  Don’t allow Fund buying to make you too bullish, preventing you from making PROFITABLE sales.  Look to improve upon existing sales.  (Lock in  these higher CA$H values for Dec, Jan, Feb, Mar, & APR). This is a great time to make up for not having much sold prior to harvest!  Have offers in to take advantage of a higher board, should one materialize.

Monday’s Crop Progress report   US HARVESTED 89% TW, 80% LW, 90% LY%, and 88% AVG.  The State of IL HARVESTED 94% TW, 87% LW, 95% LY, and 89% AVG.

 

BEANS     

UP 16    

FUND BUYING!  Meal sales bounced back, a new sale to unknown of 140 K , and decent oil business transacted.  Export Sales at 17.7 were on the light side relative to trade expectations of  26-37 million.  South American Meal is now MUCH cheaper than that of the US. More data confirms that several more bean meal vessels are being switched from US origins to SOUTH AMERICA.  Additional export demand is still needed and the market is not terribly concerned about South American weather at this point.  South American meal MAY be cheaper, but one consulting firm concludes that the good ‘ol U.S. logistical network is more reliable than either Argentina or Brazil.  On average, U.S. beans arrive within 3 days of expected delivery date, Argentina within 7 days,  and Brazil as high as 15 days.

 

Monday’s   US BEANS HARVESTED 94% TW, 90%LW, 94% LY, and 96% AVG.  IL HARVESTED 95% THIS WEEK, 91% LW, 98% LY 97% AVG.

 

WHEAT          

UP 9

Fund Buying.  Export Sales were routine at 13.3 mbu  vs expectations of  11-18 and 11.8 per week needed.  Lanworth is said to peg 2015 U.S. winter wheat acres 4% lower with the crop at 1.57 bbu, up 180 mbu from this year.  Exports from France’s Seine River port of Rouen jumped 75% to 6+ mbu as soft wheat exports to N Africa have nearly tripled.  Despite military activities in Russia, consultant APF-Inform expects Ukrainian wheat exports to reach a record 10.4 MMT this year, up from 9.7 million last year.  Acreage for next year will likely fall, down 6% for winter grains.

Monday’s Crop Conditions Report had US Winter Wheat CONDITIONS  60% G/E THIS WEEK,  60% LW, and 63% LY.  STATE OF IL CONDITIONS 57% G/E this week, and 60% LW. US WINTER WHEAT PLANTED 95% TW, 93% LW, 99% LY, and 97% AVG.  THE STATE OF IL WINTER WHEAT PLANTED 90% TW, 84% LW, 100% LY, and 95% AVG.  US WINTER WHEAT EMERGED 87% TW, 83% LW, 88% LY, and 84% AVG.  THE STATE OF IL EMERGED 64% TW, 52% LW, 85% LY, and 81%AVG.