COMMENTARY 9/29/14

Our above average temps should break Wed -Thurs as a more normal weather pattern begins. Widespread rains should impact the Delta and SE 2/3rd’s of the Corn Belt Thurs-Fri. Any freeze this weekend or next week should be limited to northern areas of the Corn Belt. In Brazil, heavy rains continue through Wednesday in the already wet wheat areas of the South, potentially lowering quality.  Widespread rain likely affects Argentina Friday-Sunday, slowing corn and sunflower planting.  Hot and dry weather will dominate Center-West and Southeast Brazil (normal in October). 

St Louis river levels DROPPING at +10.6ft  and forecast to be 8.5 by 10/4.  **SHOULD RIVER LEVELS CONTINUE TO DROP, THIS WILL CAUSE EVEN HIGHER FREIGHT COSTS PER BUSHEL.  To show JUST how much freight has skyrocketed in the last couple of weeks: On 9/10 it cost only .33 cents per bu to get from STL to the Gulf by barge.  On 9/17 it cost .87 cents per bu.  On 9/26 it cost $1.20 per bu !!

CORN                    

UP 3  

The wet weather forecast later in the week gives corn a break from the recent slide.  Nearby freight continues to soar.   Full season corn is 30-40% planted in Brazil while the Rosario Grain Exchange says the Argentine corn crop is 50% planted.   Export Inspections are 23.7 and well short of expectations at 37-43 mbu and the 34/week needed for the USDA projection. This afternoon is expected to put corn harvest in the 17-20% range, versus 7% LW and 11% a year ago & 23% avg

DO YOU HAVE A SIGNIFICANT PORTION OF YOUR MEGA CROP SOLD??!!  We continue to hear more comments of sub $3.00 corn futures for the 14/15 crop year.

Cargill’s lawsuit against Syngenta AG over rejections of genetically modified U.S. corn by China may be just the start of legal challenges against global seed makers over trade with one of the world’s biggest markets. Trading giant Cargill said in court documents on Friday that it had lost more than $90 million because Syngenta sold Agrisure Viptera corn, known as MIR 162, to U.S. farmers without first obtaining import approval from China, which has turned away boatloads of U.S. crops containing the variety over the past year. The lawsuit will be a test case of who is ultimately responsible for such rejections that damage international trade: the seed companies that develop unapproved GMO traits or the merchants who sell grain that may be contaminated with it. – Reuters

Monday’s Crop Progress report remained unchanged showing corn at 74% G/E this week, 74% LW, 55%LY. The State of IL   83% G/E vs 83% LW.  US Dented is 96% TW, 90% LW, 95% LY and 97% Avg.  The IL dented 100% TW 95% LW 97%  LY, and 96% AVG.   US MATURE  was 60% TW, 42% LW, 60% LY, and 70% AVG.  The State of IL MATURE was 80% TW, 56% LW, 68% LY, and 75% AVG.  US HARVESTED 12% TW, 7% LW, 711% LY, and 23% AVG.  The State of IL HARVESTED 14% TW, 6% LW, 12% LY, and 34% AVG.

The crystal ball of Rabobank ‘s Price Prognosis has Q3 corn valued at $3.70/bushel and  Q4 at $3.50.   According to Bloomberg, another pundit expects U.S. corn prices to remain sub-$3 from 15/16 through 19/20 crop years with 15/16 ending corn stocks rising to nearly 3 bbu.  An IL Farm Appraisal group reports a 4.2% drop in average Illinois farm land prices, to $13,000 for the first half of  2014.

 

BEANS     

UP 13           

A small bounc off of Friday’s 4 year low.    Export Inspections were 25.2 vs expectations of 15-22!  Brazil bean planting is estimated to be 2-3% planted, slightly ahead of past 2 years while Argentine producers have yet to start.  So far it looks like early indications are that the bean yields are being reported as 60’s, 70’s, and 80’s!

Soybean planting in Parana and Mato Grosso off to a fast start with an eye towards being able to plant a 2nd crop following harvest.  Recent showers are adding to southern Brazil’s planting ideas and production potential.  The addition to the world’s bean carry-out (stx/use ratio) COULD very well be the LARGEST EVER since the export era began (32% versus 25% in the current year).

The Rabo Bank price outlook for Q3 is $12.00,  Q2 is $10.00, and $10.60 in 1st quarter of 2105, expecting higher acreages in Brazil and Argentina despite prospects of lower prices.   A Farm Future’s survey indicates a 2.1% increase in 2015 U.S. soybean plantings to 86.6 million and sees returns from both beans and corn falling below the cost of production.

US CROP CONDITIONS increased at 72 % G/E, 71% LW, and 53% LY.  The State of IL was 78% G/E THIS WEEK and 76%LW. US DROPPING LEAVES 69% TW, 45% LW, 64% LY, and 71% AVG.  IL DROPPING LEAVES was 68% TW, 45%  LW, 62% LY, and 67% AVG.  US BEANS HARVESTED 10% TW, 3 % LW, 10% LY, and 17% AVG. 

 

WHEAT          

UP 7

 Follow through strength from YC & YSB.  Lot’s of wheat in the world!  Export Inspections were routine at 18.6 versus 17-22 expected and 16.6/week needed.  The Ukraine exporters continue to pump out the wheat for export with Sep exports up nearly 50% yr to yr at 1.94 MMT!

Informa pegs U.S. crop at 2.046 bbu, 16 million above last USDA. Sluggish export demand concerns over the longer term and abundant global availability and export competition rises.  Ample supplies and concerns the Black Sea crops may get even larger.

US Winter Wheat Planted is 43% G/E THIS WEEK,  25% LW, and 37% LY, and 36% 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.