Subject: : Advance Insight - 9/9/13
Attachments: AI 090913.pdf
Subject: Advance Insight - 9/9/13
Corn
CZ closed at 463.5 dn 4.75. Avg guess for Thursday’s report is
153.9 yield/13.641 prod vs. last USDA #’s of 154.4/13.763. Big basis drops in
Cent and Northern markets today (20-60c) as some selling by farmer and more by
elev/merchants looking at 90 degee temps and anticipating harvest. This
collapsed the CU/CZ back to 13.75 with a 23-13c range today. Early harvest reports continue
for corn planted in April. Have seen reports as far north as Spfld Il. Basis
will drop further but may be overdone temporarily, it will be a very bumpy ride
for the basis short. Farmer selling/early harvest incentive collapsed with the
spot basis. The # of better than expected yields dwarfs the less than expected
so far. But the drought stressed area is not in harvest yet. CZ/CH
closed at -13.00b/-12.75a with the # bid now down to 13714 on the close. We
still like locking in CZ/CH but are reticent to move short to CK or CN as big
yield trend may continue. G/EX was 54 dn 2 and % mature was 9 vs 4 LW and 28
avg. Question for the cash market is whether the heat is pushing maturity
forward towards a normal harvest time or is tonites 9% mature # correct? Did
hear Lock 52 near Bridgeport on the Lower Oh is going to have a 10 day closure
of the main lock the end of Sep and another in FHOct. Given the historic yields coming from the Ohio
Valley, this may back corn into the SE or onto corn piles temporarily.
Jeff Hainline
Beans
Soybean
futures finishing under pressure with SX3 closing at $13.56 ½, down 11 1/4
cents. Futures felt like
they took their direction from the cash markets, as many processors were
dropping their bids to the next delivery period without the inverse rolling
forward. This also managed to ease back the spreads too, with SX3/SF4
leaking 1 ¾’s cents to a ¾ cent inverse. Bean harvest getting going
in its smallest degree in southern Illinois, and the Delta. Hearing
great yields in the Delta. Yield reports in the Midwest haven’t been very
plentiful. Soybeans, like corn, trying to stair step down to an all Fall type
bid. That hasn’t happened yet, but every day we may take something out of the
spot bid. One Central Illinois processor has pulled all bids as it is taking
downtime. This may happen elsewhere. Not much rain around the Midwest this
past weekend, and very little in the forecast. Hot for the beginning of the
week, and cooling Wednesday forward. Last week at this time, it was difficult
to find a field that had turning leaves. Fast forward a week, and now its
getting harder to find a field not turning. Crop conditions dropped from 54% to 52%, which was
somewhat expected. Soybeans dropping leaves this week are 11% vs. 34% LY, and
19% avg. This heat has moved things along. Producers still act like
reluctant sellers as it is hard to know what is out there. The avg. trade
estimate yield at 41.2 bpa comes in light compared to last months 42.6 bpa.
There was a time there last week when the trade felt like they were concerned
about a sub 40 bpa. The avg.
trade estimate carryout is 165 mbu, which is a tight carryout number, but one
we have worked with before. This type of US crop size and yield will make the
futures market sensitive to what the S. American weather pattern is doing, as
the world market will not want to deal with problems down there. USDA
production report on Thursday.
Jack Fitzgerald
Wheat
Wheat
started the week on a sour note as spillover selling from the corn and
soybean pits, tempted funds to aim for the December Chicago wheat contract low
price of $6.35 ½. The KC December futures got within ¼ cent of the $6.88
contract low while Mnpls Dec futures took out the low of $7.10 early in the
session and then hovered around $7 for the rest of the day. Fundamental news
was thin and we can’t even look forward to much fresh news in the report this
week as most of the mystery is reserved for corn and soybean
estimates. Inspections of 31.6 mbu this AM were solid and within guesses,
but did show a little easing from LW’s 37.1 mbu total. Over 1/3 of the
wheat was SRW with Chinese liftings at 11.0 mbu. The very active front loaded export
program is clearly evident with a balance of the year weekly shipment average
needing only 19.1 mbu/week to meet USDA estimates. Outstanding book of HRW
sales isn’t out of line, so demonstrates the short term buying and quick
shipment. While HRW YTD
sales are 25% more than LY, HRS YTD sales are 15% behind last year.
USDA is reporting we’re down to the last 20% of the US spring wheat harvest and
while the area did receive some weekend showers, should be able to get to the
last acres without too many problems. Also noted in the weekly progress report
is 5% of the winter wheat crop planted (mostly WA and ID), on pace with the
5-year average. Canada is 1/4th done with spring wheat and yields
still exceeding expectations. Australian crop range is narrowing up a bit
more with 24.0 mmt a popular guess. Stat’s Canada debating if they have more
faith in satellites vs surveys and might be leaning towards an imaging type
report for September production guesses moving forward. Based on this year’s
vegetative index maps, it looks like the 30+ mmt crop from Canada is well
within reach. Mnpls Dec futures dipped to a 14 cent premium to KC Dec futures.
Historically, that spread usually finds support near even money though a
stronger correlation post CWB monopoly (albeit on fewer data points) with
Canadian production would indicate additional weakness and an eventual discount
to KC December futures is possible.
Kelly Herrick
Alex Grohsmeyer
Advance-Trading, Inc.
309.664.2392
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