COMMENTARY 8/26/14

A sharp north/south humidity/temp gradient is developing. Both waves of energy AND a storm system ride the gradient through the weekend and should result in widespread rainfall.  A larger, stronger system comes through around next Mon/Tues, causing additional rounds of rain to recur next week – especially in the Corn Belt.  A few storms return to the excessively-wet areas of the spring wheat belt and any rain would now be viewed as unhelpful, as nearly 30% of the production area has received at least 3 months’ worth of rain over the last 30 days.

St Louis river levels EASING at +10.6 ft  and forecast to be 9.3 by 8/31.

CORN                      

DOWN 4

FUND selling. More follow-through on better crop ratings yesterday (see below), decent weather this week, and more rain in the forecast, took its toll today. Surveying for the USDA Crop Production report out on 9/11 began this week and will continue into the first week of September. Monday’s Export Inspections were strong at 43.0 vs expectations of 32-38.  Buyers were Japan, Mexico, and South Korea.  The BA Exchange expects 10% drop in corn area this year as Argentine producers face low cash prices and rising input costs, thusly holding their current crop estimate steady at 25% MMT.

The Pro Farmer results are all in!      U.S. CORN YIELD is 169.3 BPA vs the USDA at 167.4 and the SIZE of the crop is 14.093 vs the USDA at 14.032 bbu.  Also according to Pro Farmer, the producer is 27% sold.  The 5 yr S/O/N average though 12/13  is 31%.  Pro Farmer’s opinion of the IA corn yield is 178.8, which is BELOW the USDA’s at 185. Their MN corn yield is 170.8, DOWN from last year’s 181.1.

The Crop Progress report increased 1 showing corn at 73% G/E this week, 72% LW, 59%LY. The State of IL  increased 2 at 82% G/E vs 80% LW.  US Dented is 35% TW, 22% LW, 21% LY and 43% Avg.  The IL dented 48% TW 34% LW 27%  53% AVG.   US DOUGH STAGE was 83% TW, 70% LW, 67% LY, and 78% AVG.  The State of IL DOUGH was 93% TW, 86% LW, 85% LY, and 87% AVG.

 

BEANS    

DOWN 1   

Fund selling.  More pressure early this am from decent growing conditions and additional rain in the forecast.  Big spread activity today flushed out nearby basis premiums as we head into New Crop. Record New crop demand was tamed by our docile weather pattern.  Excellent Export Inspections at 5.3 vs expectations of 1 – 4 mill.  The big buyers were  Mexico 2.9 mill, Other Asia 600 K, and Taiwan 700 K.  Soybean meal demand is hot from excellent crush margins, Argentine farmer selling uncertainty, prices are and have been on the decline, and India’s smaller bean crop (USDA would disagree) will reduce Asian local availability.

The Pro Farmer results are all in!      U.S. BEAN YIELD  45.35 BPA vs the USDA at 45.4  and the SIZE of the crop is 3.812 vs the USDA at 3.816 bbu.

US CROP CONDITIONS decreased 1% at 70 % G/E, 71% LW, and 58% LY.  The State of IL was 78% G/E THIS WEEK and 78%LW. US POD SETTING 90% TW, 83% LW, 82% LY, and 89% AVG.  IL POD SETTING was 94% TW, 89%  LW, 82% LY, and 88% AVG.

 

WHEAT          

DOWN 1

Fund selling early.  French wheat is 97% harvested, 4 points ahead of LY and up 1 for the week.   France is the EU’s largest wheat producer and much Black Sea region competition is seen.  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.  Monday’s Export Inspections were healthy and hearty at 20.5 mbu vs expectations of 16-20. Big ger lots of 1.9 mill to Japan and 100 K to China. By class,  HRS, 4.8; SW, 2.8; HRW, 6.9;  SRW, 5.3 and 700 K durum.

US Spring Wheat conditions are 66% G/E THIS WEEK,  68% LW, and 67% LY.  US Spring Wheat Harvested 27% THIS WEEK, 17% LW, 39% LY, and 49% AVG.

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.

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.