COMMENTARY 7/31/14

~MARKET CHOKES FEED GRADE WHEAT~

Cool and mainly dry weather will remain in the area for for the weekend. A milder pattern will then follow, bringing some rain as warmth allows a wave of energy to move through central U.S. 43% and 39% of corn and soybean producing areas have received less than 1/2″ the past two weeks.

St Louis river levels EASING at +20.5 ft as of 7/23 and forecast 15.2 by 7/28.

CORN                      

DOWN 4

Old crop export sales are weak at 6.8 mbu, since 12-18 was expected. New crop sales were a hefty 43 mbu, with 20-31 expected, on sales to Mexico and an unknown. The IGC raised its world corn production estimate 6 MMT to 969, 5 short of last year’s record 974 MMT out-turn. Cordonnier—raises corn yield estimate 2 bpa to 169, noting cooler forecast and no prolonged heat wave. Lanworth’s US Crop estimate Corn: 14.6 billion bushels w/ 172.8 bu/ac average. Friday, Lanworth reports that the corn crop is getting larger, raising the yield estimate from 172.1 to 172.8 bpa.

New Crop barge freight is higher with the continued buzz about the super-sized crop we have growing.  Weather forecast is just not threatening and one more good inch of rain will make the crop hard to hurt, that is, …….barring an early frost. NOTE:  This is NOT a good excuse to continue to hold old corn into new crop into declining and inverted market.

The Crop Progress report that was released today shows corn at 75% this week 76% LW, 63%LY. The State of IL  remained unchanged at 81% G/E vs 81% LW.  US CORN SILKING was 78% This Week, 56%% LW, 67%LY and 75% AVG.

 

BEANS    

OLD ~ UP  3    NEW~ Unchanged

Lanworth’s US Crop estimates: Soybeans: 3.67B bushels w/45.2 bu/ac average. Old crop export sales were at 6.9, near the upper end of the range (8.9 to China). New crop was at 46.6 which exceeded the 29-40 mbu range. DDG’s weakness is drving prices <$100/St in WCB, which will pressure bean basis.

The (6/30) USDA REPORT WAS BEARISH FOR OLD & NEW CROP BEANS.   ACRES 84.84 vs 81.49 million.  (Avg guess was 82 million)  The report added 3.3 million more to planted acres and “found” some beans as the negative residual was 23 million more than the trade had been anticipating. Stocks were .405 vs. 992. Funds are still LONG (that means a large amount of selling would likely pressure the Board).

US CROP CONDITIONS improved 1% at 73 % G/E, 72% LW, and 64%LY. The State of IL was 77% G/E THIS WEEK and 76%LW.  US BLOOMING was 60% THIS WEEK, 41% LW, 243% LY, and 56% AVG.  BLOOMING for the State of IL was 69% THIS WEEK, 50% LW, 47% LY, and 55% AVG.

 

WHEAT          

UP 3

It’s all about quality – (or lack thereof). The quantity of feed grade wheat is increasing as a result with milling quality at a 30 euro premium to feed wheat. Export sales were 16.3 today vs 13-20 expected and 12.8/week needed ahead of the report; led by 6.0 SRW, 3.0 white, 3.5 HRS and 2.8 HRW. In the US, harvest continues to work its way North into WI, MI, & S. Ontario. Quality weighs on basis values as the market continues to access the damage and costs associated with vomitoxin AND LOW TEST WEIGHTS.   Test Weights below 56.0 are becoming harder to find a market for.  Wheat mills, as well as River Terminals are rejecting lower quality loads for higher vomi (over 4.0, 5.0, and 6.0) and TW now below 55.0.  Higher discounts for lower Test Weights SHOULD BE EXPECTED in the immediate future. Vomi discounts are significant as the markets digest the effects of FEED GRADE quality wheat. 

Winter heat harvested is 83% This Week, 75% LW, 80% LY, and 80% AVG.  The STATE of IL is 95% harvested.

FOR QUALITY:  Keep the bin fans on, take moisture below 13.0 to help ensure that conditions inside the bin are not conducive for fungal growth.  If they are, vomitoxin levels CAN grow if the fungus is allowed to prosper.