Current Marketing Thoughts
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Freeze Warnings for Wheat across Southern Plains
Oct 25, 2012
***UPDATE*** Export interest continues to remain extremely strong for the US soy complex. Simply stated: we have the cheapest soy supplies in the world, and I suspect demand for the high proteins to remain in vogue. Please keep in mind, however competitive you believe we are in the Dec/Jan/Feb soy deliveries, we are just as "uncompetitive" from March 1st forward, when the demand clearly shifts in full-swing to South America. As for corn and wheat, even though things have improved, we continue to remain highly "uncompetitive" on a global scale. Most insiders suspect we will remain some $20-$30 per ton more expensive unless something major happens in the global landscape. I continue to hope that once we turn the page into 2013 and Black Sea, South American and European supplies are depleted we will once again become a major supplier, the problem is that window of opportunity may not be extremely large. Understand what I am saying here. Yes, we are becoming more competitive on a global scale, as sources are now reporting that Brazilian corn is being offered at just $25-$30 per metric ton cheaper than corn out of the gulf. Just two-to-three weeks ago the difference was about $55 per metric ton. The problem is even though we are getting closer...we are still NOT the cheapest by a long-shot!
USDA reported weekly export sales data this morning showed no real surprises. Corn sales were once again below expectations but not horrible. Soybeans were a little disappointing as well. Wheat sales were actually above expectations. Details below:
- Corn export sales reported at 142,300. The trade was looking for a number between 150,000 and 250,000.
- Soybeans export sales reported at 522,000. The trade was looking for a number between 650,000 and 850,000.
- Wheat export sales reported at 572,000. The trade was looking for a number between 250,000 and 450,000.
Weather continues to be the basis for argument amongst both the bulls and the bears. Personally I am NOT getting that caught up in the weather just yet. Don't get me wrong, I have my eye on it, I am just not getting overly consumed. The bulls want to argue about continued dryness in Northern Brazil, where as from my perspective the extreme "wetness" in parts Southern Brazil and Northern Argentina may end up being a more important story. My hunch is that the dryness up around the Amazon will end up correcting itself, but if the rain continues to fall in the areas that are already experience too much moisture there could be a fairly large production setback. In fact, there are already stories circulating in the trade that flooding in parts of the Argentine grain belt has allowed fungus-based diseases to attack the wheat crops, in addition it is further delaying their soy and corn planting. As a whole however I wouldn't advise getting overly bullish or bearish the "weather" as of yet, it is still very early and the forecasts are looking more conducive for improvements in some of the areas that are in question... Best advice is to remain patient and let's just see how things play out.
As for today, the trade remains in limbo. No real "weather" story to trade, "supplies" are ample enough to get us by (though tight), and the only real "demand" story continues to be in the soy complex. Reports out of China are that the soybean auction didn't go so well, only selling about 10% of the beans they had up for auction. The crushers were saying prices were simply too high for the "quality" offered. Some may view this as bearish near-term, but from my perspective this will push the Chinese crushers back towards the cheaper US supplies and help boost exports. Lets also keep our eye on the weather here at home over the next couple of days considering there are "FREEZE" bulletins in effect for the southern Plains wheat areas Thursday and Friday night. Never know, could certainly stress young plants. Moral of the story, by the end of the day "wheat" may end up showing the most strength, but I suspect soy and corn will eventually trade both sides of the fence as well with very little news influencing the trade. Don't forget Nov options expire tomorrow!
We are making some moves in response to what the market is showing us. You can sign-up here to receive a 30 -DAY FREE trial of my Daily Grain and Livestock commentary in which you will see where I stand on cash sales and some strategies on how you can take advantage of "Money-Flow" and the Outside Markets. Just click here - Van Trump Report