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06-27-2017 06:45 AM - edited 06-27-2017 06:46 AM
So.........the good/excellent ratings for the corn and soybean crop did not improve this week, like many thought they would. It seems to me that the longer the traders and end users stay complacent, the more explosive these markets could be down the road. Just wondering what lights the fuse? Could it be the acreage report coming out Friday? We shall see. Many of the bears still point to the carryover numbers as being burdensome........but maybe sometime in the future, they'll be glad we had that cushion. What are your thoughts?
06-27-2017 07:29 AM
Watch China and their corn. The WASDE has to drop China production as China has said 211 instead of 215. Also, ne China is in for 6-8 days of 100 degree days. Add another 5mmt drop in production? Thats one of the corn areas. There was a story out of China yesterday(covered by RJ Obrien) that stated their 2013 corn is in bad shape. That was being sold in ne China-I think they need it in the south and China was thinking about buying some US corn. US corn is about 200yuan cheaper than the Chinese corn. Yesterday the Dalian had the highest price for corn since March of this year. Personally, I think WASDE is going to lower China,s corn carryover to 70mmt or more. They put a tariff on our DDGS and must be grinding alot of corn as they are now are exporting large amounts of ethanol. Must be using the DDGS from the corn plus China wants to import more US ag to keep Trump happy. Its a small price for them to pay.
Add on the fact that the Ukraine is dry-lowered their corn prod by 2.5mmt yesterday with more dry weather to come. France has already lowered their corn prod estimate by 2.5mmt.
Take the US with a stubborn 67% G/E. It seems that poor root systems are to blame from planting in wet ground-remains to be seen. Alot of analysts are putting the US crop at 166 to 168 bu per acre-knocks off 320 mil bu or 8mmt without an acreage reduction or PP. If this all comes to pass, the world carryout of corn would drop from 220mmt to about 160ish in one year. Do you think the world will gear up to add more corn acres at $3.50 to $4.00 per bushel? Also add in the increase of animal units and the corn/wheat spread widening to $1 or more.
I must admit that the volume of cash sales with the bump up a week ago or so caught me by surprise-never imagined Argentina and US would dump that much corn. But its in the pipeline and soon to be gone. I think the table is set.
06-27-2017 07:51 AM
Good post voltzman, I would tend to watch what China does........and not what they say. It just might be two totally different things. It is interesting to note that many thought that Trump's policies would start a trade war with China........yet the opposite appears to be taking place. China clearly wants to continue to sell their cheap junk over here and they now realize that they might just have to buy more from the USA to keep that trade going.
06-27-2017 08:30 AM
Probably needs to quit raining first.
There's some hint of warmer and drier in the extended forecasts but I'm not over impressed at the present.
But yeah, I think we're maybe limping toward a trend corn crop at best and that puts a modest draw on US stocks and a bit more on the world as it appears to be shaping up.
Beans are about August rain and my general 50,000 foot view remains that there's plenty of moisture in a hot atmosphere so I'd lean to the wetter side- but it can certainly set up a ridge and have a dry 6 weeks.
Tightening up stocks would be constructive but there's a distinct disinterest in money chasing commodities right now so I expect anything that's not big to underwhelm. That can change but right now I'm hard pressed to see where it is coming from.
06-27-2017 11:02 AM
It needs to start raining here first. Less than 1/2 inch all month. Most of Iowa had had considerably more, just in the wrong small pocket right now. Three inches would drop down the cracks and soak in no problem.
Amazing, corn still looks goods. Cooler temps have saved us. Beans are small, but June don't matter that much to a bean--test that theory this year.
06-27-2017 05:54 PM
jec, hopefully your "million dollar rain" will come this week. Truly you must be in a dry pocket.
Here in the SW part of CIA my thirsty crops have flourished on 2.10" in June ( a hand full of small rains) plus a full profile of sub soil moisture. Your "black gold " soil really pays (bigger moisture bank) in moments like these. What does concern me a little is that June is to be the wettest month of the year. June is not over.
06-28-2017 12:14 AM
voltzman, that is interesting information. My question is whether that info is in the market or not - I suspect most of it is. It would seem to me we need some new and here-to-fore unheard of event to get much bullish sentiment in the market.