Morning Comments – Monday September 19, 2016

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Last week’s markets were lower for corn, soybeans and wheat. The energy markets were lower, financial markets higher and the Dollar Index was higher, closing the week at $96.07. The US bond market weaker with the 10 Year Bond yielding 1.70% and the 30-year bond closed at 2.45%. For the week, DEC Corn was 4 cents lower, closing at $3.37, NOV Soybeans lost 14.25 cents, closing at $9.66 and DEC wheat was 0.25 cents lower, closing at $4.0325. For the week, Crude Oil lost $2.45, closing at $43.26. The DOW gained 39 points, closing at 18,124 and the US Dollar Index closed at $96.07, up $0.73. October Heating Oil futures closed at $1.4057, down $0.025 for the week. CBOT closes in the JAN-MAR contracts were $3.4725, $9.7125 and $4.25 for 2017 MAR Corn, 2017 JAN Soybeans and 2017 MAR Wheat, respectively. MARCH 2017 soybeans traded 14 cents lower for the week and settled at $9.6975. MAY 2017 corn closed at $3.385, up 4 cents for the week, DEC 2017 corn closed at $3.4525. MAY 2017 wheat lost 10.75 cents, closing at $4.2125, JULY 2017 wheat closed at $4.3475, SEP 2017 wheat closed at $4.4625. The Baltic Dry Index closed at 764, down 40 points from last week’s 804, a new all-time low for the index was set on 2-12-16 when the index hit 290, establishing a new low for the index stretching back thirty plus years. The Baltic Dry Index is up 59.83% YTD.
October SBM closed Friday at $313.70, down $4.00 for the week and down $105.00 from the high of $418.70 set on June 13, 2016. With the high yields being discussed for the US soybean crop, one would think that soybean meal would continue to trade lower going forward. Some analysts are discussing a potential slowdown in Chinese purchases of soybeans during 2017. This could impact both soybean and meal prices going forward.
Our Annual I-55 Tech Park Tour was held Wednesday, August 24th. We shared the past year’s plot data and discussed the new genetics, herbicide programs and plant growth regulators. We had several agronomy folks on hand to discuss genetic programs, herbicide programs and plant growth hormones. I received many comments on how outstanding the soybean crop looked. Most folks told me that the depth of genetic testing and the demonstration of different herbicide programs impressed them. One thing that really stood out to me was the herbicide demonstration where we showed people how many weeds (Waterhemp) could come from 4-year-old seed in the soil seed bank. We had kept that particular area free of weeds for the last 4 seasons and still had a large escape of weeds in the area where we did not use the Liberty and Scepter spray combination. More information about our test plots is available on our website: www.buchheitagri.com
The CIF markets are weaker for corn and soybeans. Corn exports have moved up and wheat exports continue to be soft, with the off-spec HRW wheat taking over the damaged wheat and feed-wheat markets. LH September corn barges are (41 bid-44 ask), October corn barges are (58 bid- 50 ask), October soybean barges are (73 bid-75 ask) and October wheat barges are (35 bid-47 ask) and OND wheat (50 bid-75 ask). Most CIF elevators are focused on corn and soybean programs with little regard for wheat.
Spec funds made significant changes to their final positions this week. Long liquidation in soybeans and soybean meal combined pushed the soy complex markets lower, while short-selling pushed corn and wheat markets lower. Specs removed 22,000 contracts from their short corn position to create a short position of 186,000 contracts net short. Spec funds removed 9,000 contracts from their long bean position to make it 74,000 contracts long. The Specs removed 4,000 contracts from their short wheat position of 130,000 contracts short. The Specs finished the week, long 32,000 contracts of Soybean Meal.
Argentine corn acres are predicted to rise by 18% to approximately 14.5 million acres. This is the equivalent of the US corn farmer adding another 3-4 million acres. If the Brazilian farmers add corn acres, we could be set up for very large corn and soybean production in South America this winter. Brazilian soybean plantings will be up about 1.5%. This is the smallest increase in soybean acres in years, due to tight financial conditions and the inability of many producers to pay off this year’s operating loans. A leading South American soybean analyst feels that they will plant 33.7 million hectares (83.3 million acres) or roughly the same amount as the US farmers will in 2017. Brazilian interest rates are very high with the subsidized Government loan rates at 8-12% and the private bank operating loan interest at 20%+. Due to the tight finances, it appears that there will be only limited increases in corn planting in Brazil even though the central Mato Grosso corn price is above $4.70 and the heavy livestock areas are paying as much as $6.75 per bushel of corn.
Most major foreign currencies were weaker versus the US Dollar. The Euro finished the week at one Euro per $1.12 US$ (unchanged). The Japanese Yen finished the week trading at 102.34 per US Dollar (up 0.31). The Russian Ruble finished the week trading at 65.04 Rubles per US Dollar (down 0.33). The Brazilian Real finished at 3.27 per US Dollar (unchanged). The Argentine Peso closed at 15.13 (down 0.16). The Canadian Dollar finished at 1.32 per US Dollar (down 0.02), the Mexican Peso at 19.64 per US Dollar (down $0.73) and the Chinese Yuan finished at 6.67 per US Dollar (up 0.01).
Live Cattle futures were higher for the week gaining $3.00; Feeder Cattle were $1.27 to $1.67 higher and Lean Hog futures were $3.76 to $4.40 lower. October Live Cattle closed at $107.88, up $3.48 and December closed at $108.05, up $2.65. September Feeder Cattle closed at 135.50, up $1.27 and October Feeder Cattle closed at $132.95, up $1.67. Lean Hogs were sharply lower. October closed at $55.48, down $3.75 for the week. Cash Hogs are called steady on Monday and Cash Cattle are called steady to $3 higher after late week trades at $170 in the beef and $110 live. The Pork Cutout finished the week at $79.14, down $2.53 for the week. Beef Feedlots are asking $112-113 in the South and $175+ in the beef after seeing some offers late week trade at $170. Choice Beef closed at $186.20, down $1.70 and Select Beef at $178.38, down $3.89 for the week. The Choice:Select spread ($7.84) has narrowed considerably from spring markets that saw the Choice:Select spread trade out to $26.00+. The spread widened out about $2.50 this past week, indicating better demand for the higher value cuts. The packers have been making tremendous profits and the basis changes in cash cattle indicate that the cattle feeder has finally got himself into a position to make the packer pay a little more for finished cattle. Some analysts feel that we could work our way back to $120-$125 for finished cattle in the next few months.
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.
Call us for help with marketing decisions or help in preparing crop programs! A DP program for those producers wanting to wait for a better day in the markets is available. Check our website or call us for quotes on DP programs. 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.