COMMENTARY 8/19/14

The past 24 hours brought 1-2 inches in NE Iowa and WI as well as ¼ to ¾” in S KS and N OK. The forecast is calling for average to above average precipitation over the next ten days.  US forecasts call for above average precipitation with average to below average temps. The hottest period of the growing season will begin Thursday and continue through Sunday or Monday.  However, the duration of the heat will be limited as a series of cool fronts send sharply cooler weather southward.  The heat will stimulate multiple storm fronts the next five days.

St Louis river levels EASING at +6.5 ft  and forecast to be 6.7 by 8/24.

CORN                      

UP 2

The OH leg of Pro Farmer tour reports avg yields of 182.1 bpa, up from 171.6 LY (USDA: 177, same as LY); SD, 152.7 (USDA: 139) bpa against 161.8 (138) LYAnother private, Lanworth expects avg corn yield of 174.8 bpa and with cool (not abnormally hot and dry), wet outlook to boost yields further.  Export Inspections 38.2 vs 31-36 expected.  French corn ratings improve 1 point to 85% this week.  Several Farm tours are going to this week to see just how big the yields are.

Last week, the USDA didn’t believe the trade’s 170 bpa average yield estimate.  They added just 2.1 bushels to the avg yield taking it from 167.4  to 167.4.  This adjustment, with no change in harvested area boosted production 172 mbu to 14.03 billion (vs avg trade guess of 14.252bill). Additional demand of 100 million combined with a 65 mbu smaller beginning stocks estimate left 14/15 C/O changed very little at 1.808 billion.

The Crop Progress report decreased 1 showing corn at 72% G/E this week 73% LW, 61%LY. The State of IL  decreased 2 at 80% G/E vs 82% LW.  US Dented is 22% TW, 11% LW, 10% LY and 27% Avg.  The IL dented 34% TW 17% LW 13%  38% AVG.   US DOUGH STAGE was 70% TW, 54% LW, 49% LY, and 63% AVG.  The State of IL DOUGH was 86% TW, 77% LW, 67% LY, and 76% AVG.

 

BEANS    

DOWN 5    

Still bearish on yield prospects and rains.  Export InspectionsAs expected at 2.1 (3.6 LW); trade range was from 1-5 mbu.   Pro Farmer tour underway.  Lanworth puts U.S. bean yield at 46.4, one bpa above the USDA.

Last week, the USDA added  20 million to old crop exports but were able to keep old crop ending stocks at a workable 140 million by “finding” another 25 million bu!  The new crop #’s look pretty reasonable with the avg yield at 45.4 . The  production value of 3.816 billion fell just 7 million short of the avg trade guess of 3.823.  From this, we must conclude that all the DDGs rejected by the Chinese apparently have had little impact on either domestic corn or soybean meal demand.

US CROP CONDITIONS increased 1% at 10 % G/E, 70% LW, and 62%LY. The State of IL was 78% G/E THIS WEEK and 78%LW.  US BLOOMING was 95% THIS WEEK, 92% LW, 91% LY, and 95% AVG.  BLOOMING for the State of IL was 96% THIS WEEK, 94% LW, 93% LY, and 95% AVG.  US POD SETTING 83% TW, 72% LW, 70% LY, and 79% AVG.  IL POD SETTING was 89% TW, 79%  LW, 74% LY, and 79% AVG

 

WHEAT          

UP 4

Very little new trade news but doubtful if the Russian/Ukraine conflict is close to be resolved.  Ukraine/Russia are in negotiations to allow humanitarian aid to be distributed. Russia is aggressively pursuing exports.  Export Inspections were respectable, up 1.8 million to 21.8 vs expectations of 15-19. Brazil has reinstated a 10% tariff on imported wheat, which should be detrimental to U.S. exports.  French wheat harvest nears completion at 95% finished and 70% G/E.  The Rosario Grain Exchange has raised Argentine wheat area 3% to 4.36 million hectares.

Last week,  the USDA’s 8.0 MMT increase in FSU wheat production led by a 6.0 increase in Russia.  Exports from the FSU were increased 3.0 MMT (all from Russia).  That was offset by a 3.0 MMT reduction in exports from the EU due to quality concerns following a rain-plagued harvest.  U.S. exports were increased 25mbu but the annual forecast of 925 million is still down 21% from a year ago.  World ending stocks of 193.0 MMT are ample and up 5% from a year ago.

Be prepared to carry lower quality wheat through fall harvest an into NEXT year’s wheat.  The market is well armed to pay you for your troubles.

US Spring Wheat conditions are 68% G/E, 70LW, and 66% LY.

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