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Advisor

The drumbeat of bearishness

Well when the bears come out it seems just about everybody wants to be a bear. Look at the headlines. "Cash selling collapses corn market" Bumper crops in 2013? and it goes on  and on. Alas over the weekend new corn was found , demand dried up and the crop turned a miracle corner. Its July 2 . Let the games begin

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Honored Advisor

Re: The drumbeat of bearishness

Yep......It's July 2nd and some the the richest ground in the world has corn that is less than 4 inches tall........or nothing growing at all.    But, those fringe acres with the pastures and CRP ground that now has corn planted on it are gonna make up the difference.   Certainly sounds bearish to me.

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Advisor

Re: The drumbeat of bearishness

You forget the extra 2ml acres of corn that was planted in the deep south.

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Veteran Contributor

Re: The drumbeat of bearishness

Here are some thoughts to consider.  Fire away Bears.

 

USDA June 28th Acreage Report was BEARISH for CORN as USDA showed total acres rising 100,000 from their March 28th Prospective Acres to 97.379 million acres despite all the planting problems and expectations of a 1.95 million acre decrease. This level of acres would be the highest planted acres since 1936 when 102.1 million were planted. They say these were "Intended to be Planted Acres as of June 1" but the use of these seems more than a little dubious given the facts of the slow planting pace. Combine this with their latest 2013 yield of 156.5 and a harvested percentage of 92.4% and you arrive at a crop of 14.080 billion bushel. They placed demand at 12.850 billion bushel in the June crop report - 4.900 billion of ethanol use, 5.200 of Feed and Residual use, 1.450 of Food and Industrial use and Exports came in at 1.300 billion bushel based on a cash price of $4.80 a bushel due the rise in ending 13/14 carryout to 1.949 billion bushel. This will likely rise back above 2.0 billion in the July crop report. MDI did an updated review based on the planting delays and came up with total 2013 planted acres of CORN falling 2,625 million to 94.750 million and using a 92.45% harvested level and a based on a state by state review of yield potential (162.0 used in IA-IL-OH-MN and IN due to late planting in the western parts and good moisture in the eastern areas) and came in up with a national average 151.0 bushel per acre which equates to 2013 U.S. Production of 13.225 billion bushel. Yes this seems way off vs.. USDA but MDI feels it is more representative of the current situation and forecasts for the late J-A timeframe which still show above normal temperatures of 1 -2 degrees and 20-30% below normal rainfall over most areas of the corn belt. Here is part of a weather forecast issued on 7-1-2013 - "The big question is just when will things turn hot and dry in the nation's midsection? Well, I'm still predicting readings in the upper 90s and lower 100s as far east as Ohio and Kentucky just ahead of the July 19-26 "full moon" cycle. This is almost exactly the same time that late-planted, shallow-rooted, mudded-in crops will be pollinating in the central and eastern Midwest." This could reduce the national yield to the MDI levels and if combined with beginning stocks for 13/14 of 725 million bushel (down due to stocks figure) and demand of 12.850 billion it causes the carryout to come in around 1.120 billion bushel which would be a still TIGHT 31.8 day ending supply - since 2000 this has been at 44.5 days. Exports could actually end up closer to the historical average since 2000 of 1.800 billion bushel due to enhanced Chinese demand but much of this demand may be covered from non-U.S. sources. Their internal corn price is still over $10.00 a bushel and they have been purchasing 13/14 corn from the U.S.. MDI does not agree with the hype of some bears that demand for U.S. Corn will be greatly reduced in the future as many of the suppliers the world turned to are not always able to produce at the levels they reached the past couple of years. Also, the current DEC 13 corn prices do not translate into Brazil planting as many higher risk, second crop acres next year. Some of their internal prices for this year's corn are under $3.00 a bushel - today! It will take some time before anything like this shows up with USDA not likely to make any changes to acres until the August report after they re-survey some of the states with late planting issues. Of course the weather is the KEY to the MDI assumpations and no one knows for sure if the hotter, drier weather will occur.

