COMMENTARY 10/29/14

Great harvest weather in the US to wrap things up.  Brazil’s center-west soybean belt saw light rain over the past 24 hours with amounts ranged from 0.05 to 0.90 inch across the north half of Minas Gerais and Espirito Santo to southern Bahia. The rains should intensify as the week progresses. Argentina had rain yesterday across the far south and will be wet through Friday.  Argentina weather is favorable. Good rains will occur today through Wednesday across northern BA and Entre Rios and Corrientes.

St Louis river levels DROPPING at +11.2 ft  and forecast to be 9.4 by 11/3.

CORN                    

UP 10

Blowback off of beans helped boost corn.  Good ECB yields noted, encouraging producer selling in that region.  Harvest progress still lagging 19 points behind average with ND, IA, WI and SD all 25% or more behind.  This supported the market most of the morning, however, early gains faded.  Monday’s Export Inspections were 27.2 vs expectations of 33-38 range with  34 per week needed.  Morgan Stanley expects Brazil corn area to fall 6% this year as soybean planting progress lags.  Argentina’s corn area is highly uncertain as some expect it down 12-20% as costs rise (USDA:  4.4% less area than LY).  Cordonnier trimmed their production forecast 1 million to 21.0 MMT from impact that inputs have on yield.  Corn acres coming down in South Africa as the Crop Estimates Committee reduces their forecast 3.3%.

Monday’s Crop Progress report  at 74% G/E this week, 74% LW, 62%LY. The State of IL   83% G/E vs 83% LW.  US MATURE  was 96% TW, 93% LW, 97% LY, and 97% AVG.  The State of IL MATURE was 100% TW, 97% LW, 100%LY, and 98% AVG.  US HARVESTED 46% TW, 31% LW, 56% LY%, and 65% AVG.  The State of IL HARVESTED 59% TW, 43% LW, 71% LY, and 72% AVG.

 

BEANS     

UP 35   

FUND BUYING! Funds bought 15,000 soybeans, 4,000 soybean meal, and 4,000 soyoil contracts!  There is a HUGE amount of money pouring into grain from the stock market/currencies/energies. Huge unshipped bean sales, the feed market needs meal and unshipped sales to SE Asia are DOUBLE the estimated level from year ago due to late harvest and spotty producer selling.  Cordonnier lowers Brazil estimate 1 MMT to 93.0—notes that 40-45% will be planted “outside” optimal planting window, raising yield risk due to disease, insects, and dry weather vulnerability, plus a concentrated harvest during rainy season.  Some Mato Grosso producers claiming of 20-30% fewer acres due to late start and low prices. Some areas of Mato Grosso are incurring the hottest, seasonal, driest spell in 20-30 years.   AgRural says Brazil planting is 16% complete, well off last year’s same date pace of 34%.  Monday’s Export Inspections were 80.7 which topped even the high end of the trade’s 66-79 mbu range.

Monday’s   US BEANS HARVESTED 70% TW, 53 %LW, 75% LY, and 76% AVG.  IL HARVESTED 63% THIS WEEK, 37% LW, 83% LY 77% AVG.

 

WHEAT          

UP 7

 Spillover from beans, crop concerns in Russia, and Australia as well AND the U.S. winter wheat planting drag.  Some see a smaller Australian wheat crop and Russian prices continue to escalate.   The outlook for Russia’s 2015 wheat crop deteriorates as the sliding ruble’s value could hurt planting prospects. Poor winter conditions are also noted. The slow pace of Midwest SRW planting is also lending support to futures.   Russian 11.5% protein wheat up $5 in the past week.  Trade survey puts Australian wheat crop at 23.2, versus ABARE at 24.2 & USDA at 25.0 as frost and hail damage in Western Australia is becoming more apparent.

Informa expects U.S. producers to plant 56.4 million acres, down 400 K from this year.  The BA Grain Exchange expects this year’s crop to exceed last year’s 10.1 MMT total; the USDA is 12.0 versus 10.5 LY.

Monday’s Crop Conditions Report had US Winter Wheat CONDITIONS  59% G/E THIS WEEK,  NA% LW, and 61% LY.  STATE OF IL CONDITIONS 69% G/E this week, and 0% LW. US WINTER WHEAT PLANTED 84% TW, 76% LW, 85% LY, and 84% AVG.  THE STATE OF IL WINTER WHEAT PLANTED 41% TW, 22% LW, 86% LY, and 75% AVG.  US WINTER WHEAT EMERGED 67% TW, 56% LW, 63% LY, and 62% AVG.  THE STATE OF IL EMERGED 18% TW, 11% LW, 44% LY, and 42%AVG.