Sent: Tuesday, September 24, 2013 4:48 PM
To: Undisclosed recipients:
Subject: Advance Insight - 9/24/13

 

Corn

CZ3 4.48 ĺ   -4 Ĺ,  CZ4  486 ĺ  - 5 Ĺ. Crude - .20,  etoh -.05. Better than expected yield reports continue and is keeping a lid on futures. The short corn/long bean spec trade was back in play today. Harvest pace is still in its infancy, with cash buyers eager to buy all fall basis levels. It may take longer than they think with few buís getting sold and gut slot bean harvest in the next 2-3 weeks. Most expect a 1-2 mln acre drop in the Oct crop report, but yields data appears to provide the offset in production. S.  Brazil has started planting corn with RGDS at 41%, SC 39% and Parana at 13%, all ahead of avg. Argentina is 3% vs 6% avg. Ukraine corn is 75c cheaper than US to many Asian and African destinations. USDA did announce a 180kmt sale to Columbia this am, which will likely get shipped next spring. UP3 +50, Cedar +70,  Blair +40, Columbus +80, STL 0, CN 0, Decatur +10, Dayton 0, NS Ft Wayne -4. Expect these nearby values to fade and the Oct values to increase. Sept/Oct river values are well below dve from southern pressure, but delivered values at northern locations not competitive. Fob Peoria on Dec 1 is 4c below delivery, Chicago is 16c below delivery and the reason for now we have good carry in board spreads.

Trent Sauder

Beans

Beans settled higher today but a dime off of its sessions highs overnight as funds were estimated buyers of 3000 contracts. Some of the corn harvest we were expecting this week in the central belt is turning to beans and the early yields are generally favorable keeping prices in check. While harvest has been done for some time in Brazil, their vessel waiting times for meal shipments are estimated to be over 90 days. Their govít is not allowing storage of meal at the ports and is helping to create this bottleneck. Basis levels along the river remain very firm and above Nov DVE for December delivery. Will be difficult to weaken the X/F under the current bids were are seeing. Index funds may help to artificially weaken the X/F as Nov Open Interest is currently 360% larger than January, but the export long will not exit the Nov until their sales get covered. The majority of the Index rolls will occur during the 2nd week of October. If you know you will need time to execute fall sales vs the F and not the X, donít be caught with hedges in the X. Basis saw more weakness in the west where values had a higher starting point to begin with. Still some plants paying better than +50X, but these are getting less every day and likely gone by this weekend. Sells these pops and focus to get any beans that are not getting sold on DP to control your house through the fall and early winter. Short DP longs need to stay in the Nov.

Dewey Hull

Wheat

Wheat closed higher across all three markets today. Early support was found in HRW, HRS as uncertainty over frost in Argentina helped boost the markets. KC Z/H firmed 1 ĺ cents to -2 ľ carry, as basis levels remains at/above delivery value for 11ís & 12ís to the Gulf. Those with lower quality wheat need to be selling any ownership. Have a little patience in the HRW Z/H if holding higher proteins, large deliverable stocks should allow that spread to ease a little as export demand for HRW gives way to increases in FSU and EU supplies.  HRS Z/H firmed 2 cents, closing at -10 carry. The larger than expected spring wheat crop as well as outlook for the Canadian crop have kept basis levels relatively weak. The logical place to turn for new demand is HRS which has the spreads narrowing a bit but basis values yet to reflect new demand as domestic mills are said to be plugged. This could change as logistics/focus turns from wheat to row crops and movement potentially slows. You could argue that taking some hedges out to the March at +/- 12 cents might not be a bad idea for those who know they are going to carry it. Canadian export capacity is said to be sold thru December with railroads falling behind on car orders.

Nate Durako

 

Garrett Merkle

Advance Trading, Inc.

309-664-2358

gmerkle@advance-trading.com

 

 

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