COMMENTARY 10/30/14

Most areas in the U.S. should be dry through the weekend, then showers redevelop in the ECB briefly at the beginning of the week.  In South America, 1-2”rains fell across Argentina Wednesday. Brazil received between 1/10 and ½” in the states of Mato Grosso, Goias and Minas Gerais.  Forecasts call for average moisture amounts for the next week to 10 days for Argentina and Brazil.

St Louis river levels DROPPING at +10.8 ft  and forecast to be 8.9 by 11/4.

CORN                    

DOWN 1

A slight increase in producer selling and surprisingly weaker Export Sales at 19.3, well below the 8-35 expected and 23 per week needed.   Harvest progress still lagging 19 points behind average with ND, IA, WI and SD all 25% or more behind.  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     

DOWN 20   

FUND SELLING.  FUNDS SOLD 35 MILLION BEANS AND 4,000 CONTRACTS OF MEALThe last two weeks there have been a HUGE amount of money pouring into grain from the stock market/currencies/energies.  Meal export movement over the past month is down 27% year to year and 20 K MT /week below the 5-year ave.  Fundamentally, huge unshipped bean sales, the feed market needing meal, and unshipped sales to SE Asia are DOUBLE the estimated level from year ago due to late harvest and spotty producer selling.  Rail car delays continue in the Western Corn Belt, slowing movement of soybean complex to consumers.  Export Sales were 48.7  mid-range vs expectations of 37-55,  SBM sales were 148 K falling short of the 150-300 expectations but were favorable versus the 92/wk needed, and bean oil was lower/middle range at 15.9.     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.  AgRural says Brazil planting is 16% complete, well off last year’s same date pace of 34%. 

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          

DOWN 2

Export Sales were respectable at 16.3 vs expectations of 11-14, with 12/week needed.  Sales by class included 6.6 HRW; 4.7, HRS; 2.5 white; 2.1 SRW and 400 K durum.  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 slow pace of Midwest SRW planting is also lending support to futures.

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.