COMMENTARY 8/26/15

It’s time to get those old bu’s on DP priced before Aug 31st!  ~JUST 3 DAYS LEFT!!

Now heavy rain affects part of the NW Corn Belt Thur/Fri while the balance of the Belt stays dry over the next 10 days.   Any rain from the eventual remnant of Tropical Storm Erika should stay E of the main yc and ysb areas next week.  Coolness continues into the weekend, followed by a week of very warm weather.

St Louis river level LOWER at +11.4 and forecast  to be 8.4 by  8/31  (Flood Stage is 30.0)

CORN

DOWN 4   

Dry weather speeds maturity, stock market shakiness, a firmer dollar, and demand concerns. Rising stocks and the potential for imports pressured today’s ethanol/gas spread.  In the Ukraine, feed wheat is trading at a whopping $7 discount to corn, capturing some South Korean feed grain demand as well as some of the EU.  The Ukraine Ag Min sees 15/16 corn exports at 16.9 (vs 19.0 LY) with the USDA projecting 17.5 MMT.  Recent rains too are said to have benefited their crop.  Speaking of benefits…..it HAS been uttered locally that there IS a lot of 200+ bpa corn, “similar to last year”.  Thursday’s Export Sales are expected to be 2 – 10 mill bu. 

Why are so many nervous about China? 

Below are China’s share of World Consumption according to WSJ. 

54% Aluminum, 50%Nickel, 48% Copper, 46% Zinc, 48% Tin, 45% Steel, 40% Lead, 31% Cotton, 30% Rice, 30% Bean Oil, 28% Bean Meal, 23% Gold, 22% Corn, 17% Wheat.  THEY ARE A –>HUGE<– CONSUMER – a consumer that the World can not afford to lose.

Bloomberg Trader Bias:  Bullish 38% (27% LW), Bearish 29% (46% LW), Neutral 33% (27% LW)  

Monday’s Crop Progress:

US CONDITION: 69% G/E , 70% LW  32% LY   STATE OF IL CONDITION: 56% G/E 56% LW

US DOUGH:   85% TW,  71 % LW, 81% LY, and 81% AVG.  The State of IL DOUGH:  91% TW, 84% LW, 92% LY, and 92% AVG

US DENT:   39% TW,  21 % LW, 33% LY, and 43% AVG.  The State of IL DENT:  55% TW, 38% LW, 46% LY, and 58% AVG

 

BEANS     

DOWN 13     **Now using Nov (X) Futures! 

China’s demand needs are still a BIG question mark. China (Smithfield Farms), is said to be culling as much as 10 million sows  and may weaken demand for bean meal and corn.   Smithfield, now owned by China based WH Group Ltd., says their US pork exports to China are up 45% for the FH of the year.  This explains the strong US bean meal use.  However, this DOESN’T mean the total US pork exports are up at all.   In fact it likely means that Smithfield is taking export business AWAY from other US companies.  The USDA indicates that US exports to China are actually less than half of what they were this time last year (down 65%).  The Chinese Ministry of Commerce estimates August bean imports at 5.7 MMT, down from 9.5 last month and vs 6.0 in 2014.  According to Oil World, recent heavy rains in Argentina may have caused damage to Old Crop bag-stored soybeans.  Thursday’s Export Sales are expected to be only 0 – to 6 mill bu.

Bloomberg Trader Bias:  Bullish 15% (14%), Bearish 70% (50%), Neutral 12% (33%)

Monday’s Crop Progress:

US CONDITION: 63% G/E  and 63% LW  70% LY   STATE OF IL CONDITION: 52% G/E, 50% G/E LW ~ up 2%

US BLOOMING:  96% TW, 93%LW, 99% LY, and 98% AVG.  The State of IL BLOOMING: 96% TW, 94% LW, 99% LY, and 98% AVG.

US POD SETTING:  87% TW, 79%LW, 89% LY, and 88% AVG.  The State of IL POD SETTING: 88% TW, 81%LW, 93% LY, and 91% AVG.

 

WHEAT          

DOWN 5    

Cheap global competition is still abundant, especially from The Black Sea and Europe region.  US Wheat Associates report average SRW test weights of 56.9 lbs/bu is below the 5 year average, while protein at 10% is near average.  The 265 Falling Number is the lowest ever, since surveys began back in 1998.  Not comforting, locally ours is 60 – 120.  Dryness is delaying Central Russia/Ukraine winter wheat sowing  per MDA Weather Services.  One research group believes the planted wheat area in Argentina could drop some 24%, which if true, could mean that Brazil would need to buy wheat from other countries.  Keep in mind that Brazil was the second LARGEST US customer in 13/14.

Bloomberg Trader Bias:  Bullish, 24% (9% LW), Bearish 48% (68% LW), Neutral 29% (23% LW)

LAST Monday’s Crop Progress:

Spring Wheat Harvested: 75% TW, 53% LW, 26% LY, 47% AVG.