COMMENTARY 11/19/14

The forecast continues for U.S. HRW areas to remain mostly dry with seasonable to mild temperature readings.  In South America, widespread above average precipitation for much of the 1st crop corn and soybean areas of Argentina, Brazil and Paraguay for much of next week.

St Louis river levels DROPPING at +6.4 ft  and forecast to be 2.4 by 11/24.  <- 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      

DOWN 9         

FUND SELLING!  Feel like we’ve done this before?   Harvest is winding down and export demand remains sluggish at best with 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).  Overnight there was a flurry of South Korea corn buying, in excess of 150 K MT, but optional origin in nature.  Thursday’s Export Sales report is expected to be 20 – 28 million bu.

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 Univ of MO raised their average corn price forecast, up 10 cents to $3.50 per bushel with NEXT year’s new crop 15/16 $.15 higher at $3.89.  Safras indicates that Brazil is 76% planted compared to 92% last year. 

 The market has moved nearly 50 cents higher during October on no real change in fundamentals.  Now we are headed BACK DOWN with 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     

DOWN 19    

FUND SELLING!  Market was unimpressed by a 4.6 mbu soybean sale to Unknown as cash markets loosened up. 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 with the market is not terribly concerned about South American weather. Thursday’s Export Sales report is expected to be 26 – 37 million bu.

According to AgRural, Brazil planting gained 17 points to 63%, now only 6 points off the 2013 pace.  The Univ of MO expects this year’s average bean price forecast up a nickel at $10/bu and new crop  15/16 bean acreage unchanged.  The average price for the new crop 15/16 is up nearly 20 cents from last month to $9.10.    Informa’s new crop acreage was trimmed to 210K acres.

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          

DOWN 11

Fund Selling and weakness from corn and beans due to Fund Selling.  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.  Thursday’s Export Sales report is expected to be 11 – 18 million bu.  Wheat ratings held steady on Monday at 60% and planting improved (see below).  The weather outlook sees less chance of extreme cold in the Plains the next 7-10 days while bringing ample rain to U.S. SRW areas.  Ukraine winter wheat reaches 6.4 million ha, 4% more than expected and all winter grains sowing is now 2% complete.  The good/satisfactory ratings are approx 83% of the total area.

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.