Subject: Advance Insight - 9/16/13
Corn
Corn
traded both sides aided by offsetting corn/bean ratio spreads, but ended weaker
on net spec selling of around 3000 contracts. Early harvest in general remains
more in the better than expected category than below. Tomorrow morning at 6:00 a.m. CST the FSA will
release their prevented planting acreage report and the trade is expecting a
lower harvested acreage number by 1-2 million acres. Basis continues to drop in
most regions though we are seeing some basis pops in areas where more harvest
pressure was expected. Some of the 25% mst corn that was getting cut last week
is now being kept in the field to dry down further as the producer is not
liking the flat price even though there remains a premium to the harvest bid. Over
the weekend some general ½ -1” rains fell in the northern corn belt which could
still have some benefits to their later planted corn. Tonight’s crop condition
report shows that 22% this year crop is considered mature vs the 5 year average
of 41%. The G/E percentage dropped 1% from last week which was within
expectations. No forecast for early frost in the 7-10 day outlook and most
areas should be clear if we can get past the 1st week of October
given the last 30 days of heat units we have received. Export inspections were
double last week at 20 mbu with W. Hemisphere taking the lion’s share. The
lower board and current forecast should keep harvest progress and farmer
movement on the lighter side for now. Be careful selling bushels you don’t
have in house yet.
Dewey
Hull
Beans
Bean futures sold off hard
led by the front months with Nov off 33 ¼ to close at 13.48 ¼. Meal futures
broke about $14/ton. Funds sold 8,000 contract of beans and 3,000 contracts of
meal. Weekend rains and more coming this week will benefit beans that are still
green(over ½ the crop) to fill pods or at least stop further
deterioration/yield decline. The conditions report did drop G/E 2% to 50%,
as expected. CIF beans were off a nickel with FH Sept at 100/112 and full Sept
at 97/100. Oil world noted a 5.3% increase in global supplies is more than
sufficient to cover demand. Inspections were 3 mbu. Early tomorrow
morning the FSA is to release updated acreage/preventive plant. With the nearby
led fund selloff, spreads leaked wider. SX/SF closed at even money. Today is the first official day
that they can plant beans in Mato Grasso, and planting may start next week.
NOPA crush came out at 110.5 mbu, 1 ½ mbu above trade expectations.
Ben Peters
Wheat
Another
disappointing day for the wheat bulls as futures started the week off with
settlements in the red. The lower close following a huge 46 mbu
inspection figure released this AM demonstrates that the market isn't as
concerned about spot fundamentals as much as the global picture. The class
breakdown of exports had 18 mbu of HRW, 14.5 mbu of SRW and ~6 mbu each of
spring and soft white. China was the big player in SRW exports while
Brazil, Japan and Mexico all supported the other class shipments. While
inspections and spot sales have been very solid, it's tough to find much demand for US wheat beyond
December. Much of the North American focus is now on Canada where the
yields continue to impress. Cash markets are being flooded with Canadian
wheat offers which are by some reports 10+ cents/bu lighter than US
offers. The late harvest and a big canola crop will create space issues
which might be causing the active movement. Another contributing factor
could be the lack of experience marketing a big crop without the CWB's
marketing monopoly/support. Russia is getting rain which will be good for
fall planting, but 10-15% of the crop is still in the field. Russia
is already dealing with a poor quality crop and more of it than expected which
only means prices will drop until they can find demand. Australian crop is
starting to hint at better than expected results as well. China reportedly
bought 2 cargos of Australian wheat, but for April/May shipment meaning that
nearby is covered? Ukraine cash values posting a $10/mt premiums to the Dec for
12.5% and 11.0% wheat. South Korea indicating they may start stock-piling
wheat and Argentine wheat conditions not in the best of shape which are still
market factors to be watched. KC basis values were 4 cents higher for mid-pro's
slightly correcting from the 20 cent decline late last week. As Terry
mentioned in Friday's wire, HRW basis values, while lacking much for fireworks
of late and easing back from highs, are still close enough to DVE that
ownership should be sold versus trying to outguess the Dec/March KC wheat
spread.
Kelly
Herrick
Alex Grohsmeyer
Advance-Trading, Inc.
309.664.2392
agrohsmeyer@advance-trading.com
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