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Senior Contributor

B-Team's in, Tuesday, May 12: REPORT DAY

Well, here's the whole enchilada...so far. So, considering the tone set by these numbers, are you more apt to hold on to more grain than you would have otherwise until you have cash needs to cover? 

 

I'll see what some of our trader pals have to say from the floor and throw it up here when I get it.  

 

The July corn futures contract is 3 1/2 cents higher at $3.64 per bushel, while the September contract is 3 1/4 higher at $3.64. July wheat is 6 3/4 cents higher at $4.87 3/4 per bushel while the September contract is 5 3/4 higher at $4.93 3/4. The good news for the bulls stops there; July soybeans are 13 cents lower at $9.61 per bushel, while the August contract is 12 3/4 lower at $9.53 3/4.

 

So, is there really that much demand out there? What do you think?

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More in a bit, but here's what we've got so far: What do you think?

 

Both old- and new-crop ending stocks are seen higher than what the trade expected, but not all pits reacted immediately negative after pre-report shortcovering sent prices higher than Monday's close after USDA released its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

 

In immediate post-report trading, July corn moved about a penny higher while July soybeans were about a dime lower and wheat moved around 4 cents lower based on larger crop and ending stocks sizes for this year's old-crop and next year's new-crop output and usage. Tuesday's WASDE report showed 1.851 billion bushels for the 2014-2015 ending stocks number; previous trade estimates averaged 1.848. 

 

For soybeans, USDA sees a 350-million-bushel ending stocks number for this marketing year versus the trade's expectation for 363 million bushels, but a 500-million-bushel outlook for 2015-2016 ending soybean stocks helped send prices lower. Wheat ending stocks are seen at 709 million bushels for this year compared to previous trade estimates averaging 689 million. For the 2015-2016 marketing year (new-crop), USDA sees corn ending stocks at 1.746 billion bushels, up slightly from previous trade estimates, and 793 million bushels for wheat, up from the previous trade estimate range of 727 million.

 

"We'll see where the market trades in here, and what the final reaction is, but of all the numbers, the 500-bushel number is the most negative for soybeans. I think there's some sketpcisim in these numbers, and justifiably so, because we haven't seen these things work out," says Kluis Commodities grain broker and market analyst Al Kluis immediately after the numbers were released. "Don't buy a big rally or sell a big break on this right away. If you keep pressure on soybeans and wheat both, it's going to be difficult for that corn market to hang in there."

 

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Just got this from a grain broker with customers down in the mid-South. Obviously not a huge area, and not necessarily the optimal corn ground in the country, but if this is part of a larger trend, maybe this will show up down the road...

 

"I had not had time to fully access the effects of the heavy Sunday night rains. I have since heard from growers who stand to lose everything they have planted so far due to river flooding. My understanding is that this is largely confined to the Black, White, Arkansas and Cache River systems in northeast Arkansas – a fairly sizable chunk of the northern Delta. Growers in these areas had struggled to get planted this year but got a good 10 day window which ended late last week. By the time the rivers recede and the ground dries enough to work, it will be too late to replant corn and milo. That ground will go to beans."

 

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Well, looks like everybody's shortcovering ahead of these reports: The July corn futures contract is 1 cent higher at $3.61 1/2 per bushel, while the September contract is 3/4 cent higher at $3.66 1/4. The July soybean contract is 6 1/2 higher at $9.80 1/2 per bushel, while the August contract is 6 higher at $9.72 1/2. Wheat's so far the leader, with the July contract 9 cents higher at $4.90 and the September contract 8 1/4 higher at $4.96 1/4.

 

What do you think? Does this mean we're setting up for a sharp dive after the reports are released?

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A few more thoughts from a couple more traders I just heard from:

 

"Today’s USDA report will be the first to show us the balance sheet for the 2015/16 marketing season and with early planting it is assumed the USDA will apply a rather healthy yield number. Ending stocks number has been estimated from 1.55 bb to 2.27 bb. Corn should see range bound trade till weather either produces too much heat and dryness or confirms two consecutive good growing seasons. Talk has to become weather to create a bullish story. Beans are still hanging their hat on the bean oil strength but worried about meal demand. Plantings are ahead of schedule but there is some concern with the forecast. USDA report isn’t expected to create any surprises."

