COMMENTARY 9/30/14

Broad coverage of precipitation should limit harvest across much of the Corn Belt and Delta Thurs/Fri.  This will be followed by a significantly wet, cooler pattern in the Corn Belt, while mild-dry weather to the south should aids wheat planting. Freeze risk should impact the more Northern areas of the Corn Belt Fri/Sat morning. In South Brazil, the current wet pattern will break tomorrow to slowly improve conditions for wheat harvesting and corn planting.  Argentina will see widespread rain through the weekend with another rain event to follow.

St Louis river levels DROPPING at +9.6ft  and forecast to be 8.0 by 10/5  **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                    

DOWN 5  

Slightly bearish USDA Report with Sep 1 corn stocks at 1.236 bbu, 55 mill ABOVE the trade guess. Also the report suggests that summer feed use was below the implied USDA # by a like amount.  Nearby freight continues to soar.  

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     

DOWN 10           

Weaker as the USDASep 1 stocks at 92 mbu, well below trade guess (141) and Sep USDA forecast, of 130.  Instead of the recent “negative” residual the add-back of -130 mbu the past 2 years, it was a negative 98 this summer.  USDA revises 2013 crop up 69 mbu to 3.358 billion.  So far it looks like early indications are that the bean yields are being reported as 60’s, 70’s, and 80’s!

Brazil bean planting is estimated to be 2-3% planted, slightly ahead of past 2 years while Argentine producers have yet to start.  Soybean planting in Parana and Mato Grosso is 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          

DOWN 4

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.