June 18, 2013
Digging into the crop progress report has the markets a little bullish today as a couple million acres of corn and 11.5 million acres of soybeans still need to get planted. Emergence is slow for both crops, creating some concern about yield potential early in the growing season. Weather will be playing a big role in the final production numbers this summer as warm days with adequate moisture and a late fall may be necessary to bring in the big crop that the market is looking for. Wheat harvest delays in the South have the Chicago and Kansas City markets a little concerned in the short term, but the strength could be short lived if farmers are able to get combines moving with short delays.
Stocks traded sharply higher today as the market believes that Fed Chairman Bernanke is likely to calm worries about tapering of current monetary policy. Mixed news came from the Bureau of Labor Statistics today as the Consumer Price Index was up 0.1% in May, but real average earnings fell 0.2% for the same month. The Census Bureau announced that new residential construction increased with housing starts up 6.8% for May to a seasonally adjusted annual rate of 914,000. The major stock indexes were from 0.7% to 0.9% higher at the commodity close.
The dollar index was lower today after making gains against the yen and pound, but falling against the euro. Crude oil traded higher ahead of tomorrow's weekly petroleum status report where many believe inventories will be lower.
Corn traded higher today led by new crop prices after yesterday's crop progress report. Emergence increased to 92% of the crop and condition improved a couple ticks this week. There was not a national planted acres report, but by digging into some state reports there is some news out there. Iowa, Minnesota and North Dakota were all at 94% planted on June 16. That leaves 1.64 million acres yet to be planted in just three key states where more rain is on the way later this week. Ethanol demand in the Midwest is pushing basis higher at the ports where export buyers have to pay more to get corn to the sea.
July corn futures were up 4.75 to $6.7325. December corn was up 12 on the day to close at $5.505.
Bottom line: Rain and cool temperatures delayed corn planting and have created further issues with flooding and need to replant some early planted acres. Anticipated reduction of corn acres and possible lower yield potential has held December futures near $5.50.
Soybeans traded mixed today with old crop lower and new crop up after the crop progress report still shows 11.5 million acres of soybeans yet to be planted. Emergence remains well behind normal at 66% of the crop, creating some concern about yield potential. The early crop condition report came in just above average for the early report, but 34% of the crop has not emerged and 15% is not planted, leaving a big hole in the condition report. USDA announced another 8.8 million bushel sale to China today, adding strength to new crop prices.
July soybeans closed down 1.75 today at $15.1075. The November soybean contract was up 4.25 to close at $12.8975.
Bottom line: Tight supplies and planting issues are playing into soybean prices. New crop soybeans are holding near $13 as planting delays and more sales to China offer support. Prices may strengthen if export sales continue and later planting impacts yield expectations. Old crop soybeans remain above $15, presenting cash opportunity to move beans near $16 in many locations as basis remains strong.
Winter wheat prices traded up, while spring wheat was down today, as harvest moves north and planting finishes up in the Northern Plains. Harvest is delayed in parts of Texas, Oklahoma, the Delta and Southeast after rain showers yesterday and last night. Winter wheat harvest is already running well behind normal at 11% complete. The key to this number is how many acres were either abandoned or harvested for hay, skewing the harvested acres value at this time. Spring wheat planting progress is up to 96%, with North Dakota making strides to 86% this week. Spring wheat crop condition bumped to 68% good to excellent this week as weather improves in the Northern Plains.
July wheat on the Chicago board was up 7 to close at $6.875. The July 2014 contract closed the day up 7 to finish at $7.3875.
July KC wheat was up 5.50 to close at $7.1925. The July 2014 winter wheat contract was up 3.75 to finish at $7.625.
July Minneapolis wheat was down 1.25 today to close at $7.99. The September contract was down 1.25 to close at $7.8025.
Bottom line: Wheat markets are pricing weather and export sales as the 2013 crop is beginning harvest in the South. Look for opportunities to complete more wheat sales as harvest moves north and wheat yields are reported.
Rains were confined to showers in the western part of the Plains and from the Ohio River south into the Delta and Southeast. Showers through the next few days will be spotty with some chances for heavy rains and possible severe weather wherever the thunderstorms show up. More consistent showers are likely to come in the Northern Plains into the northwestern portion of the Midwest toward the weekend. High pressure in the Southern Plains has pushed the showers to the north with heaviest rains likely to fall in Canada. Warmer temperatures are on the way to help the newly planted corn and soybean crops in the Midwest. Drier weather looks to be on the horizon as we move toward the end of June.
Recently released data from the National Climate Data Center shows that April/May Corn Belt weather was the wettest on record back to 1895. In addition, this spring ranks among the top 10 for coolest/wettest weather for the spring wheat belt. To offset this and to underscore the differences in weather patterns, southwest Kansas, the Oklahoma Panhandle and west Texas had one of the top 5 driest April/May periods since 1895.
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