COMMENTARY 3/26/14

CORN

DOWN 2

LACK OF FUND BUYING.

Additional Chinese corn cancellations?  YES – Due to the presence of the MIR 612 gene from Syngenta.  Syngenta claims it is high prices that is causing China to reject unapproved US corn with their trait in it, not their fault.  China then went and replaced it by buying two cargos from the Ukraine.  The problem is getting worse.   You didn’t even have to plant the dreaded gene to have it affect you negatively.  South Africa opens their doors for the first time in two years and imports 550k bu of Ukrainian corn.

Rather choppy again as if to be waiting for next Monday’s reports.  Informa’s estimate is 93.0 on acres was right in the mid range of 90.5 – 94.5.  Mar 1 stocks est is 6.82 -7.74 billion.  Cordonnier sticks with their Brazil crop est at 68.5.  A wet fall could add an additional 1 – 2.  China province Tianjin rejects its 1st cargo of US corn, a 21800MMT shipment. Civil unrest with the Ukraine flag being lowered and Ukraine families evacuating, unrest in the Black Sea and Export Inspections were at a marketing year high at 45 million vs 30 – 45 expected and only 35 needed.  Expect to pay more for poultry this year while in Russia.  Due to exchange issues and deficit production you can expect to pay 20%more in 2014.  Currency fluctuations/fears said to be restricting Ukrainian producer selling. %’s vary but a couple of sources overnight said 14/15 Ukraine corn output could be down 25-33%, due to lack of input funding.   FWIW, Producers, such as yourselves, when surveyed by Farm Futures see a corn acres reduction of 3.5% to 92.1 million.

River levels now steady and holding!   Barge freight costs continue to dwindle.  Boats seen moving North as far as mid way into Iowa now, but ice thickness is seen nearly 3 times thicker than normal in some areas.  Freight costs are now some 28 cents/bu cheaper than what they were 25 days ago.  Much needed water has come in from the North to help stabilize river levels and give some logistical relief.   St Louis river level now at +9.9 ft and forecast to rise to 9.6 by 3/31.  Drafts on barges improving with more volume being able to be loaded into a barge, which makes cost per bushel cheaper.

 

BEANS

UP 12

FUND BUYING.  Funds are VERY long beans.  The old crop supply/demand issues are still not resolved and the market is not yet convinced that the old crop has been rationed, thus showing more firmness.   It HAS BEEN CONFIRMED – China State reports that 8 South American cargoes of beans HAVE been resold to come into the US.  Additional rumors still abound regarding Chinese vessels ne-route from Brazil to the Gulf.

Monday’s much anticipated report: Avg trade guess for bean acres is 81.2 with a range of 78.5 – 83.6.  Stocks 987mbu avg with a 924 – 1.087 range. Chinese crushers agree to cut purchases as domestic soybean meal supply/demand are creating volatility.   Farm Futures sets record US bean plantings forecast at 82.9 million.

The US is 107% sold and 90% exported.  Both of these levels are unprecedented.  If we export all that has been sold, that would put C/O down to just 37 mill bu.   Look to see the US import both soybeans AND bean meal as it may  be cheaper to import them than it is to grow them.  Vessel waiting times at Paranagua are almost half of what it was this time last year.

Argentina was again dry over the weekend and expected to be dry all through the weekend.

Ag Rural puts Brazil harvest at 63%, up 4 from last week.  Safras has crop at 67% complete vs 64% last year.

Light rains for the Plains states with heavier amounts in the Mississippi River Valley into Thur/Fri.  The 8 – 14 day forecast, from the Dakotas to Ohio,is calling for below normal temps,  does not look real conducive for fieldwork.  Who wants to have corn in the ground when it is 17 degrees?

 

WHEAT

DOWN 10

LACK OF FUND BUYING.

Consolidation and Black Sea concerns still wane.  Russian Ag  Minister says that “acquisition of Crimea will add 2MMT to Russian grain production.

Estimates for next Monday’s reports are 56.9 acres with a 54.8 – 57.5 range.  Mar 1 stocks 1.05bbu avg with a 975 – 1.2bbu range.  WSJ reports that Russion grain exports are up some 40% from July 1st to Ma 19th.

Some areas in S CA, NW TX, and SW OK haven’t seen rain in some 60 days!  Last week, 31% of the TX wheat crop is rated poor/very poor, which is down from 46% the week before.  Kansas crop saw their poor/very poor rating drop from 22% to 18%.  Export Inspections improved from last week to 19.3 vs 14 – 23 expected and 24 per week needed.  Egypt wheat stocks are now thought to be sufficient until mid-June per Egyptian Ag Minister.