Grains Marginally Higher Tuesday Morning...
Aug 14, 2012
The grain markets are marginally higher this morning in what could be a typical “Turnaround Tuesday” type trade. Crop ratings for corn were unchanged in the good-excellent category at 23% while soybeans increased 1% to 30% good-excellent. The corn crop is rated 51% poor-very poor; soybeans are rated 38% poor-very poor. Last week’s rains helped the bean crop to some extent while cooler weather and more rain chances should give the crop in some areas a fighting chance at decent yields. Winter wheat harvest is wrapping up in the north while spring wheat harvest is now 65% complete. The spring wheat crop is rated 61% good-excellent; many have noted high protein levels. The December corn contract seems comfortable at the $8 area for the time being, as many traders believe that more rationing needs to be accomplished.
Today is the last trading day for August soybeans, meal and oil. Noted agronomist Cordonnier lowered his corn yield estimate by 2pba to 123.0bpa; Dr. Cordonnier lowered his soybean yield by 2bpa also to 36.0bpa. Early corn yields out of the south continue to be extremely disappointing. Most of the early corn in states like KY and MO are running below 100bpa, with many fields being “zeroed-out” by insurance adjusters.
Outside markets are mostly quiet this morning. Crude oil is marginally higher and continues to hold above the $92 mark this morning. Equity futures are higher, bonds lower and currencies mixed. European stock markets are higher this morning on better-than-expected German and French GDP data. Eurozone GDP fell by .2% in the second quarter according to a preliminary report.
President Obama announced yesterday measures to assist livestock producers affected by the drought. The USDA will buy $170 million of meat and fish in order to assist troubled livestock producers. Many livestock producers quickly criticized the program, noting that input prices, and not the actual prices of their product, are the main problem. The food will go mainly to food banks and food assistance programs. Obama also commented on the farm bill yesterday, noting its importance to rural communities.
Moving forward, weather conditions are mostly benign as cooler temperatures and scattered showers assist soybean growers. It will be very interesting to see whether or not end-users bid-up grain prices later this week on the small break in prices. Spread action in soybeans is far more convincing than the spread action in corn. Bean price may not need to move significantly higher on a flat price basis in order to ration demand given the enormous inversions between nearby contracts and the July ’13 contract.
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