Morning Comments 7-13-16

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Buchheit Morning Comments from Dave Danker

Tuesday’s commodity market was higher for corn, soybeans and wheat.  Specs and commercials pushed the soybean market sharply higher, after the release of the USDA WASDE report at 11:00 am CDT.  The Macro Markets were positive as the DOW was higher; Oil higher and the US Dollar Index trading higher.  The Dow closed at 18,348 up 121 points for the day.  Crude Oil closed at $46.48, up $1.24 per barrel.  The West Texas Intermediate Crude (WTI) August 16 to August 17 spread closed tonight at $5.73 carry to August 2017.   July Heating Oil closed at $1.4491, up $0.0328 per gallon.  The US Dollar Index closed at $96.51, up $0.41.  The 10-year US Treasury bond closed down slightly at a 1.52% yield and the 30-year bond closed at 2.24%.  Tuesday’s CBOT closes were 4 to 6 cents per bushel higher for corn, 24.5 to 32 cents higher for soybeans and 7.75 to 8.5 cents higher for Chicago wheat.  Cash bids at the river have rebounded back to $11.07 after they reached $11.90+ for November through January for soybeans and SEP corn is trading around $3.65 after hitting a top in $4.65-4.75 area for JAN delivery corn.  We are currently bidding about $0.15 to $0.20 behind those prices for the same time slots.  Informa Economics released their 2016 crop estimates last Monday with a 14.531-billion-bushel corn crop estimate, a 3.89-billion-bushel soybean crop estimate and a 2.217-bushel wheat crop estimate.  If you add in the 200-million-bushel increase in USDA’s 2016 Ending Stocks estimate, you come up with a bone chilling 2016-2017 corn carryout of 2.451 billion bushels.  This will leave most export buyers and industrial users very confident of sourcing whatever bushels they need at a low price.  The weather over the next 2-3 weeks will be the primary determinate of just how large the 2016 Corn Crop will be, but the current weather forecasts indicate the likelihood of a large crop.  Last Friday’s close left the corn: soybean ration at 3.31 to 1 is one of six times that the ratio has exceeded 3.2 to 1 since 1980.  Typically, these spikes create a situation where soybeans decline 15-20%, while corn increases in value by 2-5%.  The ratio closed on Tuesday at 3.02 to 1.

The USDA July 12th WASDE report was released this morning at 11:00 am – CDT.  Average trade estimates for 2015-2016 GRAIN CARRYOUT Stocks were as follows:  Corn – 1.758 billion bushels AND Soybeans – 350 million bushels.  The USDA estimates for stocks RELEASED THIS MORNING:  Corn – 1.701 billion bushels and Soybeans – 350 million bushels.    Average trade estimates for 2016-2017 GRAIN CARRYOUT Stocks were as follows:  Corn – 2.218 billion bushels AND Soybeans – 316 million bushels.  The USDA estimates for stocks RELEASED THIS MORNING:  Corn – 2.081 billion bushels and Soybeans – 290 million bushels.  June – 2017 wheat ending stocks were estimated at 1.105 Billion bushels, up 65 million bushels from the June estimate.   

THE USDA CROP PRODUCTION ESTIMATES THAT WERE RELEASED AT 11:00 AM CDT THIS MORNING WERE AS FOLLOWS:  CORN – 14.540 BILLION BUSHELS AND SOYBEAN – 3.88 BILLION BUSHELS.  The yield estimates were as follows:  Corn – 168.0 bushels per acre and Soybeans – 46.7 bushels per acre.  THESE NUMBERS WILL MOST LIKELY BE CONSTRUED AS neutral – bearish for corn!  NEUTRAL TO BULLISH FOR SOYBEANS.

Check out our Daily Grain Bids (updated every 10 minutes during the trading session) by clicking on:        www.buchheitagri.com/biehle-grain-bids/   or   www.buchheitagri.com/morehouse-grain-bids/      or feel free to call us at 800-622-7937 (ask for Katlyn, Eric or Dave) or call 573-667-9921 or 573-768-0489 and ask for Shon. 

USDA Crop Progress reports released Monday afternoon estimated corn Good-Excellent condition at 76% versus 75% LW, 69% LYR and 65.1% for the 5-year average.  The soybean condition ratings were 71% GE, 70% LW and 62% last year with a 5-year average of 62.1%.    This report was bearish.  We are still very much in a weather market!        

Long Accumulation by the Specs and Commercials pushed the corn, soybean and meal markets higher today as Specs bought 6,000 contracts of corn to finish the day at 77,000 contracts long. They bought 10,000 contracts of soybeans to close at 137,000 contracts long and they bought 3,000 contracts of wheat to close at 106,000 contracts short.  Specs bought 4,000 contracts of SBM and are long 61,000 contracts of Soybean Meal.    

CIF bids have weakened in the Gulf with JJ wheat at (35 bid-42 asked), OND wheat (55 bid).  October soybeans were quoted (82 bid-88 ask).  August corn was quoted (no bid-67 ask), Sep was not quoted and October corn was (71 bid-75 asked).

Barge freight has been trading at remarkably low levels.  Freight firmed 60-70% in the last two weeks with the nearby July quote at 225-300%.  August at 285-400.  Harvest barges traded today at 425-525 for SEP and 500-525 for OCT. 

Fescue prices were quite strong during the 2016 Harvest.  We paid prices to range from $0.48 to $0.50 per pound.  A good fescue fertility program involves the addition of 40 lbs. of nitrogen per acre in late August, followed by an application of nitrogen, phosphorus and potassium in the spring.  You can spray 2,4-D and Dicamba for weeds in either the spring or fall.  If you have a very heavy infestation of weeds, you might consider doing both.

We have updated our test plot results on our website, you can check out our 2015 corn yields and some 2014 soybean and corn yields at:  http://www.buchheitagri.com/tech-park-data

Be sure to check out our website at:  www.buchheitagri.com  and see the marketing information available.  If you scroll down on the front page you will find our market info page supported by AgriCharts.  If you examine the left hand side of that page you will discover the options that allow you to create price graphs or charts and also to check on historical spread information.

We are providing a DP program for those producers wanting to wait for a better day in the markets.  We can help develop a marketing plan and a floor price program.  Call Katlyn, Chad, Eric or Dave at 800-622-7937, Shon at 573-667-9921 or 768-0489.