 

"Plenty of potential for surprises, with the first world numbers for 2015/16. Soybeans typically have the biggest moves. Ending stocks below 350 mbu would likely be bullish. New crop stocks above 500 million would be bearish at current price levels, IMHO."

 

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And, here's a rundown of the numbers the trade expects, from Dan Hueber from the Center for Agriculture & The Hueber Report:

 

"The average estimates for 2014/15 ending stocks are 1.848 billion for corn, 363 million in beans and 689 million for wheat. For the 2015/16-crop year, average estimates for ending stock are 1.736 billion corn, 438 million beans and 727 million for wheat. The average estimate for corn production is 13.55 billion, beans at 3.826 billion and wheat at 2.098 billion. The world number could be as critical as any this morning as it will be a reflection and reminder of just how large world inventories are."

 

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Heard from one trader, Jack Scoville from the PRICE Futures Group in Chicago. Here's what he says heading into this morning's reports. Think he's right about trading volume picking up?

 

"We will watch the wheat production as it is survey based and therefore real data and then the projections for new crop corn and beans. Movement should probably come from those estimates. Looking for big yields for beans and corn due to early planting, ideas more mixed on the wheat after the Kansas crop tour last week. Been very slow, so I think trading will pick up pretty good after the reports come out."

 

Have a couple texts out to folks out around Hoxie in northwest Kansas to see how chilly it got out there and whether it nipped the wheat. Hobby, any reports further west from Stockton? 

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Mornin'! Well, not a whole lot of sizzle to the steak this morning for prices heading into these USDA reports this morning. Wheat saw some brief upside in overnight trading, but it's joined corn and beans lower heading into this morning's open. Doesn't sound like there are any great expectations for this morning's reports, especially for the bulls.  From Kluis Commodities' Cory Bratland this morning: "I think it is going to be real hard for the USDA to give us a bullish report today at 11:00 am. I am watching to see if the market can rally on a negative Crop Production Report. If that does happen we could have a near term low in the market."

 

Sounds like a nice forecast is going to be a culprit today on top of the USDA data, too. But, is it that nice out there? Hearing some reports of crummy weather -- continued damp soils and some frosty temps out west. Anybody in wheat country see a frost or freeze last night? 

 

We're shorthanded this morning, with Mike still out sick, but I'll make darn sure I'm on the horn getting what everybody thinks of these reports this morning. What's your take at this point? 

 

Hey, stay safe out there today! I'll be back with more in a few!

 

Jeff

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6 Replies
Honored Advisor

Re: B-Team's in, Tuesday, May 12: REPORT DAY

Got a text from the Stocton, ks area of 30° F. 

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Veteran Advisor

Re: B-Team's in, Tuesday, May 12: REPORT DAY

Seems like everyone is leaning completely beaish on this report.  Who knows? Maybe one of those USDA analyst transposed a number and threw this report out of whack.  Maybe a measured, contrarian BUY might do the trick.  

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Senior Contributor

Re: B-Team's in, Tuesday, May 12: REPORT DAY

Hobby, just heard from my crop spotter around Hoxie (my pop!) and he said that he doesn't think it got too frosty around there. Said there was a little frost on the rooftops, but didn't appear to freeze. Said it was 36 this morning at 6. 

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Honored Advisor

Re: B-Team's in, Tuesday, May 12: REPORT DAY

Just got text from Hill City area

32° and very frosty. 

Low fields probably hurt some.

 

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Senior Contributor

Re: B-Team's in, Tuesday, May 12: REPORT DAY

Maybe my great-granddad was onto something...when he came over from Germany, he decided to farmstead up north of Hoxie (closer to Dresden) because he, as my granddad used to say "hated trees!" He was going to settle around Hill City but kept moving west! I think they have maybe had a little more rain around there lately, haven't they? They've had showers around Hoxie, but no big frog-stranglers. A friend of mine further west and south out by Tribune has had some real gully-washers the last couple of weeks. The Smoky is running like a proper waterway out there! 

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blugill
Senior Reader

Re: B-Team's in, Tuesday, May 12: REPORT DAY

1900my dad attended "normal" school in dresden in early 1900s.  an uncle had a livery stable there

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