Market Recap

This week’s action: 

Corn Sep down 9 @ $6.27

Corn Dec down 16 @ $6.23

Beans Nov down 46 @ $14.06

KC Wheat Sep down 42 @ $8.46

Feeders Sep up 1.82 @ $185.07

Fats Oct up .65 @ $145.27

Oct Hogs down 6.90 @ $93.10

Sep Crude down 1.60 @ $90.28

Seasonal Averages:

Dec corn Feb 1 – June 30: $6.80

Dec corn since Russian invasion: $6.70

Nov beans April 1 – today: $14.59

Sep KC wheat since Russian invasion: $10.48

 

 

Recap:

We are still probably two months away from totally knowing what US corn production will be, but we are entering crop tour season! AgResource kicked things off this week and the famous/infamous ProFarmer tour begins Monday. I’m sure both good yields and poor yields will be reported. At the end of the day, no one is expecting a total failure of the US corn and soybeans crops. We’ve had every bullish headline in the book this growing season, yet December futures are about $1.50 off its highs.

 

Over the last 20 years, the largest negative adjustment from the August WASDE to final production was -14 bpa for corn in 2003, and -6 bpa for soybeans in 2005. This months WASDE pegged yields at 175.4 bpa and 51.9 bpa.

 

Generally speaking, though, overall production in the western corn belt is expected to be problematic. This should create opportunity for those with on farm storage. We are already seeing some FOB bids for next April/May and June/July show 60-80 cent premium compared to harvest bids in some markets. I would expect this action to continue creeping into most markets.

Ukraine is estimated 91% complete with wheat harvest. If remaining yields are as expected, Ukraine will produce a crop of about 19.1 MMT vs USDA estimate of 19.5 MMT. More and more ships are planning to enter the country to continue exporting grain as part of the Russian/Ukrainian agreement to allow grain shipping through safe corridors.

 

For those planning on storing corn, it is about time to discuss placing orders to roll December hedges to deferred months. Below is analysis of recent years of carry in the corn market and when the peak occurred. As you can see, we are getting close to the seasonal (late Aug- mid Sept) time frame these peaks are formed. Let’s make it a goal to have orders in soon to capture this carry.

 

Currently:

Dec/Mar is 7 cents

Dec/May is 10 cents

Dec/July is 7 cents

 

Forecast:

Moderate temps and forecasted rainfall for Minnesota/Iowa/Illinois/Indiana/Ohio over the next two weeks should help add soybean bushels and finish the corn crop. Unfortunately, much of Nebraska reamains on the dryer side.

 

Outside Markets:

We started the week on news of lower Chinese economic growth and their government discussing lowering interest rates in an attempt to provide a spark domestically. Due to exchange rates, it is reported importers in Mexico and Japan (the top 2 US export nations) are paying higher prices for corn than they did in 2012.

 

The current national gas average is $3.92/gallon ($3.71 in Nebraska). This is down from the June high of $5.02, but still about 75 cents above last year at this time. Today’s diesel average is $4.99/gallon compared to recent highs at $5.82. One year ago the diesel average was just $3.29. US crude exports set a record at 5 million barrels/day as Europe and others struggle to secure energy.

 

Some good news- We are on pace to have the quietest hurricane season since 1999.

 

 

Something that Probably Means Nothing:

Apple is now 7% of the S&P 500. That is nearly twice the entire energy group sector.

 

 

Enjoy your weekend!