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
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