Subject: Advance Insight - 9/10/13

 

Corn

Corn ended the day higher after a very choppy light volume trade, Dec corn closing up 5 ½ cents at $4.69, March up 5 ¼ closing at $4.81 ¾. Other than more weather chatter in the market, the trade feels content waiting for the upcoming USDA report for some fresh fodder to consider. Forecasts calling for cooler / some light rainfall across much of the Midwest for Wednesday/Thursday, total precip expected to be insignificant. Another chance of rain expected to come Sunday/Monday though precip in that system is expected to stay mainly West with Iowa benefitting the most. Goes without saying we are well behind normal in August through today on precip – T-storm reported solid evidence of that for three central belt states with Aug. 1 thru Sept 15 last year precip versus this year significantly lower:  Iowa 4.5 inches LY vs 1.7 TY, Illinois 7.5 vs 1.8 and Indiana 7.8 vs 2.5. Some more early harvest yields popping up in the corn belt:  Decatur IL 200+ bpa 22 to 27% moisture, North Central IL 195-200 bpa 27 to 29%, Central IA 209 bpa 21% moisture. Cash markets were for the most part quiet/ weaker again today. Eastern/Southeastern basis was noted to be off 3 to 5 cents, Central belt processor markets were steady, Western basis both rail and truck values were steady/slightly weaker tone - some worry in the West of rain delaying harvest later this week which has prevented some nearby values from softening. Might see erratic basis movement near term from East to West as the market continues to drag its feet buying as little as possible at nearby levels hoping sooner than later they will see the ebon flow of new crop replenishing the pipeline and hammering basis. With only three sessions left before Sept goes off the board, the U/Z spread lost more of its inverse today closing at 5 ¾ inverse, 8 cents weaker than Mondays close. The weakening of the spread is indicative of the breaks we’ve seen in basis/availability of new crop bushels into the pipeline causing the long to bail covering their needs with cash bushels versus taking delivery. Open interest as of this morning was just over 7700 contracts – 4500 contracts of U/Z traded today so and educated guestimate would peg 5000 or less left in open interest in the Sept tomorrow. CZ/CH was quiet – narrowed ¼ cent on the close to 12 ¾ (13 did trade today).   

Paul Dubravec

Beans

Beans were steady to lower for most of the day, but was able to close slightly lower to unchanged for the 2013 crop and 10-13 higher for November ’14, ’15 and ’16. Trade seems to be taking a wait and see attitude for Thursday’s crop estimate as fear of pod weights will be too high if they’re based on the 5 year average vs the very dry August we have seen in most of the corn belt. Currently the trade guess is at 41.2 bpa vs last month’s estimate of 42.6. USDA did announce a sale of 120tmt of beans to unknown for this marketing year. According to SAFRAS the Brazil farmer has sold 25% of their ‘13/’14 crop vs 43% last year at this time. Looks like they are following the U.S. farmers pattern of waiting and hoping even though acres should be higher. No deliveries again for beans and meal while oil saw 13 deliveries but also had 138 receipts canceled. Last trading day for September futures will be on Friday. Basis remains highly inverted between spot vs new crop but this spread gets closer every day. Stay sold up and be prepared to get your customers to accept a DP program this fall.

Dewey Hull

Wheat

Wheat had a positive day as many attributed the gain to short covering before the USDA report. Biggest take away on the day would be the mid-day weather pushing moisture to the western 1/3rd of Kansas in the 5 day forecast. If this rain was realized it would be in great timing as wheat plantings are just around the corner. Field work has been the main focus while producers in HRW country wait for corn to dry down. The other news worthy item would be the 235k tonne Egypt tender. Romania, Russia and Ukraine got the business as US SRW was about 60 cents/bu to high. None the less the foreign demand was seen as bullish to the trade. Iraq announced a tender today as well for 55k tonnes of wheat this tender closes Sept 22nd. Brazil cut its forecast for the 2013/2014 crop by 11.9% to 4.95 million tonnes due to a frost, and Australia lowered their expectations on their wheat crop to 24.467 million tonnes. Protein scales in KC were pretty quiet  13.6-14.0 were up 2c on the day. KCBT Spreads are pretty quiet unless you are still hanging around the September, (last trading day Friday) Dec/March is an uneventful  7 ¾ carry. That value won’t have people lined up to buy tickets but if you have sales vs the March one should consider staying classic. Full carry would be  around 22c, the question will be how long does this export program hang around? USDA report Friday most will be watching to see if the government acknowledges a faster export pace on HRW if so you could expect a tighter carry out. World production will be closely watched as well, specifically Australia and Argentina.

Troy Presley

 

Garrett Merkle

Advance Trading, Inc.

309-664-2358

gmerkle@advance-trading.com

 

 

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