COMMENTARY 11/14/14

The Upper Miss will start closing early next 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.

In South America, soybean meal IS cheaper than the high priced US stuff.  Dry weather improves conditions for corn and soybean planting in Argentina, Paraguay and South Brazil through at least Monday.  Temperatures should turn hot in Western Argentina as temps  soar into the 90s. A cool front should break the heat T/We and to the north, a dissipating cool front triggers storms in Northern areas of Center-West and Southeast Brazil by Mon.  Although beneficial rainfall of 1.00”-3.00” are likely, areas to the immediate South have received little or no rain.

St Louis river levels DROPPING at +6.7 ft  and forecast to be 6.2 by 11/19.  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. 

CORN      

DOWN 5         

Extremely volatility!  After climbing to the highest level since mid-July, the market experienced profit-taking ahead of the weekend.  Today marked the fifth weekly gain in the last six weeks for CZ14.  Funds sold back a measly 2,000 of the estimated 40,000 corn contracts they had accumulated throughout the week. Export Sales were only 19.9 mbu (right in line with expectations), but rather measely for the size of this corn crop Sales NEED to be 30 million+ per week going forward.  Today’s Sales were a 3-week high, however still 49% below the prior 4-week average.   This morning Informa released their 2015 acreage estimates, increasing corn acres this spring to 88.3 million. This is up from their previous estimate of 87.8 million. That is the exact same number they are now using for beans.  Full-season corn planting progress in Brazil pegged at 60%, which is equal to last year but behind the 65% avg.  On Monday, the U.S. corn harvest is expected to be at 85-90% as of Nov. 16 vs. the 5-year avg. of approximately 88%.  Dow Agro Sciences said it will restrict sales of its new genetically modified corn and soybeans to prevent them from entering U.S. domestic or international marketing channels as it awaits import approval from China.

The market has been expecting an increase in production for this November report. The USDA, instead lowered yields from 174.1 bpa last month to now 173.4 by particularly lowering yields by 2 bpa in Iowa, MN 5bpa, and KS by3 bushels.  We may have to wait until the Jan report for them to increase.  On Tuesday’s USDA Report, the C/O was lowered from 2.132 to 2.008.

 ************USDA                PRIVATE            LINN               INFORMA            STONE

OCT         174.2/14.5            180/14.7              /14.9                176.4/14.4          178.4/14.96

NOV     173.4/14.4        175.7/14.6          /14.8              174.4/14.5         178/14.8

The market has moved nearly 50 cents higher during October on no real change in fundamentals.  Monday’s Export Inspections were light at only 16.8 mbu vs expectations of 29-35 with 34.4/week needed.  <-This IS fundamental.  Don’t allow Fund buying to make you too bullish, preventing you from making PROFITABLE sales.  One should look to improve upon existing sales.  (Lock in some of these higher values for Nov, Dec, Jan, Feb, & Mar). This is a great time to make up for not having much sold prior to harvest.!  One might also have offers in to take advantage of a higher board, should one materialize.

Monday’s Crop Progress report   US HARVESTED 80% TW, 465% LW, 82% LY%, and 80% AVG.  The State of IL HARVESTED 87% TW, 77% LW, 92% LY, and 84% AVG.

 

BEANS     

DOWN 31   

More volatility again.  Profit-taking also surfacing in beans with today’s Export Sales total of 39.5 mbu, slightly below the low end of trade estimates at 40-48.  The trading range today for SF was nearly 33 cents!  Rumors that South American soybean meal had been traded into the South East is becoming more truth than of rumor…..  South American Meal is now MUCH cheaper than that of the US.  Informa updated their new crop acreage and trimmed back beans 210K acres.

Tuesday’s USDA report left the size of the crop at 3.958 billion bu and raised C/O 9 million at 450 mill and left the yield no bigger at 47.5 bpa.  Exports were increased 20 mill to 1.72 billion.  The avg producer price was raised to $3.20 – $3.80.

*********USDA              PRIVATE         LINN             INFORMA            STONE

OCT         47.1/3.93            47.2/3.97            /4.09               48.5/4.02            48.4/4.07

NOV      47.5/3.958     47.7/3.98         /4.06             47.9/3.99          48.4/4.03

Monday’s   US BEANS HARVESTED 90% TW, 83%LW, 90% LY, and 91% AVG.  IL HARVESTED 91% THIS WEEK, 83% LW, 96% LY 93% AVG.

 

WHEAT          

UP 7

FUND BUYING.  Look at that resilience!  Informa increased their winter wheat acreage at 400 k today, with the new number essentially unchanged from last year’s final number.   Export sales of 15.3 were just above the top end of market expectations of 9-15 million for the week.  Yesterday, Funds bought 7,000 contract – or 35 MILLION bu’s of wheat.   (Again, nothing fundamental)  Patchy winterkill is possible over the weekend and into next week for wheat across the Central/Northern Plains as minimum temperatures fall to around zero in snow-free areas of Colorado-Kansas and north.

Tuesday’s USDA Report  had world production at a RECORD 719.9mmt.  Exports were lowered by 1 mmt to 17.5mmt (6%lower than a year ago).  Continued poor export demand, and weakness in foreign currency continue to create concerns about the producer’s ability to secure needed inputs for 2015 spring wheat planting.  Bloomberg Trader Bias:  Friendly, 7% ; Bearish, 71%; Neutral, 21%

Monday’s Crop Conditions Report had US Winter Wheat CONDITIONS  60% G/E THIS WEEK,  59% LW, and 65% LY.  STATE OF IL CONDITIONS 60% G/E this week, and 64% LW. US WINTER WHEAT PLANTED 93% TW, 90% LW, 94% LY, and 93% AVG.  THE STATE OF IL WINTER WHEAT PLANTED 84% TW, 69% LW, 98% LY, and 91% AVG.  US WINTER WHEAT EMERGED 83% TW, 77% LW, 83% LY, and 79% AVG.  THE STATE OF IL EMERGED 52% TW, 36% LW, 77% LY, and 74%AVG.