 

The June 28th, 2013 U.S. Wheat Acres were up 90,000 acres vs.. their Prospective Plantings Acres figure of 56.440 million acres to 56.530 million for 2013 with Winter Wheat acres rising a surprising 709,000 acres to 42.697 million, Spring Wheat acres were shown falling by 406,000 to 12.295 million and Durum acres were shown down 213,000 vs.. March 28th at just 1.538 million. The spring planted acres fell as expected BUT the increase in the winter wheat acres is disturbing. Winter Wheat acres had to be reported last fall, have had two USDA reports showing the certified acres including the May 12th report and NOW THEY FIND MORE ACRES???? The added acres came primarily from 100,000 more in KS and OK  with 200,000 in TX and 80,000 in OH. MDI redid it's state by state review using the new acres and raising KS to 40 bushel but dropping harvested acres in KS to 80% and came up with an overall national yield of 44.9 and a 81.76% harvested level nationally. MDI showed the 42.497 million Winter Wheat with a 45.2 yield and production of 1.479 billion bushel. Raised Spring Wheat acres by 25,000 to 12.320 million times 97.14% harvested and a probable yield of 44.7 causing production of 534.5 million bushel and Durum acres may rise 50,000 to 1.588 million times 97.9% times a 40.3 yield results in production around 62.5 million bushel. This makes a total 2013 production level of 2.076 billion bushel. Expect USDA to lower beginning stocks to 718 million bushel and lower demand to around 2.255 billion bushel (958 food, 77 seed, 270 feed and 950 of exports) which could mean their projected ending 2013/2014 U.S. carryout may end up at 670 million bushel which would be an ending days of supply level of 108.5 days or above the average figure since 2000 of 106.2 days. This assumes imports of 131 million bushel.

 

They may make added changes to their SOYBEAN acres based on a re-survey of late planting areas and assuming they find 1.165 million more acres planted than in their June 28th level of 77.728 million and with a harvested percentage of 98.45% and a yield below trend of 42.5 bushel per acre (down on late planting) they would arrive at production of 3.300 billion bushel. MDI did an updated state by state review based on 1.165 million more total acres and came up with total 2013 acres of 78.908 million. Using a historical harvested acres % of 98.45% or 77.684 million acres and with an average yield of 42.5 for 2013 U.S. Soybean Production of 3.300 billion bushel. Assuming that the ending 12/13 carryout remains at 125 million bushel and with a normal 15 million bushel of imports, the 2013/2014 U.S. Soybean supply would come in at 3.440 billion bushel. Demand could remain at USDA's 3.264 billion bushel figure thus ending 13/14 carryout would be 176 million bushel which would be just a 19.7 day ending supply or below the average level since 2000 of 28.6 days of ending supply.

 

The June 28th Acres for 2013 Grain Sorghum fell by 425,000 to 7.195 million acres (still up a large 951,000 acres vs.. last year with a 300,000 acre increase in KS and 400,000 added acres in TX. CO acres were shown up 95,000 and NE came in 35,000 higher while OK is showing a 40,000 acre increase vs.. 2012). MDI's updated state by state review arrived at 2013 production of 380 million bushel based on 7.105 million planted acres and a harvested level of 84.42% or 5.998 million acres and a yield of 63.3 bushel per acre. This would bring the supply for the 2013/2014 marketing year to around 405 million bushel assuming ending 12/13 stocks of 25 million bushel. This means using USDA's June 10th demand figure of 390 million bushel would move stocks down to 15 million bushel so look for a lower demand figure should USDA agree with the MDI yield.

 

If I knew for sure, I would not be working for a living.

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Veteran Advisor

Re: The drumbeat of bearishness

Who is "MDI" ??

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Veteran Contributor

Re: The drumbeat of bearishness

A farm market information service that I have worked with for the last 15 years.

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Veteran Advisor

Re: The drumbeat of bearishness

For the record, I sold most of my 2012 corn production for around $8 during last fall's harvest, but I do have some "gambling" bushels around that I want to get some good coin for, too.

 

What is going on now is some "scare" tactics to try to shake loose enough bushels to keep the old crop price from exploding.

 

If you have old crop corn (or beans) left, please do not be a freaking idiot and fall for the "delayed pricing" game that is also played all the time.....those that deliver grain and put it into the use channel without securing a price should be tarred and feathered.

Veteran Advisor

Re: The drumbeat of bearishness

..................and poked in the eye with a sharp stick, Red.

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Veteran Advisor

Re: The drumbeat of bearishness

Assuming you have all bills paid and money in the bank then don't sell. If you need funds to get by then there is no other choice but to sell some bushels .
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Senior Advisor

Re: The drumbeat of bearishness

Since much of the crop is behind the normal development on 4 July, perhaps the typical summer price deciline will wait a couple of weeks till the development reaches what we normally see now.  Or, maybe they'll just sell on the calendar.

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